The Recession New Zealand Has To Have?

Going Down? Governments also suffer in recessions and depressions – just like their citizens. Slowing economic activity means fewer companies making profits, fewer people in paid employment, fewer dollars being spent, and much less revenue being collected. With its own “income” shrinking, the instinct of most government’s is to sharply reduce spending. 

CONVENTIONAL ECONOMIC WISDOM insists that the only effective cure for rising inflationary expectations is a short, sharp recession. Easy to say, but much, much harder to accomplish – especially if you are at least nominally a party of the Left. The ghost of John Maynard Keynes is forever whispering in the ears of Labour parties – even those which long ago embraced the precepts of Neoliberalism – and his message is always the same: Spend, spend, spend.

The problem with spending in an inflationary environment is that it does nothing to discourage the notion that the price of basic items in six months’ time will be appreciably higher than they are now. In such circumstances, simple logic dictates that it is better to make a substantial purchase today, than tomorrow. They also encourage the idee fixe that one’s income must be increased to match, at the very least, the rate of inflation. Understanding this expectation, employers budget to recover the cost of increased wages and salaries by increasing the price of their goods and services.

Once stimulated, inflationary expectations, and the upward spiral in wages and prices they set in motion, are very difficult to suppress.

Essentially, a government is required to make it a lot more expensive for people to borrow money. At the macro level, sharply rising interest rates have the effect of slowing economic growth. At the micro level, employers stop hiring and start firing. Those forced onto the dole face a dramatic loss of income and all discretionary spending ceases abruptly. The rest of the workforce, fearful of losing their jobs, stop demanding wage and salary increases. They also stop spending on non-essentials and start saving. Retailers now have the strongest of incentives to keep their prices stable.

Pretty soon, economic growth stalls, and then shifts into reverse. Pessimism reigns supreme. Inflationary expectations, along with inflation itself, come to a shuddering halt.

The trick, of course, is in knowing how long to keep the interest rates going up, when to hold them steady, and when to let them drop. Keep them high for too long and the economy risks transitioning from recession to depression. Those with money, ill disposed to risk it, satisfy themselves with government-guaranteed returns. Unable to borrow, or meet their higher interest payments, businesspeople go bust, and property-owners with mortgages lose their homes. Unemployment rises, spending decreases still further, and retailers are forced to contemplate lowering their prices.

What the economists most fear now is not of inflation but deflation. The prospect of the economy not simply grinding to a halt – but shrinking.

At this point, all eyes turn to the government. Something must be done! But governments also suffer in recessions and depressions – just like their citizens. Slowing economic activity means fewer companies making profits, fewer people in paid employment, fewer dollars being spent, and much less revenue being collected. With its own “income” shrinking, the instinct of most government’s is to sharply reduce spending. Now it is the turn of those businesses, organisations and institutions dependent on government money to feel the pinch. Exactly the same contractionary spiral that wound down the private sector, now grips the state and its hangers-on.

But the trials and tribulations of the state do not stop there. The huge number of unemployed and otherwise impoverished people have nowhere else to turn for assistance but their government. Meeting that need from a dwindling treasury, however, is the stuff of political nightmares. Just keeping the education, health and transportation systems functioning is a huge drain on the state’s resources, feeding and housing the hungry and homeless threatens to render it insolvent.

But you can’t just let people starve – can you? The hungry and the homeless themselves are likely to answer that question, as they did in New Zealand’s hungry winter of 1932, when riots tore the main streets of Auckland, Wellington and Dunedin apart. Terrified, the conservative coalition government postponed the 1934 general election by 12 months and passed the draconian Public Safety Conservation Act. Not that it did them much good. On Tuesday, 26 November 1935, New Zealanders elected their first Labour Government.

And what did that government do? It spent, spent, spent.

So, what should Jacinda and Grant do? Continue to spend, spend, spend? Or allow Reserve Bank Governor, Adrian Orr, to push up the Official Cash Rate (OCR) to 5 percent and watch economic activity nosedive?

From a left-social-democratic perspective, at least part of the answer would be to embark on a massive political education campaign. Explain to Labour’s voters the havoc inflation wreaks upon the lives of ordinary people, and why it must be driven out of the New Zealand economy. Tell them defeating inflationary expectations will require the full co-operation of the whole population. Then announce a two-year wage, price and rent freeze. Further announce the state subsidisation of basic foodstuffs and energy supplies, to be paid for by higher taxes on the wealthy, the restoration of Death Duties and a Capital Gains Tax.

A return to the bad old days of Muldoonism? Damn straight! It certainly beats asking the poorest and most vulnerable New Zealanders to carry the full burden of eliminating inflation. Few people appreciate that the whole purpose of destroying Muldoonism – which was simply an eccentric form of Keynesianism – was to free the wealthy from their obligation to contribute their fair share towards the maintenance of a decent society. That was all Rogernomics and Ruthanasia were ever about: making the poor pay more so the rich didn’t have to.

Not that Jacinda and Grant are at all likely to adopt a left-social-democratic economic agenda to deal with the impending crisis. They will make the poor pay, pretend they’re not, fool nobody, and be bundled out of office in 2023.

Ironically, their policy choices may end up decisively reducing inflationary expectations. To the limited degree permitted by Neoliberal economics, the economy will recover, and the National Party will kick-off another nine year term on a thoroughly sunny note. Who knows, by the time the next election rolls around in 2026 they might even be in the mood to: Spend, spend, spend.

This essay was originally posted on The Daily Blog of Friday, 10 June 2022.

Unmistakably Labour Legislation.

The Age-Old Question: The idea of laying a solid floor of wages and conditions beneath the feet of workers in industries notorious for engaging in exploitative “races to the bottom”, but keeping the way clear for improving upon these base “Free Pay Agreement rates” in case-by-case collective bargaining, will act as a highly effective recruiting sergeant for the unions.

AT LAST! The Sixth Labour Government has finally introduced legislation the First Labour Government might recognise. Labour Minister Michael Wood’s “Fair Pay Agreements Bill” is the first real effort since the Labour Relations Act of 1987 to materially strengthen the hand of New Zealand’s beleaguered trade union movement. If the Bill’s intent is not watered-down in the process of making its way through Parliament, and if the Labour Government is re-elected, then trade unionism in this country is likely to expand rapidly.

The reason for this is simple: the Bill not only makes joining a trade union look like a good bet; it makes it look like a safe bet. The idea of laying a solid floor of wages and conditions beneath the feet of workers in industries notorious for engaging in exploitative “races to the bottom”, but keeping the way clear for improving upon these base “FPA rates” in case-by-case collective bargaining, will act as a highly effective recruiting sergeant for the unions.

Something very similar happened when the First Labour Government made membership of a trade union a legal prerequisite for enjoying the fruits of compulsorily arbitrated “awards” – the model for Wood’s FPAs.

Following the legislation’s passage in 1936, vast, hitherto unorganised, swathes of the workforce were swiftly enrolled in a clutch of new trade unions. The largest of these was the Clerical Workers Union which, for the first time, allowed the overwhelmingly female workforce of office clerks to join the ranks of the industrial army. In the years that followed, workers as varied as journalists and law-clerks were enrolled. There was even a Musicians’ Union.

The “Awards” negotiated by these unions were the brainchild of the Labour Party’s predecessor in progressive social reform, the Liberal Government of 1890-1912. Its 1894 innovation, the Industrial Conciliation and Arbitration Act, was hailed across the world for its enlightened approach to labour relations.

The IC&A Act empowered an Arbitration Court, composed of judges representing the employers, the unions, and the state, to issue legally binding sets of minimum wages and conditions, negotiated by the representatives of workers and employers from across entire industries. The Arbitration Court could also issue “General Wage Orders” lifting the incomes of workers across the entire economy.

The problem, of course, was that if an industry remained unorganised, then the Court was unable to “award” its workers and employers wages and conditions minima. Caring and responsible employers soon found their less scrupulous competitors undercutting them on price by requiring their employees to work harder and longer for less.

Such were the tactics that set off the aforementioned “race to the bottom”: a business model predicated on the maximum exploitation of an industry’s workforce. Putting it bluntly: the lower the wages, the higher the profits.

This was the problem the First Labour Government’s introduction of universal union membership was designed to remedy – and it worked.

The National Party’s spokesperson on “Workplace Relations & Safety”, Paul Goldsmith, was quick to respond to Minister Wood’s introduction of the Fair Pay Agreements Bill, promising to oppose it “stridently”. It was, he said: “an ideological overreach, deliberately going to war with employers at a time when we’re facing huge economic challenges”.

One can only admire Mr Goldsmith’s cheek. The political party guilty of “ideological overreach”; the party guilty of “going to war” against its fellow New Zealanders; is not the Labour Party, but the National Party.

The Employment Contracts Act 1991, introduced by Mr Goldsmith’s predecessor, Sir William Birch, stripped New Zealand workers of workplace rights they had enjoyed for nearly a century. It set in motion the relentless shift of corporate surpluses from wage-earners to shareholders that has seen today’s workers earning thousands of dollars less per year than would have been the case had Mr Goldsmith’s “flexible labour market” not destroyed the inherent Kiwi fairness of the system it replaced.

The destruction of the trade union movement is the most important achievement of New Zealand’s Neoliberal Revolution. In 2022, fewer than 10 percent of the private sector workforce is unionised. In dramatic contrast to 1990, today’s typical union member is a tertiary-educated female, working in the public sector, and earning a salary well above the median New Zealand income of $59,000 per year.

Michael Woods Fair Pay Agreements Bill represents a first – and unmistakably Labour – step towards re-empowering all Kiwi workers.

This essay was originally published in The Otago Daily Times and The Greymouth Star of Friday, 1 April 2022.

Equality, Equity & The Great Race Of Life.

Thesis, Antithesis, Synthesis: For many – perhaps most – people, the word ‘equity” is a synonym for the word “equality”. And, to be fair, this is very often the way politicians expect the word to be understood. But the assumption that “equity” and “equality” mean roughly the same thing could not be more wrong. The difference between these two words is as important as the difference between “reform” and “revolution”.

THE WORD “EQUITY” is appearing more and more frequently in New Zealand’s political conversations. It is the new “go to” word for activists, journalists and, inevitably, politicians. It peppers political speeches, media releases, newspaper articles, television interviews and, naturally, it’s all over social media.

For many – perhaps most – people, the word ‘equity” is a synonym for the word “equality”. And, to be fair, this is very often the way politicians expect the word to be understood. But the assumption that “equity” and “equality” mean roughly the same thing could not be more wrong. The difference between these two words is as important as the difference between “reform” and “revolution”.

Most New Zealanders believe in and expect to enjoy “equality of opportunity”. They recoil from the idea of people receiving preferential treatment. Everybody is expected to line-up straight behind the start-line before the starter’s pistol sets them off and running in the great race of life. Very few people, however, expect the runners to cross the finish line at the same time. Most accept that in a contest someone comes first and someone last. A race in which everyone crosses the finish-line at exactly the same moment is not a race – it’s a jack-up.

But “jacking-up” the race (also known as “affirmative action”) is precisely what the proponents of “equity” believe in. What they are seeking is not “equality of opportunity”, but “equality of outcome”. If there are people in the race who have had the advantage of professional coaching, then those denied that advantage need to be advanced several metres ahead of the start-line. If there are runners who have enjoyed excellent nutrition all their lives, then those who have been poorly nourished since childhood must be similarly advanced along the track. If there are competitors who, on account of their ethnicity, enjoy a greater measure of confidence in their ability to win the race than those whose ethnicity has accustomed them to coming last, then those so afflicted also deserve advancement. Calculate these handicaps correctly and every runner should cross the finish-line simultaneously. Hey Presto! – Equality of Outcome!

Except, of course, that’s not the way it would go – not unless the people calculating the handicaps had guns. What sort of seasoned runners are going to accept others being positioned so far ahead of themselves? Rather than compete on such terms, many athletes would simply walk away from the contest altogether. Those awarded handicaps in the name of equity would then have to be reassessed and assigned a new handicap. How else could everybody be guaranteed to cross the line together? Not that anyone would be there to applaud them when they did. If the outcome of a contest has already been thoroughly engineered, why would anyone turn up to see it? Life is uncertain. So is sport. That’s why people watch.

The partisans of equity insist that their only goal is “fairness”: all they are seeking is a society in which everyone gets to enjoy life’s bounties; a society without “winners” and “losers”; a society in which the very idea of some people being allowed to “succeed” while others “fail” is regarded as obscene.

“Team Equity” will always get a hearing in New Zealand, where “fairness” is celebrated as the Prince of Virtues. What they will not find so easy to sell, however, is the idea that fairness requires people to be treated differently. That’s because Kiwis understand “fairness” to mean everybody being treated the same. Just watch what happens to someone who tries to jump a queue in New Zealand, or is given more than others are getting. Those responsible will be told in no uncertain terms that while everyone is entitled to a “fair go”, that does not mean they’re entitled to receive special favours from people who don’t know the meaning of the words.

This is where the propensity of New Zealanders to treat equity and equality as synonyms leaves Team Equity facing an enormous problem. In regard to Māori-Pakeha relations particularly, the argument has shifted well beyond the generally accepted notion that the indigenous people and the beneficiaries of colonisation were guaranteed, and continue to receive, equal treatment. But, “equal treatment”, in this context, can only mean that all the advantages accruing to the destroyers of Māori sovereignty must be left untouched, while the tangata whenua, stripped of their autonomy by “the imperial project”, are condemned to play a never-ending game of catch-up. Team Equity is demanding a solution considerably “fairer” than that.

What that fairer solution might look like is set out in the He Puapua Report. Its authors have come up with a twenty-year plan to give effect to what they see as the promises of equity (not equality) embodied in Te Tiriti o Waitangi. Essentially, they see Māori and Non-Māori running in the same race, but on separate tracks, until such time as both sets of runners become genuinely competitive. And the handicap? Well, that will come in the form of a more “equitable” distribution of the New Zealand state’s fiscal resources, achieved by the construction of a more equitable, te Tiriti-based constitution. He Puapua is much more than a blueprint for reform, it’s a road-map to revolution.

An exciting plan, then, but the chances of selling it to Pakeha New Zealand are as slim as the chances selling the idea of some runners being advanced ahead of others on the great racetrack of life. Its only possibility of success lies in selling equity as equality – which was the great achievement of the First Labour Government. How did they do it? Not by saying they were going to advance the interests of exploited working-class New Zealanders ahead of privileged middle-class New Zealanders, but by promising to build a nation in which everybody had the same access to a job, a home, universal public healthcare, and an education system which gave every citizen the best possible start in life. How did they pay for it? By handicapping the rich through progressive taxation. What did they call it? Equality of Opportunity!

This essay was originally posted on The Daily Blog of Thursday, 9 September 2021.

After Four Years In Office …

They Did This: On March 27th 1939, Michael Joseph Savage opened the new Social Security building. Built in just 7 weeks, the new structure replaced the half-completed Social Security headquarters destroyed in an arson attack on 2 February 1939. In his book The Quest For Security, W. B. Sutch recalled the ceremony taking place “in the presence of thousands of people, in time to mark, five days later, the end of poverty.”

IT’S 30 APRIL 1939, and the New Zealand Labour Party has been in office for nearly four years. On the 15 October 1938, the government of Michael Joseph Savage had been re-elected with 55 percent of the popular vote – a still unsurpassed level of support.

April 1939 began with the coming into force of the Social Security Act. Described by the National Party as “applied lunacy”, and by the Labour leader as “applied Christianity”, the Act represented one of the most far-reaching social reforms ever undertaken by a New Zealand government.

Just how popular Labour’s social reforms were among the overwhelming majority of New Zealanders was revealed when, on the morning of 2 February 1939, the half-completed Social Welfare departmental headquarters situated in Aitken Street, not far from Parliament Buildings, was burned to the ground in a deliberate arson attack. Savage refused to be daunted by this overt act of far-right defiance. “We have got to get the Social Security Act working on April 1st and it’s going to work”, Savage told the country.

The Labour prime minister was as good as his word. “We are not going to weep,” Savage’s irrepressible Minister of Public Works, Bob Semple, bellowed. “It is a question of getting our backs into it, and getting the job done.”

While firefighters were still dampening down the smoking ruins on Aitken Street, Semple promised the construction of a replacement building within six weeks. The Public Works Department, Fletcher Construction, and the building firm of R.C. Love began work immediately on a site in Aotea Quay.

This breakneck schedule would “necessitate the working of two 10-hour shifts”, James Fletcher admitted, “and it is anticipated that approximately 150 men will be required for each shift”. The normally obstreperous building trades unions agreed to work the site around the clock. Fletcher and Love agreed to take no profit.

Thirty years later, the eminent public servant and historian W. B. Sutch, recalled the almost festive atmosphere that permeated the construction site: “Wellington citizens daily visited the job to share, to encourage, and to offer, at breaks, refreshment for weary workers.” Astonishingly, the construction was completed in seven weeks – just 7 days shy of Semple’s wildly optimistic target. Even the normally hostile journalists of the daily press were forced to acknowledge “an achievement never approached in New Zealand before.” On March 27th 1939, Savage opened the new building. In his book The Quest For Security, Sutch recalled the ceremony taking place “in the presence of thousands of people, in time to mark, five days later, the end of poverty.”

When the First Labour Government said “Let’s do this!” – it meant it.

Because, of course, the Social Security Act (1939) and the herculean rebuilding of the new department’s headquarters, were not the only things Labour was able to show after nearly four years in power. Between 1935 and 1939 Savage’s housing czar, the charismatic John A. Lee, had overseen the construction of thousands of so-called “state houses”. According to Sutch: “[D]uring 1937 there were three times the number of houses built compared with 1932 or 1933; by 1938 this had risen to five times”. By 1940-41 fully 40 percent of all houses built in New Zealand were state houses.

It is important to remember that the Members of Parliament who served in the First Labour Government were overwhelmingly drawn from the same working-class that made up the solid core of the Labour Party’s electoral base. Hardly any of them had much in the way of formal education. University graduates were few and far between. Trade unionists, on the other hand, were sufficiently plentiful to secure the passage of a bill making union membership universal across most of the New Zealand workforce. For good measure, they also reduced the working-week to 40 hours.

Like the Sixth Labour Government of Jacinda Ardern, Mickey Savage’s ministry was fond of harking back to the darkest days of the Great Depression, when New Zealanders were subject to the tender mercies of the right-wing coalition of George Forbes and Gordon Coates. Unlike Jacinda’s government, however, Savage’s never resorted to highlighting the Tories’ failures as a way of justifying its own.

Michael Joseph Savage made a promise to transform New Zealand, and nothing – not even a right-wing arsonist in Aitken Street – was going to prevent him from keeping it.

This essay was originally published in The Otago Daily Times and The Greymouth Star of Friday, 30 April 2021.

Let's Make Jacinda Break Her Promises.

Make Her An Offer She Can't Refuse: Expecting Jacinda and her colleagues to break their promise not to introduce a Wealth Tax is not only unfair it is unwise. A consensus for change has never arisen out of a series of polite discussions - or base betrayals. A better New Zealand becomes possible only when its citizens muster sufficient democratic force to guarantee themselves a fair hearing. Change will only come when New Zealanders are strong enough to make Jacinda break her promises.
 

IF THE ACTUAL RESULT on Saturday evening is anything like the latest UMR poll, Jacinda Ardern will have a problem. UMR has Labour on 50 and the Greens on 6 percent. Replicated in the polling-booths, those numbers would give the centre-left a higher percentage of the votes cast than Mickey Savage’s government received in 1938. Jacinda would have a problem because, unlike Mickey Savage, she lacks a clear and comprehensive plan for economic and social change.

It gets worse. In assembling her unbeatable electoral coalition, and holding it together, Jacinda has had to give an explicit promise not to enact the sort of urgent fiscal programme the country requires. This will be the new government’s dilemma. How to do what needs to be done without breaking its word, and without breaking up the cross-class alliance of voters that brought it to power.

To overcome this dilemma, the prospective Labour-Green Government will have to devise some way of persuading its working-class, middle-class and ruling-class supporters to pursue change together. The Government’s objective: to create a broad-based consensus around the policies needed to steer New Zealand through the Covid Recession to the point where a united and purposeful response to Climate Change can begin. Jacinda and her team will have to lead this discussion, but they must not be left to lead it alone.

Peter Dreier, writing in the Huffington Post, recalled an important anecdote from the early years of President Franklin D. Roosevelt’s “New Deal” (FDR’s administration’s broad programme to meet the multiple challenges of the Great Depression.)

“FDR once met with a group of activists who sought his support for bold legislation. He listened to their arguments for some time and then said, ‘You’ve convinced me. Now go out and make me do it.’”

Fifty years ago, the institutions upon which a centre-left government could rely for that sort of coercion would have been the Federation of Labour, the NZ University Students Association, the major Christian denominations’ social service organisations, the universities, and a host of NGOs and progressive pressure groups. Today, virtually none of these institutions (or, at least, those that have survived!) could be relied upon to avail themselves of such a huge opportunity.

The successor organisation to the Federation of Labour, the NZ Council of Trade Unions, which should be chomping at the bit to “go out and make” a centre-left government do its duty, is a morally and organisationally moribund organisation. The vast majority of New Zealand workers are employed in the private sector, but only 8 percent of private-sector workers are unionised. Most unionised workers are public servants of one kind or another, and the unions they belong to dominate the CTU completely. In practical terms, this leaves the majority of New Zealand workers not only unprotected but unrepresented.

What this suggests is that one of the most useful initiatives the new Labour-Green Government could take would be to radically re-constitute the New Zealand labour movement. On this very blogsite, Matt McCarten has published a series of articles detailing the atrocious exploitative practices already deeply embedded in the New Zealand workforce. Along with the workplace reforms already promised, legislation to dramatically increase union density in the private sector would go a long way toward bringing the NZ working-class back on to the political stage.

The effectiveness of this reform would be further enhanced by facilitating the creation of a national organisation composed exclusively of unions representing private sector workers. The history of the CTU has demonstrated conclusively that the interests of public and private sector workers cannot be reconciled within a single organisation. It has also shown that ruthless centralisation and democracy make for extremely uncomfortable bedfellows.

It is difficult to imagine a more enthusiastic activist ally for a centre-left government than a working-class once again recognised as a vital part of New Zealand society. If Covid taught us anything, it’s that this country’s most essential workers do not wear suits and ties!

Another re-constitution more-or-less guaranteed to produce enthusiastic activist allies for a centre-left government would be the restoration of universal membership provisions to the nation’s university student associations, and, in the spirit of the union reforms, a revitalisation of democracy on the nation’s campuses. This would not stop at the radical re-organisation of student representation. Democratisation would occur across the whole university system, restoring the decision-making powers of academic staff in the management of the nation’s institutions of higher learning. Universities are not businesses and they should not be run as if they are.

These sectional reforms would be matched by a general restoration and reinvigoration of citizens’ rights generally. The powers of employers to gag their employees are in need of radical curtailment. Freedom of expression shouldn’t be restricted to a citizen’s spare time in their own home. Human rights do not cease to apply simply because workers are required to operate on their bosses’ real estate. By the same token, access to the courts should not be rationed according to the size of a citizen’s bank balance. Nor should the prohibitive cost of legal representation deprive ordinary New Zealanders of their day in court.

Jacinda and her team have given no irrevocable promises in regard to any of the above. Interestingly, very similar reforms were undertaken by the First Labour Government (1935-1949). The Labour Party acted as midwife for The Federation of Labour, and the associated legislation mandating universal union membership (via the closed shop) made the FoL a real and admirably democratic force for the advancement of workers’ interests for 50 years. FDR, likewise, through his radical Secretary of Labour (and only woman in his cabinet) Frances Perkins, made sure that the drive towards union organisation would be assisted by strongly facilitative legislation. It didn’t hurt that the President, himself, was willing to publicly declare that if he was an industrial worker, then he would most certainly be a union member.

As Peter Dreier put it in his Huffington Post article:

“Even in the middle of the Depression, Roosevelt understood that the more effectively people created a sense of urgency and crisis, the easier it would be for him to push for progressive legislation — what we now call the New Deal. FDR used his bully pulpit, including radio addresses, to educate Americans about the problems the nation faced, to explain why the country needed bold action to address the crisis, and to urge them to make their voices heard.”

Because one thing is absolutely certain: the representatives of business, the leading civil servants, think tank policy researchers, lobbyists and right-wing journalists (is there any other kind?) will be making their voices heard. A consensus cannot be forged where agreement is already unanimous. New Zealand has suffered from one-sided conversations for far too long. Helping to create a two-sided conversation should be Labour’s and the Greens’ top priority.

Expecting Jacinda and her colleagues to break their promise not to introduce a Wealth Tax is not only unfair it is unwise. A consensus for change has never arisen out of a series of polite discussions - or base betrayals. A better New Zealand becomes possible only when its citizens muster sufficient democratic force to guarantee themselves a fair hearing.

Change will only come when New Zealanders are strong enough to make Jacinda break her promises.

This essay was originally posted on The Daily Blog of Thursday, 15 October 2020.

It's Time For Disaster Socialism.

Transformers: The disaster of the Great Depression was transformed into a new and fairer society by the democratic socialism of the First Labour Government. The disaster of the Covid-19 Pandemic offers a similar transformative possibility to the Labour-NZ First-Green Government. Seize the time, Jacinda! You will never have a better opportunity to be strong, to be kind, and to break the chains of neoliberalism for those who have waited so long and endured so much.

“NEVER LET A CRISIS go to waste.” That was the key take-out from Naomi Klein’s 2007 book, The Shock Doctrine: The Rise of Disaster Capitalism. Remember the stories? Who could forget the one about the way the American Right took advantage of Hurricane Katrina? How it looked upon the tragedy of New Orleans’ flooded public schools, and saw only a heaven-sent opportunity to privatise the city’s education system.

I know Jacinda wants us all to “Unite Against Covid-19”, but I also know that out there the One Percent are working feverishly to protect, defend and if possible extend their gains of the past 35 years. The neoliberal elites survived the Global Financial Crisis of 2008-09, and they are absolutely determined to survive the Global Pandemic of 2020. That cannot be allowed to happen. The Left must drive the stake so deep into Neoliberalism’s black heart that, this time, it does not get up. What’s needed now is “Disaster Socialism”.

Last December, contemplating the rout of Jeremy Corbyn’s Labour Party, I observed:

A democratic-socialist leader possessed of a sophisticated strategic sense would understand that election manifestos are best restricted to promoting policies that the electorate actually wants – not policies his (or her) comrades believe the electorate should want. Let the drift of events – economically and socially – propel the party in directions which the capitalists may not like, but which they no longer feel able to redirect. Most importantly, identify the one reform most likely to undermine the institutions upon which their opponents’ rely most heavily for protection. Implement it early, fast, and without compromise.

In the context of the current crisis, the “drift of events” is pushing the Coalition Government inexorably towards introducing some form of Universal Basic Income (UBI). Finance Minister Grant Robertson has (very wisely) refused to rule out such a measure. Indeed, it is difficult to see how preventing a precipitous descent into mass poverty and significant social dislocation can be avoided without some form of UBI.

If Jacinda and her colleagues wish to avoid New Zealand spiralling down into the sort of mass civil unrest that characterised 1932 – the darkest year of the Great Depression – when angry crowds of desperate unemployed smashed-up Auckland’s Queens Street and fought running battles with the Police, then constructing some form of income floor for the population to stand on is pretty much unavoidable.

The beauty of the rising clamour for a UBI is that it is not actually coming from the Government. Rather, it is bubbling-up (as all great social reforms should) from below, as thoughtful people look ahead and see the black hole into which New Zealand’s economy will disappear if some form of income guarantee is not introduced – and quickly.

(Which is not to say that Robertson will not be finding it difficult to suppress a wry chuckle. Remembering the derisive reception the UBI option received when it emerged from Labour’s 2016 “Future of Work” discussions, he will no doubt be thinking “what goes around, comes around”!)

Even more beautiful than the genuinely popular nature of the demand for a UBI, is the fact that the voices of the capitalists themselves – especially the smaller ones – are joining in the clamour for change. They know that the thing they have to fear the most is (as Franklin Roosevelt rightly observed in March 1933) “fear itself”.

When people lose all confidence in their ability to escape the economic calamity assailing them, their whole mind and body are attuned to only one thing – survival. Their own and their family’s future fades to black. “Sufficient unto the day is the evil thereof.” In times like these the most important thing a government can do is give people hope. And, in the midst of an economic catastrophe: hope = money. If the people have no hope – no money – they cannot and will not spend. Every capitalist with a brain knows this. They know that impoverished consumers must put at risk the entire capitalist system. That’s why they, too, however reluctantly, are coming to the conclusion that the introduction of some sort of UBI is inevitable.

Ironically, this leaves Neoliberal Capitalism’s official spokesperson, Simon Bridges, off-side with a growing number of capitalists. His objection to the introduction of a UBI is that once introduced it will instantly become a permanent fixture of the twenty-first century welfare state. Abolishing it will be politically impossible. He’s right, of course. A UBI, like Mickey Savage’s “social security”, is one of those reforms which the Right must, at almost any cost, prevent, because once it’s in, it’s in for good. National’s wartime leader, Sid Holland, came to this realisation only slowly. He had to be beaten three times at the ballot box before he was ready to reassure the electorate that Social Security would be safe under National. Clearly, Bridges knows enough of his own party’s history to grasp the importance of heading a UBI off at the pass.

And, when I use the expression “at almost any cost”, I’m not exaggerating. So appalled was the New Zealand Right at the prospect of Social Security coming into force that, on 2 February 1939, one of their number poured petrol over the timbers of the half-constructed Social Security Building in Aitken Street, not far from Parliament Buildings, and set them alight. The resulting blaze lit up Wellington’s night sky and reduced the construction site to ashes. Not that Mickey Savage and the people who had just re-elected the Labour Government were deflected by the arson in Aitken Street. The Government, private builders and the construction unions, working together, took only weeks to construct a new Social Security headquarters. It was opened by the Prime Minister on 27 March – just five days from the coming into force of the Social Security Act on 1 April 1939.

Mickey Savage opens the Social Security Building on 27 March 1939.

Similar determination is now required of Jacinda and her government. The present crisis demands a bold measure to both reassure and economically support an anxious nation. She has the power to meet the people’s need – and she must use it. If calling the reform UBI is a problem, then for God’s sake call it something else! But get it in place, Jacinda. Let Bridges and all the other neoliberal ideologues howl. After all, how much attention did they pay to the howls of protest that greeted Rogernomics and Ruthanasia? What goes around, comes around.

And when the Covid-19 Pandemic passes and we all emerge into the sunlight, the emergency measures will need to be given permanent legislative form. To accommodate this reform many other things will have change – not least our taxation system. A UBI will require the One Percent to pay their fair share. Something they haven’t done since the early 1980s. Employers will also face changes. No longer in fear of “the sack”, their employees will demand a fairer distribution of the surplus they create: more for the workers, less for the shareholders. The UBI will thus unleash a torrent of innovation and creativity – helping as nothing else can the rehabilitation of New Zealand’s stricken economy.

The disaster of the Great Depression was transformed into a new and fairer society by the democratic socialism of the First Labour Government. The disaster of the Covid-19 Pandemic offers a similar transformative possibility to the Labour-NZ First-Green Government. Seize the time, Jacinda! You will never have a better opportunity to be strong, to be kind, and to break the chains of neoliberalism for those who have waited so long and endured so much.

Let’s do this! Now!

This essay was originally posted on The Daily Blog of Thursday, 26 March 2020.

The Only Way Through This Crisis Is Together.

Together: In leading New Zealand through the Covid-19 Pandemic, the Prime Minister could do a lot worse than allow herself to be guided by the spirit of collective sacrifice and co-operation that animated the New Zealanders of 80 years ago. Most Kiwis alive today have had no opportunity to prove their mettle in the way their parents and grandparents did during the global struggle against fascism. In the weeks and months to come, Jacinda’s Government must do everything it can to ensure that we are given our chance.

THE COALITION GOVERNMENT’S greatest political challenge over the next 6-12 months will be keeping up morale. If it fails to hold the nation together, then it will be swept out of office on a tsunami of fear, anger and recrimination.

Only a very small number of New Zealanders can draw upon historical experience to help them through the unfolding Covid-19 crisis. Assuming people’s coherent memories kick in from around the age of 7, to recall the onset of the Great Depression in 1929 you would need to have been born in 1922 – making you 98! To have clear memories of the outbreak of the World War II, in September 1939, you would need to be 88. Most of us have never experienced anything like the present crisis. If our morale is not to crumble in the face of mass illness, a rising death toll, and something pretty close to economic collapse, then the Government will have to box very clever indeed.

It is, therefore, to be hoped that Jacinda and her colleagues, in addition to being briefed by scientists, physicians and senior civil-servants, call upon the services of New Zealand’s historians – especially those with knowledge of “The Home Front” during World War II. The Government needs to know how this country kept up its morale during six long years of war. Especially important to understand, is how we coped with the first three years of the war – when nearly all the news was bad. What prevented us from falling to pieces when the Germans and the Japanese were winning on just about every front?

Critical to the maintenance of public morale was the near complete control exercised by the wartime government over information and the means of communicating it. The daily newspapers, radio broadcasts, cinema newsreels – even private letters – were strictly censored. The Government’s key objective was to ensure that every citizen received the same information about the war.

While no government can prevent people spreading rumours and speculation, the state does have the power to punish those responsible. During World War II, persons found guilty of spreading “alarm and despondency” faced harsh penalties. To be convicted of attempting to undermine the government and/or the war effort, or, even worse, give “aid and comfort to the enemy” – i.e. commit treason – could mean execution.

There can be little doubt that had the Internet existed in 1940, one of the first things the Labour Party leader and wartime prime minister, Peter Fraser, would have done is bring it under strict state control. Inevitably, Jacinda Ardern will have been briefed by the Security Intelligence Service (SIS) and the Government Communications Security Bureau (GCSB) on the practicalities of controlling the Internet, should the situation deteriorate to the point where such action becomes necessary. If that sounds fanciful, just consider the fact that in 2019, governments around the world shut down the Internet on nearly 200 occasions. Given the Internet’s crucial economic role, the NZ Government would be loath to take such a drastic step. But, if fake news was inciting major unrest: rioting in the streets; a run on the banks; or massive and prolonged panic buying; Jacinda and her colleagues would be left with little choice.

Controlling the crisis “narrative”, however, is just the start. Keeping up public morale is best achieved by encouraging all citizens to “do their bit” for victory. In the present circumstances, “doing our bit” might involve joining neighbourhood units dedicated to assisting the elderly and those in “self-isolation” with food and medicine deliveries. Such groups could also serve as the Government’s “eyes and ears”: reporting possible new cases of infection and enforcing the quarantine. “Doing our bit” might also involve working in the “instant factories” set up to manufacture protective masks and clothing, and construct additional ICU facilities. This sort of state-directed production is already underway in the United Kingdom and the United States. If New Zealanders could lead the world in medical equipment innovation; protective gear, and electrical appliance design, then this manufacturing proposition shouldn’t be beyond our powers!

During World War II, the NZ Government gave itself more-or-less unlimited powers to intervene in and control every aspect of the market. Obviously, this included the labour force. Just about anyone could be “manpowered” (sorry, but this was the 1940s!) anywhere. In 2020, with the supply of immigrant farm labour shut off, keeping up agricultural and horticultural production (our principal source of overseas funds now that tourism and education have been taken out of the export mix) may require those without work to accept being “person-powered” to the nation’s orchards and dairy farms.

When World War II came to an end in 1945 the sense of collective achievement was huge. Clearly, the suffering and dangers endured by New Zealand’s soldiers, sailors and airmen in direct conflict with the enemy could not be shared by everyone, but just about everyone contributed something to the war effort. The women who worked in factories, offices and on the land; the kids who collected waste paper and scrap metal; the grandparents who tended “Victory Gardens” and knitted socks for the “boys overseas”. There had been shortages, rationing, deep fear and agonising loss, but New Zealanders had come through their national ordeal, together, and they were enormously proud of their resilience. Moreover, most of them were equally proud of the government that had guided them through – re-electing Fraser’s Labour Party in 1946.

In leading New Zealand through the Covid-19 Pandemic, Jacinda could do a lot worse than allow herself to be guided by the spirit of collective sacrifice and co-operation that animated the New Zealanders of 80 years ago. Most Kiwis alive today have had no opportunity to prove their mettle in the way their parents and grandparents did during the global struggle against fascism. In the weeks and months to come, Jacinda’s Government must do everything it can to ensure that we are given our chance.

A top-down, government-knows-best approach will not secure the public “buy-in” crucial to keeping the people of this country together. If the response to the Covid-19 Pandemic is not crafted and delivered by all of us, working together, for all of us, then the many hardships and wrenching tragedies that lie ahead will not bind our communities more closely together, they will tear them apart. Good leaders do not attempt to carry their people, they allow themselves to be carried by them.

We can be strong, we can be kind, and we will be okay, Jacinda. Count on it.

This essay was originally posted on The Daily Blog of Friday, 20 March 2020.

Where We Stood: Chris Trotter Replies To Stevan Eldred-Grigg.

Joining The Fight: Stevan Eldred-Grigg's argument for New Zealand staying out of the Second World War fails not only on the hard-headed grounds of preserving the country’s strategic and economic interests; and not just on the soft-hearted grounds of duty and loyalty to the nation that had given New Zealand birth; but, ultimately, on the grounds of the damage it would have inflicted on New Zealand’s soul – for want of a better word.

SHOULD NEW ZEALAND have declared war on Germany on 3 September 1939? This is the startling question posed by Stevan Eldred-Grigg, one of New Zealand’s more interesting historians, in an essay posted on TheSpinoff. I say “startling” because, while many wish that New Zealand could have stayed out of World War I, the number suggesting we should have stayed out of the existential struggle against fascism is vanishingly small.

The first great global conflict of the Twentieth Century may have been a vicious brawl between competing imperial powers, tricked out in the bunting of King and Country and, later, as a noble crusade “to make the world safe for Democracy”, but the Second World War was the real thing. Adolf Hitler and his regime constituted a clear and present danger to human civilisation which simply had to be stopped.

Eldred-Grigg’s revisionism should not, however, be dismissed out of hand. Nothing is lost by holding the icons of our history up to the light and scrutinizing them closely for flaws and blemishes. Such scrutiny becomes an urgent necessity when the accusation is made that the historical icon in question depicts a lie. Let us then take a closer look at Eldred-Grigg’s argument.

His case against New Zealand’s participation in the war is presented in two parts. The first suggests that the “hard-headed” strategic and economic arguments for joining the fight against Hitler simply do not stack up. Great Britain, he says, was simply too far away to offer the slightest strategic protection, and Nazi Germany too far away to pose a credible threat. Our export trade, he implies, would have prospered regardless of which nation emerged victorious.

The second line of attack is directed at what Eldred-Grigg calls the “soft-hearted” reasons for ranging ourselves alongside the “Mother Country”. Poland, he suggests, wasn’t worth fighting for – being little better than Nazi Germany in terms of its politics. Likewise, the Mother Country, herself. Great Britain remained an imperial power whose hands, vis-à-vis the promotion of freedom and democracy, were still far from clean. “[B]eliefs about freedom and democracy, together with emotions about duty and loyalty”, Eldred-Grigg suggests, were an insufficient justification for plunging New Zealand into someone else’s war.

But, Eldred-Griggs revisionism is wrong on all counts.

Strategically-speaking, Great Britain was not that far away at all. In 1939, the Royal Navy was still capable of considerable force projection – even into the Southern Hemisphere. Moreover, if Britain had been defeated by Germany, and the Royal Navy had fallen into the hands of the Kriegsmarine, how long does Eldred-Grigg think it would have taken the Fuhrer’s reflagged battleships to come a-calling?

As for New Zealand’s economic situation on 3rd September 1939 – well, it was parlous. The Labour Finance Minister had earlier that year visited Britain seeking the continued co-operation of the Bank of England and the City of London in extending New Zealand’s lines of credit. This they were most reluctant to do. Labour’s social welfare reforms and her state house construction programme did not meet with the British bankers’ approval. Had war not broken out in September 1939, it is almost certain that British capital would have put a suffocating financial squeeze on the errant left-wing government of its far-flung economic colony.

The outbreak of war radically shifted the pieces on the economic board in New Zealand’s favour. Michael Joseph Savage’s famous declaration: “Both with gratitude for the past and confidence in the future, we range ourselves without fear beside Britain. Where she goes, we go; where she stands, we stand.”, wasn’t simply a “soft-hearted” acknowledgement of “duty and loyalty”. It was also a hard-headed decision to do what was required to keep the workers’ government in office.

The weakness of Eldred-Grigg’s argument lies precisely in its refusal to acknowledge the political context in which the decision to go to war was taken. Does he really suppose that a left-wing New Zealand government which refused to join Canada, Australia and South Africa at Britain’s side could have endured in office for more than a few days? Has he forgotten that, as Mickey Savage was committing New Zealand to a war against fascism, the Soviet Union was preparing to roll across the Polish border in fulfilment of the secret protocols of the Nazi-Soviet Pact? Can he not see that the National Party and the newspapers would have accused the Labour Party, with ample justification, of taking up a position indistinguishable from that of the Moscow-aligned Communist Party? An historian of Eldred-Grigg’s standing must, surely, acknowledge that Savage, Nash, and the prime-Minister-in-waiting, Peter Fraser, would not have been able to convince their own Labour caucus – let alone the broader New Zealand electorate – that such a position was even remotely tenable?

A decision to remain neutral in September 1939 would have produced only one thing – a crushing victory for the right of New Zealand politics. All of Labour’s work between 1935 and 1939 would have been undone. The state housing programme would have been abandoned, and what the National Party leader, Sid Holland, described as the “applied lunacy” of the Social Security legislation would have been swept away.

That is the price the New Zealand working-class – whose interests Eldred-Grigg has long and honourably championed – would have had to pay. Not for peace, because peace was never on the agenda; but for the utter foolishness of those who thought they could stay out of the most important moral struggle in human history.

And therein lies the clinching argument. Staying out of the war fails not only on the hard-headed grounds of preserving New Zealand’s strategic and economic interests; and not just on the soft-hearted grounds of duty and loyalty to the nation that had given New Zealand birth; but, ultimately, on the grounds of the damage it would have inflicted on New Zealand’s soul – for want of a better word.

No possible outcome of the war could have left us unsullied in the eyes of the civilised world. Had Britain accepted Hitler’s generous surrender terms in 1940, we would have fallen under the sway of the very worst elements in British – and New Zealand – society. Why? Because a British Empire in thrall to Nazi Germany would have been a fascist empire. And, if Britain had won the war without us? What would we be then? Certainly not the widely respected “social laboratory of the world” whose Prime Minister spoke up successfully for the rights of small nations at the San Francisco Conference which gave birth to the United Nations. No, New Zealand would have found itself lumped in with the likes of Eamon De Valera’s Ireland, and Juan Peron’s Argentina: countries not-so-secretly regretful that Hitler had been defeated.

How would Stevan Eldred-Grigg feel, I wonder, writing the history of a nation like that?

This essay was originally posted on The Daily Blog of Tuesday, 3 September 2019.

KiwiBuild Should Be Targeting The Poor.

Lotto - Oops, I Mean KiwiBuild Ballot - Winners: Derryn Jayne and Fletcher Ross pose with Phil Twyford and Jacinda Ardern outside their new KiwiBuild property in Papakura. Twyford is willing to buy Labour’s promised houses straight off the property developers’ plans. At a stroke, bad financial bets are transformed into sure things. Phil’s happy. The developers are happy. The banks are happy. And the winners of KiwiBuild ballots are over the moon.

KIWIBUILD, Labour’s flagship housing policy promising first-home-buyers 100,000 affordable dwellings by 2028, is a dog. It started out as a political fix and has yet to mature into coherent policy. Nowhere are Labour’s ambitions for KiwiBuild matched by the resources needed to fulfil them. Worst of all, the people most in need of 100,000 extra dwellings – beneficiaries and the working poor – are not the scheme’s targets. KiwiBuild is a perverse mixture of corporate and middle-class welfare, offering a handsome subsidy to builders and a generous hand-up to young professionals.

KiwiBuild began its life as David Shearer’s answer to David Cunliffe. In November of 2012, convinced that the Labour Left was plotting to replace him, Shearer was casting about desperately for a political circuit-breaker. He needed something that would halt the ambitious Cunliffe in his tracks and reassure the party’s rank-and-file that he was a Labour man through-and-through. KiwiBuild was that something. His announcement that the next Labour government would build 100,000 affordable homes for young New Zealanders brought Labour’s 2012 annual conference to its feet. In the warm glow of the membership’s support, an emboldened Shearer banished Cunliffe to the back-benches.

Having served its purpose, KiwiBuild was filed and forgotten. The necessary detailed development work on how it would be implemented, by whom, and at what cost, never progressed much beyond the hurried sketch vouchsafed to conference delegates and the news media six years ago. The consequences of Labour’s failure to fill in the gaps are now embarrassingly clear.

A Labour Party with stronger connections to the world beyond Parliament would have identified much sooner the practical limitations of KiwiBuild. The people and the products required to build 10,000 dwellings every year for 10 years simply aren’t out there. New Zealand’s construction industry remains chronically short of labour. The private sector will struggle to meet its own deadlines – let alone the government’s.

Unlike the First Labour Government, Jacinda Ardern’s coalition is attempting to build thousands of additional new dwellings with a construction industry at full-stretch. John A. (Jack) Lee, the man who oversaw Labour’s massive state-house-building programme between 1935-1938 could summon thousands of unemployed carpenters, tilers, plumbers, electricians and other construction workers to the cause of housing the people. Idle factories could be reactivated to supply the required building materials. This is what made “The Houses That Jack Built” possible. The absence of such vital enabling factors explains the houses that Phil Twyford cannot build in 2018.

Six years ago, when KiwiBuild was born, the full extent of the housing crisis had yet to emerge. Back then, affordability was the issue. The near impossibility of young professionals getting their feet on the first rungs of the housing ladder. Fortuitously, these same young professionals just happened to be the Shearer-led Labour Party’s prime electoral targets. First and foremost, KiwiBuild was a political “solution” to a middle-class “problem”.

Six years on, and the focus has shifted to beneficiaries and the working-poor sleeping in their cars or shivering in the overcrowded garages of family and friends. Voters for Jacinda’s transformational “politics of kindness” they may be, but they’ve not been deemed worthy of 10,000 houses per year. For these, the working-class people in whose name Jack Lee built the “social housing” of 80 years ago, 6,000 new state houses, in total, is considered adequate.

The irony is that, at an estimated price of $650,000, KiwiBuild’s “affordable homes” are rapidly moving beyond the reach of all but the luckiest of middle-class offspring. Those to whom the Bank of Mum and Dad still happily provides a deposit. Those for whom the wills of Mum and Dad hold out the prospect of eventual relief.

Undeterred, the Housing Minister presses on. Treasury may have revised downwards its projection of the scheme’s contribution to residential investment – but what do those “kids” know? Twyford is willing to buy Labour’s promised houses straight off the property developers’ plans. At a stroke, bad financial bets are transformed into sure things. Phil’s happy. The developers are happy. The banks are happy. And the winners of KiwiBuild ballots are over the moon.

About the only people who aren’t happy are those who believe that publicly funded social interventions on the scale of KiwiBuild should be directed first to those most in need. Tragically, however, the Coalition Government is selling the poor a pup.

This essay was originally published in The Otago Daily Times and The Greymouth Star of Friday, 2 November 2018.

When "Applied Christianity" Becomes "Applied Lunacy".

"Feed My Sheep": At some point in just about every Sunday service, Christian congregations recite the Lord’s Prayer. God’s will, they affirm, is to be done “on Earth, as it is in Heaven”. In short, Christianity has always been about much more than mere personal salvation. The gospel of the carpenter from Nazareth has to be applied. Accepting the universal obligation to care for our fellow human-beings has become a lot harder in Neoliberal 2017 than it was in Christian Socialist 1938.

WHEN THE NATIONAL PARTY dismissed the Labour Prime Minister’s social welfare legislation as “applied lunacy”, his response was crushing. Michael Joseph Savage simply informed the House of Representatives that his preferred description of Labour’s Social Security Bill was “applied Christianity”.

In the ears of young, twenty-first century New Zealanders, Savage’s riposte must sound rather quaint. In 2017, New Zealand’s “mainstream” Christian denominations are, with the notable exception of the Catholic Church, advancing towards their respective graves on a collection of wobbly Zimmer Frames. Meanwhile, in those few churches still able to attract a youthful following, the theology being preached elevates faith above works with fundamentalist certitude. To the lost and the disappointed, salvation is presented as the permanent pay-off of their personal surrender to the Almighty. Neither version strikes much of a chord with New Zealand’s millennial generation.

Ah, but 80 years ago, it was a very different story!

Every Sunday the churches were full, and their lofty interiors rang to the sound of heartily sung hymns. Little children went to Sunday School and their older brothers and sisters to Bible Class. People said their prayers and, in the midst of the greatest economic depression the world had so far experienced, pondered the meaning of Matthew 9:24, where Jesus says: “It is easier for a camel to go through the eye of a needle, than for a rich man to enter into the kingdom of God.”

And that kingdom was about something much more engaging than “pie in the sky when you die”. At some point in just about every Sunday service, Christian congregations recited the Lord’s Prayer. God’s will, they knew, was to be done “on Earth, as it is in heaven”. In short, Christianity was about more than mere personal salvation. The gospel of the carpenter from Nazareth had to be applied.

Mickey Savage’s sound-bite possessed divinely sharpened teeth!

That he said nothing more about National’s “applied lunacy” quip was because it said so much for itself. It drew the voters’ attention to the desiccated economic rationalism of the laissez-faire capitalism from which the National Party sprang – and to which it was irrevocably dedicated.

Giving the taxpayers’ hard-earned cash to the shiftless and the idle would always be lunacy. Without the goad of poverty to drive them back to the shop door and factory gate, what was to prevent the poor and needy from becoming a vast underclass of worthless spongers permanently subsidised from the public purse? Christian charity (an expression which has always stuck in the throat of the rich and the powerful) should be reserved for the “deserving” poor only. And their eligibility must always be subject to proof.

If this gospel resonates more loudly in the ears of contemporary Kiwis, it’s because it’s the gospel we have heard preached every day for the last 30 years. Indeed, so pervasive has it become that the Labour Party of 2017 would strongly counsel its leader against veering “off-message” and into the political long-grass of religious expression.

A government uneasy about reciting a parliamentary prayer in which God and Jesus still rate a mention is likely to become entirely unhinged by even those most oblique references to camels, needles and (shhh!) rich men.

And yet, as the report released just a few days ago by the Child Poverty Action Group makes agonisingly clear, the need for some “applied Christianity” is as strong today as it was in the 1930s. “Further Fraying of The Welfare Safety Net”, penned by Dr Gerard Cotterell, Associate Professor Susan St John and Dr M. Claire Dale offers a grim picture of what happens when a nation succumbs to the “applied lunacy” of free-market economics.

Mickey Savage, were he able to read the following words from the Report’s conclusion would shake his head in disbelief and wonder where it all went wrong:

“New Zealand’s traditional safety net, once described as “cradle to grave”, is failing to support the many families who need it most. There has been a subtle process over three decades in which New Zealand has lost sight of the original intentions of the welfare state. This has allowed a gradual unravelling to proceed regardless of which major political party has been in power.”

I suspect he would conclude that when the religious obligation to do God’s will “on Earth, as it is in Heaven” fades away to the point where it’s regarded as a quaint relic from the distant past; then the democratic-socialist injunction, “from each according to their ability, to each according to their need”, is likely to follow hard upon its heels.

When caritas – the Christian love of humankind – withers and dies, then the fashioning of public policy on any other grounds than those of naked self-interest becomes politically suicidal.

The behaviour not of a saint, but a lunatic.

This essay was originally published in The Press of Tuesday, 19 December 2017.

Transformational Politics Demands Transformational Economics.

Change Agents? Grant Robertson’s economic orthodoxy bodes ill for the expectations of Labour, NZ First and Green Party followers that Jacinda Ardern will, indeed, preside over the “transformational” change promised in her new government's coalition agreement.

LABOUR’S ECONOMIC ORTHODOXY presents its supporters with an A-Grade conundrum. If all you ever do is all anyone has ever done, then what are the chances that anything will ever change? Something in the Marxist nucleotide of Labour’s DNA continues to carry forward the message that economics and politics are inextricably linked. Stuff up the former and the latter will swiftly follow suit. That being the case, Grant Robertson could be Labour’s worst enemy.

Not that he should feel too badly about that, because Labour finance ministers have a well-established historical reputation for being their party’s worst enemies.

One has only to think of Philp Snowden, Chancellor of the Exchequer in Britain’s first and second Labour governments. While no one could fault the old man’s dedication to Labour’s working-class voters, his utterly conventional economic ideas left him helpless in the face of the Great Depression. In the words of his biographer, Keith Laybourn: “He was raised in an atmosphere which regarded borrowing as an evil and free trade as an essential ingredient of prosperity.”

It was Snowden’s unwavering faith in these nineteenth century liberal orthodoxies that broke his party and discredited his government. The people who paid the price for their Chancellor’s intellectual rigidity were (as is so often the case) his beloved working-class.

Things might have gone the same way here in New Zealand just a few years later had the proposals of Labour’s economically orthodox leaders (Michael Joseph Savage, Peter Fraser and Walter Nash) not been voted down by the more radical members of their party’s caucus.

It was thanks to this latter group that Labour went into the 1935 election with an economic policy calling for the “immediate control by the state of the entire banking system; the provision of currency and credit to ensure adequate production, guaranteed prices and wages; readjustment of all mortgages” – along with a policy of state-fostered industrialisation which, today, would be described as “economic nationalism”.

How very different these policies were from the policies of Roger Douglas, the Labour Finance Minister who championed the same laissez-faire economic policies implemented by Philip Snowden between 1929 and 1931. “Rogernomics” radically transformed New Zealand’s economy and politics – and very nearly destroyed the New Zealand Labour Party!

The two politicians most responsible for rescuing Labour from political oblivion were Helen Clark and Michael Cullen. In a double act of extraordinary sophistication, Clark and Cullen kept hold of the political reins for nine years by cleverly masking both the true extent of their government’s economic success, and the political opportunities it opened-up.

As Finance Minister, Cullen proved a master at making his burgeoning revenue surpluses, which might have funded a much more ambitious social-democratic programme, disappear.

Some of Cullen’s billions were invested in the special superannuation fund that still bears his name. Even more went into Working for Families, the massive employer subsidy which Cullen introduced in preference to allowing the trade unions to extract the money from corporate shareholders. Most of Cullen’s surplus billions, however, were directed towards paying down Crown debt.

The opportunity cost of these fiscal diversions would only become apparent towards the end of the next decade, when New Zealand’s physical and social infrastructure began to, quite simply, fall apart.

That Michael Cullen has for many years been Grant Robertson’s political patron and mentor bodes ill for the expectations of Labour, NZ First and Green Party members that Jacinda Ardern will, indeed, usher in the “transformational” change promised in the new government’s coalition agreement.

Even before he received his ministerial warrant, Robertson was at pains to bind Labour to precisely the same diversionary economic strategies pioneered by Cullen.

A Finance Minister who repeatedly swears allegiance to his own “Budget Responsibility Rules” is unlikely to champion the sort of creative and progressive economics that makes for creative and progressive politics.

Unless, like Savage, Fraser and Nash; Ardern, David Parker and Robertson are reined-in by a Labour caucus determined to fulfil their government’s “transformational” ambitions, then the long-deferred renovation of New Zealand’s disintegrating institutional and physical infrastructure will not receive the resources it requires.

A transformational government cannot be brought into being except by means of transformational economics. For all his faults, Roger Douglas understood this fundamental proposition. Progressive voters need a Finance Minister whose economic policies are as bold as his government’s political promises.

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, 15 December 2017.

Jacinda's Biggest Challenge: Redefining "Economic Orthodoxy".

Economics Matters: The jubilation of Election Night 1984 was soon overtaken by the economic and social blitzkrieg that was Rogernomics. So, the two questions voters preparing to elect another popular Labour leader in 2017 need to ask themselves are: Does Jacinda's caucus contain the same number of radical change agents as David Lange's? And, if it doesn't, exactly how far will cautious economic orthodoxy carry Labour towards its goals of social equality and economic justice?

LET’S BEGIN with the assumption that Jacinda Ardern is about to become New Zealand’s next prime minister. And that, after nine very difficult years, Labour is poised to re-take the Treasury Benches. The next step, then, is to ask: “What happens now? What sort of Labour-led Government should we expect?”

More than one political observer has noted the similarities between this year’s general election and that of 1984. They have pointed out that Labour entered both campaigns with a new (or, relatively new) and inspiring leader. They also draw our attention to what they claim is a very similar sense of public frustration with the status quo. Socially, economically and politically, they allege, New Zealand finds itself stalled down a dead-end street. The dramatic response to Jacinda Ardern’s elevation, they say, has revealed the same hunger for bold new solutions to intractable old problems that made the 1984 election such an historical watershed.

The crucial factor in the 1984 equation, however, was the presence in Labour’s caucus of a critical mass of radical change agents. Even more critically, these change agents knew that their radical plans would be instantly endorsed and rapidly expedited by like-minded change agents strategically located in the Reserve Bank and Treasury. They were further reassured by the knowledge that important figures in the upper echelons of both the business community and the news media were sympathetic to their proposed “reforms”. Knowing this, Roger Douglas, Richard Prebble, David Caygill and Michael Bassett were supremely confident that the process of fundamentally changing New Zealand would begin the moment they made it into the Beehive.

In this respect, the contrast between the governments-in-waiting of 1984 and 2017 could hardly be greater. As evidenced by their self-imposed “Budget Responsibility Rules”, the leading figures of a Labour/Green/NZ First government pose no threat whatsoever to the underlying assumptions of the economic and social status-quo. Even the usually hostile right-wing newspaper columnist, John Roughan, seems relaxed about the prospect of electoral change, observing smugly that: “[T]oday’s economic orthodoxy, or ‘neoliberalism’ if you don’t like it, is well entrenched in the public service and there is little risk we will lose it.”

Certainly, as the acknowledged protégé of the former Labour Finance Minister, Sir Michael Cullen, Labour’s current finance spokesperson, Grant Robertson, has repeatedly reaffirmed his support for the standard political operating procedures of the Helen Clark-led Labour Government of 1999-2008.

At the heart of those procedures lies an unshakeable commitment to “responsible” (or, as Mr Roughan would put it, “orthodox”) economic management. No less than his mentor, Sir Michael, Mr Robertson has absorbed the lessons of the infamous “Winter of Discontent” of 2000, during which the New Zealand business community provided the Prime Minister and her Finance Minister with a short but effective demonstration of the sort of reaction any government foolhardy enough to stray from the paths of economic righteousness should expect.

It is difficult to imagine that, over the course of the past month, Mr Robertson has not reiterated those lessons to Ms Ardern. Certainly, her own public commitment to uphold the Labour/Green Budget Responsibility Rules points in that direction.

All of which presents Ms Ardern with a dilemma. On the one hand, her slogan, “Let’s Do This.”, suggests to voters that hers will be a government of action and achievement. On the other, her commitment to uphold the Budget Responsibility Rules speaks to the business community of a government committed to not rocking the boat – or, at least, to not rocking it very vigorously.

But, building “more homes” and delivering “better health and education” will require New Zealand’s social and economic boats to be rocked very vigorously indeed. Every bit as vigorously, in fact, as they were rocked by the “Rogernomes” of the 1980s.

Unfortunately, support for such radical rock-n-rolling will be extremely hard to find among the orthodox defenders of the status-quo populating the upper-reaches of the public service, news media and business community. As in 2000, their response to the merest hint that Labour is getting ready to embrace a genuinely progressive programme will be swift and brutal.

Ms Ardern’s response to their response should be guided by the political strategy of the First Labour Government. Take the people into your confidence. Explain what you want to do for them and identify the forces standing in their way. Reassure them that, with their support, the long-delayed changes in housing, health and education – the changes they voted for – will happen. And, finally, remind them that, in a democracy, crucial decisions about the future of their country must be made by – and for – the many, not the few.

Because the truly astonishing thing about all genuinely radical programmes for change – including those of 1935 and 1984 – is how quickly the utterly impossible of yesterday becomes the entirely doable of today.

This essay was originally published in The Press of Tuesday, 5 September 2017.

Of Capitalist Catastrophes And Collectivist Triumphs

Greed Meets Fear: A New York stockbroker attempts to keep pace with the vertiginous slide in the Dow Jones Index following China's "Black Monday" (24/8/15). Capitalism likes to paint itself as a force of nature, before which human-beings are individually and collectively powerless. Only when this economic fatalism is challenged by people's renewed confidence in the efficacy of collective action can capitalism's catastrophes be overcome.

 

ROUND AND ROUND AND ROUND it goes, and where it stops nobody knows! You might think that ordinary human-beings would have tired of Capitalism’s cyclical catastrophes by now. But our capacity to absorb these entirely man-made calamities appears to be no less impressive than our ability to cope with the genuine disasters nature sends our way. Indeed, Capitalism’s longevity is, almost certainly, attributable to its success in convincing us that it, too, is a force of Nature – something far beyond our feeble strength to influence for good or ill.

 

It was not always so. Eighty years ago, with the world in the clutches of another capitalist catastrophe, human-beings somewhere found the collective strength to denounce this “force of nature” falsehood. They decided that what humankind could ruin just by “letting things go” (laissez-faire) it could rebuild by replacing the “invisible hand” of the all-powerful capitalist market with their own.

 

The American President, Franklin Roosevelt, demonstrated the power of those all-too-visible hands in the massive public works of his “New Deal”. And the British Prime Minister, Clement Atlee, likewise demonstrated what focused political will could achieve when, in the midst of post-war austerity, the British people created their National Health Service.

 

Nor was New Zealand lacking in these triumphs of the people’s will. The First Labour Government’s Social Security Act of 1938 was New Zealand’s answer to the poverty and desperation of the Great Depression. Likewise its state housing programme: a massive construction effort funded by “Reserve Bank Credit”. (A capital source unrecognised by contemporary capitalist economists!)

 

So spectacular were the achievements of collective endeavour in the years before, during and after the Second World War, that capitalists everywhere felt obliged to pay them a grudging lip-service. This apparent conversion was, however, illusory. Whenever the parties of “private enterprise” managed to supplant the parties of collectivism, the latter’s policies were either subtly, or not so subtly, perverted. Projects designed to serve the interests of the many, always seemed to end up by disproportionately benefitting the few.

 

Visionary Blueprints: Ministry of Works plans for "The Auckland That Never Was".

 

The visionary blueprints for the development of post-war Auckland, drawn up in the mid-1940s by Ministry of Works planners, anticipated the goals of Auckland’s contemporary urban planners by 70 years. Tragically, the election of the First National Government, in 1949, put paid to this “Auckland that never was”, leaving Aucklanders with the sprawling, automobile-dependent conurbations that, today, they cannot afford to fix.

 

An even more comprehensive development plan, this time embracing the whole country, was brought together by William B. Sutch in the 1950s. One of New Zealand’s most creative (and controversial) public servants, Sutch recognised, very early, the urgent need for New Zealand to diversify its agricultural commodity-based economy. He argued for the sort of value-added products that distinguished the export-base of small economies like Switzerland and Denmark. This would require a much stronger national emphasis on skills acquisition and tertiary education. Only with a highly educated workforce could New Zealand produce the innovation necessary to broaden its economy. Sutch also argued for an economy that was much less import dependent. New Zealand, he said, must develop a much stronger industrial base.

 

In the Second Labour Government (1957-1960) led by Walter Nash, Sutch found a pair of eager listeners. The Finance Minister, Arnold Nordmeyer, and the Industry and Commerce Minister, Philip Holloway, were both convinced that Sutch’s ideas offered the only coherent path to a more prosperous, and less vulnerable, economic future for New Zealand. It is one of the great tragedies of this country’s history that the Second Labour Government did not last long enough for the change it contemplated to be undertaken and become entrenched.

 

As Sutch would later write: “The National Party could not have made this change because of their dependence for financial and political support on the farmers, importers, merchants and finance houses.” Plus ça change!

 

It’s been seven years since the Global Financial Crisis of 2008 provided yet another warning of New Zealand’s economic vulnerability. Was it heeded? There’s scant evidence of it. What cannot be missed, however, is seven years of enormous investment in dairying. The export of raw commodities remains this country’s stock-in-trade.

 

Today, as another capitalist catastrophe looms, is it not time to heed the collective spirit of ‘38 and ‘45 and ’57? Those years when “Yes we can!” was more than a presidential slogan.

 

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, 28 August 2015.