Thursday 26 March 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.


John Hurley said...

The Great Depression was followed by WW2 and new technology. The NZ hill country was broken in and farmers were getting (something like) $170/kg for their wool.

Michael Reddell says:
In the late 19th century and early 20th century, immigration to New Zealand could be seen
as reflecting a favourable shock to the tradable sector. Opening up new lands to production, falling transport costs, refrigerated shipping combined to lift the population capacity of New Zealand while still offering high wages and high rates of return.

By the middle of the 20th century, New Zealand was settled and producing, and technological change in the key export sectors was no longer as rapid (relative to other producers). The factor price equalisation justification for strong population growth had dissipated, yet population growth remained high. Across the OECD, there is some evidence that rapid population growth in post-war advanced countries was associated with an apparent cost to per capita growth rates.
Treasury paper 14-10

Labour has stood by and watched real wages fall in it's biggest sectors in favour of it's next door neighbours and TEU (export education)

petes new write said...

The reform will be started by Jacinda and finished by her successor, Minister of Finance Robertson, the next PM.

David Stone said...

UBI was called something different in Micky savage's day. It was called Social credit, or more specifically a "national dividend". It was rejected then by the bankers who will likely prevail again.
And in this era the imbalance is not between the majority of NZ employees and their employers, which is in many cases the reverse of the imbalance Chris eludes to, but between the whole of the real economy of people who are providing the goods and services we all use and need, and the financial tumour that the banking system has become in the intervening years. Metastasised and far more aggressive than in the 1930s.
What most politicians are talking about nowadays when they talk of a UBI is not really a significant change to the states quo however , and it will not fix the problem. They don't envisage the UBI as the origin of the money supply which it needs to be to work as means of restoring to money its legitimate role of a means of exchange rather than the most scarce and for after and ultimately expensive commodity in the system. With a privileged elite having the ability to create it at will and lease to the rest of the economy at whatever price the industry can survive on ( for a while). No the UBI spoken of these days is just more money borrowed from banks and remaining owed to the banks.
Something more radical than this is needed if anything is to change.


Jens Meder said...

Dear Chris.
Of what use is a UBI at a lower rate than NZ Super, when some of us complain that NZ Super should be even higher than what it is ?
And would not the majority of us still prefer Social Security to be paid out only to those in serious need, rather than to all through a UBI, as most of us are - or at least the majority who "Have" - will be able to survive any calamity in a somewhat better situation and ability to be of help, than "have-nothings" ?
So - unless it is aimed to totally eliminate private enterprise and wealth ownership in favor of State Monopoly Capitalism (or with what the word capitalism - saving and investment - should be replaced) -
is not the current crisis an effective reminder, that wealth reserves provide superior security at a higher level than what "last resort" emergency sharing of everything "hand-to-mouth" can deliver, i.e. that we should make the effort of not sliding into that poverty level ?
In other words, might not our current crisis encourage a "kick-start" towards at least a minimally meaningful level of wealth (and resultant security and even income) ownership by all citizens eventually ?

Wayne Mapp said...

Lets not do this now!

This crisis is no excuse to radically transform society on a permanent basis. That would be a gross abuse of power. If Labour wants a UBI, they should campaign for it at the next election.

A meaningful UBI, say $300 per week for every adult, would cost around $60 billion. That is 20% of the economy, at least as it was at the beginning of March 2020. I appreciate that it would offset some benefits and NS, but it would still require an increase in the size of the state from around 30% of GDP to at least 40% of GDP. Income taxes would have to be radically increased, not just at the top, but across the board. Basically you would have to increase the total income tax take by 40%.

The measures already in place will cost a great deal, but they are emergency related. It would be a gross breach of a democratic mandate to radically and permanently change the economy. In 1938 Labour had a democratic mandate, in fact quite a large one to bring in social security. That is not the case now.

I note the a whole bunch of radical socialists, and for this purpose they clearly includes Chris Trotter, want to use the current emergency too bring about a socialist nirvana, but without having to worry about a democratic mandate, not even with the slightest shred of one. It would be the worst abuse of power even seen in New Zealand

Kat said...

Good post Chris, a UBI would certainly help "flatten the curve" of disparity in society. Any way of getting NZ back to a more egalitarian state. Alongside a UBI the reinstatement of a 21st century Ministry of Works is paramount for continuity. The private sector is a failure in getting people at the bottom of the heap into meaningful jobs. A functioning and successful MOW is what neolibs fear the most.

Brick said...

Where do you think the money is extorted from to support the great unwashed. Socialism is a wonderful thing - until the money runs out.

David Stone said...

@ Wayne Mapp

If you believe that the world's economy was sailing along just fine until the outbreak of this virus , and the virus has caused all the sharemarket and financial disruption all by itself , then what you say about misuse of the crisis has some sense . But do you really think that there was nothing wrong with the system? That it was going to carry on for the foreseeable on it's recent path? If it had no underlying flaws, why could it not have taken a health issue in it's stride? The infusion of trillions of urgently created dollars to try to keep it intact can't be part of a functional system. Just because it takes a couple of generations for the disfunctionality to manifest itself, or rather for the manipulators of finance to overcome the practical sensible structures put in place after WW2 to manage the money supply and banking.
Most articles I am reading on the effect of the virus on the sharemarket etc. assume that the viral outbreak is a pin that pricked a massive bubble . Do you not see it that way?


JanM said...

I would have said that Rogernomics was the biggest abuse of power experienced in our lifetime

David George said...

Thing is Chris, there are a range of ideologies trying to advance their cause on the back of this.
The anti human high priests of the eco extreme are calling this the revenge of their God Gaia and a justification for the destruction of post industrial revolution modernity.
The globalists and supra nationalists say trust us we're the only ones that can take care of the world.
The nationalists blame open borders; wind back globalism and strengthen the nation state and it's self reliance they say.
The socialist Utopians are drooling at the prospects of starving babies and riots; the impetus for the glorious revolution. Our social safety net should prevent that.
But the people just want things to go back to normal; their jobs and liberties. Fair enough - a conservative approach you could say. Can't see the mad ideas getting much traction, maybe a more nationalist trend if anything.

Gary Young said...

Mr Mapp, allow me to amend your second to last sentence with reference to the $2000,000,000,000 stimulus package recently passed by the Republican majority US Senate;

"I note a whole bunch of radical republicans, and for this purpose they clearly include Donald Trump, want to use the current emergency to bring about a libertarian nirvana"

As Chris says above: ' Let Bridges and all the other neoliberal ideologues howl. '

I submit that your response to his article is merely one such 'howl'

The Barron said...

I think we can get lost in western political classification. If we are to take a more anthropological / sociological look at the responses to the virus we can see difference between east Asian sociocentric societies and western egocentric approaches to social crisis. Whether autocratic (China) or on a democratic scale (South Korea, Japan, Taiwan, Singapore) we find that those in which the society is for the greater good has quickly been able to put measures in place which has effectively protected the people.
Iran has been a very messy emergence of modernity in the health sector, with theocratic restrictions.
Lombardy, has suffered from a capitalistic nationalism which has defined the egocentric approach in northern Italy.
The United States has defined itself as a plutocracy in which the greater good has been over-ruled by greed of the few.
This leads us to New Zealand and the argument Chris puts forward for reform. NZ has been a strange interaction between settler ego-centricism and Polynesian socio-centricism. Unlike the USA, the NZ settler society was founded in Wakefield's view of a co-operative organised society and Britain's post-Slave trade illusion of social progress. The individuality of the US settler mentality was balanced by the better society ideals of the NZ settler.
The covid-19 crisis puts New Zealand firmly at the point it needs to define itself. Is it a state and society that is to support the greater good and the most vulnerable, or one that protects the empowered at the cost of the dis-empowered?
Whether we go the path of the UBI or we choose another road to equity, those with a knee-jerk reaction to the call from Chris for definition of our society and distribution of wealth and opportunity, should not simply cry 'socialism' as if the term is enough to decry progress, but should put the case for social cohesion in a state of shared crisis that does not include a democratic-socialist approach.
If not, please list those you are willing to sacrifice.

Anonymous said...

Can't get myself to vote left Chris, but just love your far the best in NZ!

Anyhow, I'm thinking:"What’s the point of us all complying with the Level 4 lockout when":

1. Hundreds of overseas people carrying Covid19 are allowed in at the airport. we've all been told the borders are closed? Closes means closed where I come from.

2. People are already breaking all the rules left right and centre on Day 1... mostly because the rules are still not crystal clear and totally open to interpretation.

3. The PM is already losing focus on Day 1 of Level 4 - now she wants to know the names of 'naughty landlords', but not the names of the covid curfew breakers!

4. The media spend more time on the CHC criminal pleading guilty, than on the possibility of 100,000 kiwis being infected by mid April.

5. Mike Bush wants his staff to be all nice and friendly - not like a real police force - hard, tough, enforce the Govt rules given to them.

It's all starting to look so typical for JA and this Govt: all the big words, the head tilt is perfect, it looks good on camera, lots of likes on Facebook, the UN will be very impressed.

But they can't ever see through a plan of action action's always half-arsed.

Why bother folks? May as well have 20 friends for a spa pool party and hope for the best.


Peter J said...

What's a democratic mandate? Does the Government of New Zealand as of today, according to the rules we have today, do things under a 'democratic mandate'?

so you tell me said...

yeah, UBI sounds great but not at the expense of existing free social services. Milton Freeman, and Free Market Capitalism dreamed of UBI as a way of removing state services and monetizing it all. With UBI the poor have money and can be asked to pay. Watch how UBI pitches don't even mentions state services, ever. They are the target, UBI will blast them away.- tw

adam said...

Thanks Wayne for pointing out why the 1% need to actually pay their fair share.

Also no one voted for any crisis, nor a raise in gst.

The reality is the government of the day has to do what is best for the country, and if you want to save capitalism in any form a UBI is your only option. Otherwise it's only going to get worse, and worse until people get desperate. Then they'll want overriding economic system gone, in a truly unpleasant manner.

Personally I not for Guillotine's, but if people are desperate then a few corporate heads in baskets, may just subdue the mob.

sumsuch said...

Well, according to some, the disaster is the only way demo-cracy can make headway. Tend to agree. Just regret the 36 years of rich-rule that allowed like a new wound.

C A Monteath-Carr said...

Hi Wayne

First of all, great job on eradicating political correctness. I for one am glad that someone had the courage to stand up for our right call cheeky darkies what they are, and you were just the man for the job.

It's funny that an alumnus of the Bolger government should criticise on the basis of electoral mandate, given that Bolger was elected to reverse Rogernomics, and he did more than anyone to entrench it- something that he has expressed regret about since.

I agree that a UBI would require a massive expansion in state spending. That's kind of the point. Currently too much of the country's wealth ends up in the hands of too few, delivered to the landlords and rent seeking class on a silver platter.

You mention increasing income tax- why not tax wealth? After all the Labour party already won an electoral mandate for a wealth tax, and it was only the stubbornness of an egotistical septuaginarian that saw this stymied.

The economy doesn't care where the money comes from - the crucial thing is to keep the money moving. Taking money out of the non-productive economy and putting it into the real economy by taxing accumulated wealth and redistributing it to the majority keeps the money moving.

You're an educated man. Your objections to the UBI seem to assume that state spending is,a priori,undesirable. You wouldn't have let an undergraduate get away without challenging that assumption, so why do you expect that we will share your preconception?

Odysseus said...

I don't know about "neoliberalism" but I do know we need to radically review our relationship with the PRC. We must encourage the repatriation of our manufacturing, even if that means the end of the FTA which was heavily weighted in the PRC's favour in any case. Time to make and keep our distance from this irresponsible actor.

Wayne Mapp said...

David Stone, Gary Young, Adam,

None of you have answered my point about how profoundly undemocratic it would be to be to introduce a permanent UBI of any meaningful level under the guise of dealing with the current crisis.

I get it that you all want a radical transformation of society, not just to deal with the current crisis, but as Chris Trotter has suggested, to use the crisis as cover to make that permanent change.

So yes. I am deeply opposed not just on economic grounds, but also on democratic grounds. If you want such a permanent change, do so by an winning an election on that platform. That is what Labour in the UK did in 1945.

I am quite happy with what the government is doing now. I know that the current measures are going to cost at least $50 billion, and will increase New Zealand's govt debt to 40% of GDP at least, that is, double it. That is going to affect the economy for years to come. That level of debt alone may require tax increases in the immediate future, say within 12 months. No political party can campaign on tax cuts for several years, not with the level of debt that covid 19 will generate.

I also know the economy is going to look different after the world comes out of covid 19. Way less travel, less consumerism, many tens of thousands permanently out of work in those sectors. It will take quite some time before the economy will grow enough to re-employ them. The govt and people will need exceptionally creativity to help them through.

UBI will just make that so much harder, by having huge income tax increases, not just for the 1% as Adam thinks, but right across the board. All income tax rates would need to substantially increase. UBI is essentially a huge new impost across the entire productive sector of the economy, just at a point when we will be expecting them to make strenuous efforts to recover.

Plugger said...

I read Kleins's book a few years ago.

It's true, the top 1% will be looking at how they can privatise what we know as public.

Jens Meder said...

adam, have you still not understood, that without capitalism - or whatever word you can find to describe saving for reserves, investment and items to trade - we would be still cave dwelling hunters and gatherers ?
If you doubt in the truth of that, please take note, that even gardening for pleasure or profit does not happen without saving or "sacrificing" the time and effort for no immediate benefit.
And that therefore in the interest of the future after the corona virus emergency - it should not be excluded from public consideration - because nothing more constructive than hand-to-mouth consumption can be achieved without capitalism by any individual or government -

that the most harmoniously constructive, egalitarian and democratic socio-economic future is in "people's capitalism", with at least a minimally meaningful (or higher) level of personal (retirement) wealth ownership by all citizens eventually, and because some meaningful level of personal capital ownership is more democratic than (totalitarianistic) govt. monopoly capitalism. ?

Repetition of this question is justified as long as there has not been any public discussion on the pros and cons or impossibility of it.

Max Ritchie said...

Rogernomics was put to the electorate in 1987 and approved. NB that the “failed policies of the past” were not materially changed by subsequent governments. The problem with a UBI being implemented without a mandate is that he who robs Peter to pay Paul will always get Paul’s vote. So let’s try it at the next election. Put all the facts to the voters and see what happens.

Patricia said...

Once we get past the idea that taxes are necessary to run a country then we can look at whether a UBI is a good idea or not. Personally I do not. In my view it would allow employers to keep more of their profits BUT if it were coupled with an annual cost of living index on wages and the UBI, maybe not. However I would prefer a job guarantee where everybody is employed and paid the minimum wage so that they could move between private and public employment. That is how it was post war. There was one person unemployed in the whole country. I remember the Waipawa railway station employed a young Down syndrome boy to sweep the platform

David Stone said...

@ Wayne Mapp

"None of you have answered my point about how profoundly undemocratic it would be to be to introduce a permanent UBI of any meaningful level under the guise of dealing with the current crisis."
I would not comment on that Wayne as I entirely agree. The opportunity has arisen again as it did post WW2 when the demonstrated failure of the lasses faire approach to a capitalist world order collapsed in a remarkably similar way as it is doing now, leading to a catastrophic world war. The manifest failure of the system in operation focused everyone's attention on what went wrong . The wisdom of leaders and thinkers like Keynes world out a set of rules set the world on a course that while it remained intact led to the longest period of egalitarian prosperity the world has known . But the rules have been eroded by vested interests and we are back to the situation that immediately preceded the 1930's depression.
Now as then the pending disaster is in everyone's face. It is this that provides the opportunity to change the system , by promoting a better one with the failure of the present one impacting everyone and focusing their attention. It must be done by persuasion to be legitimate. Not as Jan M points out above by stealth as with Rogernomics that set capitalism on this path of destruction.
There are not enough people that matter hurting enough yet to democratically make these changes , but it may not be long away. The ideas have to be out there ready to put in place when the mood is right.

Cheers D J S

Tauhei Notts said...

We already have a basic income in the form of the Guaranteed Minimum Family Income, which some twerp changed the name to something I cannot remember.
That scheme should be updated then there would be no need for the UBI you write about. The trouble with the Guaranteed Minimum Family Income is that it was introduced by Sir Roger Douglas and the Lefties have this irrational idea that everything he did was bad.