Compassing The Economy's Death.

What Were They Thinking? It’s probably fair to say that “Queen Jacinda’s” response to the "Crisis of Business Confidence" would be somewhat more robust than inviting Air New Zealand CEO, Chris Luxon, to chair a Business Advisory Council!

IN ENGLISH LAW “compassing the king’s death” was treason. “Compassing”, in this context, meant ‘imagining’, ‘contriving’ or ‘plotting’. Medieval jurists held fast to the notion that the thought is father to the deed. Which made even thinking about the king’s death a capital crime. After all, if the Gospel of Matthew (5:27-28) could hold that “whosoever looketh on a woman to lust after her hath committed adultery with her already in his heart”, then any subject looking darkly upon the monarch was, at the very least, guilty of entertaining treasonous thoughts about his future. Thought Crime existed long before George Orwell’s Nineteen Eighty-Four.

It would be interesting to live in a world where simply thinking negative thoughts about important people and institutions could get you arrested. What would become of business leaders, for example, if they were shown to have consistently experienced (let alone given voice to) a woeful lack of confidence in the personnel and policies of the Government? Such negativity would, almost certainly, be drawn to the “monarch’s” attention. How would she respond?

It’s probably fair to say that “Queen Jacinda’s” response would be somewhat more robust than inviting Air New Zealand CEO, Chris Luxon, to chair a Business Advisory Council!

One can easily imagine her humbler subjects demanding that she take a very hard line with such rebellious noblemen. After all, compassing the demise of the kingdom’s economy strikes directly at the livelihoods of tens-of-thousands of hard-working men and women. Excessive business negativity costs jobs. It stymies much needed investment. Taken to extremes, it can seriously jeopardise the economic well-being of the entire country. It’s hard to see “Queen Jacinda” regarding this as anything other than economic treason.

In the Middle Ages, rebellious nobles faced not only execution, but also the complete forfeiture of their estates to the Crown. Were such draconian powers still available to the leaders of today, then it is easy to predict the outcome of what most of the country’s leading economists have characterised as a completely unwarranted “Crisis of Business Confidence”.

Queen Jacinda’s Attorney-General, David Parker, would be asked to draft her a sheaf of all-purpose Bills of Attainder which she would then pass over to her Justice Minister, Andrew Little, for presentation to the House.

Bill of Attainder? Oh, these were extraordinary documents! A “Bill” or, once passed, an “Act of Attainder” was a piece of legislation declaring a person or persons guilty of a crime, or crimes, without the irksome necessity of first securing their conviction in an ordinary court of law. Essentially, Bills of Attainder forced their victims to undergo “Trial by Parliament” (in the United States they call this “Impeachment”) in which the role of the jury was played by the assembled parliamentarians. A simple majority was enough to strip “over-mighty” subjects of their titles, offices, properties – even their lives.

With Lord Shane Jones playing the role of the Queen’s Special Prosecutor, it isn’t difficult to predict how these Trials by Parliament would go. The rebellious business barons would be found guilty of “Compassing the Death of the Economy” and their companies and corporations would be declared forfeit to the Crown. “Nationalisation”, you see, goes back a lot further than the Twentieth Century!

And what about Master Simon Bridges? Surely, Queen Jacinda and her counsellors have a strong prima facie case that he is not only the prime mover in this plot to kill the economy, but that he also intended the misfortunes flowing from its demise to effect the political death of the Queen?

Did he not declare on Thursday, 30th August that: “Business confidence has slumped further to levels not seen since the global financial crisis 10 years ago. This time the crisis is of the Government’s own making and the return to duty of the Prime Minister a month ago has only made it worse.”

No loyal subject of Queen Jacinda could read those words without forming the strong conviction that Master Bridges means his monarch harm. That he has already committed treason against her in his heart.

“Convey him to the Tower! Prepare the Bill of Attainder! Fetch timber for the scaffold! Sharpen the axe!”

This essay was originally posted on The Daily Blog of Friday, 31 August 2018.

The Government v. The Business Community: Playing Chicken Over Employment Law Reform

But Has Grant Got His Leather Jacket Caught In The Handle? Declining business confidence and how the government should respond to it is fast developing into a game of political and economic ‘chicken’. Both sides know they are being challenged. They also know that the longer they delay responding the greater the risk of a tragic outcome. (Screen shot from Rebel Without A Cause) 

EVERY TIME the Prime Minister and the Minister of Finance address the “Business Community” I wince. It’s painful to watch them abase themselves in the way they do. As if their endless protestations of good will and their oft-repeated promise to “listen” will make the slightest difference. The Business Community is acutely aware that there is nothing with more potential to cause them harm than a left-wing government. If it cannot be tamed, then it must be broken.

At the moment the attention of the government’s business opponents is focused on its reaction to the evidence of plummeting business confidence. This is fast developing into a game of political and economic ‘chicken’. Both sides know they are being challenged. They also know that the longer they delay responding the greater the risk of a tragic outcome. The Business Community is, however, convinced that, on the basis of its previous experience with left-wing governments, Jacinda Ardern and Grant Robertson will swerve first.

By “swerving” they mean backing away (if not actually backing down) from their proposed employment law reforms. The more intelligent members of the business community are only too aware of the head of steam that is building up in the workforce for a decisive shift in the power relationships prevailing in the workplace. Any reform that makes it easier for workers in the private sector to be organised into unions – let alone aggregated into the occupational collectivities of the pre-Employment Contracts Act era – has the potential to set off a wave of unionisation that could fundamentally disadvantage shareholders of all sizes.

Such a “revolution of rising expectations” has, however, been on the cards from the moment Jacinda began scattering her stardust hither and yon in the run-up to last year’s election. That stardust poses a huge problem for Labour. Without it, there was – and is – no possibility of the party winning anything like enough support to form a government. In deploying her politics of hope and kindness, however, Jacinda has raised New Zealanders hopes and dreams to dangerous new heights.

New Zealanders are expecting the Labour-led government to usher-in real and positive changes in the way they live their lives. Failure to meet these expectations will, almost certainly, result in the fall of the Labour-NZF-Green Government.

Jacinda and her team know this. They may have bought themselves some time by setting up scores of working-groups and inquiries, but at some point before the 2020 general election they are going to have to start delivering real gains to the people who voted for them. Being seen to back away, albeit under fierce business pressure, from restoring a modicum of fairness to the workplace will be seen by many traditional Labour supporters (especially the present and former members of trade unions) as a betrayal.

And yet, as the wage campaigns of public sector workers (the only groups who have been able to retain a credible measure of union density) are rolled out and resolved in settlements involving double-figures, the restiveness of the largely un-unionised private sector workforce can only grow. The Business Community do not need to have the consequences of this restiveness spelled out for them. Employment law reform could quite easily result in an unprecedented and largely unorganised strike-wave sweeping across the country.

That’s enough to shake the confidence of even the most unflappable CEO.

Unfortunately, it is also more than enough to unsettle the nerves of a social-democratic government that would (to paraphrase the shrewd observation of an old trade unionist pal of mine) retain control of the losing side in an argument about employment law reform than lose control of the winning side.

In spite of its name, the last thing Labour wants is the New Zealand working-class taking matters into its own hands.

Those who have put their money on Jacinda and Grant swerving at the last minute have, if history is any guide, made a pretty safe bet.

This essay was originally posted on The Daily Blog of Friday, 10 August 2018.

Undivided Power Is Perilous.

Unbridled Power? As Prime Minister and Finance Minister combined, National's Rob Muldoon wielded more raw political power than any New Zealand politician since the Second World War. His command of the political sphere could not, however, protect him from the unrelenting opposition of the economic and social spheres.

THERE’S A WIDELY-HELD misapprehension that “The Government” controls society. That the politicians commanding a majority in the House of Representatives, or a President duly elected by the people, possess the power to rule us as they see fit. Nothing could be further from the truth.

Power is very seldom concentrated in a single individual or party. The General Secretary of the Communist Party of the Soviet Union, Joseph Stalin, came terrifyingly close to exercising absolute control over his society, but his was the exception, not the rule. In just about every other time and place power is separated into three discrete locations: the political sphere, the economic sphere and the social sphere.

It is very difficult indeed for a person or a party to dominate all three of these spheres, and in a democracy it is next to impossible.

Take the present government of New Zealand, for example. Unusually, it does not include within its ranks the political party which received the largest number of votes. To secure a majority in the House of Representatives, the Labour, NZ First and Green parties had to join forces in a political alliance. Constant negotiation and compromise is required to keep this unlikely combination of social-democrats, populists and environmentalists from flying apart. With the National Party, on its own, retaining the support of just under half of the electorate, the political sphere is very far from being the all-powerful force that many New Zealanders still believe it to be.

The surveys of business confidence (which seem to have been released every other week since the Labour-NZF-Green government came to power) continue to present a consistent picture of unhappiness and mistrust among the business community. So much so, that they have become potent symbols of the power that lies within the economic sphere.

Falling business confidence puts the whole economy at risk. Fear of and/or resentment towards a government’s policies can easily persuade foreign and domestic investors to put away their cheque-books. Without investment and the economic expansion it encourages unemployment is likely to grow and the government’s tax-take decline. Fearful of the future, people stop spending and before long the economy begins a slow spiral downward into recession.

All governments know how crucial it is to avoid the all-important “back-pocket” issues turning negative. Securing re-election is almost impossible when the voters are fearful of themselves, or members of their family, losing their jobs and falling into debt. Small wonder, then, that politicians – Ministers of Finance in particular – spend so much of their time reassuring the economic sphere that its interests (and profits) are protected.

The social sphere is crucial to this process of political reassurance. Encompassing critical societal institutions like the news media, schools and universities, churches, the caring sector and the entertainment industry; it plays a critical role in conferring moral legitimacy upon the individuals and organisations entrusted with governing the population. Few governments can withstand the pressures brought to bear by a social sphere which has turned against it on account of its mishandling of the economic sphere.

One has only to think of the doomed National government of Rob Muldoon in the early months of 1984. It’s ability to preserve a majority in the House of Representatives was being sorely tested by maverick MPs like Mike Minogue and Marilyn Waring. Its handling of the economy was under fire from big business, the unions and even key bureaucrats within the Reserve Bank and Treasury. The editorial pages of the newspapers railed against Muldoon’s interventionism and academics demanded root-and-branch reform. Churchmen preached against National’s foreign and defence policies and entertainers lent their glamour to the efforts of Muldoon’s Labour opponents to bring him down. Not surprisingly, they succeeded.

It is worth noting here that in 1984 New Zealand prime ministers were able to exercise a great deal more political influence over the economic and social spheres than is the case today. Much more of the economy was under state – and hence political – control. Radio and television, similarly, were publicly-owned and therefore highly susceptible to political influence.

And yet, not even these huge advantages could save the most effective master of the political sphere since World War II from ignominious defeat. That said, however, if you see a prime minister amassing unusual powers over the economic and social spheres – be on your guard!

This essay was originally published in The Otago Daily Times and The Greymouth Star of Friday, 6 July 2018.

Governing For The “Other Half” Of New Zealand.

Up Where We Belong? In the end, the promise to be a “transformational” government is a promise to put the need of the many ahead of the greed of the few. Keeping that promise is unlikely to retain the confidence of the business sector, but it just might be enough to win the confidence of that “other half” of the New Zealand people whose votes made this government possible.

THE LABOUR PARTY has never been very tolerant of dissenters. It is, therefore, unsurprising that very few within its ranks have reacted positively to my recent posting on The Daily Blog. No matter how many private reservations Labour supporters may be harbouring about Grant Robertson’s “fiscally responsible” economic policies, they would rather his critics refrained from giving public voice to their concerns.

The case they make for maintaining radio silence on the new government’s performance is that criticism, no matter how well-merited or constructive, will only reinforce the National Oppositions “shambolic” narrative. What Jacinda Ardern and her team need more than anything else at this time, argue their supporters, is a few weeks of relative calm in which to prepare themselves for the challenges of 2018.

Convincing New Zealanders that their new finance minister is not a swivel-eyed economic loon is regarded as crucial to this process of political consolidation. Grant Robertson winning accolades from mainstream journalists for his fiscal and economic responsibility is much more to be desired, at this stage of proceedings, than receiving the hearty endorsement of radical leftists. It’s “baby steps” that Labour needs to take right now – not giant strides.

One critic of my criticism put it like this:

“What you are dealing with in NZ today, is a fairly conservative political climate. The political Left is no longer a strong and coherent force. The electorate is split roughly down the middle between Left and Right. Any government somehow has to bridge the conflicts and disunity to represent the voting population, and it’s going to be centrist. The new government is treading carefully very deliberately, so as not to alienate the business sector or impede market confidence. The new government has to gain confidence and that imperative guides it for now.”

But, if the electorate is “split roughly down the middle”, then describing the Left as no longer “a strong and coherent force” makes no sense. Equally nonsensical is the suggestion that in a society characterised by “conflicts and disunity” the only viable strategy is to embrace the politics of centrism. Governing on behalf of the centre makes sense when, on social and economic issues, there is a broad measure of agreement. While that may have been the case in the 1960s, it is certainly not true of today.

Nor is it true that New Zealanders are living in a “fairly conservative climate”. Mainstream newspaper and magazine editors may like to think that their own conservative views are also those of the majority; and talkback hosts like Leighton Smith will loudly insist that they are; but that half of the population routinely excluded from mainstream political discourse seethes with entirely justifiable resentment and barely suppressed rage.

These New Zealanders are unlikely to be mollified or impressed by the spectacle of a Labour-led government “treading carefully very deliberately so as not to alienate the business sector or impede market confidence.” They have, after all, seen this happen many times before and they know that the moment “their” government makes the maintenance of business confidence its No. 1 priority, then all hope of it ever living up to its promise of “transforming” society flies out the window.

Because, of course, gaining and maintaining the confidence of the business sector involves a great deal more than managing-down Crown debt and building up healthy surpluses. Nothing requires more in the way of constant state intervention and control than a laissez-faire economy. The slightest hint that the plethora of legal constraints required to keep the markets “free” might be thinned-out or, horror of horrors, done away with altogether, is absolutely guaranteed to send the confidence of the business sector into a nosedive.

Just recall the howls of outrage that accompanied Metira Turei’s promise to make a bonfire of the MSD’s hated “sanctions”. New Zealand’s brutal social welfare regime fulfils exactly the same role as Britain’s nineteenth century workhouses: it is a means of ensuring that workers will accept low wages and poor working conditions in preference to enduring the humiliation and material deprivation of life on “the benefit”. Any relaxation of the “rules” governing beneficiaries’ lives would shake the business sector to its core.

Even more destabilising to the business sector would be any serious attempt on the part of a “transformational government” to rebuild the strength and fighting spirit of the trade union movement. Restoring “compulsory unionism”, and lifting the current legal restrictions on the right to strike, would instantly provoke employers into full-scale revolt. They do not need to read the works of Karl Polanyi to know that “the only way politically to temper the destructive influence of organized capital and its ultra-market ideology [is] with highly mobilized, shrewd, and sophisticated worker movements.”

My point is that just about any measure aimed at loosening the controls that keep the “free market” running smoothly will be deemed unacceptable by the business sector. Any attempt to make the lives of working-class people less constrained and fearful; any move to emancipate and empower the inhabitants of the social depths; will be interpreted by those who occupy the commanding heights of our society as a direct thrust at their interests and privileges.

Yes, raising taxes and/or increasing the deficit would be regarded as an unfriendly act, but so, too, would decriminalising marijuana, or emptying the prisons of all those found guilty of victimless crimes, or following the example of Costa Rica and abolishing the armed forces.

In the end, the promise to be a “transformational” government is a promise to put the need of the many ahead of the greed of the few. Keeping that promise is unlikely to retain the confidence of the business sector, but it just might be enough to win the confidence of that “other half” of the New Zealand people whose votes made this government possible.

This essay was originally posted on The Daily Blog of Saturday, 16 December 2017.