Who Ya Gonna Call? Labour and the New Zealand Economy.

Truth In Advertising: Labour, it would seem, is the party that knows nothing about running the economy right up until the moment that it does. 

HOW DID LABOUR acquire its reputation for being a poor economic manager? As with most things political and historical, it’s a long story.

In the beginning, the very idea that Labour might become New Zealand’s government was considered so preposterous that its economic policies weren’t considered seriously. To be fair, in its early days Labour’s economic ideas were more ideological than practical. The party espoused “the socialisation of the means of production, distribution and exchange”. Once the people were firmly in control of the economy, Labour seemed perfectly content to leave the details of its management to them.

Unfortunately, the revolution in Russia and the seizure of power by the Bolsheviks provided the rest of the world with a lurid picture of what “socialisation” could look like. Most New Zealanders recoiled in horror. If this was class war, then roughly 8 out of every 10 voters wanted no part of it. Clearly, hair-raising and formulaic responses to economic questions were not the way to win votes for Labour outside its working-class bastions in the big cities – and the West Coast’s coal mines.

Thus began the long and difficult journey from the Red Dawn of Labour’s adolescence to the Pink Sunrise of its adult years. Along the way the party steadily shed the most radical of its manifesto promises. That Labour was finally ready to occupy the Treasury Benches was signalled when the party voted to abandon its longstanding commitment to nationalise all privately-owned land in New Zealand.

The event which drove this crucial shift from revolutionary rhetoric to reformist realism was, of course, the Great Depression. Labour had to present the electorate with something it could vote for because it was fast becoming clear to a majority of New Zealanders that the conservative coalition government of the day was utterly bereft of ideas about how to get the economy moving again. Labour owed the people a workable alternative – and in the 1935 general election it delivered one.

For the next 14 years, through depression and world war, Labour kept on delivering. For tens-of- thousands of New Zealanders, the party not only stood for the nation’s, but also their own families’, economic salvation. The policies of Mickey Savage, Peter Fraser, Bob Semple, Jack Lee and Walter Nash were widely credited with transforming New Zealand. The country entered the post-war period with one of the world’s most prosperous economies. The opposition National Party only secured the reins of government in 1949 by promising to leave Labour’s “cradle to grave” welfare state intact.

The event that cost Labour its reputation as a wise and just economic manager was the so-called “Black Budget” of 1958. Confronted with a ballooning balance-of-payments deficit, Labour’s Finance Minister, Arnold Nordmeyer, increased excise taxes and sharply curbed the importation of foreign goods. For old and ignoble political and personal reasons, the trade union leader, Fintain Patrick Walsh, joined with the National Opposition in castigating Nordmeyer’s “Black Budget” as a puritanical Presbyterian’s attack on the booze-and-baccy pleasures of the working man.

That Nordmeyer’s tough-but-fair measures actually righted the economy and restored its forward momentum was forgotten. For the best part of two decades all any National Party politician had to say was: “Remember Nordy’s Black Budget!” and voters winced.

By the mid-1980s, however, the gross incompetence of a conservative government had, once again, compelled Labour to set aside its social-democratic dreams. New Zealand urgently required an economic programme capable of extricating its economy from the cul-de-sac into which the dirigiste policies of National’s Rob Muldoon had driven it. “You can’t run a country like a Polish shipyard!”, boomed Labour’s leader, David Lange. Roger Douglas wasn’t about to disagree.

Labour, it would seem, is the party that knows nothing about running the economy right up until the moment that it does. It is nothing short of astounding that in spite of everything that has happened since the party’s formation in 1916 – up to and including Labour’s two decisive re-organisations of the New Zealand economy of 1935-49 and 1984-1990 – New Zealand’s conservative establishment still finds it expedient to cast the Labour Party as a bunch of blood-thirsty Bolsheviks hell-bent on nationalising everything and shooting the buggers who complain.

This woeful lack of gratitude on the part of New Zealand’s capitalists makes me wish (almost) that their false description of Labour was true.

This essay was originally published in The Otago Daily Times and The Greymouth Star of Friday, 31 July 2020.

Large American Pot, Meet Small Chinese Kettle.

Disharmonious Fists: China: the country which, unlike the United States, has been willing to open her markets to New Zealand’s agricultural exports on a truly massive scale. The country which, more than any other, kept New Zealand afloat during the Global Financial Crisis. The country which, in return for keeping our economy healthy, asks of us only two things: equal access to our markets; and tangible evidence of our respect.

IRONICALLY, THE CONCERN over Chinese influence in New Zealand is being raised against a backdrop of unchallenged American hegemony. Extending across the whole width of the nation’s political stage, this American backdrop has become so much a part of the play’s scenery that most Kiwis no longer notice it. The inclusion of a few Chinese props, however, is enough to induce something close to panic among New Zealand’s political class.

That this country remains enmeshed in the intelligence gathering networks of the United States National Security Agency, for example, is considered problematic by only a very small minority of New Zealanders. Between the Battle of the Coral Sea in 1942 and the passage of New Zealand’s anti-nuclear legislation in 1985, most Kiwis simply assumed that the United States would always be their country’s principal military protector. America’s strategic planners seemed to agree, because they never for a moment considered suspending New Zealand from the so-called “Five Eyes” intelligence-gathering alliance. Dropping us out of the ANZUS Pact was considered punishment enough.

Moreover, as Nicky Hager’s book “Other People’s Wars” make clear, from the moment New Zealand was suspended from the ANZUS Pact, elements of what passes for this country’s “deep state” undertook to rebuild this country’s damaged relationship with the United States. Senior civil servants like Gerald Hensley simply refused to accept the Fourth Labour Government’s foreign and defence policies.

With the Wellington Declaration of 2010, and the Washington Declaration of 2012, the rift between the United States and New Zealand became a thing of the past. It had taken Hensley and his successors 25 years, but the anti-nuclear rebel was finally back in what Prime Minister John Key called “The Club”.

For those of you wondering what the Wellington Declaration (signed by Hillary Clinton and Murray McCully) entails – here’s the guts of it:

“The United States-New Zealand strategic partnership is to have two fundamental elements: a new focus on practical cooperation in the Pacific region; and enhanced political and subject-matter dialogue — including regular Foreign Ministers’ meetings and political-military discussions.”

The content of the Labour-NZF Coalition government’s Defence White Paper, far from being a departure from existing policy, is clearly a reaffirmation of the previous National-led government’s re-commitment to the United States.

These diplomatic and military links are merely the most formal manifestations of US hegemony in New Zealand. Beyond and beneath them extends an intricate network of personal, cultural and economic relationships that binds together inextricably the American and New Zealand political classes.

So many Kiwis have studied and worked in the United States. So many exchange students have come and gone. So many of our military and police officers have been seconded to serve alongside their American counterparts. So many of our best and brightest graduates have been shoulder-tapped for a stint in Washington or New York.

So numerous are these relationships that they could be said to constitute a veritable “fifth column” of American power in New Zealand society. Even if Kiwis elected a government committed to breaking free from the tutelage of the USA, the resistance from these US “assets” in our foreign affairs, military, business and media bureaucracies would be formidable.

Also to be considered is the all-pervasive influence of American “soft power” on New Zealand society. So much of the digital information we receive, the movies and television shows we watch, the music we listen to, the clothes we wear and the vocabulary we use in our everyday speech hails from the United States. Our directors and screenwriters head for Los Angeles and New York. Young Maori and Pasifika from South Auckland emulate the musical and dance styles of Black and Hispanic Americans. Even our news and current-affairs shows formats are borrowed from the US. How much of New Zealand culture is genuinely indigenous? Three-quarters? Half? A quarter? Less? Living in the shadow of a great power can be a profoundly disintegrative experience.

We have been here before, of course. Back in the days of “Mother England” when New Zealand made a fetish of being the most loyal of the British Empire’s “dominions across the sea”. British hegemony in the century between the signing of the Treaty of Waitangi and the Battle of the Coral Sea was no less all-encompassing than the hegemonic networks of the United States.

There was, however, one important difference between British and American rule. Up until 1973, the United Kingdom was happy to assign New Zealand the highly remunerative role of the Mother Country’s South Seas farm. The Americans, however, have never expressed the slightest interest in taking all the agricultural produce New Zealanders would be only too delighted to send them – quite the reverse, in fact. American farmers have worked tirelessly to keep the highly-efficient Kiwis primary exports out of their markets.

Which brings us to China: the one country which has been willing to open her markets to New Zealand’s agricultural exports on a truly massive scale. The country which, more than any other, kept New Zealand afloat during the Global Financial Crisis. The country which, in return for keeping our economy afloat, asks of us only two things: equal access to our markets; and tangible evidence of our respect.

To secure this reciprocation, China is doing no more than any other powerful state will do to achieve its national objectives. It is building relationships with its trading partner’s political and economic elites; and, it is projecting its soft power as far as possible into their society. In other words, behaving exactly as the British and Americans have behaved in relation to New Zealanders – albeit on a much, much smaller scale.

If New Zealand’s American “friends” are so anxious to have us remove the handful of Chinese props from our political stage, then perhaps it is time for us to replace their all-American backdrop with something Kiwi-made.

This essay was originally posted on The Daily Blog of Friday, 20 July 2018.

Australia's Coolies

Second-Class Non-Citizens: Australia's and New Zealand's Nineteenth Century immigration policies discriminated viciously against the Chinese, denying them the same political, economic and social rights as those enjoyed by their workmates and neighbours. In the Twenty-First Century, Kiwis seem to have replaced the Chinese as Australia's second-class non-citizens - to the ultimate advantage of New Zealand's employing class.

WE HAVE BECOME Australia’s coolies. Openly discriminated against by state and federal authorities, New Zealanders and their children are officially denied the same social and political rights as their Australian neighbours and workmates. Nearly half-a-million Kiwis living in Australia are subjected to taxation without representation – the same injustice against which Americans rose in revolt in 1776. But so downtrodden and spiritless have we become that every year more than 40,000 of us voluntarily submit to the same sort of racist restrictions our government once imposed on Chinese immigrants.
 

Why are so many New Zealanders willing to endure such naked discrimination? And why has their government been so abject, so supine, so utterly useless at defending their rights?
 

The answers have much to do with the relative strength of the New Zealand and Australian economies. Overwhelmingly, those boarding the airliners for Sydney, Melbourne, Brisbane and Perth are economic migrants. Australian wages are between thirty and fifty percent higher than those paid for similar work in New Zealand – in some trades and professions twice as high. For scores of thousands of under-employed and under-paid Kiwis, the lure of a decent pay-packet is simply irresistible.
 

But economics is not the whole explanation for the huge numbers emigrating to Australia. People do not abandon their homelands lightly. To leave behind family, friends, colleagues and all the familiar and reassuring geography of hearth and home one must be driven by factors of equal or even greater emotional force. Fear, shame, resentment, greed and lust will drive people across borders; but so, too, will the conviction that their homeland is not only unable to offer them and their loved ones a life worth living, but also that, really, it doesn’t care.
 

The creation of such a deadly malaise is never attributable solely to the failings of those in authority. Our rulers remain in place because we are content to leave them there. So, while governments may be the immediate cause of the deep disillusionment that drives citizens from their shores, there must also be a significant portion of the population which is, if not gratified, then at least untroubled, by their departure.
 

In New Zealand’s case the culprits are not hard to find. One has only to identify the class of citizens who have gained the most from the economic and social settings driving so many of their compatriots across the Tasman. Overwhelmingly, it is the employing class which is most untroubled – even gratified – by the level of emigration.
 

Changes to employment law dating back to 1991 began the uncoupling of New Zealand and Australian wage rates. The steady reduction of the social wage paid to New Zealanders in the form of state-funded health, education and housing services, which had begun ten years earlier with tax and spending cuts, was thus rendered even more destructive. Other economic “reforms” led to the wholesale deindustrialisation of New Zealand and a dramatic rise in structural unemployment. The social and political consequences of these changes were devastating, but without the safety-valve of emigration to Australia they would also have been unsustainable.
 

Had Kiwis not been able to escape across the ditch, unemployment levels in New Zealand would have generated an electoral backlash of sufficient force to undo the neoliberal “reforms” from which employers had gained so much economic, social and political power. But, with neither of the major political parties willing to incur the wrath of the employing class (just a little of whose power the Clark-led Labour-Alliance Government experienced in the  “Winter of Discontent” of 2000) the changes required to convince New Zealanders that their government was, indeed, committed to helping them make a better life for themselves were never introduced.
 

And so the exodus continues. To paraphrase King Richard II’s contemptuous response to the defeated remnants of the Peasants Revolt of 1381: “Coolies we are, and coolies we shall remain.”*
 

Until such time as we find the courage to build again a nation worth loving – not leaving.

* When the vanquished rebels enquired of their King whether his promise to abolish villeinage (serfdom) still held, he replied: "Villeins ye are still, and villeins ye shall remain."
 

This essay was originally published in The Dominion Post, The Waikato Times, The Taranaki Daily News, The Timaru Herald, The Otago Daily Times and The Greymouth Star of Friday, 18 January 2013.

Intensifying The Vicious Circle

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

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

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

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

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

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

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

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

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

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

This posting is exclusive to the Bowalley Road blogsite.

After The Ball Is Over

And Then What?: Only the criminally ill-informed and/or the hopelessly romantic believe that anyone but John Key will be prime-minister after the General Election. The more important question is: What happens then? After the ball is over - and the global recession finally hits New Zealand?

WITH MORE AND MORE voters regarding a National Party election victory as inevitable, the question arises: “What happens after the ball is over?”

When all the hoardings have been taken down, and all the ballot papers counted – what then? What challenges lie in wait for New Zealand’s government a few miles down the track?

While a fitful sun still bathes large parts of New Zealand in a golden light, many communities already lie in the shadow of storm-clouds blown-in from northern climes.

Farmers and their support networks in rural and provincial New Zealand may find it hard to comprehend the difficulties being experienced by metropolitan New Zealand. This is because record export prices have cushioned them from all but the first few recessionary blows.

Even so, the nation’s cockies – being a cautious and responsible breed – are furiously paying down their debt and eliminating all unnecessary expenditure. It seems axiomatic to them that their government should be doing the same. If the National Party was to run the country the same way they run their farms, say the farmers, all would be well.

But, I wonder if they’d still say that if, as many economists now predict, the Chinese economy experiences a sudden contraction? If China’s apparently insatiable appetite for New Zealand milk powder disappeared overnight – along with her equally insatiable appetite for unprocessed Pinus Radiata and Australian minerals – would our farmers still model their economic expectations on a simple set of household accounts?

For the sake of argument, let’s assume they would. What would be the result?

That’s easy. The farming sector’s huge debts to Australia’s banks would very soon precipitate a major financial crisis. If Chinese demand dried up – on both sides of the Tasman – the Australasian banking sector would be in serious trouble. Farmers unable to pay their mortgages would be foreclosed. Rural properties would flood the real-estate market and land prices would collapse. Farming families’ equity in their properties would evaporate, and the ownership of New Zealand farmland would pass into fewer and fewer hands – many of them foreign.

Very rapidly, the farmers’ pain would be transmitted to everyone else in rural and provincial New Zealand. With the demand for agricultural goods and services in free-fall, small to medium businesses throughout the “heartland” would falter and/or fail. Thousands would find themselves without an income. (Being self-employed, these folk would quickly discover the meaning of bureaucratic delay: how much longer it takes to access the unemployment benefit when you’re not a laid-off employee from a major city.)

To make things worse, the Government (still assuming the country is being run according to the household accounts model) would be searching around frantically for ways to reduce ballooning public expenditure.

A collapse in export prices couldn’t help but have a massive impact on the entire economy – sending the indices of unemployment, spousal abandonment, mental illness and sickness through the roof. Welfare spending would soon constitute an insupportable burden on the State. Benefits would have to be cut and eligibility tightened. Working For Families tax credits would be abolished. The age of eligibility for New Zealand Superannuation would be lifted from 65 to 67 and then to 70. The quantum of the pension would fall from two-thirds to half the average wage.

New Zealand’s misery index would rise sharply.

Of course the cutting wouldn’t stop at the Welfare Budget. Spending on health and education would also fall. The interest-free student loan concession would be removed. Major capital projects, such as hospital, school, state-highway and light-rail construction, would be put on hold. Eventually, the wages and salaries of public servants would face the chop – possibly by as much as 10-20 percent.

This is what “austerity” looks like.

What if the Government adopted a different economic model? A model based on something other than a simple set of household accounts? A model which called for the maintenance of a strong and consistent demand for goods and services? A model which held that price deflation, reduced incomes, and the corresponding reduction in the demand for goods and services thus created, only make the economic situation worse – not better. In short, the model put forward by the British economist, John Maynard Keynes, back in the 1930s?

Well, that model would require the Government to do a great many things.

First and foremost it would have to bring the financial sector under strict public control (yes, that does imply a large, state-dominated banking and insurance industry). Then, in order to equip itself with the resources to maintain employment and demand, it would need to institute a radically redistributive fiscal programme. Finally, it would require policies calculated to sustain the viability of New Zealand’s export and import substitution sectors.

Unfortunately, none of these measures are even remotely compatible with the current policy settings of the National Party.

This essay was originally published in The Press of Tuesday, 11 October 2011.

Budget 2011: Front Line Casualty

Registered In Flesh and Blood: If Bill English could see what his numbers added up to, I wonder: would his calculations be different?

BUDGETS ARE WRITTEN for the sake of abstract nouns: Prosperity; Stability; Productivity. But they are experienced by people who are all-too-real. And, if the decisions of our Finance Minister are expressed in numbers, their effects are registered in flesh and blood. If Mr English could see what his numbers added up to; I wonder: would his calculations be different?


THE POLICE CONSTABLE stared at the blank page of his notebook and took a deep breath.

“Can you tell me why your father took his own life?”

The young woman seated opposite him lifted her head slowly, as if the knowledge inside it was too heavy for her body to bear.

“He’d lost everything that meant anything to him. His wife, his home, his job, his self-respect. I think he looked ahead and saw nothing but uselessness and loneliness. In the end, I reckon he just didn’t see any point in going on.”

“He was an educational consultant?”

The young woman snorted.

“That’s what he called himself after he’d been made redundant in that first round of cuts. Used nearly all his redundancy money setting himself up in business. God, he was so keen. But there were no contracts – not one. His whole life had been devoted to research. He picked the eyes out of other countries’ education policies and fed them into the Department. But no one wants ‘back-office bureaucrats’ any more. These days everything’s for the ‘workers on the front line’. He went bust.

“And your mother?”

The young woman smiled wanly.

“She tried – she really did. But the mortgage was just too big for one salary to service. They got behind. The bank was pressuring them to sell. Dad blamed himself. He got more and more depressed – started drinking. There were arguments – fights. In all my life, I’d never seen Dad raise a hand to anyone. But one night I got a call from Mum – she was crying. Dad had hit her. I told her to get out: ‘Go to Women’s Refuge’, I said. Mum just laughed. ‘You’re behind the times over there in Australia’, she told me. ‘The Government’s stopped funding the refuges, most of them have shut up shop.’ I told her I would fly back as soon as I could get a flight, but she told me to stay where I was. ‘They’ll be after you for that student loan of yours’, she told me. ‘You save your money. Your father and I will be all right’.”

“But they weren’t.”

“No. Dad thought he’d go back to varsity – do a law degree. But the Government had stopped lending to mature students – reckoned the over fifty-fives would never pay them back. Seemed like everywhere he turned someone slammed a door in his face. Mum says he just spiralled down and down. His GP referred him to a private psychotherapist, but they couldn’t afford the fees. The public mental health service was no bloody use – just filled him full of lithium. Mum said he was like a zombie. He’d just sit and sit and sit. She couldn’t bear to watch. The house was sold. Mum set Dad up in a little flat – arranged for him to go on the Sickness Benefit. What a joke that was! All he got were endless hassles from the MSD. Told him that if he wasn’t actively seeking work they’d stand him down. A Master’s degree in Education and they had him sweeping floors at the local primary school.

“And that’s where they found him?”

“Yes, that’s where they found him. He’d hanged himself from a metal beam in the school’s reception area.”

The young constable closed his notebook.

“I’m very sorry for your loss.”

The young woman looked out the window at the grey winter sky and blinked.

“You know what Mum said?”

The constable shook his head.

“She said: ‘Dad gave his whole adult life to the back office – but that wasn’t enough to save it from the bottom line’.”

This essay was originally published in The Dominion Post, The Timaru Herald, The Taranaki Daily News, The Otago Daily Times and The Greymouth Star of Friday, 20 May 2011.

Budget 2011: A Moderately Good Hand

Raising The Stakes - But Not Too High: John Key knows that if he's to keep on winning the electorate must be persuaded to keep on playing. That's why Bill English will not risk the voters betting everything on a change of government.

NEW ZEALAND should count itself fortunate in having a governing political party located in the centre of the political spectrum. In trying economic times the peddlers of extreme solutions are never without an audience. It takes genuine courage to embrace moderation when the political rewards for extremism can be so high.

For nearly three years now, John Key and Bill English have resisted the advice of extremists and kept the New Zealand economy right-side up. Reading the signals ahead of this week’s Budget, it’s clear they’ve no intention of turning it upside-down anytime soon.

As far as possible – without attracting the unwanted attentions of the international credit rating agencies – Bill English will strive to maintain the purchasing power of the voting public. He cannot avoid making some gestures in the direction of reining-in Government expenditure, but such cuts as there are in the Budget will not be felt universally (as happened with the GST increase) or even immediately.

Mr Key’s announcement of a “Zero Budget” in conditions of relatively strong inflation actually signals a 2-3 percent reduction in the real level of Government expenditure.

Government departments and agencies may receive the same appropriation as last year, but in dollars that are worth less. Maintaining the same level of services to the public in these circumstances will be a struggle. Civil servants will find it equally difficult to preserve (let alone increase) their incomes. Indeed, the value of their wages and salaries will almost certainly decline in real terms.

So, its name notwithstanding, there will be quite substantial public spending cuts in Thursday’s “Zero Budget”. It’s just that by being restricted to the public sector, and because they’ll be happening in slow-motion, most of the electorate won’t notice them.

Private sector savers, families with children, and tertiary students will, however, find it difficult not to notice the Government’s plans to cut-back the State’s contribution to Kiwisaver; tighten-up the eligibility for “Working For Families”; and take a more aggressive approach to the recovery of outstanding student loans.

But, even here, Mr Key and Mr English have made moderation their watchword. Very wisely they have ignored the advice of the business community’s more feral elements – which was to squander a huge chunk of the Prime Minister’s personal political popularity by rushing through these austerity measures under Urgency. Instead, Mr Key and his Finance Minister have chosen the impeccably democratic option of post-dating the reform of Kiwisaver, Working For Families and the recovery of student loans until after the General Election.

In effect, the Prime Minister is daring the electorate to abandon his government for an Opposition in varying degrees of disarray. “Back me or sack me!” is his cry – leaving the average voter in the agonising position of the poker player holding a weak hand who must decide whether or not to pony up his last dollar to discover if his opponent is bluffing.

John Key is asking voters to look at the Opposition parties, assign them playing cards according to their worth, and then decide whether or not their hand is stronger than the Government’s.

If they decide the Oppositions’ cards are too low, then they should give the Government what’s on the table. But, if they honestly believe the combination of Phil Goff (King?), Metiria Turei (Queen?), Winston Peters (Joker?) and Hone Harawira (Knave?) constitutes a winning hand, then, by all means, they should push all their chips forward. Lose a little or win a lot: that’s the wager. And it’s only their own, their children’s and their country’s future that’s at stake.

It’s high risk politics for Mr Key and his government, but the genius of the Prime Minister’s proposition lies in how little he has actually put on the table.

If he had followed the advice of the Business Roundtable, or Dr Don Brash, or the right-wing commentariat, Mr Key would have pushed everything into the centre of the table. All of the state assets; interest-free student loans; Working For Families in its entirety; Paula Rebstock’s welfare reforms; the whole kit and caboodle of neoliberal obsessions would have gone into the pot.

Had he done that, then the voters might have been willing to risk everything – even on the poor hand the Opposition parties have dealt them. The wager would have been a terrifying zero-sum choice: win it all or lose it all. Folding wouldn’t have been an option.

But John Key, the successful currency trader; the self-made millionaire; the high-stakes riverboat gambler; has made throwing-in our hand a reasonable option. The Key-English version of moderate-conservative poker may set the table limit low, but by reassuring the punters that they’re not engaged in an all-or-nothing gamble, it keeps them at the table.

And so long as they keep on playing, the Prime Minister knows he can keep on winning.

This essay was originally published in The Press of Tuesday, 17 May 2011.

Reflections On The Christchurch Earthquake: Getting Through

Blood, Toil, Tears, and Sweat: Winston Churchill's words to the people of Britain during its "finest hour" in 1940 were so magnificently inspiring precisely because they were so utterly uncompromising. The political force-field created by the Christchurch earthquake can be harnessed by our politicians, but only if they display the unflinching honesty and unshakeable resolve of Britain's wartime leader.

THE CHRISTCHURCH TRAGEDY has generated its own political force-field. Events of such gravity always do. When something as big and brutal as Christchurch’s devastating earthquake shatters the ordered symmetry of our daily lives, we expect our political leaders to respond with measures of equal force.

These measures don’t always have to be practical – although it’s on the ground that the authorities’ performance will always, ultimately, be judged. Often, in moments of crisis, the words of our leaders can be just as important as their deeds.

Recall Winston Churchill’s words, upon assuming the mantle of wartime leadership in 1940. "I have nothing to offer", he told a hushed House of Commons, "but blood, toil, tears and sweat."

That steely realism: so bereft of sentiment; so empty of comfort; stiffened the sinews of the British people. At such critical moments, citizens aren’t looking for soft words of pity and consolation. What they want is speech of unflinching honesty and unshakeable resolve.

"You ask, what is our aim?", Churchill went on. "I can answer in one word: victory; victory at all costs, victory in spite of all terror, victory, no matter how long and hard the road may be; for without victory, there is no survival."

New Zealand is about to be tested in ways only marginally less gruelling than the ultimate audit of war. We are faced with the abrupt cessation of more than a tenth of our national economy – for how long we cannot tell. If the rebuilding of the earthquake-devastated Japanese city of Kobe is any guide, Christchurch may require as much as a decade to fully recover.

The leader who successfully harnesses the political force-field of the Christchurch earthquake will be the leader who tells New Zealanders clearly and without prevarication exactly what he or she expects of them. Because any politician who suggests that Christchurch can be rebuilt or that the New Zealand economy can successfully weather this crisis without a supreme and united national effort, is insulting the intelligence of the electorate.

Not only that, they are insulting the thousands of ordinary Kiwis: farmers, workers, businessmen, students, beneficiaries and retirees; who have added their skills and energy to the unstinting efforts of tens-of-thousands of dedicated public servants.

The men and women who have rushed to bring practical assistance to their fellow New Zealanders are showing the way forward to any political leader with the wit to see it. We are not going to get Cantabrians through this crisis except by means of a co-ordinated and collective effort. And New Zealand will only find the money to rebuild and restore Christchurch if every New Zealander pays their fair share of the cost.

That means the top ten-percent of income earners will have to give up the generous tax windfalls of last year’s Budget – as well as pay a special levy on incomes in excess of $100,000 p.a. It will require the rest of us to pay higher EQC levies. And all of us will have to invest in Earthquake Recovery Bonds with the same sort of patriotic enthusiasm that our parents and grandparents once invested in War Bonds.

Getting through will also require New Zealanders to dispense with many of the economic articles-of-faith that have been drummed into them this past quarter-century. The notion that "Government isn’t the solution to the problem. Government is the problem" (to quote Ronald Reagan’s infamous formulation) must go.

The other lesson which the heroic altruism of ordinary Cantabrians should be teaching our political class is that New Zealanders feel much more like themselves when they’re helping – not hurting – their neighbours. Any political party that believes a national reconstruction effort can be successfully undertaken while unemployed Kiwis and solo mums are being stigmatised, or while the sick and disabled are being harassed and harried into non-existent jobs, is criminally deluded.

Rebuilding Christchurch, and its crucial contribution to New Zealand’s national life, requires, above all else, the same unity of purpose that allowed the Allies to overcome fascism in World War II.

The earthquake’s political force-field will simply annihilate any politician or party which, by unfairly distributing the burdens of recovery, sets New Zealander against New Zealander – in mutual ruin.

To paraphrase Churchill: At this time we are entitled to claim the aid of all, and say: "Come then, let us go forward together."

This essay was originally published in The Dominion Post, The Timaru Herald, The Taranaki Daily News, The Otago Daily Times and The Greymouth Star of Friday, 4 March 2011.

Mr Oram's Revolution

Must Try Harder: Business commentators like Rod Oram (above) are constantly berating New Zealanders for their failure to grasp the nettle of neoliberal "reform". Mr Oram is now demanding a "cultural revolution" to "help us build a business one". But New Zealanders have been living through a Rogernomics-inspired cultural revolution for twenty-seven years - yet still the Neoliberal cry is for more of the same. Perhaps its time to stop criticising the patient's failure to improve - and start questioning the cure.

A CULTURAL REVOLUTION? Rod Oram wants one. Writing in The Sunday Star-Times of 20 February, the respected business commentator laments the state of our nation. "We are locked into a low-growth trajectory thanks to misdiagnosing our challenges, misjudging our opportunities and poor execution of our few good ideas."

Mr Oram attributes these failures to five crucial deficiencies in our national character: Complacency, Delusion, Distrust, Distraction and Frustration. His prescription: "We need a cultural revolution to help us build a business one."

Angry denunciations of Kiwis’ manifold deficiencies by business leaders and commentators have become something of a fixture on the business pages of this country’s newspapers. Clearly we are a bitter disappointment to the arbiters of change – so much so that nothing less than a cultural revolution is required to correct the errors of our ways.

I thinks it’s a little late (and more than a little cheeky) to demand a cultural revolution from a nation which has spent the past quarter-century passing through one.

The economic and social reforms unleashed by the Fourth Labour Government in 1984 have not only transformed New Zealand, they have profoundly altered New Zealanders.

For those born and raised in the dark cavern of Rogernomics there can, of course, be no memories of the sun. The deeper tragedy, perhaps, is that those New Zealanders fortunate enough to grow up in a country bathed in sunshine have somehow convinced themselves that the magic lanterns responsible for Neoliberalism’s deceptive shadows are a preferable alternative.

We have forgotten so much – and swallowed so many extraordinary lies.

Foremost among these being the lies about public ownership and the inefficiencies of the State.

How many times, over the past 25 years, have we been fed the image of the lazy employee of the "Ministry of Jerks", leaning on his shovel at the side of the road? Who now remembers the elite Ministry of Works construction teams who built New Zealand’s world-beating hydro-power schemes on time and under-budget?

Did anyone pause to wonder why the huge snowstorm that cut the power supply to so many thousands of Cantabrians a few years back didn’t wreak more havoc on the region’s energy infrastructure? No. Because we take the excellence of its engineering and the gold-standard quality of its construction completely for granted. It never occurs to us that a privately owned construction company – mandated to provide a healthy rate of return to its shareholders – would never have provided this nation with such a robust and reliable system.

The Rogernomes couldn’t get rid of the Ministry of Works fast enough – and for very good reason. Far from being a fiscally draining make-work scheme for New Zealand’s most indolent and unintelligent drones, the Ministry of Works, from its inception, had been home to some of this country’s most innovative and creative civil engineers, architects, town planners and designers. Indeed, it’s probably not drawing too long a bow to suggest that the Ministry of Works highly-motivated public servants embodied the practical wisdom, quiet self-confidence and understated patriotism, for which New Zealanders are so universally admired.

That’s what made it so dangerous. In the eyes of the Neoliberal revolutionaries the Ministry constituted that most dangerous of threats – an alternative source of ideas and explanations. For a regime whose slogan was: "There is NO alternative" the Ministry was anathema. It not only had to be destroyed, it had to be defamed.

So, perhaps Mr Oram is right. Perhaps we do need a cultural revolution. A revolution dedicated to rooting out the five deforming "character" deficiencies Neoliberalism transmits to the populations it infects.

Complacency: The complacent ideological assumption that the market knows best.

Delusion: The delusion that a nation of isolated and disconnected individuals (the Internet does not equal intimacy) will ever summon-up the collective energy to identify (let alone pursue) the public good.

Distrust: The distrust of the past as a source of solace, strength and inspiration; of intellectuals, artists and anybody else who dares suggest that a more generous existence lies beyond Neoliberalism’s cave; and of the scientific method - with its power to expose the fads and fallacies of dogmatic ideologues.

Distraction: The need for constant and socially divisive distraction – to prevent the population from ever accurately identifying the true source of its insecurity and despondency.

Frustration: The creation of massive levels of personal frustration in order to maintain the social tension required to keep Neoliberalism’s victims angry and divided.

Since the premiership of Julius Vogel (1873-76) wise New Zealanders have understood that their country is only viable as a national economy if its best and its brightest, rather than being dispersed by the anarchy of the market, are concentrated and empowered under the protection of an active and innovative state.

Executing that "good idea" really would require a revolution.

This essay was originally published in The Press of Tuesday, 22 February, 2011.

Farmers - Not Peasants

To lose land is to lose sovereignty: This was the lesson Maori learned from Pakeha. Are all New Zealanders about to be taught the same lesson by the Chinese?

THE OUTRAGE was as plain as a Chinese pikestaff. Responding to Agriculture Minister, David Carter’s, comment that the sale of sixteen dairy farms to the Chinese-backed Natural Dairy (NZ) Ltd was "unlikely to go through", the company’s vice-chairman, Graham Chin, cut straight to the chase.

Not only were the Minister’s comments "completely unacceptable", snapped Mr Chin, but they also raised "serious questions as to how genuine and understanding the Minister of Agriculture is in relation to New Zealand’s trading and investment relationship with countries such as China."

Forget the "such as". Mr Chin was bluntly reminding our government that, along with all the international kudos and commercial opportunities, New Zealand’s highly prized Free Trade Agreement with the Peoples Republic of China also included a number of fundamental obligations and responsibilities.

Foremost among these is the New Zealand Government’s obligation to ensure that the same commercial opportunities made available to New Zealand investors in China are fully reciprocated in relation to Chinese businesses seeking to invest in New Zealand.

China will not tolerate a trading partner who attempts to have it both ways. If Beijing is willing to open doors for Fonterra, then Wellington must be equally hospitable to Mr Chin and his Hong Kong backers.

And it would be very foolish to suppose that Chinese officials will be fooled by New Zealand politicians attempting to wash their hands of all responsibility by pointing to the "independence" of our Overseas Investment Office (OIO). China’s ambassador will know as well as the Campaign Against Foreign Control of Aotearoa (CAFCA) spokesperson, Murray Horton, that the OIO hasn’t turned down a land purchase application in twenty years.

Once Natural Dairy’s application is granted, however, New Zealand’s farmers, and the politicians who represent them, are going to have to do some very serious thinking.

China’s purchasing plans for New Zealand are unlikely to stop at the Crafar family’s former properties. Indeed, Natural Dairy (NZ) Ltd’s principals have made it clear that their long-term objective is to construct a New Zealand-based, wholly-Chinese-owned, vertically integrated dairying operation in direct competition with Fonterra.

It must be as obvious to Chinese business interests as it is to this country’s Australian-owned banks that for more years than we care to admit, New Zealand’s dairy farmers have been in business not to sell milk, but to realise the enormous capital gains engendered by the ever-rising price of rural land.

With the global financial crisis having brought New Zealand’s rural property boom to an abrupt halt, a great many dairy farmers (and their bankers) are now stuck with properties their cows’ udders can no longer finance. Overextended in their rural lending, the Australian banks want to effect a quick exit from our agricultural sector with the minimum possible damage to their bottom-lines. They are looking for buyers of agricultural land, and, as luck would have it, the Chinese are looking for anyone with agricultural land to sell.

What is a Kiwi cow-cockey, technically insolvent and unable to borrow, supposed to do when Natural Dairy (or something like it) comes calling with an open cheque-book? As one veteran farmer of my acquaintance put it recently: "If a Chinese buyer offers me $3 million, cash, for my property – I’m not going to turn him down."

There’s only one way New Zealand can avoid losing, farm by farm, its core agricultural assets, and that is to make it illegal to sell agricultural land to anyone except the Crown.

Like the Maori before us, we face the prospect of seeing our most valuable taonga, land, and the key resource which will soon be worth even more than land, water, being sold out from under us. Only then will we discover, as they did, that losing one’s treasure means losing one’s sovereignty.

Turning our farmers into Crown Tenants, or, if they bridle at that term, into "Stewards" of the nation’s most treasured resources, would allow them to do what they do best: grow protein. Rather than farming for capital gain they could, once again, farm to feed a hungry world.

And to China’s inevitable protests our response should be:

"As a people, you have known the humiliation of being brought low by foreigners, but also the exhilaration of rising, proudly, to your feet.

"We are happy to be China’s farmers – but we will not be her peasants."

This essay was originally published in The Dominion Post, The Timaru Herald, The Taranaki Daily News, The Otago Daily Times and The Greymouth Evening Star of Friday, 28 May 2010.

Paying The Ransom - Again

The rich aren't like us - they get bigger tax cuts.

WE’VE BEEN FED the same message for twenty-five years. Over and over again it’s been stuffed down our throats: "The Rich aren't like us. They have different needs. They follow different rules. They require different incentives." And if we’re all feeling just a little bit queasy this morning, it’s because we’ve been forced to swallow that same bilious stew of self-serving lies all over again.

There were moments when I thought John Key was a different kind of National Prime Minister. Times when I actually believed that the combination of a childhood lived under the protection of the Welfare State, and an adulthood spent accumulating enough wealth to snap his fingers at National’s paymasters, had produced something new on the Right: a genuinely compassionate conservative.

But, no. Mr Key has proved himself to be just another shill for selfishness and greed: just another defender of privilege and plutocracy.

Earlier in the week he was urging us not to react jealously, or enviously, to a Budget which has poured millions of dollars into the pockets of the people who deserve it least, while raising the living costs of those families most in need of relief.

"We can be envious about these things", purred the Prime Minister, "but without those people in our economy all the rest of us will either have less people paying tax or fundamentally less services that they provide."

Thus does the Prime Minister pass on to us the contents of the ransom note delivered to him by this country’s wealthiest citizens.

Translated into plain English, it reads: "We’ve got your economic system under our control. Hand over hundreds of millions of dollars – or your helpless little economy will be made to suffer, and you’ll never see Prosperity again."

And last night, Bill English paid up – just as every other Finance Minister has been forced to pay up since the 1980s.

It was a bad move then and it’s still a bad move. Negotiating with economic terrorists is as craven and foolish as negotiating with any other kind. Because once they realise you’re willing to pay for their co-operation, they will hold your economy to ransom again, and again, and again.

Of course Mr Key has attempted to paint the primary beneficiaries of Mr English’s "tax package" as good, hard-working professionals: "Those who pay the top personal rate fit into some of the core critical categories for our economy. They include doctors, entrepreneurs often, scientists, engineers, lawyers, accountants, school principals, nurses".

Well, no, actually. While it’s true to say that a great many professional people are on or slightly above the top rate, they are not the tax package’s primary beneficiaries. At best, most of the people Mr Key cites will benefit from Mr English’s largesse to the tune of about $40 per week. Of that about $20 will be swallowed up by the increase in GST, leaving them just $20 per week better off. Subtract the increases in most people’s ACC levy and these hard-working professionals might end up with an extra $10-$15 per week. Wow.

But even "generosity" on this paltry scale must be paid for by someone. Our public health system is about to suffer the death of a thousand cuts. Our universities will be forced to turn away more and more young New Zealanders. Our prisons will become ever more squalid – and dangerous – repositories for the victims of an economic system which has, for the umpteenth time, been unfairly skewed in favour of the Rich.

Perhaps it would all be bearable if, in return for the extra $300-$500 per week we’re allowing them to keep, our captains of industry, financial wizards and heroic entrepreneurs would guarantee the "step-change" this country so desperately needs.

But if History is any guide, that’s not what we will get. If History’s any guide, we’ll just see more of our industries fall into the hands of foreigners; more "Mum & Dad" investors lose their life’s savings; more holes in the ground; more half-finished palaces; more angry denials of any and all social responsibility.

And why, in God’s name, would we expect anything else? The Rich did not get rich by giving – but by taking. It’s what they do. It’s all they’ve ever done.

And until we stop meeting their demands – they’ll go on doing it.

This essay was originally published in The Timaru Herald, The Taranaki Daily News, The Otago Daily Times and The Greymouth Evening Star of Friday, 21 May 2010.

Impasse

Stalemate: New Zealand can move neither forwards, nor backwards, and yet it cannot stand still forever - but try telling New Zealanders that!

NEW ZEALAND stands at an impasse. Though New Zealanders’ deep-seated desire to break free of the economic and social constraints in which they find themselves remains undiminished, fears are growing that escape is no longer possible. At every turn, arguments for change are met with counter-arguments for doing nothing. For every bold step the National-led Government takes forward, it then takes two cautious steps to the side. Pundits mutter darkly of "government by opinion poll" and lament the lack of "strong leadership". New Zealand has stalled – and refuses to be re-started.

New Zealanders’ reactions to this impasse vary. The business community, for example, shows every sign of being in a state of denial. Confidence surveys reveal a wild optimism almost entirely lacking in evidentiary justification. Most economists agree that economic recovery – where it is happening at all – is occurring at a snail’s pace, and that there is significant risk of a second downturn. When required to focus exclusively on their own firms, most business-people share the experts’ pessimism. But ask them to pronounce on the prospects for the nation as a whole and what can only be described as "magical thinking" takes over.

It’s as if they cannot – or will not – allow themselves to entertain the thought that "their" Government is economically out of its depth, bereft of credible policies and drifting ineffectually on the unpredictable currents of public opinion. Rather than admit such a crushing dénouement to their hopes and dreams they’re attempting to will an unequivocal economic recovery into being through the collective projection of positive thinking.

But if the country’s business-people are wildly and unreasonably optimistic, its trade union movement is mired in a state of industrial and political passivity without precedent in New Zealand’s recent history. While the CTU’s fraternal peak organisations in Greece and France pour workers onto the streets in loud protest at their respective governments’ retrenchment policies, their Kiwi counterpart seems to have forgotten how.

Like the business community, the CTU is also in denial. Rather than admit its cowardly failure to defend trade unionism in the face of the 1991 Employment Contracts Bill – an admission that would at least allow it to "move on" from its current passivity to a more assertive stance – the CTU doggedly continues to repress its shameful historical memories.

The moral and organisational inertia created by this repression is manifested in the anti-democratic control-freakery and addiction to process that distinguishes today’s trade union leaders from the militant battlers of the past. In this respect, at least, the industrial wing of the labour movement is in perfect harmony with the political wing.

Ever since New Zealand became an unwilling host to the neoliberal army that ideologically occupied its intellectual landscape 25 years ago, both the CTU leadership and the Labour Party’s parliamentary wing have adapted themselves more-or-less willingly to life in the Occupation’s "Green Zone". The implementation of neoliberal policies in New Zealand’s workplaces and homes would’ve been next to impossible without the Labour Movement’s active collaboration.

"Waitakere Man" – the aspirational working-class battler who deserted Labour in the 2008 General Election – is almost entirely the product of this betrayal. Denied the opportunity to fight for his class through union and party, he has – since the debacle of "Rogernomics" – learned to fight for himself and his family alone. The diminished ideological horizons of this struggle have produced a corresponding diminution in the scope of his political engagement. Matters that impinge upon him and his family directly – interest rates, taxes, crime, healthcare costs and the education of his children – have retained their political salience. Those that do not have not.

For younger workers with no memories of New Zealand’s solidaristic and collectivist past, the narrow individualism which neoliberalism enforces is simply the norm. And yet, like their parents and grandparents, they also feel the loss of the worker-friendly economic order that neoliberalism swept away. Like the itch in an amputated arm, it bears witness to something that no longer exists – and that absence is resented.

Labour has yet to grasp the way in which Waitakere Man’s resentment is being played out politically – as punishment. It simply can’t understand why more and more "Labour people" are willing to cut off their noses to spite what they see as their erstwhile Party’s supercilious and unrepentant face.

Middle-class New Zealanders are also at an impasse.

Though not averse to the fundamental principles of the new economic order (which were, above all, the bourgeois principles of private enterprise and individual responsibility) they are nevertheless struggling to accommodate Neoliberalism’s practical consequences.

The social pathologies generated by burgeoning inequality are forcing middle-class people all across the Western World to embrace harsher and harsher methods of social control. It’s only recently begun to dawn on them, however, that these hard-line "solutions" necessarily entail the surrender of the moral and political foundations upon which bourgeois culture ultimately rests.

Increasingly, the progressive and humanitarian achievements of middle-class reformers in the 19th and 20th centuries are being challenged by extreme neoliberals touting remedies (like torture) which pre-date the era of bourgeois democracy.

That neoliberal and democratic values may not, in the end, be compatible is a frightening thought – but not as frightening as the sort of measures decent middle-class people will eventually be forced to condone once the cords of democratic accountability are severed.

Not surprisingly, these are prospects few middle-class New Zealanders are ready to contemplate. They, too, are in denial.

And thus we come to the very heart of the impasse in which New Zealand finds itself. We long to rid ourselves of the economic and social constraints that have steadily shrunk the space in which individual liberty can be meaningfully exercised, but we are not yet ready to accept that the origin of these constraints is the very neoliberal order we embraced more than a quarter-century ago to expand our freedom. That’s hardly surprising: who, after all, relishes confronting a difficulty without a solution? Or participating in an argument where no agreement is possible?

"The crisis", wrote the Italian socialist, Antonio Gramsci, "consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear."

Thus is the impasse defined. Though "morbid symptoms" are driving our politics, we find ourselves both unable and unwilling to treat them.

This essay was originally published in The Independent of Thursday, 15 April 2010.

Justifying Progressive Taxation

About time Atlas shrugged? The creator of this 19th Century political cartoon had no difficulty in identifying who carries who in capitalist society. Ayn Rand notwithstanding, it is the countless millions of proletarian Atlases who prevent Capitalism's world from sinking. Progressive taxation is the price the capitalists' pay for keeping their feet dry.

IT’S ALREADY BEGUN – the wealthiest New Zealanders and their hired guns are already laying down a curtain of covering fire for what looks like being the most inequitable Budget since 1991. The report of the hand-picked Tax Working Group has already (and very predictably) recommended a reduction in the top marginal tax rate from 38 to 30 percent – to be paid for by an increase in the rate of GST from 12.5 to 15 percent. And to head-off the inevitable protests from the Left, the editors, journalists and columnists of the Right are already casting (here and here) the objections of the nation’s "progressives" as manifestations of "the politics of envy" and plain, old-fashioned class hostility.

And they’re winning.

Most left-wingers simply assume that "progressive taxation" – the more income you receive, the more tax you must pay – requires little or nothing in the way of economic or philosophical justification. It is simply presented as "a good thing" – like Motherhood and Apple Pie. If its defenders feel at all obliged to justify the fact that 44 percent of income tax receipts are extracted from just 10 percent of the tax-paying population, they do so by pointing out that this same group of taxpayers controls more than half the nation’s wealth. If their incomes weren’t redistributed by means of progressive taxation, the say, our society would rapidly become even more unequal than it is at present.

But, once again, the Left is assuming that everybody, like themselves, looks upon inequality as "a bad thing" – something which, if it can’t be entirely eliminated, must be ameliorated to the maximum extent possible.

But is this true? Do the wealthiest layers of our society, and those who aspire to join their ranks, really believe all human-beings are equal? Or that our society should be organised to give every one in it "a fair go"?

In my opinion, the answer to that question is: "No – they don’t." Reading the columns and blogs of the Right’s leading apologists, I get the distinct impression that the doctrines of Social Darwinism command a considerable following in this country. Just consider the reaction elicited by Social Welfare Minister, Paula Bennett, whenever she exposes the worst excesses of the beneficiary class. Think about the widespread support for Anne Tolley’s campaign to impose a test-based "standards" regime on our educational system – a policy which the upper and middle classes instinctively recognise as likely to rebound to their social and economic advantage.

No. I don’t think all New Zealanders view inequality as "a bad thing". Not at all. Not by a long shot.

The Left needs to ask itself how the notion of "the more you earn, the more you pay" ever got established. How were the upper and middle classes of modern capitalist societies ever persuaded to go along with fiscal policies so manifestly designed to limit both their wealth and their power?

The answers might surprise them.

For a start there was the enormous moral and social force of the Judeo-Christian and Islamic religious traditions. The Jewish prophets reserved their most devastating condemnations for those who refused to share their wealth with the poor; who "ground the faces of the widows and orphans". Jesus famously declared that it was "easier for a camel to pass through the eye of the needle, than for a rich man to enter the Kingdom of Heaven". Philanthropy was similarly mandated by the Prophet Mohammed – all Muslims are required to contribute to the maintenance of the poor.

In an irreligious age, and in a nation as secularised as New Zealand, it is easy to forget that, in the past, conformity with these moral precepts was a condition for the salvation of one’s immortal soul. Jewish, Christian and Islamic culture expected people to turn over a significant portion of their wealth to their less fortunate brethren. After all, to see oneself as a child of God more or less mandates a belief in equality and fraternity: if God is our father, then we are all brothers and sisters.

These fundamentally religious precepts flowed naturally into the secular faiths of democracy and socialism.

The French Revolution struck down the notion that inherited privilege had any legitimate role to play in the modern age. The new capitalist wealth, however, was earned. In stark contrast to the wealth of the aristocracy, argued the bourgeois revolutionaries, the capitalist’s profits were the product of individual wit and energy and, therefore, manifestations of democracy.

Classical Marxism dispelled this notion with a vengeance, imbuing wealth with the same moral taint as the teachings of Jesus, Mohammed and the Old Testament prophets. According to Das Kapital, the capitalists appropriated the "surplus value" of their worker’s labour in the form of profit – exploiting the new industrial proletariat no less ruthlessly than their predecessors, the feudal landlords, had exploited their serfs.

The progressive income tax was simply "social democracy’s" means of clawing back the proletariat’s pilfered sweat and talent. Not for nothing was the second of Marx & Engels’ ten demands in The Communist Manifesto: "A heavy progressive or graduated income tax".

The Right, at least, recognises the revolutionary political, social and economic objectives behind the institution of progressive taxation, even as it rejects and denies the religious and/or ethical justifications for its imposition.

In the months ahead, New Zealand’s left-wingers will have to learn once again what their parents and grandparents came to grasp only after long struggle and bitter experience: that equality and social justice are never simply given; they must be fought for – and won.　

Holiday Message

Ideological Statement: Imposing a "public holiday" surcharge on cafe customers is a political - not a commercial - decision.

IT’S the little things that tell the larger stories; the details which make up the big picture.

How many times over the holiday period have you seen those irritating notices posted on the doors and windows of restaurants and cafes, informing you that a 15-20 percent "surcharge" will be added to your purchases because of the Holidays Act?

I don’t know about you, but whenever I see such a notice, I turn on my heel and go in search of an alternative eatery. According to the vast majority of restaurateurs and cafe-owners who don’t impose these surcharges, it’s what most people do.

So, what’s the point? Why post these notices; why go to the trouble and expense of printing up a special menu; if, as likely as not, all it does is drive potential customers out of your establishment and into one of your competitors? Does the surcharge cover the cost of your lost trade? Probably not. Does it contribute to your enterprise’s store of goodwill? Definitely not. So, why do it?

The answer, of course, is ideological. It’s all about politics.

The intelligent - and economically rational - course of action for any proprietor operating in the hospitality industry is obvious. The entirely predictable cost of hiring workers to operate a business on statutory holidays can be very simply factored into its overall cost structure, and recovered over the course of the financial year.

But, if one’s principal objective is to make an ideological statement, then absorbing the extra cost of operating during the holiday season is entirely the wrong way to go.

You want people to think about the payment of time-and-a-half to your employees. You want people to question the necessity of giving them a day-in-lieu for working on a public holiday. Making them pay an extra 15-20 percent for their Eggs Benedict and Flat White is your way of making them share your anger. You want them to fuss and grumble while they’re waiting for their order - and scowl at the waitress when she delivers it.

But to what purpose?

Simple. You wish to make it clear to your customers that, as far as you’re concerned, how much your employees are paid, their conditions of employment, and the number of hours they’re contracted to work are matters to be negotiated between you and them - and nobody else.

You want your customers to know exactly how you feel about the state sticking its nose into what, for you, is a private business relationship. The cost of labour, and the terms and conditions under which it is bought and sold is something for market participants to decide - not politicians.

And that’s what the surcharge achieves: it registers how deeply the hospitality industry resents this sort of heavy-handed government intervention in the operation of private business enterprises. If it requires a little lost trade to make the point - then so be it.

There are, of course, two things very wrong with this picture.

The first is that, in spite of all the protestations to the contrary by laissez-faire capitalist economists, the employment relationship is not an equal one.

People do not sell their labour unless they have to. Most of the things we do - from cooking the evening meal to reading our children a bedtime story - are done without thought of payment. We engage in paid labour only in order to live. Which is why those with the power to offer or withhold paid employment always enjoy an advantage over those who come asking for a wage.

The second thing is that, in the hospitality industry’s picture, human-beings become means to an end - mere instruments of its will. People are torn from their social context and stripped of every human attribute not immediately useful to their employer. They’re no longer members of families. The lives they lead outside working-hours count for nothing. They’re just units of labour: expendable, interchangeable, and worth only what the market dictates.

A world in which people become means, rather than ends, is a world become suddenly unsafe for everything that contributes to a truly human civilisation.

Those who give notice of a holiday surcharge might as well hoist the plague-flag above their business. Their greed has become a sickness.

Take care not to become infected - stay away.

This essay was originally published in The Dominion Post, The Timaru Herald, The Taranaki Daily News, The Otago Daily Times and The Greymouth Evening Star of Friday, 8 January 2010.

Reality Check

Saving Capitalism from itself: The global economy was rescued not by the actions of private individuals and corporations, but by the collective wealth of the planet's peoples.

SO, THAT WAS 2009? A peculiar year – both here in New Zealand and around the world. A year in which the economic and social theories which have governed our lives for the past quarter-century continued to hold sway, even though their fundamental premises were daily contradicted by reality.

A year of denial, then, for local and global elites. And, because elite opinion – undivided and unchallenged – is transferred to us by an increasingly under-resourced news media, a year in which the ordinary person’s grasp of what is actually happening "out there" has become correspondingly tenuous.

For the world’s neoliberals 2009 has also been a very confusing year. Why? Because politicians in the world’s leading financial and industrial powers – the United States, China, Japan, Germany, France and Britain – only succeeded in rescuing the capitalist system by adopting precisely those economic strategies which neoliberalism has consistently denounced: massive state intervention; printing money; and running-up colossal deficits.

It was precisely the failure of 1930s politicians to adopt such remedies that plunged the world into the Great Depression. Neoliberals, however, have long argued that it was President Franklin Roosevelt’s economic interventions and his administration’s deficit-spending that turned a momentary market "correction" into a world-wide slump.

Reviewing the events of 2007-2009, however, it’s crystal clear that only the timely and virtually unlimited underwriting of the international financial system by the world’s most powerful nation-states prevented its utter collapse; and only the unstinting expenditure of trillions of Dollars, Yuan, Euros and Yen has averted another Great Depression.

In other words: we have been saved not by the actions of private individuals and corporations, but by the collective wealth of the planet’s peoples; and that, when it comes to making intelligent economic decisions, the performance of the world’s politicians and bureaucrats has proved to be far superior to that of its business leaders.

These brute facts should be transforming the way the world is run – but they’re not. In spite of the crisis of the past two years being almost entirely attributable to the greed and recklessness of capitalism’s "best and brightest", the message promulgated by the world’s elites is unequivocal: this is the best of all possible worlds; no change is necessary; business as usual.

It’s the unceasing reiteration of these extraordinarily dangerous – because utterly false – reassurances that explains the unprecedented popularity of John Key’s Government.

It can’t last, of course.

The world’s leading nation states must rebuild their revenues, and quickly, or their own financial situation will become as untenable as Lehman Brothers’.

In the past (to underwrite the extraordinary expenditures required during World War II, for example) this was accomplished by imposing higher taxes on the nation’s wealthiest individuals and corporations and by encouraging ordinary citizens to save more.

In the current climate, however, such a solution is unlikely. After all, it was the roll-back and ultimate elimination of precisely these kinds of social-democratic interventions that neoliberalism was devised to accomplish.

The alternative approach involves governments restoring their financial stability by imposing swingeing cuts in public spending, reducing the wages of public employees, and making the whole population pay higher taxes.

This is exactly the solution which the leading credit-rating agencies (yes, the very same agencies whose triple-A rating of manifestly deficient credit instruments fuelled the global financial crisis) are asking the world’s politicians to impose upon their peoples. It’s the "solution" America’s ruling elites expect President Barack Obama to impose on the American people, and it’s almost certainly what Mr Key and Finance Minister, Bill English, have planned for New Zealanders in 2010.

Worse still, it looks increasingly likely that the National-led Government will be prevailed upon to slash the top marginal income-tax rate from 38 to 30 percent – even as it raises the rate of GST from 12.5 to 15 percent. This will, of course, confer a huge windfall upon the country’s wealthiest citizens, while lowering still further the already declining incomes of its poorest.

The result will be another, much sharper, economic contraction: higher unemployment; rising poverty; and decreasing social cohesion. And, even though they’ve just persuaded the Government to intervene decisively on behalf the wealthy, the neoliberals will insist that the poor be left to fend for themselves.

Amazingly, as 2009 draws to its close, most New Zealanders are anticipating none of this.

"Happy New Year!" we cry.

It won’t be.

This essay was originally published in The Timaru Herald, The Taranaki Daily News, The Otago Daily Times and The Greymouth Evening Star of Friday, 1 January 2010.