Winston’s Dream Can Only Be Realised By Putting New Zealand Second.

Zealandia Redux? What Winston Peters and his party now have to decide, is whether transforming their homeland into an economic, political and cultural colony of the People’s Republic of China was what they meant when they promised to put New Zealand first.

WHAT DOES NZ FIRST WANT? More than anything else, NZ First and its leader, Winston Peters, would like to reconstruct the New Zealand economy of the 1950s and 60s. These were years of extraordinary economic and social progress, during which more and more New Zealanders were lifted into relative affluence. The country’s infrastructure (especially its hydro-electric energy generation capacity) was similarly enhanced. NZ First’s desire to replicate this success is, therefore, commendable. But, is it possible? In a world so very different from the one that emerged from World War II, is it reasonable to suppose that the remedies of ‘Then’ are applicable – or even available – ‘Now’?

At the end of World War II the United States of America stood completely unchallenged: militarily, economically and culturally it was without peer. The American mainland remained untouched by the fascist enemy; its factories were geared to levels of production without parallel in human history; and the sophistication of its science, which had bequeathed to the world both cheap antibiotics and the atomic bomb, promised a future of unbounded promise – and unprecedented peril.

Accounting for half the world’s production and nearly two-thirds of its wealth, the United States nevertheless faced a problem. If the rest of humanity was not to slide into the most wretched poverty and, once again, fall prey to the purveyors of extreme political ideologies, then it would have to be given the wherewithal to lift itself up into prosperity. Except that, when the Americans spoke of humanity, they were not really thinking of the human-beings who lived in the Soviet Union, or civil-war-ravaged China, or in the vast continent of Africa. It was in the rehabilitation of the peoples of Europe, South America and Australasia that the USA was most interested.

New Zealand, also materially unscathed by the ravages of war, was ideally positioned to benefit from the Americans’ self-interested altruism. The United Kingdom constituted an insatiable market for this country’s agricultural products, and the United States made sure its enfeebled British ally received sufficient cash to go on buying (among other things) all the butter, cheese, lamb and wool New Zealand could send it. It was an arrangement which very quickly transformed New Zealand into one of the wealthiest nations on earth.

Sixty-five years on from the fat 1950s, however, the world is a very different place. Europe and Japan rebuilt themselves, and the USA’s effortless hegemony became harder and harder to sustain. In lifting its own people, and much of the rest of the world, out of poverty, American capitalism had facilitated the rise of powerful working-classes in all the major Western nation-states. They had created increasingly self-conscious and militant labour movements which, if not tamed, would soon be in a position to transition their societies out of capitalism and into a new, post-capitalist, form of economic and social organisation.

The world currently inhabited by New Zealanders reflects the self-defensive policies set in motion by the ruling classes of the leading capitalist nations in the mid-to-late 1970s – the period of Capitalism’s maximum danger. Perhaps the most important of these policies involved the integration of the populations of the Soviet Union and China into what was intended to become, as soon as they were brought safely under its influence, a truly global capitalist economy. Against such a massive expansion in the supply of cheap labour, the working-classes of the West stood no chance. The golden age of post-war social-democracy – the age which Winston Peters and NZ First would so like to re-create – was at an end.

Or was it? The Chinese Communist Party’s embrace of “Socialism – with Chinese  characteristics” (a.k.a State Capitalism) following the death of Mao Zedong, not only assisted China’s integration into the global capitalist economy, but unleashed pent-up forces of commercial dynamism which, in the space of just 40 years, transformed China into an economic behemoth. It is now China which offers New Zealand an insatiable market for its agricultural products. Indeed, so constant is Chinese demand for New Zealand exports that the same level of state-sponsored economic and social uplift which characterised this country in the 1950s and 60s is, once again, becoming a possibility. But only under Chinese hegemony.

What Winston Peters and his party now have to decide, is whether transforming their homeland into an economic, political and cultural colony of the People’s Republic of China was what they meant when they promised to put New Zealand first.

This essay was originally posted on The Daily Blog of Thursday, 19 October 2017.

Adults In The Room?

Meet The Old New Boss: Sir Michael Cullen's snow-white head of hair is clearly visible as Labour's negotiating team prepare to meet waiting journalists after their preliminary meeting with the negotiators for NZ First. The presence of so many former members of and advisers to the government of Helen Clark in Jacinda's entourage raises some troubling questions. When Labour's new leader talked about ushering in “generational change”, most New Zealanders fondly assumed that she was committed to taking their country forward – not back.

WHAT’S GOING ON, JACINDA? Why has the former Labour Finance Minister, Sir Michael Cullen, and Helen Clark’s former Press Secretary, Mike Munro, been invited on to your team of negotiators with NZ First? And, while we’re on the subject of Labour’s Rogernomics Generation, why was Annette King sent to ride shotgun alongside you for the duration of the election campaign?

These are important questions, because when Jacinda talked about ushering in “generational change”, most New Zealanders fondly assumed that she was committed to taking their country forward – not back.

The other assumption New Zealand made, as the baton of leadership passed from Andrew to Jacinda, was that she was completely up to the job of carrying it without assistance. We made precisely the same assumption about her senior team’s readiness to govern the country without “adult supervision”.

The September newsletter from “Positive Money” (a group dedicated to creating “a money and banking system that serves a fair, democratic, and sustainable economy”) may, however, give many Labour supporters cause to wonder whether any of those assumptions were justified.

In the newsletter, two of Positive Money’s stalwarts, Don Richards and Sue Hamill, describe a “surprising and somewhat disappointing” exchange of views with Sir Michael Cullen at an election meeting in Whakatane on Friday, 15 September:

“Sir Michael, the former Labour Finance Minister during the Helen Clark-led government was with Grant Robertson, the Labour Party’s current Finance spokesperson and Kiri Allan, our local Labour Party candidate.

I asked Grant Robertson if he was aware of what was happening in Japan with the Central Bank buying up a significant portion of their national debt. Inflation in Japan was close to zero and the real economy was thriving. Had he considered instructing the Reserve Bank to do the same, thereby saving taxpayers money for social and infrastructure projects?

Grant asked Sir Michael to answer the question and he said that Japan had been experiencing negative growth for some time and so the two economies were not similar. I reminded Sir Michael that the Japanese economy was now thriving and the Central Bank was still buying up their national debt. I was told that a Labour government would not be doing that.

Sue then asked Grant Robertson if he had thought about doing what the first Labour Government did in the 1930s, using the Reserve Bank’s balance sheet to fund the building of housing and infrastructure? The question received a few claps from the audience.

Sir Michael once again fielded the question. He said that we had to be fiscally responsible otherwise we could end up with an economy like Germany after World War One, Venezuela or Zimbabwe. Sue carried on with a second question stating that as private banks create most of the money in the economy, why not let the Reserve Bank do it as well. Sir Michael responded by saying the banks do not create money.

The meeting finished with an invitation to meet at a local café for a chat. We went home and printed off the Bank of England’s article and the IMF’s discussion paper that stated categorically that banks create money in the act of lending. Sue went back to the café and had a further conversation with Sir Michael. He dismissed the Bank of England paper as not relevant and that it did not mean that banks created money. He also dismissed the IMF paper saying that banks lend out people’s savings.

It was a frustrating experience and if Sir Michael has the ear of Grant Robertson, as he appears to have, then no difference will be made to the way our money is created, should the Labour Party come to power.”

When Richard’s and Sue’s report of this encounter was drawn to my attention, I responded with the following comment:

“That is the most alarming piece of intelligence I have received in the entire course of the 2017 election campaign. It is hard to distinguish which is the most dispiriting aspect of [the] report: that Grant Robertson cannot answer basic questions on political economy without reference to his mentor, Sir Michael Cullen; or, that Sir Michael’s grasp of these issues is as woeful as Don Brash’s (who also refuses to accept that banks create money). If this truly is the level of understanding in Labour's senior ranks, then we are all - to use a technical political science term - fucked.”

This essay was originally posted on The Daily Blog of Saturday, 7 October 2017.