Rankin File: Short Items
© 1998Keith Rankin
Coalition Building (14 June)
A More Unequal Society? (13 June)
On Breaking-Up Electricorp (10 June)
Jenny Shipley: Bulldozer or Democrat? (9 June)
Looking after the "Intellectual All Blacks" (7 June)
Act in Tauranga (6 June)
A New Mood at Moody's (5 June)
Three Ways of Contributing to Society (4 June)
The Electronic Labyrinth (3 June)
Coalition Building(14 June)
The success of Pauline Hanson's "One Nation" party in Queensland serves to remind us of the unstable populist element in New Zealand politics. Thanks to traditional confrontational first-past-the-post attitudes to coalition building, a successful populist party is likely to go straight into government. While that is not necessarily a bad thing, there are likely to be other coalitions of the centre that the public would prefer.
Given the five percent party threshold, it is likely that future parliaments will be dominated by five or six parties: National, Labour, a party to the left of Labour, a party to the right of Act, and a populist party. Possibly also a Green party closely aligned with the left.
I suggest that the voting public would like our parties to follow the following rules when forming a Government:
A vote for the centre requires a government of the centre that uses most of our best political talent, working together. And populist parties can be very effective in Opposition.
For reasons relating to the experience of New Zealand First, there may be no significant populist party in 1999. The populist vote will probably split between the Alliance and Act. But I'll bet that there will be a significant populist party contesting the 2002 election; perhaps a "One New Zealand" Party.
Now is the time for Labour and National to contemplate the circumstances in which they would form a coalition government.
A More Unequal Society?(13 June)
There are those who will deny that the neoliberal reform program has created more inequality. One is Reserve Bank Governor Donald Brash, in his recent London speech (ref. "A New Mood at Moody's"). His point, reported in the "Loose Change" column of the Sunday Star-Times (7 June 1998), is that "those rich before the reforms were not made richer by them".
Dr Brash is probably right. Many people who embraced the reforms and saw themselves becoming very rich very quickly in 1985-87 fell down with the subsequent crash in the sharemarket and the commercial property market. The reforms were intended to make the rich richer; they were strongly supported by business organisations with that end in view. The fact that they failed to make all the rich richer does not make those who were not rich, who were intended to be restructured (and were restructured), feel any better.
In fact, while the reforms may not have done much for the mean rich person in 1984, they did create a capital friendly environment which boosted the wealth of those of the old rich who did not make foolish investments, and they created many new rich. The new environment was one of commercial opportunism rather than optimism.
There is now more likelihood that rich people will not stay rich. And there is more likelihood that people from middle-income strata will become rich, if they keep their heads down. It is probably harder than ever for people from poor backgrounds to become rich. And it's pretty hard for those who openly question the commercialisation process to become comfortable, let alone rich.
The real way to measure inequality is by measuring the average wealth and income in rich neighbourhoods, and contrasting that with averages in poor neighbourhoods.
Census data in the 1990s clearly shows that inequality has increased in ways that were not happening in the 1960s and 1970s. As well as huge differences between neighbourhoods, there are massive differences between generations, with today's young being particularly disadvantaged.
In the 1960s and 1970s, inequality was between men and women, reflecting distinctly different gender roles. Differences within demographic groups were relatively small. Now men and women are much less unequal, incomewise, whereas almost all groups show a huge increase in inequality. Women are less equal compared to other women, men less equal compared to other men, Maoris less equal compared to other Maoris, young adults are less equal compared to other young adults, and so on.
The mere fact that there is more income mobility within each group does not refute the basic thesis that the neoliberal reform program has created a great deal of inequality. It simply means that we have more insecurity as well as more poverty.
On Breaking-Up Electricorp(10 June)
The proposal to split Electricorp New Zealand into three competing bulk power supply companies is passing through "committee stage" in Parliament. This proposal is the baby of Max Bradford, Minister of Energy, and one of the far right "Gang of Four" in Cabinet (John Luxton, Maurice Williamson, Max Bradford, Lockwood Smith).
This is not a proposal to privatise Electricorp, although it makes sense to see it as a preparatory step in that direction. However, I have a more fundamental disagreement.
The philosophy of "more competition" is based on the ideal of "consumer sovereignty". (When most of the discretionary spending in concentrated in the relatively few hands of the rich, consumer sovereignty is not far removed from the concept of the sovereignty of the wealthy. But we will let that point pass for now.)
The consumer ideal is that the benefits of economic growth are passed onto consumer citizens. However, under public ownership, the profits are paid to the same citizens, this time in their capacity as shareholders rather than as customers. All introducing more competition appears to do is to redistribute income from citizens to citizens, with citizens who use less electricity becoming worse off while citizens who use more electricity become better off.
There are two problems.
First, the total market value of the three enterprises is expected to fall markedly, meaning that total profits will fall. The government has substantially marked down the value of its electricity generating assets in the anticipation of this reform. The gains to consumers, on the other hand are moot. There is no hard evidence that electricity prices will fall. It seems more likely that the consumer gains will be swallowed by the triplicate bureaucracy. (We have already been down this road with the Regional Health Authorities, and abandoned it on account of its bureaucratic expense.)
Any price cuts that do take place are likely to go to business customers, rather than to household consumers, who may end up paying more. This is in fact the real agenda. It is another attempt by organised business to externalise business costs; ie to make others pay business costs. This was the rationale of the 1991 Employment Contracts Act which ensured a significant redistribution of income from wage-earners and beneficiaries to shareholders, creditors, and executives. Likewise the pressure for income tax cuts is an ongoing attempt by big business to shift their costs. There's nothing ideological about this; it's simply profit maximisation, or, more strictly, the "rent-seeking" activity that has always accompanied minimally-regulated business.
The push for reduced business charges for electricity, at the expense of the public as shareholders, is an exercise in income redistribution. It has nothing to do with economic efficiency. At best, the exercise is a "zero-sum game" favouring rich New Zealanders over poor New Zealanders. More likely it is a negative-sum game, in which the losses to the present owners of our generation capacity far exceed gains to New Zealand businesses and New Zealand consumers.
There may also be some small net gains to foreign consumers buying products from New Zealand businesses. That's OK, especially if the gains are reciprocated. But such gains will be small. The biggest gainers will be the shareholders and executives of the holding companies which own the companies which will get their power bills cut.
Jenny Shipley: Bulldozer or Democrat?(9 June)
I think it is true that many, perhaps most, New Zealanders are ambivalent about democracy, if not downright confused. As Ian Templeton says (Sunday-Star Times, 7 June 1998, p.C2),
"It is one of the curious ironies of New Zealand politics that New Zealanders hold politicians in such low regard, but a significant number, perhaps even a majority, believe the Government should 'run the country'."
We see our Prime Minister of six months - Jenny Shipley - remains very popular precisely because she has a reputation for being a political bulldozer, albeit a "perfumed bulldozer" as she is fondly regarded by supporters and detractors alike.
Yet I don't think she is a ruler by force, and I do think that she promotes consensus politics. I think that the New Zealand media have largely misread her. Like Robert Muldoon before her, she needs the votes of the people who want someone to "run the country" for them, which, to them, basically means dealing forcefully to "trouble-makers" (be it coalition partners, whinging school-teachers, or conspiratorial businessmen).
I have seen no sign of a "lurch to the right" since she took office. She seems to be more than happy to see the pet projects of her right-wing colleagues exposed to widespread public scrutiny, knowing that coalition governments are more sensitive to public disquiet than were single-party governments. The quality of debate - inside and outside of Parliament - about the issues we face has not been great, but that's no fault of the Prime Minister.
Jenny Shipley is a conservative; there's no doubt about that. She believes in the work ethic, in the virtues of thrift, and in the nuclear family. But she's no ideologue, and I don't believe that she acts for the business community in ways that some of her colleagues transparently do. She's a pragmatist; a female Muldoon, or even a Seddon. She believes that society is something more than a set of individuals. She is willing to accept diverse forms of work as contributing to society, diverse forms of thrift, and diversity in our families (so long as families remain the central institution of our society).
Mrs Shipley is a democrat with the image of a bulldozer. Given New Zealand's peculiar political culture, that's a recipe for greatness. Given a sobriety that Muldoon lacked, it could be a recipe for longevity; not necessarily continuous power, but a dominant presence until well into the 2010s. It's not a prospect that concerns me. While I might disagree with her on any number of issues, I trust her as a democrat. And I trust her as a politician astute enough to galvanise widespread political support through personifying different qualities to different people.
Looking after the "Intellectual All Blacks"(7 June)
"Highly educated, honed, trained to an edge, Dr Glenn Vile , ... when he isn't passing around the hat, spends his time at the Christchurch working on ultra-violet radiation and how it causes skin cancer. ... 'I can't spend [up to four months] every year just cobbling things together', he says. He has no career structure, no job security. Vile is sick of being the optimist who takes his lunch to work. At 35, he [and his family] are moving to Marlborough ... to grow olives for a living."
The All Blacks are icons of New Zealand; cultural ambassadors and all that. They are much more than a sports team, and I laud them for their success at promoting New Zealand.
When I was at school, success came in two forms; the sporting dux, and the academic dux. Our top schools look forward to their sporting duxes becoming New Zealand representatives, in cricket, soccer, hockey or netball if not rugby. And they dine out on the sporting achievements of their "old boys".
But what about the academic duxes? We kind of assume that they will be successful, but without realising what success means for such people. We sort-of kind-of expect them to become leading businesspersons, managers, doctors, lawyers, bureaucrats.
But academic excellence is not required to reach the top of these professions; rather success (equated to wealth) comes from business nous, the profit motive, ego, getting the right breaks, and not rocking the boats of national politics and professional jealousy until the trappings of success have been achieved.
The academic All Blacks are not creatures of the market. Rather, they work in the public domain: as scientists, researchers, university lecturers, writers. It is in the public domains of our capitalist societies that they can best express their creative and technical skills. Gifted persons naturally seek to use their gifts to serve the public good, while expecting to be able to live normal poverty-free private lives; eg have families, own houses, buy lunch.
People with advanced academic capability are not commodities, are not simply dollops of "human capital", are often not good at selling themselves, are often misunderstood by the people imbued in market culture who they have to sell themselves to, and tend not to see any point in spending time fundraising when there are plenty of other people better suited to such activities.
It is not only "losers" who need the social support of the welfare state. Indeed, without public support for intellectual activity, our schools' academic winners simply bloat our emigration statistics.
Intellectual leadership is a precious public resource. Furthermore, the strength of a nation's economy depends more than ever on the activities of their academic "All Blacks". That need to foster our most intellectually accomplished people was a central claim made in an essay of mine (Ideas for New Zealand Industry) that was recently published in the Australian collection Manufacturing Prosperity; Ideas for Industry, Technology and Employment. And it is the central point of the Listener article (13 June) "No Future for Research", by Bruce Ansley.
We can all benefit from pride in and the work of our intellectual All Blacks, just as all except a few anti-sporting cynics feel good about the success of our rugby All Blacks. We don't have to know who they are - indeed intellectual All Blacks are often shy people. We just need to know that we are supporting our duxes to do well for us, instead of treating them as we used to (and in many cases still do) treat our accomplished amateur sportsmen and women. They should be working, not begging.
The All Blacks are simply a metaphor for the very best of the best. The public should of course be able to value and enjoy the benefits of a vibrant creative community, and not only the proven elite. For the All Blacks to be successful on a long-term basis, public support needs to filter through to the grass roots of the sporting world. Likewise, the intellectual community needs to be nourished and valued - as a national investment - at all levels from the grass roots to the proven elite.
Act in Tauranga(6 June)
The decision last week of Act's deputy leader, Ken Shirley, to move to Tauranga so as to stand against Winston Peters, will probably backfire. It will force National into a position of not contesting Tauranga, and hence of not standing candidates in any seats being contested by NZ First Ministers, and to not contesting the Maori seats. Winston Peters will become, in effect, the Government candidate for Tauranga. (See my comments from last year.)
I expect an agreement between National and NZ First re constituency candidates to come later this year, as a trade-off. NZ First will agree to relinquish its claim - part of the December 1996 coalition agreement - for additional seats in Cabinet.
In Australia, there is preferential voting in the constituencies. That means both coalition partners can afford to run candidates in each electorate, with each party of the coalition "giving its preferences" to the other.
New Zealand, on the other hand, has retained "first-past-the-post" voting; a system that only makes sense when there is a simple head-to-head contest between two candidates. Thus, the logic of our MMP/FPP system is for candidates of major parties - ie candidates who are likely to come third, fourth or fifth - to withdraw from the contest. We saw this quite dramatically in 1996 when the National candidate for Wellington Central was withdrawn in all but name.
This deal-making approach fits into New Zealand's political culture. In the first half of the century it was commonplace for non-Party candidates on the left or right to have no Labour or National opponent. (Harry Attwood in Nelson was a classic left-leaning Independent.) More recently, it reflects the culture of major party leadership elections.
In theory, the leaders of National and Labour are elected by exhaustive balloting; in effect a form of preferential voting. In practice, also-ran candidates withdraw before any formal balloting takes place. In today's world, media polling takes the place of the "numbers men" in the party machines.
So, I am sure that, in future (esp. from 2002), we will get both agreements within the left and the right to not stand high profile candidates against each other. And we will get many more late withdrawals than we are used to.
Commonsense suggests that the Tauranga contest will be between the NZ First and the Act candidates. And, in neighbouring Coromandel, the contest will be between the Green and the National candidates. Both Labour and the Alliance would be foolish to stand candidates against Jeannette Fitzsimons.
A New Mood at Moody's(5 June)
New Zealand has been put on notice by Moody's Investor Service, an international credit rating agency. The problem is New Zealand's huge balance of payments deficit, running at well over seven percent of GDP. The balance of payments problem is the same problem that precipitated the 1997 Asian crisis.
While the Asian crisis has contributed to New Zealand's problem, it is by no means the major cause. The problem, which dates back to the 1970s, has been escalating since 1995. It was already a very serious problem last year. The problem is closely linked to a history of overvalued currency since the dollar float of 1985. And it is closely linked to the 1989 Reserve Bank Act.
On Wednesday (3 June 1998) Reserve Bank Governor Don Brash spoke about the problem to a London audience. He identified two problems: a low national savings rate, and excessive capital imports (ie excessive and inappropriate foreign investment).
In fact, the problem of the low savings rate is a red herring; a dangerous diversion. Indeed, the Asian economies got into their economic pickle despite a high savings rate (as recently noted in an article - "The Vice of Thrift?" - in The Economist) and not because of low savings.
Dr Brash is spot on with respect to the most important cause, capital imports. Yet the New Zealand media have failed to pick up on this major about-face from the Bank Governor, and the Treasurer (Winston Peters), who has long had a hobby-horse about savings, has swallowed the herring. The mainstream news commentary still follows the line: we must save more so that we borrow less from overseas so that foreigners will lend more to us!! [PS] Believe it or not, that is a commonplace view; that we should borrow less from foreigners so that foreigners will lend us (ie invest in us) more.
The problem is largely self-correcting. The depreciation of the New Zealand dollar is a result of fewer foreigners lending us their money. Problem solved. The notice from Moody's is part of that solution; not part of the problem.
Now we will have to pay for our imports with our own earnings. Fortunately, with a lower exchange rate, that will now be possible. Look out for strong economic growth in New Zealand in 1999 and 2000. The only thing stopping strong growth will be new policies designed to force us to save more. We will save more, soon enough, after rather than before a rise in our incomes.
There is another worry. The rise in share prices in the United States, in the past resulting from growth and low interest rates, is now moving into a speculative phase, as US capital is repatriated. The situation in the USA in 1998 is very much a rerun of 1928, when capital that had been invested in Europe and Latin America was instead creating a bubble in Wall Street. Interestingly, the New Zealand economy was buoyant in 1929 and 1930, but the world crisis eventually intervened. [PPS]
PS [10 June] Quote from the NZ Listener "Creepbuster" by Gordon Campbell (13 June, p.35): "The National Party ideologues named by Geoff Thompson [party president] - [John] Luxton, [Maurice] Williamson and Lockwood Smith - do share a remarkably consistent worldview. Essentially this worldview holds that, in a global economy, capital will flow to those countries that most encourage trade."
Thus, in the neoliberal worldview, a country's success is its attractiveness to the savings of residents of other countries. Yet a country's failure is its balance of payments deficit which is no more than a measure of the net inflow of foreign savings into a country. Thus, a net inflow of foreign savings is, according to the neoliberals, both a key measure of success and a key measure of failure. [back]
[PPS] There are two important differences between 1999 and 1929, which lessen the chances of a world depression like that which began c.1929. First, floating exchange rates mean that the US is taking the rest of the world's exports, and second, 2000 is an election year, unlike 1930.
Three Ways of Contributing to Society(4 June)
Humankind is a social species, and is implicitly understood as being so by, I would guess, 95 percent of us. (The exceptions are the extreme individualist; the sort of people who go to bed with a copy of Ayn Rand under their pillows.)
The social good represents the "grand commons" of our species, meaning everything that is shared (eg resources, cultures, environments, institutions, infrastructures, science, ideas, ideals). We grow up with the innate belief that everyone must contribute in some way to the maintenance of the commons, suspecting - consciously or subconsciously - that if some are seen to not contribute (free-riding) then others may be tempted to free-ride also. Societies die when too many people become free-riders.
In Western and Confucian cultures - eg under the "Protestant Work Ethic" - the term "contribution" has come to be understood to mean "paid work". In reality, of course, there are other forms of contribution. In addition, much paid word does not contribute to any social ends, and may indeed be socially damaging while serving strictly individual ends.
For me, there are three broad categories of social contribution.
The first is socially responsible market production. Here, we must recognise that the contribution is the "net social product" arising from the work, and may be unrelated to the efforts, time sacrifices or wages of the paid workers. We should never regard market incomes as measures of contribution. Nor should we regard "income tax" as a measure of an individual's contribution to society. An individual who appropriates an excessive share of market income will be regarded as having paid more income tax than persons less able to claim large shares, but may have made a smaller net contribution.
The second form of social contribution is non-market production. This includes a whole range of unpaid activities that take place at global, national, local and household levels. Raising children is a particularly important example of a non-market contribution; an example that occurs on all four levels simultaneously. Each parent, through reproduction, is creating the future (paid and unpaid) workforce of the world.
The third form of contribution is "conservation", or "treading lightly". The purpose of social contribution is to maintain the integrity of the commons. One way to maintain that integrity is to adopt a lifestyle that, while not involving any form of measurable production, at the same time involves no destruction. Leaving the planet as we find it is a form of contribution.
Two cricket metaphors are apt here: "A run saved is a run gained", and "Dropped catches lose matches". Contribution through conservation [good fielding] is as important as contribution through production [batting]. And the socially negative by-products of indiscriminate market activity [dropped catches] tend to far exceed any negative impact arising from those conservers who add little to the commons that sustain us.
A welfare system that facilitates a balance of the three different forms of contribution is more valuable to human society than a system that forces everyone to contribute through just one of the three forms. Indeed, mass labour market participation may contribute even less, net, than mass idleness.
Variety is the spice of life. Variety of contribution is the means of safeguarding society.
The Electronic Labyrinth(3 June)
"The notion of a network appeals to those who are wary of hierarchical or linear models [of writing].... 'It has a plurality of connections that increase the possible interactions between the components of the network. There is no central executive authority that oversees the system'. This may explain why certain hypertext theorists are so enamoured (perhaps naively) of what they believe technology promises: namely, a democratisation of access to information, knowledge and the academy." [Ilana Snyder]
It seems to me that the World Wide Web of the Internet represents an amazing opportunity to get anybody if not everybody involved in the process of global dialogue and hence global governance.
I reject the notion that the web creates a huge divide between those who have private computers and those who do not. Rather, the web can be a more convenient and practical tool for universal dissemination than can e-mail, which requires regular and frequent access to the Internet.
The keys to the democratisation of global society through the World Wide Web are (i) public libraries, (ii) Internet cafes, and (iii) community education to eliminate computerphobia and to disavow the "surfing" culture attributed by many to the web.
With respect to public libraries, users can treat the Internet much as a microfiche machine. Armed with a URL address of an Internet publication - eg from a contact (eg a "snail mail" Newsletter), from a catalogue, from a newspaper - library users can have the address loaded by a staff member and then be told (i) how to use the mouse and (ii) how to use the browser's "back" button.
Navigating the World Wide Web is like navigating our roads; we can do it by private or public transport. Public libraries are just the public transport equivalent. Internet cafés come in between. They represent privately supplied public transport, and have immense potential to bring the Internet to just about anyone in the Third World. That is, they would be as available as a privately run public telephone or photocopy machine.
Navigating the roads of South Auckland is often easier than in Auckland's North Shore because South Auckland is poorer. South Auckland has a public transport culture that is absent in the affluent northern suburbs. Internet Café culture thus also has greater long-term potential in the communities in which private computer ownership will remain low.
Whatever, public libraries and Internet cafés together have to potential to provide universal coverage of the web. What is needed now is for community organisations to promote the use of the web among the computer phobic, in particular through community publications, newspapers, newsletters etc.
While being willing and able to access the World Wide Web may be as important as being willing and able to read, web literacy is not the same thing as computer literacy. People can feel comfortable about using the World Wide Web, even if they have acquired no computer skills (except how to click the mouse and use the "back" button). While the web might be a wonderful and complex labyrinth, using it can be one of life's most simple tasks.
Bibliographic note: quote from Hypertext; the Electronic Labyrinth (1996) by Ilana Snyder [Melbourne University Press], with an embedded quote from H.R Pagels, The Dreams of Reason, the Computer and the Rise of the Sciences of Complexity (1989) [New York: Bantam].
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