Does the Government Represent Us?
Memories are short. As Brian Rudman reminds us, one of the new government’s first acts in 2009 was to cancel the attempt to keep junk food out of school tuck shops. Flying in the face of all expert advice, the new Education Minister set herself up as an expert on child nutrition and moved quickly to meet the interests of the pedlars of fast food and sugary drinks. Child obesity was apparently a minor consideration.
Fast forward six years. The World Health Organisation and the Prime Minister’s Chief Scientific Adviser, Sir Peter Gluckman, are in no doubt that child obesity is a major threat to the nation’s health. The government has little option but to concur.
But some things never change. The one startling omission from the package of measures put forward to combat this newly recognised threat is any action to restrain the activities of major companies in selling and advertising to young people the very products that are unerringly identified as responsible for the obesity epidemic.
It may be that, as the Herald explains, there are difficulties in taxing particular products on social or health grounds. Similar arguments were advanced in respect of tobacco and alcohol. Even today, the major tobacco companies argue that selling a product that causes pain, misery and death to hundreds of millions of people should be of no concern to government, and threaten legal action every time their right to do so is challenged.
The significant feature of the government’s response on the obesity issue is, in other words, the easy acceptance that it is not their responsibility to protect us, including the most vulnerable – our children, and that any attempt to do so would violate the sacred right of big business to make profits wherever they can, whatever the cost to our citizens.
So naturally does this conclusion come to our Ministers that they scarcely bother even to address the issue. The profit motive is sacrosanct; there is nothing more to be said.
The outcome, as I see and understand from my work in primary health, is that growing obesity will go on wreaking its avoidable and terrible damage. But the significance of the issue extends beyond the health of our young people.
The government is in the process of signing up to an agreement that parades as a “free trade” deal. They profess to be unconcerned about provisions in the TPPA that allow major corporations to sue our government for any action taken that might adversely affect their profits.
“We have nothing to fear,” our government tells us. “We have no intention of taking any action that would run counter to the interests of our overseas investors”. In the light of what we are seeing in respect of the fast food and sugary drinks issue, we can see what they mean.
In the global economy, and like so many other governments around the world, our own government sees it as axiomatic that their role is to represent the issues of big business. Little wonder that they are relaxed about the prospect of being sued when they see no prospect of their policies causing any problem to business interests.
It was John Lennon who asserted that, in a democracy, “we are the government”. If only that were the case! But the truth is that the government – in many important respects – operates quite independently of us, the people. The TPPA is a case in point. The government has blithely conceded to powerful overseas business interests a major part of our power of self-government, not only without consulting us, but without even allowing us to know what it is they have committed to. And their excuse is that the TPPA simply codifies in this respect what they have done and will go on doing anyway.
Democracy, we should never forget, is a mode of government, not just a process. It is about more than votes and elections, but is about ensuring that the interests of everyone are properly taken into account, on every issue, and that a fair balance is struck. A government that serves interests other than our own is not democratic.
We are often told that people in other countries and with different histories and cultures do not share our commitment to democracy, but are content as long as they have full bellies and stability. But are we so different? Are we not happy to trade away our right to decide for ourselves in return for the material things to which we now attach such importance?
And since we care so little, can we blame a government that is confident that it can keep us happy by just jollying us along – not so much bread and circuses, but a Prime Minister happy to entertain us with supposedly “jokey” interviews on Radio Hauraki and revelations about his less salubrious habits? Is this what democracy has become?
Bryan Gould
21 October 2015
Is A Budget Surplus A Sensible Target?
The government is to be congratulated on achieving a fiscal surplus – even if, as the commentators point out, it is likely to be short-lived. They have finally succeeded, for the first time in seven years, in hitting a target which they, at least, evidently see as important.
But, does it really deserve the importance given to it, and has it not been achieved at a greater cost than is justified?
The public discussion about “the deficit” is bedevilled by misunderstanding. Most people, and many commentators, fail to distinguish between the government’s accounts and the country’s. When they are told that we have eliminated “the deficit”, they take that to mean that the country is back in the black. If only that were true!
The truth is that we continue to live well beyond our means, and are likely to do so to an even greater degree in the coming years – hence our perennial need to borrow from overseas and to sell our assets to foreign owners so that we can finance a living standard we have not earned. A government that poses as a prudent manager of our economy has done nothing to change this rake’s progress.
The deficit the government have focussed on, however, is not the country’s, but their own; and, while cutting public spending may seem like good housekeeping, it has made the economy as a whole smaller and less efficient than it could and should have been.
The priority given to reducing its own expenditure means that important public services – the police, armed forces, health, education, biosecurity at our borders – have been denied the resources they need. Valuable voluntary organisations are forced to close down for want of proper funding. The public service is weakened as public servants lose their jobs and are replaced by consultants.
State-owned organisations – like ACC, Air New Zealand, TVNZ – are compelled to make ever larger profits to swell the government’s coffers, even at the expense of failing to meet their proper purposes. The private management of prisons and other services is encouraged so that the expenditure can be taken off the government’s books. New taxes are surreptitiously introduced, including most recently higher charges to those leaving and entering the country.
Most importantly, lower government spending, targeted in isolation, simply means a lower level of demand and economic activity in the economy as a whole. The reduced level of economic activity explains why, for example, our unemployment rate remains so high, growth is slowing, Bill English kept missing his deficit target for so long, and further government deficits – as tax revenues fall – seem inevitable.
A smaller and weaker economy inevitably has greater difficulty in paying its way, so that the country’s deficit – the one that really matters – is almost certain to get worse. And, in a kind of vicious circle, a larger overseas deficit means in turn that a government deficit becomes harder to avoid.
That is because the overseas deficit is accounted for – as a matter of accounting identities -by the deficits of the two sectors of the domestic economy – the public and private – taken together. A larger overseas deficit makes it inevitable that the combined deficits of the two sectors will also get larger; if the attempt is made to reduce government’s deficit while the overseas deficit is growing, it is equally inevitable that the private sector deficit must grow even faster.
So, if the economic case for targeting government finance in isolation from the rest of the economy is not convincing, why is it being done? The answer is that it is seen by the government as politically desirable to achieve a smaller role for government, whatever the economic consequences.
And that makes it all the more surprising that the government’s opponents have also committed themselves to achieving a surplus if elected to government. Their reason for doing so is presumably to maintain “credibility” with a public that is conditioned to see a “surplus” as a good thing; yet, even when viewed in isolation from the rest of the economy, a government surplus simply means that the government takes more out of the economy, by way of taxes, than it is putting in – not necessarily what the economy needs or the taxpayer would welcome.
None of this means that governments should not insist on value for money and efficiency in the public sector. Nor should it preclude a sensible distinction between the government’s current spending and what it invests for the future, where – as anyone with a mortgage will tell you – borrowing to build a future asset is perfectly sensible and where the government is generally able to borrow at a lower rate than the private sector can.
But it does mean that government spending is an important and valuable element in our overall economy and to cut it back for purely ideological reasons is likely to make us all poorer. We should not forget that the best and surest way to eliminate the government’s deficit is to get the rest of the economy working properly. Cutting public spending – in isolation from anything else – runs directly counter to that goal.
Bryan Gould
15 October 2015
Playing the Tories’ Game
A major factor in Jeremy Corbyn’s appeal to voters in the recent leadership election – and potentially to the wider electorate as well – was his brave assertion that austerity was the wrong response to recession and was doing absolutely avoidable damage to both economic performance and social cohesion.
That assertion not only gave fresh hope to millions dispirited at being told that “there is no alternative” but also opened up a long-overdue debate that brings the Labour party within touching distance of a newly emerging economic policy consensus and that could be of great value both to the party and to the country’s economic fortunes.
All the more surprising then that both Corbyn and his Shadow Chancellor, John McDonnell, are still apparently in thrall to a key element in neo-classical orthodoxy. They have found it necessary to commit to reducing “the deficit” and to producing a budget surplus by 2019. It may be that such a commitment is deemed necessary in order to maintain “credibility” with the voters, but if the voters are not to be told that treating such a goal in isolation from any other part of the economy makes no economic sense, when will they ever be told and what meaning can we ascribe to “credibility”?
It is, after all, Labour’s long-standing support for, and failure to challenge, the central tenets of neo-classical orthodoxy that has disabled any challenge they have tried to make to any other aspect of the Tory progamme.
The confusion is compounded when, like the voters, Corbyn and his team seem on occasion to talk of “the deficit” without distinguishing between the government’s deficit and the country’s. If the deficit they identify were indeed the country’s deficit, they could be applauded – but, sadly, there is little evidence that this is what they mean or that they are even aware of the economic and social significance of the foreign trade deficit we have run perennially for over 30 years.
As for the voters, how many of those who support the Tory government’s often touted “prudent economic management” realise that we are now in our fourth decade of living beyond our means, financing our rake’s progress through overseas borrowing and selling off our assets? Shouldn’t Labour be bringing this into the light of day, rather than allowing it to be shrouded in obfuscation?
And do the voters, or John McDonnell, realise that – for as long as we have an overseas deficit – a government surplus is just another way of describing the fact that the government is taking more from us in tax than it needs, so that the private sector is left in deficit? And, since the total of the overseas deficit must, as a matter of accounting identity, equal the sum of the private sector and government deficits, how many understand that a sizeable and perennial overseas deficit makes a government deficit virtually inevitable – hence George Osborne’s difficulty in getting his deficit down.
None of this means of course that a Labour government would not demand value for money and efficiency in the public sector. But does John McDonnell see that the reductions in public spending that are said to be necessary to eliminate the government’s deficit are in fact a central element in the suite of austerity policies whose main purpose is the political aim of reducing the role of government? Is that the road he wants to travel?
He is on safer ground when he distinguishes, in considering the government’s finances, between the capital account and current spending. It makes perfectly good sense, as he suggests and as everyone with a mortgage will understand, to borrow for the purposes of creating capital assets. But, even here, his courage seems to have failed him.
In other countries – China and Japan, for example – investment in the future, and particularly in productive capacity, is often financed not by borrowing or selling assets but by government-sanctioned credit creation. The idea is not exactly unknown to us – we call it quantitative easing – but we see it as being used almost entirely for bailing out the banks.
The irony is that – when we are obliged to sell assets to make up our overseas deficit – those assets are often purchased by foreign investors using credit created for them by their banking system at their government’s behest. There is no reason why our own banking system should not perform that function – but they are too busy creating credit for lending profitably on mortgage to be bothered.
Corbyn and McDonnell talked in the leadership contest about a “people’s quantitative easing” but the idea seems now to have dropped out of sight. A successful alternative to austerity, however, demands the courage to break free from the intellectual shackles that have inhibited fresh thinking for so long. We should not forget that the best and surest way to eliminate the government’s deficit is to get the rest of the economy working properly. Cutting public spending as a means of focussing on the government’s deficit – in isolation from anything else – runs directly counter to that goal.
Bryan Gould
12 October 2015
Tough Negotiation? I Don’t Think So
Now that we are at last allowed to know a little more about the TPPA negotiated in our name, it is clear that the free trade goal that was said to be the main point of the exercise has not been achieved.
Tariff-free access for our dairy produce into US, Canadian and Japanese markets has been denied to us. Such small gains as have been secured are so insignificant that Tim Groser, the Trade Minister, could not even remember what they were. The best he could come up with was a small reduction over time in the Japanese tariff on cheese.
The truth is that this much-touted goal was never even on the agenda. We were deluding ourselves – or our government was deluding us. The dairy industries of these large countries were too powerful and too protectionist to allow it to happen. New Zealand was just too small, too insignificant, to be taken into account. The negotiators knew, because we had made it clear, that we would take what we were given, even if it was virtually nothing – so much for “tough negotiation”.
Even in those instances, such as kiwifruit and beef, where small gains were made, we – typically enough – put them in the shop window as net pluses, without taking account of the increased penetration of our own market across a wide range of other products.
So, if the TPPA is not from our viewpoint really about free trade, what is it about? As Joseph Stiglitz, the Nobel Prize-winning economist, maintains, it is about managed, not free, trade – and trade that is managed in the interests of large, international, and mainly US corporations.
There is of course a powerful case for an international agreement that would regulate the activities of international corporate investors across national boundaries. Such an agreement would ensure that overseas companies would – inter alia – comply with national law, would protect the interests of their workforces and would avoid damage to the environment.
But the TPPA is not such an agreement. Instead of defining the obligations of large foreign corporations in relation to the domestic economy, it tips the balance the other way. The TPPA is a blueprint for extending the operation of those corporations without their having to bother with the restrictions that might be placed on them by national governments in the interests of their domestic populations.
It represents, in other words, a further, large, and largely irreversible step towards the absorption of a small economy like New Zealand into a much larger economy – an economy that is increasingly directed from overseas, not by politicians or even officials, but by self-interested and unaccountable business leaders.
Perhaps the most obvious indication of that further shift in power is the Investor/State Dispute Resolution provisions included in the TPPA. These provisions allow overseas business interests to sue our government in specially constituted tribunals if they feel that the government has done or is likely to do something that might adversely affect their profits.
A democratically elected government carrying out its mandate, could – in other words – be compelled by a tribunal comprising just three unelected business people from overseas, to abandon its legislative programme and thereby give up a major power of self-government.
Much soothing language is at present being used to try to reassure people that there is nothing to fear on this score. Our own lunch-time TV news even reported – parroting the official line – that this power had never been used. That assertion had been dropped by the time we had got to the evening news.
The reality is that there have been hundreds of occasions where a power of this kind has been used – and that is to say nothing of those many more occasions where governments have been deterred from proceeding with their plans for fear of being hauled before a tribunal.
What the apologists fail to take into account is that we are now dealing with notoriously litigious American corporations who have demonstrated many times over their willingness to use or threaten this undemocratic weapon. There is already the possibility that a mechanism will be set up in the US under which governments will be invited to obtain approval in advance from those corporations so as to avoid the danger that they will be forestalled later on – so that, in effect, overseas business interests will increasingly exercise a power of veto over what our government, and other national governments, want to do.
As we assess the impact on democracy and self-government of conceding these powers under a TPPA, we are entitled to judge the democratic credentials of those who have pushed the TPPA by what we have seen of it so far. How can we have confidence in an arrangement that has been agreed in secret and over our heads, that has at the same time taken such care to consult and serve the interests of such a small group of powerful international business leaders, and that potentially has such a far-reaching impact on our ability to govern ourselves?
Bryan Gould
7 October 2015
Why The Despair?
The despair felt at England’s premature departure from the Rugby World Cup is understandable, but also informative. It tells us something significant about the problems facing English rugby, and perhaps English sport more generally.
No one doubts that the “pool of death” was always going to pose a major challenge to the England team. That problem was of course compounded by the last-minute loss to Wales – and suddenly, the match against Australia assumed huge importance.
The reaction of the England team was everything that the Australian coach, Michael Cheika, could have hoped for. Never mind that England had home advantage, that the Wallabies had been beaten by England in four of their last five meetings, that Australia’s last match against a tier-one nation had been a 41-13 loss to New Zealand, and that their two opening World Cup matches – while producing decisive wins – had been against less challenging sides.
The language of England rugby was all about backs to the wall and battening down the hatches. The Wallabies had suddenly assumed superhuman proportions. More than most, the Australians are a confidence team; they were no doubt delighted to see England talk themselves into the role of underdogs.
The match bore out all of these dread premonitions. The Wallabies struck a purple patch – something they often do but usually can’t sustain – and England duly fulfilled their prescribed role as ill-fated and inevitable losers.
But let us not forget that, with 10 minutes to go, England had fought back to be just one score behind. It was the sending off that tipped the scales and allowed the score to blow out in the last minutes. But England have not become no-hopers and the Australians world- beaters in the course of a single match. If England played Australia in another ten matches in the next few weeks, it is unlikely that they would be outplayed again so comprehensively.
It is not so much the fact of the loss, with all its unfortunate consequences for English rugby, but the reaction to it that is revealing. The depth of the despair reflects the fact that English fans have been fed an illusion for years – that England would surf through to a Twickenham final where home advantage would carry them to victory – probably against the All Blacks – on the strains of “Swing Low”.
It is the creators of that illusion who must take the real responsibility for English despair. In the professional era, sport – as we know – is big business. Its profitability, especially in the more populous countries, depends on attracting and retaining mass audiences, an undertaking in which the media are both major players and beneficiaries.
English football is perhaps the prime example of how the media set out to dramatise and romanticise every aspect of the game. The leading players become larger-than-life figures, their exploits endlessly celebrated. The fans become accustomed to a diet of manufactured drama and excitement – and demand nothing less.
The syndrome is on its way to infecting other sports, and English rugby – sadly – is in the process of succumbing as well. Almost instinctively, it seems, English rugby commentators feel that simply acknowledging a good piece of play by England is not enough; viewers expect to hear something of the superlative if it is to be given its due.
A classic instance occurred midway through the first half of the England/Wales World Cup match. The Welsh kicked deep into the English half, the English player gathering the ball – Jonny May – was trapped on his line but managed to get the ball to Mike Brown, who then cleared the danger with a long touch-finder.
It was a competent piece of defence. The television commentator, however, could not contain himself. “There is no other player in the world,” he proclaimed, in a state of high excitement, “who could have done that!” At that point, millions of non-English viewers around the world must have said to themselves and each other – “What?”
So, what is the relevance of all this to the English defeat? The problem is that, as the media and the fans egg each other on and feed off each other, the sport is played in an increasingly unreal context. The English fan is encouraged to live in a kind of fantasy land, in which superhuman heroes will achieve great feats. Completely unrealistic outcomes are routinely expected.
The cult of the hero had a possibly decisive impact on the critical closing moments of the England/Wales match. Chris Robshaw’s decision to kick for the corner rather than attempt a penalty goal was a brave and justifiable gamble.
Where the gamble went wrong, however, was when the five-metre lineout was taken. For the first time in the match, Robshaw called the lineout throw to himself, at number two in the line. That short throw made it almost inevitable that, even when the ball was taken cleanly, it would be immediately driven into touch and the game would be lost.
Why did he do it? Because the Twickenham crowd demanded a hero, and he saw himself as Captain Marvel. Fantasy is not a good basis for sporting performance – or for judging the outcomes.
Bryan Gould
4 October 2015