Is Roy Greenslade’s Despair Justified?
So, that’s it then – the game’s up. Roy Greenslade’s bleak analysis would have us believe that the good ship “Labour and the Left” has at last run aground and is unlikely to be re-floated.
No one doubts that the Labour Party is going through one of its periodic spasms of internecine conflict and less than promising electoral prospects. But it would be a serious mistake and an unnecessarily self-inflicted wound to throw in the towel, just because the party’s leaders – over three or more decades – have made a hash of providing Labour supporters with a coherent and convincing way forward.
It is not as though there is not a perfectly sensible path to rebirth and salvation. The question to be answered is not whether or not it exists but as to why it has not been taken.
Labour’s current difficulties are the direct and inevitable outcome of intellectual failure. That failure originated in the 1970s, with the apparent demise of Keynesianism, and gathered pace with the neo-liberal revolution that swept much of the western world in the 1980s.
Many Labour politicians and thinkers will resist the notion that their own thinking has been influenced by those developments. They will protest that they remain committed to the true faith. They will point to their continued allegiance to the great left virtues – social justice, equal treatment, solidarity, tolerance and compassion.
All well and good. But where they have failed is that, having proclaimed those values, they have signally failed to explain how they are to be achieved. And that is because they have been unable to provide an analysis of how the economy works, or of how it could be made to work, in such a way as to make those outcomes possible. The voters have accordingly remained unconvinced. How they ask, can we believe that different results will be obtained if the analysis remains the same?
The truth is, in other words, that from Denis Healey onwards, most Labour leaders have lacked the intellectual firepower to challenge the basic rules of a supposedly “free market” economy – that the market can safely be left unregulated, that the economy must be run as though it is a business, that government should not second-guess market outcomes.
This tacit acceptance of these supposed truths as to how a market economy should work has placed a powerful weapon in the hands of the left’s opponents. Any proposal from the left falls to be judged according to precepts asserted by those who benefit most from them to be objectively unchallengeable.
The left’s leaders, rather than risk being pilloried, were easily persuaded that it was safer not to stray too far from orthodoxy. Some went so far as to make a virtue of their willingness to endorse the positions prescribed by their supposed opponents. With no effective challenge to that orthodoxy, the political battlefield was successfully narrowed to comprise only the terrain most helpful to the left’s opponents.
A further tactical withdrawal was also apparently required and duly delivered. For those left politicians still ready to assert their commitment to fairness and compassion, and their concern about growing poverty and inequality, it was increasingly made clear and accepted that a choice had to be made between economic efficiency and success on the one hand and the “pie-in-the-sky” goals of social justice on the other. Those who stuck to their guns were easily portrayed as other-worldly theorists, not to be trusted with the tough business of running a real economy.
The casualties of these withdrawals from the real battlefield included, of course, any sense that the left itself had of where it was going or of how the battle was to be won. They fell back on skirmishing, on the odd guerrilla raid, waiting for their opponents to make mistakes, never daring to mount an all-out assault on the enemy’s heartland of self-serving orthodoxy. This absence of a clear sense of strategy and direction provided of course the perfect conditions for dispute and dissension in the ranks – the kind of disintegration that Roy Greenslade now laments.
How did all this happen? Left politicians did not work hard enough. They failed to develop a persuasive and credible alternative to “free-market” economics. Many even, in their heart of hearts, accepted the right-wing analysis.
The good news is that even this late hour is not too late. There is a growing body of sensible and informed opinion, until now largely ignored by the left’s supposed leaders, ready to challenge the “free market” orthodoxy, ready to assert that austerity and public spending cuts are literally counter-productive, that high unemployment makes us all poorer, that unaffordable housing widens the inequality gap, that economic efficiency is best secured by making use of everyone’s efforts, that the more unequal an economy the less successful it is, that government should use its power not just to bail out the banks but to fund productive investment and proper jobs in manufacturing and real wealth creation.
And because these are sensible policies that are readily explained, the left can get over its fear of departing from the current orthodoxy and can convincingly describe a future around which the whole party can unite. Perhaps there is a future after all.
Bryan Gould
8 December 2015
What Really Matters
Jeremy Corbyn’s difficulty in carrying his parliamentary colleagues with him in his opposition to bombing in Syria will be seen by his supporters as a decent man struggling to reconcile his deeply held principles with the exigencies of political leadership, in a society that is easily persuaded that action counts for more than reason. Others, no doubt, will see his willingness to alienate centrist opinion on this and other issues as further evidence of his unfitness to lead.
Even those who wish him well, however, will recognise that, after a lifetime of endorsing minority or unpopular causes, bombing in Syria is just one of a number of similar issues, each of which will run the risk of further eroding his precarious support in the parliamentary party, encouraging further outrageous attacks on him from the right-wing media, and discomforting even some of those who voted him into the party leadership.
A realistic assessment, in other words, would lead to the conclusion – welcome or otherwise, according to taste – that whatever views he may hold on Syria or on other issues of the day, there is a growing possibility that he might never have the chance to put them into practice. He could tire of the struggle and decide that the game is not worth the candle; or his many opponents in the parliamentary party could find a way to roll him; and, even if these possibilities do not eventuate, their mere existence will shorten the odds against his leading Labour into government at the next election.
If any one of these outcomes were to materialise, it would be celebrated in many quarters, not least by those who would leap at the opportunity to proclaim that a Corbyn demise meant that everything he stood for had been discredited. But in that event, those who found much to support in his leadership election campaign would need to ensure that what Corbyn has to say on the most important issues, and that stimulated such a positive response, is not thrown out with the bathwater.
It may be necessary, in other words, to distinguish between the man – Jeremy Corbyn, with his own political baggage and at times idiosyncratic positions – and the message, the message that he articulated and that resonated with tens, perhaps hundreds, of thousands of those who had given up on politics.
That message was clear. There is an alternative – a real and viable alternative to the current orthodoxy of austerity, of giving priority to cutting public spending, of widening inequality, of piling burdens on the most vulnerable. It was this brave assertion that propelled him into the leadership and that opened up a long overdue debate. It is a message that could and should have been delivered long ago by his rivals for the leadership and by his current opponents in his own party.
Their dereliction of duty meant that it fell to Jeremy Corbyn to deliver it. That he seems alone in doing so is an indictment of others rather than of him. Whatever may be the deficiencies of what he might say on other issues, what he had to say on the central question of politics – who runs the economy and in whose interests? – was right on the money.
There is a rapidly emerging consensus that – as we discovered 80 years ago but then forgot – austerity is the wrong response to recession. We are learning that lesson all over again. Even in terms of its own stated objectives, austerity has failed; the supposedly central priority of eliminating the government’s deficit remains a long way from being achieved, while the deficit that really matters – the country’s continuing failure to pay its way – remains unattended to and is getting worse.
In the meantime, poverty and inequality increase, housing is increasingly unaffordable, net investment is virtually zero, the prospect of a revival in manufacturing is non-existent, and an unsustainable consumer boom fuelled by asset inflation underpins our rake’s progress to decline.
Corbyn’s assertion that it need not be like this, that government’s responsibility is not to focus on cutting its own spending but to get the economy moving again in a productive direction, that growing poverty and inequality are barriers to economic efficiency, that we must invest in new productive capacity if we are again to pay our way in the world, that full employment is the hallmark of a properly functioning economy, is endorsed by a growing number of economists and others who are now prepared to stand up and be counted.
On this issue, in other words, Corbyn is far from isolated. On the contrary, his message is gathering force. He points the way to government accepting its true responsibilities and to policy and action that are increasingly recognised as essential for our economic future. If his opponents in his own party turn back to their long-standing and virtually inexplicable acceptance of a failed neo-classical orthodoxy, they will – unwittingly perhaps, but because they are obsessed by day-to-day political infighting – have closed their minds to their true responsibilities. What is at stake is more than the political fortunes of one man but the chances for both party and country of finding a way out of their long trough of decline.
Bryan Gould
30 November 2015
A Sign of Strength or Weakness?
In 1995, a year after my return to New Zealand to take up the Vice-Chancellorship of Waikato University, I was invited to lead a delegation from the university to visit universities in China – the first such invitation to be issued.
Seventeen years earlier, in 1978, I had been a member of a British parliamentary delegation which had been the first westerners to visit China since the fall of the Gang of Four. It was, I believe, that earlier contact that led to my invitation in 1995.
The contrast in what I saw on the two visits was startling. On the earlier visit, the only shops had been Friendship Stores, reserved for foreigners, the only transport for ordinary Chinese was by cart and bicycle, and the only colour –amongst a sea of Mao tunics – was the red of Party banners. But by 1995, China was clearly a country on the move.
My 1995 visit was the first of many such visits I paid to China over the coming years. My association with that wonderful country and civilisation led to the first institution-to-institution arrangements between New Zealand and Chinese universities, and ushered in a huge expansion in the numbers of Chinese students studying at New Zealand tertiary institutions.
Since those days, providing tertiary education to students from overseas – not just China, but India, the Americas, the Middle East and may others – has become big business for New Zealand. In terms of foreign exchange earnings – at over $3 billion each year – export education is more than twice as valuable to our economy as the wine industry. There is scarcely a single tertiary education institution in this country that does not rely to a large extent on the income from foreign students to allow them to balance their books.
Foreign students bring not only valuable funding, but also a range of benefits to this country, not least a greater understanding for our own students of other cultures and a wider range of contacts, both personal and institutional, with students who are potential leaders in their own countries.
The positive net inflow to this country of people from overseas is substantially accounted for by the numbers of foreign students who now come to us for their education. This success is rightly a cause for self-congratulation. Our ability to compete with other western providers for the custom of foreign students is testament to the quality of our education. So, what is there to cavil at?
The answer is that it is all a matter of balance. Each institution will have some idea of what is an optimal proportion of foreign students in any given class or course, although opinions as to what that might be will often vary considerably. And the calculation is not made any easier by the strong tendency of overseas students to focus on courses in particular disciplines, such as business management, so that what might seem to be an acceptable proportion for the institution as a whole might conceal a concentration of foreign students in just a few areas.
A class that has a high proportion of students from overseas, particularly those for whom English is a second language, may not serve the interests of domestic students as well as it should – and even the overseas students themselves may feel that it is not quite the New Zealand education they had bargained for.
And the institutions themselves may find that there is a downside. There are considerable and additional costs involved in attracting foreign students and in looking after them properly while they are here. The costs of marketing overseas, paying commissions to agents, providing appropriate facilities, accommodation, support and counselling in respect of both academic and personal matters, will all mean that the fee income earned will often be substantially offset by those outlays.
There is also a world of difference between treating overseas fee income as a useful supplement that can be applied to discretionary purposes that might not otherwise be afforded, and the situation that most tertiary institutions now find themselves in – that is, an increasing reliance on that income to keep their heads above water.
The truth is that our tertiary institutions have, by international standards, been underfunded for many years – and the sinking lid is still being applied year after year. In typically Kiwi fashion, we expect outcomes of international standard to be produced from funding that is only two-thirds or – in some cases – only half of that provided overseas. That disparity is bound to tell eventually – and once it becomes apparent, it will inevitably reduce the attraction of a New Zealand education in overseas markets.
Looked at in that light, our income from foreign students is better regarded as a sticking plaster or as a life belt – a cry for help, rather than a badge of success. It represents another casualty in the drive to cut public spending at any cost – requiring our tertiary institutions to see themselves as commercial and trading operations, with a year-to year time horizon, rather than as focusing primarily on providing the best possible education for the communities they serve.
Bryan Gould
24 November 2015
Where’s the Christmas Spirit?
When the condemnation by an independent review of “state-sponsored” doping of Russian athletes is reported on Russian television, followed by an assurance from Vladimir Putin’s Minister of Sport that the accusations are groundless and should be ignored, we feel justified in rolling our eyes. “What else do you expect?” we say. Russia may claim to be democracy but we know that Putin has such a hold on Russian opinion that he can get away with murder – and probably does.
When the Fijian police chief resigns, claiming that he can no longer tolerate interference from the military, but is then immediately replaced by an army colonel, we shrug our shoulders. We know, don’t we, that the army is calling the shots, whatever the claims that democracy has been restored, and that Fijian majority opinion will simply accept what they are told.
We, of course, live in a proper democracy. We wouldn’t swallow such nonsense. But when our Prime Minister launches an intemperate and unprincipled attack on those who stand up for human rights as “backers of rapists and murderers”, in an attempt to divert attention from his failure to act on abuses committed against New Zealand citizens by the Australian government, what do we do? Nothing. We, or at least many of us, say “well, he’s got a point, hasn’t he?” And “good old John, he tells it like it is.”
What each of these instances – and there are many more – illustrates is that democracy is about more than form. There are many regimes that parade the trappings of democracy but whose practice actually falls well short of the democratic ideal. The lesson from such instances is that democracy essentially depends on constant scepticism and scrutiny, on not believing everything we are told simply because the person telling us is an authority figure or someone we like or generally support.
It was Thomas Jefferson who is usually credited with the aphorism that “the price of liberty is eternal vigilance”. If that vigilance flags, if we once accept whatever we are told, if we no longer challenge or question, our democracy becomes a mere cipher, and our government can confidently do whatever it likes.
How real is that threat in New Zealand? No one would argue that our government is undemocratic, in the sense that it consistently ignores or flouts public opinion – indeed, quite the contrary, since there is a strong populist flavour in much of what it does.
The risk we run is rather different but perhaps just as real. Our Prime Minister is adept at reading the runes and staying closely in touch with public opinion – it is one of his great political strengths. But he has become so accustomed to exploiting that ability, so confident that he will be believed however implausible may be what he says – indeed, he has so often stayed upright while skating on very thin ice – that he can now be forgiven for believing that he can get away with anything.
On most occasions, he has been able to stay just the right side of credibility and judges correctly how far he can go. But on the Christmas Island issue, his antennae seem to have let him down.
Even so, he will judge that the furore created by his display of manufactured outrage in parliament has meant that, while the media and others debate the rights and wrongs of what he has said on an issue that has no substance, he does not have to answer the difficult questions. Have these New Zealanders detained on Christmas Island – those with criminal convictions – not served their time? Are they not now being doubly punished? When they are told that they can go “home”, have they not made Australia their home? Are they not being discriminated against because they are not Australian? Are they not being locked up in a prison camp, and denied recourse to protection from the law, and is this not an abuse of human rights? Why does the Prime Minister not raise these questions with his Australian counterpart?
In a proper democracy, we would demand that these questions should be answered, not just because we need to know the particular answers in this case, but because our leaders should be obliged as a matter of principle to be accountable, by providing truthful and accurate information, for what they do in our name.
Trusting our leaders to do the right thing, even if the evidence suggests otherwise, is not good enough. In a democracy, we need to keep our eyes – and our minds – open, not closed.
Bryan Gould
12 November 2015
Whose Interests Are Served by Unemployment?
The unemployment figure announced this week at 6% and rising is a disgrace – not only a personal tragedy for individuals and families but a senseless waste of the nation’s resources that makes us all poorer. Nothing contributes more directly to growing poverty and widening inequality. What’s more, the official statistics undoubtedly understate the number of those seeking work, or who would do so if there were jobs available, so the lost output and the numbers of blighted lives are even greater than they seem.
Unemployment at this level is not just a fact of life or an act of God – it’s a policy choice and is the best indicator we have that the government has other priorities and that the economy is failing. There is nothing economically efficient about denying a significant sector of our population the opportunity to make their contribution.
The unemployment total tells us that we have failed to address our many problems. It tells us that the focus on eliminating “the deficit” at the expense of other more important goals has been sadly misplaced and that sustained government spending cuts have meant not only poorer services but also a lower level of economic activity – certainly lower than the level needed to provide full employment.
The government, after all, is a customer like any other; if it cuts and lays off staff, there is a smaller market for the goods and services provided by the private sector, and therefore less incentive to employ more staff across the whole economy.
The unemployment total also tells us that nothing has been done to remedy the deficit that really matters – the country’s deficit, or, in other words, our failure to pay our way in the world. It is that deficit that requires us to sell assets and to go on borrowing from overseas in order to make up the difference, and it is that deficit too that represents our continued appetite for imports that we can’t afford or that we could be producing ourselves.
A sluggish economy and high unemployment tell us that we have wasted the opportunity provided by record commodity, and particularly dairy, prices, to broaden our productive base. Our dangerous dependence on the dairy industry has left us with few options when prices fall. The rest of the economy struggles to pick up the slack under the burden of interest rates that are still higher than elsewhere and of a dollar that is still overvalued and that prices Kiwis out of jobs.
The one area of the economy that is, in some senses at least, booming, is the Auckland housing market. But that is little comfort to the unemployed who do not on the whole own their own homes. While record mortgage lending may have produced record bank profits, at over $4 billion, and Auckland home-owners can take comfort from an average $1600 weekly increase in house values, the unemployed have trouble making ends meet – and gains made in housing values and asset values more generally provide few jobs.
While continuing high unemployment may be the mark of a malfunctioning economy, are we justified in holding the government to account, or is it the result of factors beyond their control? Keynes, the greatest economist of the twentieth century, provided a direct answer.
His response to the Great Depression of the 1930s was to demonstrate that unemployment was the result of an inadequate level of effective demand in the economy – and that government policy was the main determinant of effective demand. A government that focused on a goal other than its own deficit, in other words, could act effectively to reduce unemployment. That lesson was learned last century – but seems to have been forgotten in the aftermath of the Global Financial Crisis and the consequent recession.
So, why does the government not act? The answer is that it feels no need to, since most people – though not of course the unemployed – seem unconcerned, and in truth the government is not unhappy about the current numbers of jobless.
The reason for this is not hard to find. The news bulletins, in reporting the rise in unemployment, also remarked on the fact that wage levels were barely moving. That stagnation in wage rates is an important factor in the current unduly low level of inflation that means that the Reserve Bank is in danger of missing its inflation target.
But the flatness in wage levels is of course causally linked to the high unemployment rate. A labour market where there are multiple applicants for every job that becomes available is also one where employers have the whip hand and where the bargaining power of workers is much reduced.
An economy with a permanent pool of unemployed and with no real growth in wage rates is also an economy with less purchasing power and demand than it ideally needs. We are all worse off as a consequence. Most of us can soldier on without too much inconvenience. It is the unemployed who are the sacrificial lambs on the altar of neo-classical orthodoxy.
Bryan Gould
5 November 2015