The indications that China is displeased with New Zealand cannot be mistaken. China is a country where nothing of this kind happens by accident; the government’s reach into every aspect of Chinese life is virtually unlimited. Nothing happens without the government’s say-so.

There can be little doubt that the Chinese government has decided to send our government a carefully calibrated message – and that message has been to the effect that our hitherto excellent relationship, and particularly our trading relationship, with the new super-power is at risk. The import of that message has potentially serious implications for our economic future and is no doubt intended to arouse considerable anxiety in some circles.

Nor can there be any real doubt about the reason for sending the message. It seems painfully clear that the Chinese government has reacted adversely to New Zealand’s decision to exclude the Chinese IT giant, Hua Wei, from any involvement in setting up our new 5G network.

That decision was taken on the grounds that Hua Wei, like many major Chinese companies, is best regarded as an arm of the Chinese government and our government was warned by our security services, the GCSB, that there could be risks to our security if an enterprise with such close links to the Chinese government were allowed a central role in our internet system.

That advice mirrored of course similar advice tendered to and acted upon by the security services of some of our principal allies who have found themselves embroiled in even more direct retaliatory responses from China. Our government is criticised by its opponents for allowing this situation to develop – with the inevitable corollary, it must be assumed, that we should hastily backtrack and reverse the decision concerning Hua Wei’s role.

But are we really at fault? And is the Chinese response justified? And should we yield to the threatened reprimand, as some critics seem to suggest?

The first point to make is that our trading relationship with China, like almost all trading arrangements, is a voluntary one between equals, and is not – nor should it be – one of master and servant. New Zealand and China trade with each other because they each see advantage
In that trade; the Chinese gain access to goods that they need or at least want, and we earn foreign exchange which helps us to balance our books.

There is, or should be, no implication that we are being done a favour by the Chinese in deigning to trade with us – a favour that will be withdrawn if we upset them in respect of a completely separate issue. And the Chinese have no one but themselves to blame if their governmental system makes it difficult for us to disregard the fact that a company like Hua Wei is in reality not just another commercial company but is rather an arm of government.

It is the Chinese, not us, who have introduced, into what should be a straightforward trading relationship, the complexities of security issues and the need to choose between China and the US in an apparent power struggle in the Pacific between the two super-powers – and can anyone really be surprised in the light of our history – in times of both war and peace – that we continue to give priority to our long-standing alliance with the US?

And when we review our own recent history and the value we have placed on refusing to be bullied – our nuclear-free policy, despite American hostility to it, was a classic instance of our insistence on independence – are we really being enjoined to yield to blackmail in this case?

Our proper response to the “message” sent by the Chinese is that we regret that they have taken umbrage at our decision on Hua Wei but that we can see no good reason why that should affect our mutually advantageous trade and tourism links and that the remedy that would qualify Hua Wei as a participant in our G5 rollout lies in Chinese hands.

If we were to follow the advice that we should reverse our decision, we would have cast aside a long-standing and hard-earned reputation as a small country that is not to be pushed around or bullied. Our future relationship with China will be all the stronger once they realise that good trade relations do not depend on one partner’s ability to dictate to the other and are harmed if that claim is made.

Bryan Gould
17 February 2019

When I stepped down as Vice-Chancellor of Waikato University in 2004, I was fortunate enough to spend a few months in Oxford as a Visiting Fellow at Nuffield College whose Warden at that time was Professor A.B. (later Sir Tony) Atkinson. He was a renowned economist and the world’s leading authority on inequality, its causes and consequences.

The Nuffield College magazine, in its latest issue, carried a range of articles in his memory and as a tribute to the work he did. The issue is entitled “Inequality Is A Choice”, reflecting one of his principal conclusions – that inequality doesn’t just happen but is the consequence of deliberate choices made by governments, choices either to act or – more often – not to act.

Sir Tony was able to show that levels of inequality vary from country to country and from time to time. Countries whose governments deliberately counteract inequality show a lesser degree of inequality, not surprisingly, than those where the interests of the wealthy and privileged prevail without restriction.

He demonstrated that a market economy will always show a natural tendency for the rich to get richer and for the poor to get (comparatively) poorer. This because the return on capital is almost always faster than the growth of the economy as a whole, so that an increasing proportion of any new wealth created goes to those who already have money and own assets. In New Zealand, we can see this demonstrated by the increasing share taken by profits and the decreasing share of wages in our economy over recent years.

It is only when a government sets out to change this trend that inequality ceases to increase – good examples were the post-war Labour government in Britain and the pre-war government here. But if governments are relaxed about, or perhaps even welcome, the usual trend, (as they have recently in New Zealand) then inequality grows.

Sir Tony was of course talking about economic inequality and accordingly focused on matters of comparative wealth and income. But there has been a growing recognition over recent times that inequality is not only an economic phenomenon, but is equally important in other senses as well. In New Zealand, we have always been blessed by our refusal to allow a “ruling class” to develop, but we are now perilously close to allowing the wealthy to have more respect, influence and therefore power than the rest of us.

And someone growing up in sub-standard housing or with limited educational opportunities or inadequate access to health care or whose working day is organised to suit his employer without regard for his own interests should surely be regarded as less than equal with his more fortunate fellow-citizens.

And that should lead us to recognise that there is a range of policies, not just economic policies – policies such as the rights of workers in the workplace and building state houses for low income families— that will directly influence the level of inequality.

It is often argued that greater equality can be achieved only by limiting the freedom of those who are doing better than others. Today, however, we can see that the link between equality and freedom is not so much that you can only have one at the expense of the other, but that they support each other; someone who is less equal is also less free than he would otherwise be.

Freedom, in other words, is not just an abstract concept but has a real practical significance; it means the power and ability to do things, to realise potential and to make choices.

A society in which only a privileged few have a wide range of choices while everyone else has to “like it or lump it” is not only unequal but also less free. The level of freedom in a society should be determined by the degree of freedom available to those who might be regarded as the least free. We have a long way to go – and may even be heading in the wrong direction – if our goal is a society that is both free and equal.

Bryan Gould

5 February 2019

New Zealand is a small country located, as some would have it, “at the end of the world”. But we like to think that “we punch above our weight” and actually lead the world in some respects – in some sports, particularly rugby of course, and in social matters where our image is that of a socially advanced country – the first to introduce the vote for women, a pioneer in developing the welfare state, and engaged in a brave project to create a genuinely bicultural, even multicultural, society where two or more races can live in harmony.

That sense of New Zealand as world leaders, in a minor way, has been alive and well over recent days as the Prime Minister’s attendance at the World Economic Forum in Davos has shown. It is not only that a political leader who is also a young mother is, not surprisingly, something of a novelty and she has accordingly been feted wherever she goes.

It is rather that what she says has seemed to capture the spirit of the times and has therefore been listened to with attention. On many of the great issues of the day – climate change, mental health, the alleviation of poverty and inequality, well-being as the proper measure of success – she (and New Zealand) have been at the forefront and she has in some instances taken the lead in shaping the discussion.

New Zealand’s standing in the world has undoubtedly benefited from all of this, and hopefully – and not least – in material terms as well; Jacinda Ardern has succeeded it seems in at least opening the door to free trade talks with both the EU and the UK.

While she has been an undoubted hit overseas, however, her problems at home now demand her urgent attention. Her government has now entered a critical phase. The fascination with novelty has gone; the readiness to excuse newcomers to government for occasional lapses due to inexperience has been exhausted; the ability to blame the government’s predecessors for inherited failures cannot retain credibility forever.

The time has come, in other words, to deliver not only on the promises made but also on the promise shown. The government’s opponents will want to check that promises have been kept; their supporters will hope to see the promise shown – their potential for good – realised. It is on these issues that the government will now be judged.

What we saw of the Prime Minister in the northern hemisphere suggests that she has it in her to meet these challenges and there are many who will expect the same leadership and far-sightedness, the same readiness to grapple with difficult issues, to be displayed at home as well as overseas.

Part of her difficulty in meeting those expectations is that the bar for reforming governments has been set so high. The great Labour governments of the past have been transformative; they have introduced changes which have shaped and benefited our society over generations. They have shown how powerful a government with imagination and courage can be in setting us on a new and fulfilling course.

The current government may not quite recognise that they will be judged according to the expectations of their supporters as well as by the hostility of their opponents. It is their ability to overcome problems that are hardly recognised as such by their opponents – problems such as the element of racism which remains endemic in our society, the growing inequality between different sectors of society in terms of respect and influence and not just financial resources, the narrow base of our economy which limits our economic prospects and leads us to be too tolerant of the damage done to our environment by the demands of primary industry – that will determine how well the government is perceived to have done.

The successful management of the day-to-day (and inevitable) problems of government matters of course; but real success in terms of transforming our society will demand the vision, courage and leadership she showed in Davos. I think she can do it.

Bryan Gould
31January 2019