More Courage Needed
Most economists agree that a currently slowing economy could do with some stimulus – and they would also agree that there is no shortage of infrastructure projects which could be brought to productive fruition with help from that stimulus.
In view of the current practice of sub-contracting economic policy decisions to the Reserve Bank, many would no doubt see the Governor as the person best able to step on the accelerator; but Adrian Orr – having dropped interest rates to near zero – would almost certainly respond by saying that he has already deployed virtually all the weapons in his armoury.
He might also say that we task governments and finance ministers with managing the economy, and that it is their responsibility to step up to the plate – and on that point, he is surely right. His responsibilities are met, under current arrangements, when he sets the Official Cash Rate; it is then up to Grant Robertson to decide what to do with the monetary situation thereby created.
The first and most obvious avenue that opens up, with the cost of borrowing at such a low level, is a review of the government’s self-denying ordinance on increasing its borrowing. It makes no sense for the government to be reluctant to borrow, when it can do so at virtually no cost, and could thereby provide a shot in the arm for a slowing economy – as well as proceeding with economically beneficial infrastructure projects.
Sadly, Labour governments have often been unwilling to borrow when it would make sense to do so, for fear of being accused of profligacy, but this is to allow their opponents to set the agenda. The Governor’s whole point in bringing interest rates down, after all, is to encourage business to borrow and, by investing, thereby to stimulate production, employment and spending throughout the economy – so why shouldn’t the government do what it is clearly hoped others will do?
Only those who are ideologically opposed to the government taking a role in the economy could object. Why is borrowing by business to be encouraged as being good for the economy, whereas borrowing by government must be avoided?
We can go further. The case for the central bank making interest-free credit available for the purpose of publicly funding essential investment has often been recognised at other times and in other places as sensible and beneficial – and, in current circumstances, with interest charges virtually non-existent, it is surely a no-brainer.
It is hard to see what objection could be made. We are after all perfectly relaxed when the Reserve Bank presides over a monetary system in which the commercial banks are allowed to create almost all of our money out of thin air. We applauded the world’s monetary authorities when they practised “quantitative easing” – creating new money to strengthen the banks’ balance sheets following the Global Financial Crisis.
The central truth about money – that we create it and that it is our servant, not our master – is well encapsulated in the famous statement by John Maynard Keynes that “whilst there may be intrinsic reasons for the scarcity of land, there are no intrinsic reasons for the scarcity of capital.”
What Keynes is saying here is that we – that is, as a country or as a society – can do whatever we have the physical capacity to do and need not be inhibited by a lack of money because, if we are short of the money we need, we can create it – that a shortage of money is, for a sovereign country, never a reason for not doing something.
Many other countries around the world have followed this insight – not least, today, Japan and China – but, at various other times, countries like the pre-war United States re-arming under Franklin Roosevelt, and depression-ridden New Zealand under Michael Joseph Savage, when we built thousands of state houses and brought the Great Depression to an end in the 1930s.
When state-controlled Chinese interests buy up New Zealand enterprises, like Westland Milk Products, they pay for them using credit supplied to them cost-free by the Chinese central bank. We are too foolish and timid to use the same technique in order to protect our essential interests from foreign takeover – or just to get our economy moving again.
Bryan Gould
11 August 2019
A Post-Brexit Europe
In the 1960s, after I had graduated with a first-class Oxford postgraduate law degree, I joined the British Foreign Office as the top entrant of my year. There, I worked for a couple of years on European affairs and was eventually posted to the Embassy in Brussels.
After this exposure to the realities of what was then an emerging “Europe”, I concluded that joining the Common Market would be against Britain’s interests – but when I expressed this view on entering the House of Commons in 1974, I was immediately labelled as an “anti-European”.
I had to grin and bear this ridiculous label – all the more ridiculous, so it seemed to me, when I thought of my love for European art, music, literature, architecture and food, and the enjoyable holidays I had spent in France and Italy and Portugal, and recalled that my wife and I had met, fallen in love and married in Brussels, and that our son was born there.
That experience has led me to what to some may seem a surprising conclusion – that, far from being the promised land of European cooperation, the European Union is in fact the major obstacle to a fruitful and rewarding relationship between the UK and Europe.
The fact is that a full and proper recognition of what each has to offer the other – and especially what Europe has to offer us – has been obstructed by all the baggage that has come with it. To limit the possible forms our relationship could take to membership of the EU is to accept the whole unwieldy and uncompromising super-structure built by those intent on, despite early assurances to the contrary, creating a single European state.
It has meant accepting as the foundation stone of “Europe” a Franco-German deal that, from the outset, was inimical to our interests. It has meant accepting economic policies designed to serve the interests of multinational corporations and reflecting the neo-liberal convictions of German bankers. It has meant recognising the European Court of Justice as our supreme court, able to over-rule our own courts and strike down laws passed by our own parliament, and thereby removing from us one of the essential powers of a sovereign state.
It has meant being unable to control and protect our own borders, and unable to restrict the inflow of foreign workers. It has meant being unable to regulate our own trade relationships, denying us access to efficiently produced food and raw materials from around the world and leaving us powerless to defend British manufacturing against powerful competition from the Continent. It has meant paying a substantial annual subscription for the privilege of belonging.
Little wonder, then, that the “Europe” we were commited to was rejected in the 2016 referendum. But there is a corollary that promises a much brighter future for UK-EU cooperation.
With Brexit achieved and behind us, the way will then be clear to build a much more beneficial relationship for both parties. We can then give proper recognition to what has always been true – that we are historically, geographically, economically, politically, culturally and militarily part of Europe – a Europe that is not narrowly defined by the EU.
With the obstacles to cooperation removed, we can then, as a sovereign state, make a fresh start and build a mutually acceptable and rewarding relationship with our friends across that narrow body of water we call the Channel.
We can, as one sovereign entity with another, negotiate in good faith a sensible trading relationship that serves both our interests. We can focus on, and extend, what I like to call “functional” cooperation – that is, working together on issues where we can both gain from sharing our expertise. In matters of developing technology, research, communications, education, foreign policy, military preparedness, there is everything to be said for working together.
We can each bring to the relationship our own particular strengths. From the British side, this would mean deploying in the common interest the expertise as a financial centre developed by the City of London – there would seem to be no point, post-Brexit, in the EU trying to set up a comparable capability of its own, when it is already available on its doorstep and has experience of working in both interests.
If we can cast aside pre-conceptions and have the breadth of vision to recognise the possibilities, in other words, a new golden age for European cooperation is possible. We can each strengthen our “European-ness” in a cultural sense, and enjoy what each can offer. Brexit should certainly not be the end of European cooperation; it may well be the launching pad for a much closer and more fulfilling partnership.
Bryan Gould
13 August 2019
A No-Deal Brexit
What an extraordinarily depressing experience it is to be compelled to watch, at 12,000 miles distance, the contortions and machinations of the British political class as they set about their determined attempt to overturn the decision taken by the British people that they wish to leave the European Union.
The pages of publications like the Guardian are replete with articles by “constitutional experts”, exploring the various arcane ways in which so-called “democrats” could manipulate constitutional and parliamentary rules and practice so as to frustrate the will of the people by preventing a “no deal” Brexit— and all this supposedly in the name of democracy!
Let us be quite clear. The rearguard campaign to prevent a “no-deal” Brexit is merely a smokescreen for the real objective, which is to frustrate any Brexit at all and, in effect, overturn the referendum outcome. Despite protestations that they are committed to giving effect to the referendum, the Remainers’ actions tell a different story.
They calculate that, if the EU can be persuaded not to budge on negotiations for a deal, there will be sufficient opposition to a “no-deal” Brexit to mean that parliament will find a way to stop it.
The contempt they show for democracy is exceeded only by their arrogance – their conviction that they alone know best – and by their readiness to demonstrate that their true allegiance is not to British democracy and self-government but to the “ideal” of European union – and, in the interests of that ideal, that they are prepared to collaborate with the EU to ensure that no acceptable deal for Brexit is available.
Let us again be clear. A “no-deal” Brexit arises as a possibility at this stage only because the EU, in pursuance of their unspoken arrangement with Remainers, refuses to talk to, let alone negotiate with, a British government committed to withdrawal – a dramatic illustration of the extent to which, when we cannot even secure a position as a valid interlocutor on the issue of our own decision to withdraw, EU membership continues to mean a status of vassalage for the UK.
The EU are encouraged in this unreasonable intransigence by the continued efforts from Remainers to convince them that the battle to overturn the referendum result is not over and could yet be won if a deal is placed beyond reach. Defeated in the referendum and professing to abide by its outcome, they nevertheless demonstrate continually – and particularly to the EU – their determination at whatever cost to make it as difficult as possible.
What are the British people to make of this demonstration of contempt for them by their supposed leaders? For many, the sense that they are not being listened to – which, many believe, lay behind the referendum result – will simply have been confirmed.
Their confidence in democratic institutions and in their leaders will be further undermined. Their sense of being mere pawns, manipulated under a cloak of democracy in the interests of the political class, will have been validated.
What else are they to think, when so much effort is devoted by politicians to frustrating their wishes, and when what should be a reasonably straightforward proposition, that our EU membership should end, seems to be beyond our institutions to deliver and is not something that the EU is even prepared to discuss with those primarily involved?
Whatever we may think of a Boris Johnson government, there must be some sympathy with its position that terminating our EU membership, in its essence, must surely be something that is within the remit and power of the UK government – deal or no deal.
Whether or not there is a “deal” is as much the responsibility of the EU as it is of the UK. In the absence of any EU willingness to negotiate a deal, it cannot be the case that the UK is locked in – prisoners who cannot escape. A “no-deal” Brexit, when and if it happens, will have been engineered, not by Leavers, but by the absence of any alternative, brought about as a consequence of the Remainers’ collaboration with the EU to prevent an acceptable deal being agreed.
Bryan Gould
9 August 2019
What’s the Point of a Climate Change Emergency Declaration?
Only those who close their eyes and minds to the evidence can still be in any doubt that we are facing a climate change crisis. The evidence is conclusive that the world is not only getting inexorably hotter, but also that the rising temperatures are creating a number of other adverse consequences.
The natural balancing factors that keep our global climate in a stable state – especially the polar ice caps – are being lost and the result is increasing climatic instability – rising sea levels, coastal erosion, flooding, slips, severe storms – all of which threaten our existing living standards and, in the long run, the very survival of our life on earth. We are getting perilously close to the point of no return, a tipping point, from which there will be no recovery.
Little wonder, then, that governments everywhere – both central and local – are increasingly being challenged to recognise and respond to the danger by declaring a climate change emergency in their areas of responsibility – and that is nowhere more true than here in the Bay of Plenty.
Growing numbers of government entities – worldwide – have taken this step. But those who have done so or proposed doing so have been greeted with a chorus of disapproval from both cynics and sceptics.
Some of the disapproving voices have been raised by those who profess to regard climate change as a “con”, though quite who would have an interest in – let alone the capability to foist upon us – such a worldwide body of misinformation is not clear.
The more usual objection, however, comes not from sceptics but from cynics. What is the point, they ask, of something that is so clearly just “gesture politics”, a prime example of “virtue signalling”, and that in itself does nothing to address the problem, assuming it is real?
That question deserves a considered answer. First, let us immediately concede that the declaration of a climate change emergency produces no automatic and positive outcomes. It produces no new resources or solutions and provides no new powers. Such a declaration has no legal or statutory force – in that sense, it changes nothing.
But in other senses it is a significant step forward. It is, first, a formal and public recognition by those in authority that the issue is real and that the threat will only become more serious if it is not addressed.
And, it signals a determination to take whatever action is necessary to avert the threatened damage to our planet and our way of life. That signal serves as a constant reminder to themselves of their commitment to act – but is also a message to those they serve, alerting them to the certain need for measures that may be unwelcome.
Even then, however, a declaration of climate change emergency will mean nothing if it is not the prelude to practical consequences.
It should, at the very least, put in place a climate change lens for public authorities through which all issues of public policy can be assessed. It should require the preparation of a detailed climate change agenda and action plan which can be rigorously implemented and adhered to.
It should mean a list of tests and questions to which every element of policy and action – even those with apparently no impact on climate change – should be subjected. A declaration should, in other words, lead to real, hard-edged and committed steps to putting climate change at the forefront of policy-making; there is, after all, if the declaration is to have its full force and effect, no issue more important than the survival of our species and of our planet.
There is also a role here, not just for government agencies, but for ordinary citizens. We must be ready to hold our elected representatives to account for the promises they make to us – through the declaration – to the effect that they have our interests at heart and are ready to do what it takes to protect us.
And we should be prepared to show some understanding of the harsh reality – that the actions foreshadowed by the declaration may at times be inconvenient and costly. We are all in this together. It is a battle we must all fight.
Bryan Gould
7 August 2019
The British Trump – I Don’t Think So
A British newspaper last week published a photograph of the Queen meeting Boris Johnson and attached a caption which had the Queen saying, with the recollection no doubt of Donald Trump’s visit fresh in her mind, “I thought you had gone back to America.”
They were not alone in purporting to see similarities between the US President and the new British leader. But how accurate is such a judgment?
I have not had the pleasure of meeting Donald Trump but I do know Boris a little. Our paths crossed first when he was the political correspondent of the Daily Telegraph – indeed, when I left British politics in 1994, he came out to my house and was the last journalist to interview me on the eve of my departure for New Zealand.
And we ran Into each other again last year at Florence airport when we were both bumped off our return flight to the UK – and we took the chance of a chat about the political situation and, in particular, Brexit, on which subject we have always agreed.
There are of course superficial similarities between the two leaders. Both are larger than life and both sport extravagant coiffures, and neither is afraid of courting controversy. But that is about where the parallels end.
If the list of similarities is a short one, the list of differences is good deal longer. Boris Johnson is an educated man – an Oxford classicist and graduate no less – and has a great deal of political experience, having been a political journalist and then Mayor of London and member of parliament. He has a good understanding of the value of democracy and the rule of law, and he is not a serial liar.
Johnson may not, as they say, be “short of a bob or two”, but he is not preoccupied with his own financial and business affairs. His personal life, and marriage history, have both been a bit messy at times, not least quite recently, but he has never faced accusations of molesting or assaulting women or treating them with disrespect.
Johnson has vowed to stand up for Britain, especially on the Brexit issue, but he has not found it necessary to set one group against another in his own country or to denigrate other countries. He is undeniably right-wing but the breadth of his political experience at least provides him with an insight into the lives of the less fortunate and into the downsides of free-market policies – and that might even lead him, while Prime Minister, to moderate those policies.
Even in terms of their foibles and and weaknesses, there are significant differences. Johnson deliberately courts the image of someone who is a bit shambolic and likely to go off the rails because he know that this helps people to relate to him – as they laugh at him, they also warm to him. But behind the buffoon’s facade, there is a sharp and calculating political brain.
Trump, on the other hand, cannot bear to be laughed at, and takes umbrage at anything that smacks of disrespect for his office. His self-importance and insistence on the trappings of power are deadly serious. In his case, the buffoon we see is not an act but is the real person.
Despite these differences between them, however, we are bound to see repeated examinations on both sides of the Atlantic of their supposed simIlarities. The British media hostile to Boris will try to use the issue as a stick with which to beat him, since any association with or similarity to Trump will not play well in Britain.
And Trump-supporting American media will try to build the story that the two leaders are blood brothers, in an attempt to demonstrate that Trump is more mainstream than he actually is, and that his peccadilloes are to be excused because they are not unique to him but can be found elsewhere.
I remain confident that Boris Johnson, whatever his other weaknesses, will not see Donald Trump as a model to be followed. My slight acquaintance with him leads me to hope that at least one of the leaders of what used to be called “the free world” knows what he is doing.
Bryan Gould
27 July 2019