Fairy Stories Are Not the True Explanation
Shane Jones’ plan to help unemployed youngsters, particularly Maori youth in Northland, to join the workforce has received a mixed response. Everyone agrees that something needs to be done to help NEETs (young people Not in Employment, Education or Training – there are so many of them that they now have their own acronym) but the proposal has predictably brought forth the usual stories about young people being workshy, drug dependent or ill-prepared to do a day’s work.
The story usually follows a familiar course. An employer is found who is prepared to say that he has jobs available but has been unable to find anyone to take them up. The story is then repeated, with no doubt a gratifyingly substantial dollop of publicity for the originator, by high-paid broadcasters, comfortably ensconced in a television or radio studio – who, true to form, enjoy using phrases such as “let’s get them out of bed” – and is then peddled by politicians who will seize any chance to argue that youth unemployment is not their fault or responsibility.
On this latter point, let us be in no doubt. John Maynard Keynes established more than 80 years ago that unemployment is not the fault of the unemployed (through, for example, demanding too much by way of wages) but is brought about by failures of policy. It is the responsibility of policymakers, he said, to run the economy so that there is sufficient demand for labour; without sufficient demand (something over which the unemployed have no control) they will remain jobless, no matter how keen they are to work.
Little attempt is made to check whether the employers telling the story are offering a genuine job, properly valued, paid and permanent, or whether the attitude is instead that a NEET should be grateful for whatever is offered and that young people’s labour is just another commodity, to be picked up at knock-down rates, and dispensed with as soon as possible.
All too often, one fears, the attitude is that the offer of a job should be viewed as an act of charity or generosity, rather than an economic transaction agreed between equals, with a commitment on both sides to fair value. There is no recognition that for most young people a job is the basis on which, potentially, they can begin life as a full member of society, earn a living, pay their way, strengthen their sense of self-worth, and plan a future. It is not just a further opportunity for society to drive home to them how little they are worth, a hoop through which they have to jump so as to land at the bottom of the pile.
The repetition of such stories reveals more about those telling them than about those who are their subjects. The stories are usually told with the most relish and gusto by those in secure and well-paid and reasonably interesting jobs, and by people whose good fortune means that they don’t have the least idea about the lives of those they presume to denigrate.
The purpose of such stories is usually to allow the tellers to wash their hands of the issue of youth unemployment, and to comfort themselves and excuse their lack of concern, by telling each other that the victims have no one to blame but themselves. All too often, as well, there seems to be a political motive – to establish, against all the evidence, that the market economy serves everyone’s interests and that it applies a moral judgment so that it will reward those who deserve it and that only the ne’er-do-wells will fail to prosper.
In any event, the popularity and frequency of such stories is further and depressing evidence of how divided and fractured we have become as a society. Those who are concerned about our future, and especially the future of those who seem to struggle from the outset, would do well to subject such convenient explanations of their struggles to careful scrutiny. To blame the strugglers themselves for their difficulties is quite literally to add insult to injury. We can do without such self-serving nonsense.
We will all benefit from living in a healthier and better integrated society oif we take the trouble to understand how the pressure points arise.
Bryan Gould
6 December 2017
Dealing with Housing Demand and Bank Lending
Any relaxation of the Reserve Bank’s restrictions on bank lending for house purchase will be welcome to those who would then need a smaller deposit than is currently required by the Reserve Bank’s loan-to-value ratios.
But how many will pause to reflect that this good news for today’s purchasers may simply mean that the problems that have afflicted our housing market could – if unrestrained – become even more entrenched for the future? And will our policy-makers learn from the evident success of loan-to-value ratios in restraining the relentless inflation in house prices?
It is widely accepted that New Zealand’s housing situation, and the policies applied to deal with it, are a total mess. The confusion arises partly because we are faced with two problems – problems that are linked in some respects but are actually two quite different phenomena.
The first is the problem of homelessness, and the second is the problem of unaffordability. The first problem is the easier to explain and redress; it arises by virtue of a simple failure to build enough houses, but is exacerbated by the incessant rise in house prices and, as a consequence, in rents.
The new government is gearing up, quite rightly, to deal with the long-term failure to build new houses; they recognise that the missing houses will not be provided by private property developers (whose interests lie at the higher end of the market where big profits are to be made), and that the houses will be built only if the government steps in.
The constraints the government faces in taking this on do not arise because they don’t have the money – Michael Joseph Savage showed in the 1930s that a determined government can always find or create the money to build new assets – but because there could be shortages of the necessary materials and skilled labour.
A solution to this problem will require government and private industry to work together on an agreed industrial strategy. There can be little doubt that building the required houses, at an affordable price, would be a major step towards resolving the homelessness crisis.
But, even if more houses are built, what further action is required, particularly in respect of the other issue – that of unaffordability? Homelessness arises not just because there is a shortage of houses, but because rents have risen so sharply. It is often the rise in rents that has left young families homeless.
It is at this point that the homelessness and affordability crises coincide. Rents have risen because speculators have been able to borrow from the banks almost without limit in order to buy up houses (often sold at knock-down prices as a consequence of mortgagee sales) and they have then raised rents on those houses so as to make a fat return on their investment.
The Reserve Bank’s loan-to-value ratios, by making it harder for speculators to borrow, have played a valuable part in restraining this unwelcome development. Interestingly, the new government has made a similar analysis of the problem, as shown by its prohibition of foreigners buying existing houses.
The effect of this prohibition is to remove an important element of extra demand from the housing market – it has, in other words, exactly the same effect as the Reserve Bank’s restrictions on borrowing. Both the government and the Reserve Bank, in other words, have at last recognised that the problem with our housing situation is not just one of inadequate supply but also one of excessive demand, caused as much by excessive bank lending as by the introduction of additional money from overseas.
When speculators take advantage of the banks’ willingness to go on lending to them, and bring this excessive demand to the housing market, their aim is always the same – to create, and derive untaxed capital gains from, an asset inflation whose effect is to make housing impossibly expensive for our young families. This self-serving pursuit of profit by the banks and speculators (whether from home or overseas) should no longer be allowed to distort our housing market, to the great disadvantage of Kiwis seeking a home of their own. At least the government and the Reserve Bank are agreed on what the problem is and what needs to be done.
Bryan Gould
1 December 2017
Recession? Surely Not!
I confess I did a double-take when I saw the headline “Recession Likely Under Ardern” this week. I wondered what new development or brilliant piece of analysis could have led to such a rush to judgment.
All became clear, however, when I looked further. The piece that was headlined in this way was written, it seems, by one Jared Dillian – described as a “US-based Lehman Brothers trader” – and, since it was the collapse of Lehman Brothers that triggered the Global Financial Crisis, one must accept that Mr Dillian might know a bit about what causes recessions.
Furthermore, the piece was published on the Forbes Magazine website; Forbes magazine, of course, is the house journal of the richest people in the world and famous for ranking them in terms of who is the richest, so one can expect that their readership might be easily disconcerted by any thought that a new government might prove to be somewhat interventionist.
My initial reaction was one of amusement at the transparency of the motivations of those involved in concocting such a piece, but my amusement quickly turned to exasperation. A further perusal of the article revealed that it was based on literally nothing of substance. The best Mr Dillian could come up with was that a government that sought to make it more difficult for foreigners to buy existing housing and that limited the numbers entering the country would be seen as putting up the shutters – and that could then have a depressing effect on economic activity.
An obvious rejoinder is that our new government is grappling with a deep-seated problem inherited from its predecessor – and that problem is one of a raging asset inflation that has made decent housing both unavailable and unaffordable for many of our young families. The limits placed on foreign purchasers are merely a sensible attempt to damp down the demand that is fuelling an unstable asset inflation, the dangers of which and the risks to economic stability they pose should surely be apparent to Mr Dillian, given his experience with Lehman Brothers.
Interestingly, while Mr Dillian professed to see the threat of recession implicit in the new government’s policy stance, other commentators hostile to a left-of-centre government are quick to point up what they see as the supposedly inflationary consequences of measures like raising the minimum wage and more spending on health and education. The two sets of right-wing commentators might have more credibility if they could only get their acts together – they can’t have it both ways.
I then further noted that the Forbes magazine piece had been seized on by the National Party and given wide circulation in social media – and all this before the new government has had time to draw breath. Then the penny dropped (don’t ask me whether that is likely to be recessionary or inflationary!)
It struck me that the episode tells us something important about the neo-liberal hegemony which has dominated politics and economics in the west for the past decade or two. The favourite tactic of those who would defend the inevitable tendency of “free-market” policies to concentrate wealth in just a few hands is to warn that any attempt to frustrate those market forces will threaten the prosperity and living standards of ordinary people.
So, a huge effort is made to deter any such attempt and that means that we are constantly assured that a government that tries to intervene to produce fairer and better outcomes will inevitably produce adverse outcomes. That effort is not limited by national boundaries – the attempt to stop government from intervening in the operations of the “free market” is made these days on a global scale.
To be successful, any such attempt to persuade people of the unlikely proposition that governments that try to produce fairer outcomes are the problem rather than the solution must be coordinated – and the only way of doing that on the required scale is to engage the support of international media.
The essence of the attempt is not to win the argument – hence the lack of any substance in Mr Dillian’s piece – but to dominate the headlines. A headline that links “recession’ and “Ardern”, even if there is nothing to support it, is a victory of a sort because it confirms in the public mind that there is always something risky about electing a left-of-centre government.
The Forbes magazine article was not in other words really aimed at a New Zealand readership, although that did not stop New Zealand politicians and their supporters from trying to take some advantage from it. It was aimed instead at an international readership, and was intended to offset the news that a left-of-centre government had taken office in New Zealand.
In the absence of any facts or persuasive argument to support it, the Dillian hatchet job is best seen as just another manifestation of the constant campaign to discredit anything at all that might encourage voters to use their power to say to the fat cats, in whatever country, “enough is enough!”
Bryan Gould
23 November 2017
Why Is Mike Hosking So Hard to Watch?
I feel sorry for Mike Hosking. Fronting a show on television may seem like a doddle but it’s not as easy as it seems.
My fellow-feeling for the beleaguered presenter of Seven Sharp does not arise because I have overlooked or have become inured to his obvious political bias. It is still there and cannot be entirely suppressed, though I suspect he has made real efforts to conceal, or at least reduce it.
These days, he reserves his overt biases for release in his other media outlets, and it is his good, or rather bad luck, that his true views are as a result well-known to most of his viewers who are accordingly alert to detect the occasions when they make their expected appearance in Seven Sharp. It is, still the case, though, that it is the sense that he cannot help but slant the day’s news to suit his social and political prejudices that no doubt explains the large numbers who have signed petitions to have him removed.
No, the problem he really faces is not an obvious political bias. I know from my own experience as a presenter of a weekly, nationally networked current affairs show on UK television, that television is a curious medium. It rewards a hard to define and unusual ability and one that has no other obvious use – the ability to appear natural and relaxed while actually performing a highly unnatural function. The skilled television presenter has to appear as though he is the man next door, or your drinking partner at the local pub, while at the same time making intelligible and conveying in simple terms items of news and current affairs that are far from easily understood.
A skilled television presenter will of course always be aware that the cameras are rolling and that every expression and grimace will be revealed to the viewer. There is no hiding place. So an experienced presenter will be aware that he – or she – cannot get away with picking his nose or looking sceptical at something said by a guest or fellow presenter.
But knowing that the cameras pick up everything only exacerbates the problem. It can so easily translate into an impossibility to escape awareness that everything – good or bad – is being transmitted to the viewer, and it is that constant awareness – or perhaps self-awareness – that, of course, is absolute death to any sense that the presenter is acting naturally.
Mike Hosking, sadly for him, is a sufferer from a disease from which it is impossible to escape. Try as he might, he cannot give the impression that he is unaware that the cameras are on him. The more he tries to appear natural, the more evident it is that he is painfully trying to appear so – and that of course destroys any pretence that he is merely a value-free reporter and transmitter of the stories of the day.
The more he tries to behave as though he is just an ordinary bloke, sharing with us the normal reactions to the items he is reporting, the more he has to act the part – hence the constant changes of facial expression, the shrugs and grimaces, the engagement with the viewer constantly maintained by always looking into – and looking for – the camera lens.
And the problem is that, once a presenter is afflicted with the disease, there is no cure. Acting being relaxed and naturally rapidly develops into over-acting, so that the viewer is increasingly delivered the message that it is not the message that matters but rather the reactions, expressions and subliminally expressed views of the presenter that are the real point of the exercise. And obvious over-acting is easily equated with pretending, so that the viewer feels he cannot believe the message that is being delivered to him and his trust is therefore forfeited.
Once the viewer twigs that it is the performer, and not the substance of the story, that is the message, the performance becomes increasingly hard to watch. In Mike Hosking’s case, it is not so much that his audience finds it difficult to accept the views he tries to promulgate, as that they want to see the story told professionally and accurately, rather than having to watch a performance by Mike Hosking whose primary purpose is to tell us what he thinks about the issue.
What can he do to remedy the situation? Sadly for him, not a lot. Once a presenter is constantly thinking only of how he appears to his audience, the damage is done and cannot be repaired. He, or his employers, could take a break and see if that could help him. In the meantime, the rest of us will find it increasingly difficult to watch Seven Sharp.
Learning About Work
The advent of November tells us that the year is nearing its end – and that means in turn that summer is about to arrive (if we are lucky) and that Christmas is just around the corner. But it also brings another annual ritual – the end of the university year and the return of thousands of young people to Mum’s cooking and the other comforts of home.
This annual migration often means the disruption of domestic calm, as large and noisy young men and women re-establish themselves temporarily in the bosom of a family that had adjusted to a quieter life without them. And the end of academic pursuits for the year does not – nor should it – mean for those returning students the end of the learning process.
For many homecoming students, the end of studies provides an opportunity, and means an obligation, to go out and get a (usually seasonal) job in their home town, in the hope of earning enough to cover their costs in the coming year – and that can offer a different kind of learning and instruction.
In my own case, and even at a time when fees were not charged for a university education, it was necessary to cover the cost of board and lodging. For me, the long summer holiday at home meant getting a job in the local dairy factory. Those months doing hard physical work taught me lessons that remain with me today. I learnt about working with mates in a team, how important it was to earn respect by pulling your weight and how tough physical work can be. And I learnt about the wider world and how milk powder, casein and butter were made, and gained an insight into what lay behind one of our most important export industries.
I learnt, too, about the dangers of working with powerful machinery. While I was working at the dairy factory, one workmate was killed and another was seriously injured. The fatal accident occurred when a workmate was steam-hosing the interior of a large steel vat which had originally been bought to make casein and was equipped with a large beater; it was however being used for the time being to store milk, and therefore had to be cleaned each day. One day, someone carelessly pushed a starter button on the wall with the result that the beater started whirring while my mate was inside.
These lessons were a valuable adjunct to what I was studying at university and could not have been available to me if I had not had to work my way through university. Perhaps the most important aspect of my education in this respect was what it taught me about my fellow-citizens. I learnt about how those of my contemporaries who were not at university but were earning a living looked at life and how they went about dealing with the obstacles in their path. This was knowledge I could never have acquired, from within “the groves of Academe”. It was knowledge that has greatly affected the way I look – even today – at contemporary New Zealand.
In a country that is, it seems, increasingly polarised between those fortunate enough to gain qualifications that open the door to a comfortable life, and those on the other hand who survive by “the sweat of their brow”, it is salutary for the former to understand the problems that face the latter.
I have sometimes heard the scornful comments of motorists as they drive past a gang of workers doing road repairs and notice someone “leaning on a shovel”. I wonder how many of those making such comments have actually spent a day on physical labour?
It is an important factor in building an integrated society that we should each have some insight into what life is actually like for our fellow-citizens and that we should each give proper value to the efforts made by others. The annual rite of the “summer job” is not only essential in financial terms for the students involved, but helps us all to share life’s experiences. Long may it continue.
Bryan Gould
19 November 2017