• Voting in Local Elections

    Local government elections are upon us again. It is a fair bet that, when they are over, we will have all the usual complaints that, despite their undoubted importance, the turnout was depressingly low. So, why do local elections attract so little attention and involvement from the general public? I have a possible answer to that perennial question.

    It is generally thought, though on what basis I am not sure, that local government is not an appropriate arena for party politics. It is presumably felt that political parties are legitimately concerned with – and are the expected participants in – the contest to produce the government of the country, but have a less obvious role in local elections.

    Whatever the merits of this view, we pay a heavy price, I contend, for the absence of political parties from the local election contest. That absence means, first, that the resources commanded by the political parties, and which are available to raise the level of attention and the volume of information available to the voters in national elections, are missing from the local scene.

    Voters are therefore less likely to be aware that local elections are taking place, let alone cognisant of their significance or of the issues involved. But there is also a further factor.

    My wife and I are keen to do our democratic duty, and we well understand the importance of the functions undertaken by local government. Where we live, there is no shortage of information arriving through the letter box and telling us why we should vote for particular candidates. So, why do we struggle to persuade ourselves to cast our votes?

    The problem is that one of the potentially most important pieces of information is usually not available. Although there are often a number of candidates put forward by the local branches of the political parties, they do not identify themselves as having a party allegiance – presumably for fear that they would thereby alienate those who are hostile to the party to which they belong.

    But the result is that the voters are left without an important shorthand indicator of a candidate’s views on signifiant issues. What, for instance, is their view of public expenditure? Would they think it worthwhile to raise rates a little in order to afford a valuable local facility? How far would they take into account the wider public interest on issues like climate change?

    A party label will often provide a useful clue as to where a candidate might stand on such broader issues. Without that information, we are left to assess the candidates on their own account of their achievements and attitudes, and that often means that the candidates who stand out (if we are prepared to wade through the often quite lengthy and detailed cvs) are those who seem to have some experience of “running things”.

    A party label can, in other words, save the voter a great deal of trouble in assessing who to vote for, and could lead to the election of candidates who are more widely qualified than merely on the basis of their individual “business” experience or lack of it.

    So, my conclusion is that local elections would produce better outcomes and attract wider participation from both voters and candidates if the political parties made their involvement more obvious and provided essential information to voters about the party allegiances of the candidates they are prepared to endorse.

    The candidates themselves should also come clean. Many budding politicians see local elections as the first step on the ladder to a political career. They should learn the lesson early that it is never a good idea to keep secrets from the public.

    But the real lesson is that local government is an important element in the government of the country – and, like every part of government, it raises real questions of political belief and principle. It is not merely the domain of the well-intentioned. The voters need to know where their potential councillors are coming from, in terms of their fundamental beliefs about how society should function. Their party political allegiances do not by themselves provide a full and accurate picture of that issue, but – where they exist – they are an important element of that picture nevertheless.

    Bryan Gould
    1 October 2019






  • The Value of Balance in News Treatment by Our Media

    I was born in Hawera, and grew up and went to primary school in the small Taranaki town. Hawera was a miracle; it had a small population and a short history, but it sported many of the facilities and attributes of a much larger and longer-established town.

    Among those was an excellent daily newspaper which provided regular coverage of International, as well as local, news. I grew up, like many Kiwis, relying on my daily paper for what I thought was an impartial account of what was happening in the world. It simply did not occur to me that what I read in the paper was anything other than the plain and unadorned fact.

    It was only when, in my early 20s, I arrived in the UK that I discovered that newspapers did not all tell the same story but, rather, could be defined by the particular stance they took on politics and everything else.

    The saving grace in the UK for this state of affairs is that the great national newspapers, London-based on the whole but with nation-wide circulations, did not hide their political affiliations. As a result, readers knew what they were getting when they purchased their newspapers. If you had your own well-defined politics, you would buy a paper that reflected your preferences.

    The situation in New Zealand is a little different. We do not have the equivalent of the British national papers; instead, each major city has its own paper to which readers turn for their daily news.

    Those readers do not generally have a choice of paper and therefore have no ability to choose a paper that suits their own views. They must therefore take what they are given, and they are implicitly invited to accept that what they read is the unvarnished and impartial truth.

    This imposes on each of those papers a responsibility to present a balanced view of what is happening. If they do not, they fail to meet one of the most important duties of a free press.

    That balance is not achieved merely through allowing occasional access to contributors whose views are at variance with those of the paper. The balance that matters is in the selection of the stories that are reported and in the prominence and frequency with which they are treated.

    Any disturbance of that desirable degree of balance can be easily recognised. A newspaper that constantly rehearses stories that disadvantage one side of an argument – or of the political divide – rather than another, or that treats what is plainly partisan comment as headline news, is manifestly failing its readers and leaves them with no other option than to find their news from a different source – which usually means the broadcast media.

    But the damage done to the proper functioning of democracy by such behaviour is not so easily undone. In a small country like New Zealand, the broadcast media are often in the same ownership as the newspaper and – even when that is not the case – will all too often take their lead as to what is news from the headlines in the major newspapers. And those city-based newspapers will themselves often have a common ownership and will therefore reflect a similar view as to what is newsworthy, thereby again limiting the possibilities of a balanced approach to news stories.

    As we can see in various countries around the world, the threats to impartial and reliable news reporting grow day by day. The issue in many countries is not just whether the press is free or not, but, rather, how well and responsibly it uses that freedom.

    So, what is the interested reader and seeker of news to do? If the news they seek is constantly presented by their usual paper in a partisan manner, the only remedy is to stop buying and reading that paper. But that is no remedy, since it would mean, for the individual concerned, further restricting the available sources of news and the range of views to be found in them.

    In the end, the price of deliberately partisan news reporting is paid by us, the readers, and by our democratic system. Responsible newspaper owners and editors should take note.

    Bryan Gould
    23 September 2019



  • The Politics of Opposition

    For most of the time I was a British MP, my party was out of government – these were the Thatcher years, when it was hard for anyone else to get a look-in. As a front-bencher and shadow minister, I became familiar with the strategies required in a parliamentary democracy of being in opposition to a well-supported government.

    My colleagues and I settled quickly into the daily pattern of probing the day’s political developments for opportunities to embarrass the government, or at the very least to put it on the back foot. This meant a constant – and virtually daily – series of press conferences and media releases designed to keep the pressure on, with the twin objective of showing the government in a bad light and demonstrating that the opposition were on the ball and had policies that were superior to those of the government.

    The media rapidly came to expect and rely on this daily diet of political guerrilla warfare, and commentators sympathetic to our cause did their best to amplify and flesh out the points we tried to make; sometimes, our friends in the media did the job for us, by launching their own hit and run attacks on the government.

    But, after a while, we began to realise that were were getting nowhere with such tactics – and that the public seemed quickly to grow tired of our predictably critical responses to anything proposed by the government.

    The voters were inclined to let our efforts pass them by, dismissing them as just par for the course – “well, they would say that, wouldn’t they?” seemed to be the common response to our attacks. The harder we tried to land a blow on the government, the more they seemed to say that it was just more of the same.

    The bad news for today’s Opposition in New Zealand is that they seem to have reached a rather similar stalemate. Voters have become familiar with what they now see as the inevitable and expected riposte from an opposition spokesperson to any news item about a new government initiative.

    Even in instances where the government has proposed to remedy a long-standing default or deficiency, or to do something that is clearly long overdue in the general interest, an opposition spokesperson will pop up to say that it is “too little” or “too late” or “will cost too much” or “we would have done it better”.

    The lesson for politicians in opposition is that they must not be seen to be opposing just for the sake of it. They can all too easily be seen as bad-mouthing an idea or proposal, not because of its merits or otherwise but because of where it has come from.

    The lesson I and my colleagues learnt in Britain was that responding to the government in a more thoughtful and less partisan way was more likely to commend itself to the public – building the opposition’s image as responsible politicians and having the added advantage that, when effective critical points did need to be made, they were given more credence than they would have had if they were seen as just another stock standard and automatic response from an opposition determined to oppose, come what may.

    This conclusion may be a hard one to accept for Simon Bridges and his team, focused as they are on trying to get maximum exposure for a leader and a front-bench that has yet to make its number with the New Zealand public.

    But, it is in everyone’s interest that our parliamentary democracy, with all of its many strengths and virtues, should not be demeaned by a constant exhibition of the downsides of party politics at its worst. We all have an interest in good government – and that can sometimes mean that politicians should forbear from playing the party game if they – and we – can see that the government of the day is making a creditable effort to grapple with a long-standing problem or an important issue.

    Giving credit where it is due can be the best policy. Sometimes, less is more, and that is as true of opposition as it is of other good things.

    Bryan Gould
    9 September 2019

  • Where Money Comes From

    Most people would say, no doubt, that they have a pretty good idea of what money is. They live with the reality of money every day. It is what is needed to buy the necessities of life and to maintain a decent standard of living.

    You get money, they would say, by earning wages or selling something or getting a return on an investment or borrowing. There is no mystery about money; it just is – a constant part of the environment, like land or air or water.

    But they don’t usually stop to ask where money comes from or who decides how much money there should be in circulation or what society as a whole should do with it. Most would say, if pressed for an answer to those questions, that the government has a role of some sort – but that would only be part of the answer.

    The truth is a little more complicated, and surprising. The government does not make the decisions that matter on money. The institutions that have the biggest say on money matters are the banks.

    It is the commercial banks the are responsible for creating virtually all the money in circulation in our economy. And the amazing aspect of this is that they create the money literally out of nothing.

    They create money when they lend to their customers, usually on mortgage. What they lend is not actual money; it is merely a book entry by which they credit your account by the amount of the mortgage. They then charge you interest on the loan they have created.

    All very interesting, you might say, but does it matter? Well, yes.

    It matters because the amount of money in circulation has a big impact on our economy. For example, if too much money is created, we are likely to see a rise in inflation. And yet decisions on these issues are being taken in the commercial interests of privately owned banks, not in the public interest – and, in our case, the billions of profit made by those banks are then shipped back across the Tasman to their Australian owners and lost to New Zealand.

    The only intervention made in the public interest is by the Reserve Bank which attempts, with only limited success, to influence the amount of new money created by controlling its price through setting interest rates. They calculate that if borrowing is made more expensive, people will be less wiling to take out loans.

    But there is a further problem about the money created by the banks. Created and lent as it largely is on mortgage, it flows almost entirely into the housing market and thereby pushes up the price of housing – and it leaves a large proportion of the population in debt. At the same time, it fails to reach the places in the economy where it is most needed – to fund productive investment in the skills, technology, infrastructure and capacity essential to a modern economy.

    There is an increasing realisation that this is no way to build a strong economy. I have the honour to be the patron of a campaigning organisation called Positive Money, which is part of a worldwide network of bodies dedicated to reforming our monetary systems.

    Later this week, on Thursday, Positive Money will present a petition bearing over 5000 signatures to parliament. It calls on the Finance and Expenditure Select Committee to conduct an inquiry into our present monetary policy arrangements, and recommends that the Reserve Bank should have the sole right to issue money, so that the current system is replaced with something that serves our interests better.

    It is surely time that our politicians recognised their responsibilities and took back from the commercial banks the monopoly power they currently enjoy to create virtually all of our money. We might then get some much-needed investment in the things that really matter

    Bryan Gould
    4 September 2019

  • 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