• A Win for Labour and Democracy

    It is very much to Labour’s credit that they have put in place a more democratic set of internal rules across the board and that the outbreak of democracy now applies to the election of the leader as well. The events of recent days, however, suggest that the party has yet to understand fully or feel comfortable with the new procedures.
    The new electoral college, which extends the power to choose a leader to party members and affiliated bodies as well as to MPs, is modelled fairly closely on the procedures of the British Labour Party. In the UK, though, the leader faces an annual election; and it was the need to protect the party against frivolous or vexatious challenges to the leader that led to the requirement that a challenger would have to secure the nominations of at least 20% of the parliamentary party. It was that requirement I had to meet when I made my own bid for the leadership in 1992, following the resignation of the then leader, Neil Kinnock.
    In both the UK and more particularly New Zealand, though, MPs have given up their exclusive power to elect the leader with some reluctance. The fear is always that the wider party electorate could saddle the parliamentary party with a leader who did not enjoy the confidence of MPs.
    We saw something of this in the provision put to last week’s conference to the effect that the new democracy would apply only if 60% of MPs agreed that there should be an election. It was always unlikely that this restriction would survive long. You cannot show the dog the rabbit and then expect it to accept, as the rabbit is put back in the hat, that it was only for show. Delegates to the conference were virtually certain to twig that, under the proposed rule, the caucus had retained for itself the virtually unassailable power to decide whether democracy should apply or not.
    When the eminently predictable happened, however, and the delegates asserted themselves by demanding a lower barrier to the new democratic process, many people – and most of all the media – were apparently taken by surprise. The result was that a state of extreme excitement was engendered overnight. Suddenly, what had seemed a distant and uncertain prospect became – in the minds of many – a virtual certainty; there would be a challenge to David Shearer’s leadership.
    Sadly, many who should have known better enthusiastically played the roles assigned to them by slavering media. Victims and villains were quickly identified and condemned. “Strong” action was urged. Personal antipathies and grievances were widely aired.
    No better case for a wider electorate than just the caucus could have been made. On this evidence, a significant role for the party membership is long overdue, since they are less concerned about their career prospects or personal rivalries and more likely to focus instead on the need to elect a Labour government.
    Let us remind ourselves of where we have got to. There will be, irrespective of whether there is any actual or potential challenge, and as the rules provide, a vote in February to confirm or otherwise David Shearer’s leadership. On the back of his achievements so far, and the fact that he enjoyed a good conference and made an excellent speech, he should and will feel confident about the outcome of that vote.
    But the provision that there should be such a vote at least once in three years is there advisedly. The fact that it is to take place is in no sense evidence that a challenge is imminent. But, at the very least, it provides a kind of safety valve – an opportunity for any disaffection to be expressed in a secret ballot. As with any secret ballot, the participants have no obligation to disclose their intentions to the media, and certainly not three months in advance.
    If and when David Shearer is endorsed in that vote, the absence of any disaffection will have been established. Only in the unlikely event that the leader loses that vote will be there be a new election and only then will we know which contender (or more likely contenders) would put their names forward. And let us remind ourselves that harbouring leadership ambitions is hardly in itself a hanging offence.
    If these are recognised as the outcomes that are presumably desired and intended and they are handled with calmness and good sense, the Labour party has nothing to lose and much to gain from the new procedures. The party will in February most probably confirm that they have the right leader to lead them into the next general election, or will elect a new leader who they think could do a better job.
    In either event, the focus must be on replacing a government whose tribulations in 2012 and parliamentary arithmetic both strongly suggest is there for the taking. Party members should breathe through their noses and enjoy the process that they have ordained; it is, after all, democracy in practice.
    Bryan Gould
    21 November 2012

    This article was published in the NZ Herald on 23 November.

  • Can Labour Win Next Time?

    There are never any final battles in politics. No one should begrudge John Key his moment of triumph on Saturday, but – as he will be well aware – the campaign for the next general election has already started.

    A 48% share of the votes cast was, on the face of it, an outstanding achievement. But we should bear in mind that fully two-thirds of New Zealanders eligible to vote did not give their support to National, either failing to register or vote, or voting for someone else.

    This was not, in other words, a coronation. Not everyone loves John Key. Yet we can already see the “elective dictatorship” syndrome in John Key’s claim that he has a mandate for asset sales, despite the incontrovertible polling evidence that the policy is opposed even by National voters.

    The election campaign was at times an unhappy experience for John Key. It revealed to his supporters, both amongst voters and in the media, a politician whom many may not have seen before. The images of an uncomfortable and defensive John Key, clearly irritated at being challenged and having to answer questions he would prefer to have ignored, will remain in the memory for a long time.

    Nor is it the case, as some have suggested, that Labour’s poor showing means that the next election is already a lost cause. We should not forget that, in 2002, National’s share of the vote dropped to just 22%, yet three years later, under the leadership of that “strange fellow” Don Brash, National very nearly pulled off a win.

    None of which means that there is any disguising the mountain Labour has to climb if it is to mount a real challenge in 2014. The first casualty of their failure has been their leader – rough justice in a sense, since Phil Goff emerged from the campaign with an enhanced reputation.

    The lesson that Labour must learn, though, is that elections are rarely won on the strength of a four-week election campaign. Labour worked hard through the recent campaign but they made virtually no progress in undermining the image that John Key had projected over the preceding three years.

    The truth is that Labour lost the election because they were, for most of the parliamentary term, an ineffective opposition. They did not work hard enough. They left their run, such as it was, far too late.

    Labour’s new leader needs to think hard about the politics of being in opposition. If they are to do better this term than last, there has to be a carefully planned, developed and staged strategy so that, by the time the next election campaign starts, the groundwork has been properly laid.

    The first objective must be to help voters to look behind the smile and the photo opportunities, and to ask the hard questions about exactly what the government is doing, what it has achieved, and – above all – whether the Prime Minister can be trusted to tell the truth. The goal must be an electorate that is ready to examine John Key’s words much more critically, and media that do their proper job of ensuring that voters are properly informed.

    A classic example will arise early in the life of the new government. John Key has so far avoided giving a straight answer to concerns about the foreign ownership of the assets that he intends to sell – concerns that are hardly surprising in a country that has already sold a higher proportion of its assets into foreign ownership than any other developed country.

    He hints that he will somehow ensure that shares in those assets will remain in New Zealand hands. Yet John Key knows (and Bill English has tacitly admitted) that the trade agreement with the United States and others that is currently being negotiated in secret is almost certain to make it illegal to discriminate against foreign investors when those assets are sold.

    The task of an opposition is to make sure that, on this and other similar issues, the Prime Minister cannot simply smile and shrug – and make up an answer that doesn’t quite mean what it seems to mean.

    The Labour front bench must also think harder about how and when to launch policies that are needed but contentious – policies like a capital gains tax, raising the retirement age, and extending the emissions trading scheme to agriculture. Policies like this should not be launched at the last minute, leaving little time for them to be properly understood.

    The policies that should appropriately be launched near or during the election campaign are those that will have a wide and immediate popular appeal – policies like raising the minimum wage or using the dole to subsidise youth employment.

    There are, in other words, three stages in a successful campaign. First, changing – through hard work and relentless pressure – the public perception of John Key as a leader who can be trusted. Second, taking enough time – well before the election – to build support for policies that opponents can easily misrepresent. And third, launching vote-winning policies so as to generate momentum through the election campaign.

    A new leader and a strategy like this could make for a very interesting election in 2014.

    Bryan Gould

    28 November 2011

    This article was published in the NZ Herald on 30 November

  • The Lump of Labour Fallacy

    Popular wisdom and what passes for common sense are not always the best guides to running a successful economy. That is why businessmen who have a good practical grasp of what it takes to run a successful business are often wide of the mark when it comes to making policy for a whole economy.

    An economy, contrary to what is often asserted, is not like a business. Particularly in down times, the measures that might be required in the interests of an individual business are the very reverse of what is needed by the economy as a whole. Cutting costs, deferring investment, and laying off workers will help to balance a single set of business accounts but are the last thing that a whole economy needs if it is to avoid continued recession.

    It is often the case that good economic management may seem counter-intuitive. A case in point is what economists call the ‘lump of labour” fallacy – the belief that there is a fixed amount of work available and that the task is to decide how that is to be shared out fairly.

    The fallacy is alive and well in the minds of even experienced policy-makers. We saw shades of it in the “nine-day fortnight” that emerged as a counter-recessionary strategy from last year’s job summit. The idea, which not surprisingly had little impact in practice, was based on the notion that if a fixed amount of work could be shared out, more jobs would be created, or at least saved. By diverting attention from what was really required – a policy which would increase the number of jobs – it actually hindered the fight against unemployment.

    The fallacy rears its head unhelpfully in other contexts as well. In the perennial debate in developed countries about immigration, one of the main arguments advanced against allowing an inflow of newcomers is that they will “take our jobs”. There is little recognition of the real possibility that a controlled rate of immigration could create jobs and expand the economy.

    There are of course many considerations in determining what are appropriate levels and kinds of immigration; but we would no doubt reach better decisions on matters such as this if we could free our minds of intuitive fallacies and look at the practical evidence. The great economic success of a Hong Kong, for example, was greatly helped by the constant inflow over many years of (often illegal) immigration from across the Chinese border.

    The “lump of labour” fallacy also underpins an important current debate in our own country. The stubborn refusal of comparatively high unemployment to melt away has again prompted discussion of what the government could or should do to “create” jobs. The very suggestion that something could be done has, however, been greeted – even by very experienced commentators – with the apparently incontrovertible objection that “the jobs just aren’t there.” And that means, it is said, that there is nothing the government can do.

    If that were really the case, of course, the government’s push to get people off benefits and into jobs would be futile. The jobs cannot both be non-existent for the purpose of getting unemployment down, yet waiting there for lazy beneficiaries to take up. And while it is certainly true that there are strict limits as to how far (if at all) governments should try to create jobs by putting in place “make work” schemes, that is not the real issue.

    The reality is that the number of jobs in an economy is not a given, but is a function of the level of demand and therefore of economic activity. The number of jobs falls in a recession and rises in better times. If we want to recover from recession, we need policies that will stimulate demand and purchasing power so that people will buy what producers make, and retailers can boost sales, and employers can see that it is worthwhile to take on more staff, and more people earning good wages will keep the virtuous circle going – so that the government’s finances benefit as well through a higher tax take.

    There is no mystery about this. And the level of demand is very largely determined by policy. A government that provides stimulus to the economy through maintaining or increasing its own levels of spending and investment, as the Australians did, can achieve a great deal in avoiding recession and fighting unemployment.

    If the policy priority, however, is to get the government’s (perfectly manageable) deficit down, the outcomes are equally clear. We may comply with good business practice by pleasing our bankers in the short term, but our economy will be smaller, unemployment will be higher and the recession longer. If we really want to please our bankers in the longer term, we should be growing the proportion of our resources devoted to production and exports. That will not be achieved by allowing a prolonged recession to close down parts of our productive capacity.

    Bryan Gould

    15 August 2010

    This article was published in the NZ Herald on 31 August.