• The Labour Leadership

    It may truly be said of David Shearer that nothing so much became him as the manner of his going. He is living proof that, in today’s politics, being a decent and thoughtful person is not enough.

    Parliamentary politics and modern communications both place a huge premium on fluency and articulacy. Quite why those qualities should be equated in the public mind with the ability to run the country is not quite clear. Glibness is not always a sign of special ability.

    Many commentators, including of course government politicians, will profess to see David Shearer’s departure as evidence of the hopelessness of Labour’s cause. The reality is, I believe, quite different; David Shearer’s decision shows clearly how tantalisingly close is the breakthrough that will push Labour through the winning tape – and here is why.

    What will be painfully clear to National party strategists is that, even as things stand today, their chances of winning the next election rest on a knife edge. With poll ratings now under 50% and trending downwards, it is hard to see how they are going to find the votes to form a government in an MMP parliament.

    Both Act and United Future seem destined for the knacker’s yard. The Maori party’s chances seem almost as slim. The Conservative party is virtually an unknown quantity, as its ability to win any seats. Where is John Key to find the parliamentary votes to give him a working majority?

    New Zealand First, if they cleared the 5% threshold, might or might not be prepared to do a deal but Winston Peters might be equally tempted by the prospect of joining a new government and making a fresh start as Foreign Minister. His decision in that regard would of course be made much easier if a Labour-led coalition could show that, even without New Zealand First’s support, it commanded a greater share of the popular vote than the National grouping.

    All of this takes place against a background where the government’s greatest advantage – the Prime Minister’s personal popularity – is a wasting asset. There are only so many times that one can go to that particular well before it runs dry. “Trust me” works well until the day that trust is exhausted – as Tony Blair discovered when the truth was finally known about the Iraq war.

    The point to grasp is that all of these considerations and uncertainties present themselves for National without any further deterioration in the polls and at a time when the only alternative as Prime Minister was unable, by his own admission, to show that he was a credible option. Imagine how a new contender, able to demonstrate the necessary credibility, could transform what is already a difficult situation for National into one that is very favourable to Labour. Another few percentage points are all that is needed.

    It is a measure of David Shearer as a man that he will have done precisely this calculation. He will have concluded that a new leader – and a leader recognised as a potential Prime Minister – would provide all that is now needed for a Labour election victory, and he has accordingly acted in the interests of the party and, as he sees it, of the country as well.

    His personal sacrifice places a special responsibility on those who will now play a part in the Labour leadership election to make that sacrifice worthwhile. The party will congratulate itself on having changed the election process so as to give itself into the best chance of electing a leader who can take them to victory.

    The great advantage of widening the franchise, so as to give party members and affiliates as well as MPs a vote, is that it creates an electorate that is able to stand back from narrow personal and partisan concerns and to put the interests of the party first.

    I have participated (in the British Labour party) in a number of leadership election elections – usually as a voter and on one occasion as a contender. I have had experience of elections conducted both with the franchise restricted to MPs and also when the franchise has been widened.

    The benefit of the wider franchise is that personalities matter less and (hopefully) ability matters more. Within the hothouse atmosphere of the caucus, every vote matters greatly and the temptation is to allow all sorts of personal considerations – ancient grudges, favours to be repaid, long-standing friendships – to sway voting intentions.

    With a wider electorate, especially one that includes thousands of party members, individual votes matter less and a broad consensus about what is important to the party matters more. That is now the opportunity that presents itself.

    The good news for Labour is that the likely contenders all seem to have what it takes. The forthcoming leadership contest is not only a welcome exercise in democratic participation; it is an essential step in offering New Zealand voters a real choice as to who should form the next government.

    Bryan Gould

    23 August 2013

    This article was published in the NZ Herald on 26 August.

  • Thatcher Followed Rather Than Led

    Love her or hate her, most commentators have agreed that Margaret Thatcher was a towering figure – for good or ill – who helped to shape Britain and the world. It is, perhaps, not surprising that, on the occasion of her death, and in line with the modern tendency to lionise and exaggerate the importance of individuals, many features of today’s world are attributed to what is called Thatcherism.

    The reality, however, is that Thatcherism was destined to become the dominant ideology of the past four decades, with or without Thatcher herself; indeed, if we fail to recognise the true nature of that ideology, and the forces that brought it about, we will be less able to identify and remedy its failures.

    This is not to say that the triumph of “free-market” economics and of an aggressive emphasis on the individual as opposed to community owed nothing to the personality of Margaret Thatcher. It is doubtful whether that triumph would have been as rapid and complete, or would have had such a long half-life, without her. But the ideology which prevailed was essentially the product of many other actors and factors.

    The first of these was the perceptible sense that the post-war consensus, celebrated for example by Tony Crosland in The Future of Socialism and focused on full employment, public services and community, had run its course, and that it no longer offered a reliable guide to economic success. When Jim Callaghan told the 1976 Labour Party conference that “you can’t spend your way out of recession”, he was announcing the death-knell of what had been regarded as one of the essential characteristics of post-war policy.

    We can now see, or should, that the problem that Callaghan was trying to describe was not the supposed failure of Keynesian economics, but a refusal to understand that – if we wanted to match the economic achievements of other countries, defeated in war, who had set about with gusto the task of rebuilding their economic strength, and even more of yet other countries that were rapidly industrialising – we needed to stop assuming that we were entitled to economic success and to think of ourselves as an economy that also needed to change rapidly if we were to keep up.

    Our problem was, in other words, one we refused to recognise – that in the face of others becoming hugely more competitive, we were locked into comparative decline, epitomised by our focus on defending the value of sterling rather than recognising our loss of competitiveness; indeed, the whole subject of competitiveness and exchange rates was at that time taboo, as I learnt at first hand when I attempted to table parliamentary questions on the subject.

    That loss of competitiveness meant that we could not grow without other problems, like the constant threat of inflation and a perennial balance of trade deficit, holding centre stage. This led many to conclude that some of the central aspects of what had been bipartisan policy were at fault and – as obstacles to a better performance – would have to be abandoned. So, public ownership, government responsibility for securing full employment, a welfare state that guaranteed basic services, were tacitly targeted as necessary sacrifices.

    By the time Thatcher won the 1979 election, there was no shortage of pundits to tell us what needed to be done. Political philosophers like Hayek and Nozick, with their emphasis on small government, became newly popular. Milton Friedman and the Chicago school advanced the merits of monetarism – a painless and foolproof way, it was thought, of dealing with inflation that also had the advantage of getting government out of the picture and handing economic policy over to bankers.

    These doctrines came together in the minds of ideologues like Keith Joseph and Nicholas Ridley, who had already prepared a “free-market” agenda for an incoming Conservative government, and were enthusiastically supported by proselytisers like the then editor of the Times, William Rees-Mogg. Significantly, even Denis Healey, from 1976 onwards, had accepted the Treasury’s advice that monetarism was the way of the future.

    Developments in the real world pointed in the same direction. The rapid increase in the volume of world trade, and the accumulation of large volumes of investment capital in private hands, coupled with the alluring prospect of the profits to be made from taking advantage of low labour costs in undeveloped countries, produced an irresistible pressure for the removal of exchange controls. When the pound “floated free”, as the Daily Express had it, the advent of a single global economy became inevitable and the power of international investors, as the masters of that global economy, grew exponentially at the expense of elected national governments. It seemed virtually impossible for democratic governments of whatever persuasion to defy the precepts that governed the “free” and unregulated market.

    It is safe to say that Margaret Thatcher essentially responded to, rather than created, these powerful trends. Indeed, before she became leader, there is little evidence that she possessed little more by way of ideology than the set of everyday Tory values she had inherited from her father.

    She must have been amazed, having negotiated a period as a less than impressive Leader of the Opposition, and an initial year or two as one of the most unpopular Prime Ministers in history, to find that the battleground on which she was required to fight had been virtually vacated by her opponents, who had on the whole retreated to their own ideological fastnesses while they waited – as it turned out, in vain – for the political pendulum to swing.

    She found that the shift in opinion that had taken place over the previous decade meant that there was now little obstacle to the implementation of the agenda offered by her lieutenants; and, emboldened by her success in recapturing the Falklands, she began to flex her muscles – and to enjoy it.

    In the event, contrary to some of the more fulsome tributes paid to her, she muffed the opportunity provided by the absence of effective opposition and by North Sea oil coming on stream, and – in thrall to monetarism – ensured that any benefits from the oil were immediately offset by the decline of manufacturing that monetarist theory asserted was inevitable. Far from “saving” Britain, she was responsible for a huge missed opportunity and, by treating manufacturing as expendable, compounded our competitiveness problem.

    It must have been, nevertheless, a thrilling experience for her to discover that – contrary to so many expectations as to the difficulties that would be faced by a woman leader – she was able to wrong foot and discomfort both colleagues and opponents by simply insisting, with increasing stridency and certainty, on getting her own way. It was in this respect that Margaret Thatcher made her contribution to Thatcherism; she did not invent it, or even necessarily foresee it, but when it became apparent, she liked what she saw and, by serving as its instrument, discovered her destiny.

    Those powerful forces that were unleashed by the triumph of the “free” market – a triumph in a battle that is constantly fought between the powerful and the ordinary people, but in which the powerful have for the time being prevailed – were extraordinarily lucky that the person who headed the government at the critical time and to whom it fell to bring about the change that they saw as necessary may not have been a great political thinker, still less a ground-breaking economist, but had the force of personality to drive that change through. It was a change defined and willed by others but delivered by Margaret Thatcher.

    With her passing, nothing much changes. Those same powerful forces are still in charge, perhaps fighting a rearguard action in the aftermath of the global financial crisis, but using their power to entrench their advantage. So let us be clear; to elevate Thatcher to the stature of a one-woman revolution is to miss the point and to divert attention from the real forces ranged against us – still very much in evidence – and the battles that still have to be fought.

    Bryan Gould

    11 April 2013

    This article was published in the London Progressive Journal on 12 April.

  • What Do Maori Know That We Don’t?

    So, now we know. When the Prime Minister said last year, in respect of the proposed sale of the Crafar farms to the Chinese, that New Zealanders would not want to be “tenants in their own land”, it was a statement “full of sound and fury, signifying nothing.”

    The Prime Minister tells us now that it would be – and in that case presumably always has been – illegal to stop the sale; he thereby reinforces a pattern that has become all too familiar – a pattern of broad assurances designed to allay public concerns on various issues, followed by periods of obfuscation, and then explanations as to why the assurances could not be acted upon.

    So, for example, the government was to insist that the recovery of the bodies from the Pike River mine must be an inescapable commitment from any new owner; it now seems likely that will mean no more than that new owners must have a “plan” to be implemented (only if possible) at some indeterminate date in the future.

    And so too, expectations are now being scaled down in respect of the commitment – so often trumpeted as confirmation of the government’s financial rectitude – to return government finances to surplus by 2014. That, we are now told, is in doubt because the global economy has – in a way that had somehow escaped the attention of the forecasters – proved to be in a parlous state.

    And what of the assurances repeatedly given by the Prime Minister that the public assets his government now proposes to sell will somehow remain in New Zealand hands? Is it now not clear that we will in due course be told – when the assets have passed into foreign hands – that it would have been “illegal” to discriminate against foreign bidders?

    There are of course many points that can be made in respect of those asset sales. Who can doubt, for example, that – just like an individual – a government that sells off an income-producing asset in order to spend the proceeds should be regarded as behaving somewhat imprudently. How, in other words, does the government propose to make good the hole in their finances when they no longer receive the income from the assets they have sold?

    And the more we are assured – for the purpose of raising their market value – that the assets offer an investment that is secure, long-term, virtually inflation-proofed, and guaranteeing a good return, the more the question is begged – wouldn’t that investment be equally valuable and attractive in the hands of those who currently own them?

    It is of course true that the New Zealand capital market would be enlarged, at least in the short term, if a major new range of investments became available. But we should surely pause to wonder why our capital market is so small and weak. The answer is that most of what were once New Zealand assets of comparable size and stability have long ago passed (via privatisation) into foreign ownership; and the further sale of what remains in public ownership seems certain to add to that longstanding trend.

    We can, of course, expect a familiar response from the Prime Minister to the latest difficulty to arise in respect of asset sales – the belief that new private owners will not accept obligations under the Treaty of Waitangi in their management of what were public assets. John Key will assure Maori that they will lose nothing from removing those statutory obligations – and by the time they discover otherwise, it will be too late.

    But the Maori stance on asset sales is instructive for another reason as well. Iwi have declared their intention of investing in the assets. They are clear that they will invest for the long term. They will hold their shares in trust for future generations. They will take seats on the boards of the enterprises so as to make the most of the influence their shareholding will give them.

    Most people, I guess, would nod in approval of all of these propositions – but they constitute, of course, the clearest possible statement of the argument for not selling the assets in the first place.

    The advantages sought by Maori are precisely the advantages currently enjoyed by all of us but which the asset sales would deny us. So, why is something that is clearly so valuable to Maori apparently of no consequence or value to the rest of us? The Prime Minister might be asked for an answer.

    Why are Maori able to look to a leadership that takes the long view and has a proper sense of its obligations to the common interest and future generations? Why do the rest of us have to make do with a leadership that looks at worst to an ideological prejudice against public ownership and at best to a short-term boost to the balance sheet that will quickly be outweighed by the all-too-familiar burden of paying the profits across the foreign exchanges to overseas owners?

    Bryan Gould

    1 February 2012

  • Leadership for A New Crisis

    When Anne Tolley disclaimed responsibility last week for misleading Parliament, blaming her department instead, those with long memories might conclude that we have come a long way from Crichel Down.

    Crichel Down was a tract of land that had been compulsorily acquired for the war effort by the British government, on condition that it was returned to the owners when the war was over. After the war, the government broke that promise by retaining the land and leasing it to new tenants. The Minister, Sir Thomas Dugdale, who was personally unaware of the error, resigned when it was discovered because he believed that was required by the doctrine of Ministerial responsibility.

    Modern governments seem to recognise no such doctrine. Public servants enjoy so little esteem, so it seems, that they are cheerfully thrown to the wolves when Ministers are asked to take responsibility for mistakes made by their departments.

    It isn’t just the former Education Minister who rejects any responsibility for misleading Parliament. The Prime Minister, too, seems remarkably insouciant. His attitude suggests that, whereas it was the Prime Ministerial smile that was the leitmotiv of his first three years, it will be the Prime Ministerial shrug that characterises his second term.

    We will see less of the affability he showed while basking in the public approval of his first term, and much more of the somewhat grumpy dismissiveness and impatience that we saw during the election campaign when he came under pressure. The task of an effective opposition, under its new leadership, will be to ensure that there are many more such moments.

    David Shearer made a good start in appointing his new front bench. He struck a good balance of old and new, and made effective use of the considerable talent available.

    He now has to show what he himself is made of. He won the leadership with the claim that he represents a fresh start, but freshness alone is a rapidly wasting asset and is not enough by itself.

    He also has a claim (though it should be made by others rather than himself) that he can match, if not out-do, John Key in the niceness stakes. Indeed, he could re-define niceness to mean more than just a ready smile and a glib answer but rather a genuine concern for all our fellow-citizens, including the most vulnerable and disadvantaged. His own personal record of humanitarian service helps to give substance to that claim.

    But what he now has to show is that he has the stuff of which leaders are made. Re-connecting with voters, and listening to what they say and want, is commendable, but leadership is about leading and not just following. We are entitled to expect from our potential leaders a view, if not a vision, as to where the country – and even the world – are or should be heading.

    So far, our political leaders have shown no real grasp of the dangers we now face. We cannot expect a John Key government – content as it is to just go along for the ride – to face up to the challenges that confront us. Yet it is now clear that business – or politics – as usual will not cut it.

    The last time we faced comparable risks was in the non-nuclear world of the 1930s. World leaders then failed abysmally to deal with the Great Depression. The consequent economic strains were not only disastrous for millions of people, but produced an international climate which led directly to the Second World War.

    The risks this time are even greater. Today’s leaders, particularly of what we used to call the West, are repeating the mistakes of the 1930s; it is now virtually certain that the euro-zone’s crisis will drive us into renewed and prolonged recession. This time, though, in a nuclear world, a major international conflict would not have a happy ending – and our self-inflicted economic wounds would in any case leave us in a state of permanent weakness.

    We desperately need leaders who can see wider and further than politicians usually do. We need to recognise that the world has changed, that the extreme “free-market” global capitalism that has prevailed for three decades has shown itself to be fundamentally flawed, economically and socially, and now threatens to impoverish and enfeeble us. We need to understand that others, less burdened by this same ideology, are doing much better than we are.

    New Zealand, it may be thought, is no more than an observer of this unfolding tragedy. But that is not quite true. We are one of the most credible and at the same time most exposed proponents of Western values and the Western way of life. We have both an interest and a duty to propose the changes that are needed to avoid their destruction.

    In the 1930s, our leaders led the world in striking out in a new direction to lead us out of recession. For David Shearer, winning the next election is of course a top priority. But winning elections is not enough. We need far-sighted leadership that will set the country on the right course.

    Bryan Gould

    21 December 2011

  • Where’s The Leadership?

    My decision to leave British politics in 1994 and return to New Zealand reflected both the pull of my home country and my failure to convince my colleagues in the British Labour Party that they were embarking on a mistaken course.

    I had become increasingly despairing of the determination of those who eventually became New Labour’s leaders to embrace policies that I believed were fundamentally flawed. Tony Blair, Gordon Brown, and their allies were convinced that Britain’s economic future lay in the financial institutions of the City of London. They were persuaded that the market should not be second-guessed and would always get the right answer.

    They were, as Tony Blair told Rupert Murdoch, “all globalisers now.” They were “intensely relaxed”, as Peter Mandelson notoriously asserted, “about people becoming filthy rich” – with the corollary that they were equally relaxed about widening inequality. They accepted that government should treat economic policy as a largely technical matter of controlling the money supply that could safely be left to supposedly non-political bankers.

    They welcomed the asset bubble and the conspicuous consumption of the rich as evidence that these policies were working. And, though public opinion deterred them from joining the eurozone immediately, they remained convinced that a single European superstate – insulating so-called free-market policies against popular scrutiny – could be imposed on the people of that hugely diverse sub-continent.

    My decision to return to New Zealand was for me and my wife a good one. But it was disappointing to find that New Zealand had abandoned its long-standing commitment to social justice and community and had become the standard-bearer – lauded by The Economist – for the “free-market” policies that were expected to produce a new era of unparalleled prosperity.

    Like everyone else in the developed world, we were constantly assured that there was no alternative, and that the huge wealth amassed by a tiny minority would eventually “trickle down” to provide at least some benefit to the rest of us.

    These simple certainties were, however, stood on their head by the global financial crisis. We learned that asset bubbles would burst, that markets could not be relied on to get the right answers, and that only governments could step up to the plate to save us from disaster.

    But the cheerleaders for (and beneficiaries of) the policies that had produced such a disaster were not to be deterred simply because all experience showed that they had been wrong. So, in the United States, for example, political leaders solemnly assert that – in the general interest – tax cuts for the rich must remain sacrosanct, while the unemployed must fend for themselves.

    In Europe, the architects of the eurozone insist that the Greek people must shoulder the burden of the inevitable meltdown. And, right across the globe, our policy-makers defy all common sense by pushing austerity as the only remedy for recession.

    Our political leaders in New Zealand offer no exception to this sadly defective performance. They, too, plod wearily along the same well-worn track, providing yet one more proof of Einstein’s famous dictum that to go on repeating the same process while expecting a different outcome is the definition of insanity.

    Yet, we have good reason to expect better. This should be a time when New Zealand’s great advantages can be brought to bear. We have the huge benefits of climate and geography, we are politically stable, we have an educated workforce, we provide a safe and welcoming context in which to do business, and we have access to the world’s fastest-growing markets for the products we are uniquely skilled at producing. What more do we want?

    Yet our government continues to give priority to its own finances. All the talk is of financial orthodoxy, of getting the government’s own (perfectly manageable) deficit down. Little attention and even less action is given to our real problems, getting our people back to work and reducing our propensity as a country to borrow from overseas – even though those are the issues that have led to the credit downgrades that we were told had to be avoided at all costs.

    Those who practice what I call “politics by label”, however, judge arguments not by their weight but by their provenance. For such people, facts can be ignored if they appear in the mouths of the wrong people.

    In pointing out what a depressing document is the Treasury’s pre-election forecast (even with the by now obligatory element of over-optimism), I do not merely draw attention to the wasted three years during which we have barely lifted our heads above the recession-imposed parapet.

    What I do is re-affirm the arguments I have made over 35 years in public life. I bemoan the lack of ambition and leadership shown by this and other governments. I regret the failure to understand that economics is no longer (if it ever was) just a matter of the bottom line. It is, as Keynes said, “a behavioural science”; it involves how people lead their lives, how they interact with the natural world, and how they live and work together in society.

    Where can we find the courage to break the shackles of a barren and discredited ideology? Where can we find even a glimmer of new thinking?

    Bryan Gould

    26 October 2011