Just Left

Taming globalisation

2008 changed everything.

The intellectual foundation of the policy framework we have used for thirty years was cut to pieces. The excuses and evasions of those in power across the West delivering stagnant wages, limiting opportunities, allowing asset price bubbles to explode and fertilising the soil that grew the Global Financial Crisis were at an end.

The lesson since is about how hard it is to change to a new approach even when you know the old one is a zombie, a dead thing pretending to live but unmistakeably past it.

If neo-liberal economy is bankrupt and a new thing needs to replace it, where are the points of attack?

One is global trade. What passes for a 'trade' framework has been frozen for over a decade in the 'Doha round' of WTO talks. It isn't a bad framework, and it has a functional institutional structure to drive it -- but it is too liberal to survive unchanged post 2008 and with the rise of developing country power in the international community.

In this case by liberal, I mean stacked in favour of the rich white core economies, and against poor developing ones. The rich export tariff free. The poor face steep market access barriers. This dynamic is what has jammed the WTO: the poor have said "enough is enough" — and for the first time, we have to listen. The same dynamic breaks climate change talks.

New Zealand is on both sides. Quite rich and quite white, we suffer from agricultural trade rules stacked against us. The rich erect barriers and soak farmers with subsidies. The poor suffer the consequences.

So in the face of this freeze at the WTO, the wealthy and powerful are trying to side step it, in part with agreements like the Trans Pacific Partnership Agreement, a cross-Pacific agreement being negotiated as I write. The next round is in Auckland in December.

This deal goes beyond trade. It seeks to limit policy choices in a wide range of areas, to rules that lock the zombie ideas of the 80s into the driving seat for all time (or until unravelled). SoE rules? Investor state disputes? Challenges to public services rights? Threats to environmental control? Copyright term extensions? A licence for Hollywood to tax Google?

It's all in there with more, aside from what you and I would recognise as more normal trade policy.

Countries like NZ face a choice.

Resuscitate the zombie?

Or let it die?

My preference is that we work in the WTO framework to serve our interests and fairness all at once: undoing the bias against primary production, and in favour of rich subsidisers.

Agreements like the TPPA might offer short term gains. But the costs are already apparent. As a small example, look how Australia got gypped in its 2004 deal with the USA. The gains are hard to see, especially with some parts of the US establishment now starting to position TPPA as a China containment strategy.

We don't know how things will change in future. Open trade is almost always for the better, where there is a true level playing field.

NZ ought to focus on that aim through the WTO framework. Not be helping dead ideas march on into a future that leaves Labour ideals - decent jobs, strong public services, democratic government, good environmental stewardship - harder to achieve.

I will be watching the NZ debate with interest...

Inflation is not the problem

This morning, we learned that consumer price inflation in the year to 30 September was 0.8%, the lowest in thirteen years.

Inflation is not the problem. Growth and exports are.

David Parker is right: the country's monetary policy is busy fighting the last war. It's a classic example of limited thinking, focusing on the past. We do it all the time, but sometimes we also have the imagination and wit to start working on the problems the future poses.

Hundreds of thousands of us are without enough work. Our incomes are too low. Our export economy is stuttering. Our economy wastes resources and abuses our environment.

Those are the challenges we need to be solving. Consumer price inflation isn't. We've beaten it. We need to keep an eye on it, but it isn't the central problem we face.

Our institutions and our policies should focus on the things that matter most. Jobs, development, progress.

Looks like a change of government will be required to bring that about.

Should your ISP have to hold your hand?

In the security session at the Australian Internet Governance Forum this morning (see www.igf.org.au for info), an interesting dilemma about security responses by ISPs came up.

There is the prospect that ISPs could use a range of more or less reliable technologies (from deep packet inspection to usage metering) to identify users whose accounts are creating a threat -- for instance, compromised computers being part of a botnet attack.

The dilemma is, should they?

It's easy to see an upside from such a step. If you were compromised, or thought to be, your computer could be put inside a walled garden (off the open Internet) so you see a website identifying the problem and suggesting remedial responses. Since most people have no idea about computers this would respond to a key problem -- user ignorance.

What about downsides?

Do we want ISPs monitoring all use of their networks and obliged to act based on what they find?

What about privacy?

Would ISPs be found liable if they failed?

Would security by hackers just leap ahead?

Good arguments were put either way.

I have long had the view that ISPs are, and should remain, simple conduits to the Internet. They should have no content role. They are not copyright police, security police, good taste police, gambling tsars or any of that. They just provide the connection, and are only responsible for doing that. (Unless you buy more services of course.)

Doesn't solve the security problem -- but keeps ISP sticky beaks at bay, and minimises the cost of ISP operations, to the benefit of us all.

What is your view?

On dealing with child poverty

In a rather interesting post this morning, David Farrar over at Kiwiblog argued that National needs to do several things to regain momentum. Responding to rising concern about child poverty was one of them. One comment was particularly revealing:

 

National’s policies around welfare reform, national standards, reducing child abuse, better domestic violence laws are in fact all about reducing real child poverty, and giving more kids a better start in life. The left’s only answer to these issues is tax and spend. They won’t confront the much tougher issues of welfare dependency, the bottom 20% of students etc. National will.

It is not often that someone like David shows a total blind spot about his opponents, but perhaps it's just the context of a post advising National how to proceed.

Redistribution is indeed a core strategy for us on the left, but it is hardly the only one.

It is useful both in terms of taxing and in terms of spending. Markets distribute income in a way few regard as fair. A progressive income tax system is a policy all significant political parties support, with debate being about the steepness of the progressivity involved — not whether there is some. Same with spending. Labour's Working for Families tax credits redistributed money from households without kids to those with kids.

(As an aside, National defined this as communism by stealth, but has kept it anyway. Same with interest free student loans. Talk about a party that falls over whenever its principles are even mildly unpopular. Watch them give up on asset sales next...)

Never ever has tax and spend been our only response to poverty. Child poverty comes about because children live in poor families. So the left's historic and modern mission to tackle inequality is at the centre of the fight to change the depraved insanity that keeps too many of our children in poor households.

Besides redistribution through tax and spend, what other tools are in our toolbox? Here are a few of them:

• Promotion of collective bargaining and workplace rights: these leave incomes higher for those at the bottom & in the middle of the income distribution. More equality, less poverty.
• Support for civil society campaigns like the Living Wage: to improve further the share of the economic pie that goes to working people. More equality, less poverty.
• A welfare state structure that supports children. This might be a part of 'tax and spend' but one could also simply target existing welfare spending differently to help kids more. More equality, less poverty.
• Strong minimum code rights on issues like minimum wages, paid parental leave, annual leave and so on. For the most vulnerable workers, this can make a major difference. (Look at what current silly plans to cut youth minimum wages will do to young peoples' incomes.) More equality, less poverty.
• Full employment as a focus of economic policy: jobs are the best route out of poverty. Economic policy needs to focus on high and stable levels of employment, so fewer people are on benefits. We got numbers on benefits down from 400,000 to 280,000 before the change of government and the GFC. Jobs with good incomes are the best assurance against poverty. More equality, less poverty.

These strategies go far beyond 'tax and spend'. Nobody should be surprised by this. Labour exists as a movement to make life better for people — for pretty much everyone.

That requires fairer sharing of the huge wealth of our economy among all our people. Fiscal policy, market structures, monetary policy, development strategies all have a role to play. Whatever you call it (the term 'per-distribution' is a bit in vogue in some parts of the left), the agenda is right at the heart of our politics and we use many tools to bring it about.

 

National doesn't believe in that agenda, and that's why National cannot sort out the child poverty crisis. David's suggestions might help a bit at the margin, but they won't turn this disaster around.

 

Just another reason why New Zealand needs a Labour/Greens government: to really, profoundly change things.

Posted with Blogsy

Responding to the New Zealand doldrums

It just keeps on getting worse.

Today's reactionary announcement by the Government that it wants to cut the incomes of vulnerable young people comes at the same time as NZIER reports lowering business confidence and expectations about next year. Unemployment remains too high, manufacturing jobs are flooding out of the economy, and citizens are flooding across the Tasman to the land of milk and honey - or jobs and higher wages, at any rate.

How the hell did it all go so wrong for National? Why are ordinary New Zealanders getting quickly grumpier with the gang in charge, sensing (not before time) that the Nats are not on the side of most of us?

Values. Values and purpose.

The National Party was set up in the 30s with no better reason than to oppose Labour's social democratic ambitions. Explicitly founded to oppose a fair distribution of incomes. To oppose policies for full employment. To oppose policies that built a New Zealand economy that would deliver for New Zealanders. A dog eat dog value set guides everything they do. For them, cooperation is and always has been a joke. Savagery and competition are the only things that matter, and climbing over the top of everyone else to grab your winnings is the only path to the light.

Nothing's really changed. The plutocrats remain in charge of National. The smokescreens of distraction are still artfully deployed. Beneficiaries get bashed whenever things are looking rough. Vast seas of public debt are run up to shelter the slow erosion of the tax base and of the public services we all need. Job losses are simply lied about, with 170,0o0 new ones promised each budget but never actually coming into being.

People are losing out. Tempers are fraying. People don't like the idea that the only hope they can have is by leaving Aotearoa.

Labour is stepping up its criticism. That's good. The mood has well and truly started to shift. But with the criticism has to come more detail about the plan. Jobs, growth, sustainability, transformation, hope.

We have been through a weird experiment the past thirty years. 2008 was its intellectual death-knell. In 2012 we are watching the zombie start to stumble. New ideas are needed. Not just ideas but concrete proposals as to what difference they'll make on the ground.

The job of thinking through the policies that deliver a better kind of country is well underway in the Labour Party and the Green Party has its own perspective on what to do differently. The biggest risk that Labour faces is being too nervous to really drive change - fearful of orthodoxy, not certain that the public will back the depth of change needed to turn the country around.

Tweaks won't do it. It is not a time for the odd policy nip-n-tuck. Triangulating towards National or trying to fly into their slipstream could only guarantee failure. A big bold case for change is what we owe the country now.

David Shearer's education speech last month got a few solid ideas out. The work two more Labour Davids are doing on the economy is starting to show through. Our Conference, coming up in a few weeks, is another chance to showcase an agenda for change.

As long as we acknowledge these three things, we'll be fine:

• The experiment of the last thirty years has not delivered the kind of country, the sort of society, or the type of economy that New Zealanders want.
• Only Labour's values about equality, guardianship and opportunity can drive a really different programme that can turn things around.
• We have to set out our ideas and argue for them in order to get the public on side - voters aren't going to arrive at support for a new approach without us having, and winning, the debate about what to do differently.

I have some confidence that that is where we're headed.