Archive for September, 2010

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Commentary round-up

Wednesday, September 29th, 2010

A regular feature spotlighting new writing (and audio) from top commentators Rod Oram, Colin James and Brian Easton.

In the Fairfax paper this week, Colin James asks, Will unequal tax cuts be good for the economy? After covering the usual contestation between government and opposition about who gains what from the October 1 changes, he concludes by saying:

Much has been made of the rise in income and wealth inequality since the 1980s in our sorts of “Anglo” economies.

That may be an element in recent political volatility and might partially explain conservative parties’ failure in Britain and Australia to win majorities in otherwise propitious circumstances: the 1950s-60s upward socioeconomic mobility stalled in the 1980s. In turn it may be a factor in faltering economic growth, now the house-bubble-borrow-and-spend taps have been turned off.

Intriguingly, the Economist magazine, not noted for soggy leftism, several times directly linked inequality to growth rates in a recent survey of Latin America: the more unequal a country, the slower its economic growth.

Of course, Latin America is different. Isn’t it?

Colin’s Otago Daily Times column is The long haul back out of the 2000s economic haze, another look at our economic situation and economic prospects:

New Zealanders were the most indebted in the developed world after now-bust Iceland. That debt was lent by foreigners: New Zealand’s country debt to the rest of the world, at 86 per cent of GDP, poses a risk that in another global shock credit lines might be pulled in.

But:

Despite our 2000s profligacy, we have a real possibility of a reasonable decade ahead. We may even, with luck, avoid a house price plunge: prices might just go sideways and let inflation engineer the fall of 30 per cent or so in real terms needed to align with fundamentals.

That however depends on exports to Australia and China, and they both have their own problems. Australia is heavily reliant on mining (as Rod Oram has noted previously) while  China needs to contend with “water; widening social and economic divisions; corruption”.

Rod Oram’s Star-Times column, Water forum offers sign of hope, covers the Land and water Forum, as Colin James did last week. Rod is a bit more cautious than Colin about whether Nick Smith has achieved a break-through in collaborative processes:

. . . it remains to be seen how far the government will buy into the forum’s recommendations. If it treats them as a framework for an enduring consensus on water, then it could run a robust, publicly supported national water strategy.

Then it, business, environmental and other lobby groups and the wider public would want to use the collaborative process to find common ground on other very difficult issues such as energy strategy, adaptation to climate change, urban land use and design, or even the likes of savings and superannuation.

But if the government treated the forum’s recommendations as a menu from which it selected politically acceptable items, or worse rejected others under pressure from lobby groups, it would make a mockery of the collaborative process. It would leave us mired in the same old adversarial politics.

Rod also talks to Nine to Noon about Transpower versus the business lobby and the government’s changes to the rules for foreign investment. He sets out some interesting ideas of his own for the latter:

Oram: It would be far more interesting if approval was contingent, for example, on a large-scale investment that would improve the industrial capability of New Zealand and increases exports beyond a business-as-usual case. Or there would be safeguards, so for example if a foreign investor bought a New Zealand company any money that that company had received in the way of government R & D grants over, say, the previous five years were refunded. You could be an awful lot more strategic about that — as other countries have been.

Ryan: Unless you lose your investment to other countries.

Oram: No but other countries are strategic. They know what they want, and they know what to ask for and expect from foreign investors. And we don’t.

Brian Easton publishes an index of his articles on gambling economics.

If you have thoughts about the issues raised by our commentators this week, or other interesting pieces of commentary you’d like to highlight, then leave a comment below!

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Looking back on the Third Way

Tuesday, September 28th, 2010

This post is about Tony Giddens, not Tony Blair.

In other words, it’s about the intellectual foundations of the ‘Third Way’, rather than an assessment of how political parties that described themselves as ‘Third Way’ did in government.

And Anthony Giddens is probably the writer most strongly associated with the ‘Third Way’ as an theoretical project. His 1998 book The Third Way: The Renewal of Social Democracy provided an intellectual justification for, and both reflected and influenced the practice of, New Labour in the UK and its overseas counterparts. (I’ll discuss the impact of ‘Third Way’ thinking on the Clark government in New Zealand in an upcoming column.)

Giddens is an academic sociologist who, by the time he came to write The Third Way, had already been working and publishing for over 25 years, starting with Capitalism and Modern Social Theory. An Analysis of the writings of Marx, Durkheim and Max Weber in 1971. Much of his work was heavily theoretical rather than closely related to contemporary political debates. An Australian collection, Social Theory: A Guide to Central Thinkers, published in 1991, described his career up to that point:

Over the past two decades he has published more than twenty books and established himself as a central thinker. Giddens’ writings combined a detailed exegesis of the classics with a sensitivity to the issues at the forefront of contemporary social theory. He brings these concerns together under the rubric of an overarching project. This project involves identifying and criticising the shortcomings of traditional thought and developing a way of theorising issues that are obscured or ignored within that framework.

. . . This involves a reconceptualisation of the concepts of action, structure and system in order to integrate them into a new theoretical approach. Giddens calls this new approach the ‘theory of structuration’.

Giddens has been heavily involved with the UK-based Policy Network over the last decade, and this year he has published two essays for them reflecting on New Labour and his book The Third Way. These essays provide a useful insight into which features of his mid-90s project he feels are likely to endure.

‘The Third Way’ as a phrase is not one of them. In his essay “The Third Way revisited” Giddens expresses some regret that he didn’t stick with his orginal (if less flashy) choice, The Renewal of Social Democracy, rather than relegating it to a subtitle: “If I had published the book under the original title, it would have been clear that it was rooted firmly in social democratic traditions.”

Giddens insists that for him ‘the Third Way’ was never about “a ‘middle way’ between left and right, socialism and capitalism, or anything else, but a left-of-centre political philosophy, concerned with exactly what was stated in my original title, the renewal of social democracy. It was NOT a succumbing to neo-liberalism or market fundamentalism.”

I’d just about be ready to buy this, and accept that that fateful title was just an unfortunate phrase that was doing the rounds at the time (thanks to the Swedish Social democrats and Bill Clinton). Except that Giddens’ previous book, where he began his exploration of some of the themes of The Third Way was entitled Beyond Left and Right — the Future of Radical Politics (1994).

Moreover, we then come to this:

On the contrary, I argued that social democrats had to move beyond two failed, or compromised, philosophies of the past, one being neo-liberalism, the other being “old-style social democracy,” characterised by a top-down state ownership of the “commanding heights of the economy” and Keynesian national demand management.

And we are back to ‘equidistance’. Despite his earlier denials, Giddens instinctively depicts his ‘Third Way’ as being as far away from traditional social democracy as it was from neo-liberalism.

Similarly, in “The rise and fall of New Labour”, Giddens again tries to have it both ways. Early on, he states: “A different relationship of government to business had to be established, recognising the key role of enterprise in wealth creation and the limits of state power. No country, however large and powerful, could control that marketplace: hence the ‘prawn cocktail offensive’ that Labour launched to woo the support of the City.” But towards the end, he admonishes: “It was a fundamental error, however, to allow the prawn cocktail offensive to evolve into a fawning dependence and turn the UK into something like a gigantic tax haven.”

Giddens’ positions about both the Third Way’s relationship to traditional social democracy and its relationship to wealth are not inherently contradictory, but in both cases they require a delicate balancing act. And I’m not sure that he provides sufficient guidance about how to achieve that balance.

Giddens and his ‘Third Way’ project have attracted many critics over the years, including some extended and detailed rebuttals. But, from my perspective, the most effective challenge came when he debated Will Hutton, another reformist social democrat who had an early influence on Blair, in their co-edited volume On the Edge (2000). At one point Hutton says to Giddens:

Well, which is to be — regulation because capitalism can be destructive now that communism has left a gap or starry-eyed faith in capitalism’s boundless creativity? Don’t traduce Schumpeter. Your argument and his are essentially the same: capitalism may be ruthlessly destructive but it is also creative. At one moment you want to celebrate capitalism, at another you’re wary of it, but without — unlike Schumpeter — offering an integrated view of how both propositions could be true.

Giddens was right that social democracy needed renewal. The ascendancy of neo-liberalism, and the faltering of progressive thinking in the face of it, suggested that new ideas were required, which took into account new social and economic contexts.

And the changes that he identified in 1998 (and restates in “The Third Way revisited”) still seem convincing as new elements a modern progressivism needs to take on board, perhaps even moreso today. These were: the intensifying of globalisation; expanding individualism; the growth of reflexivity; and the increasing intrusion of ecological risk into the political field.

But in the end the failure of the Third Way was its inability to repeat the task that Weber and Keynes, between them, had achieved a generation before. This was to set out a compelling account of, not only the need for but also the effectiveness of, state action.

That theoretical failing was to be reflected in the limitations of early-21st century progressive governments in practice. And it is this that a new wave of progressive leaders and progressive thinkers need to remedy.

Links

Further Reading

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It’s Ed!

Sunday, September 26th, 2010

The new leader of the UK Labour Party has been announced. The contest had turned into a two-horse race between the Miliband brother, David and Ed, sons of the prominent Marxian economist Ralph Miliband who each worked for many years as advisors for Tony Blair and Gordon Brown respectively, and then went on to become senior ministers in the Brown Cabinet.

The elder brother David entered the race as the favourite, but in the end the winner was Ed Miliband, the younger and reportedly the more leftwing of the two — although a set of parallel Q&As by the blog-site Left Foot Forward highlighted how similar they were on the substantive issues.

The victory makes Ed Miliband a central figure in the international progressive movement at an important period of renewal. His views and the way he goes on to shape his party will inevitably have an influence on the tenor of progressive thinking here in New Zealand.

So I thought it was worth citing the following statement (from those same Left Foot Forward Q&As), which I think sets out one of the central challenges for progressive governance in our time (as also discussed at Policy Progress, here and here):

Would you make tackling income inequality a specific goal of a Labour government?

Yes. It is the right thing to do for people on low incomes and it is the right thing to do for society as a whole. Strong, cohesive societies are ones in which hard work is fairly rewarded. More unequal societies are less well off in a range of ways, for example suffering with poorer physical health, poorer mental health and higher crime rates.

New Labour was too cautious on this issue, and as a result, despite us being the most redistributive government in history, inequality rose. So we need a different approach that targets the fundamental causes of inequality rather than focusing on just trying to use redistributive payments to correct for failures in our economy. That is why I am so passionate about a living wage and want to see tax cuts for responsible businesses who pay a living wage.

Many people are surprised to discover that taxpayers are paying more than £6bn each year subsidising low wages in our economy and I want that to end – improving pay and saving money for government. I want a High Pay Commission to sit alongside the Low Pay Commission and address the unfairness that comes when a banker earns in a week what their cleaner earns in a year. And I want a new industrial activism to build a new economy less reliant on low-wage, low-skill jobs and better at investing in people and in skills.

P.S.: Left Foot Forward offers some advice to the new leader.

P.P.S.: As does Malcolm Tucker (from The Thick of It).

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Weekend reading, 24 September 2010

Friday, September 24th, 2010

A version of this list of recommendations also comes out earlier in the day as part of the weekly Policy Progress e-newsletter.

Gavin Kelly and Nick Pearce – Wanted: an old, new left

Although pitched at a UK audience, this prospect magazine article by two former Downing St advisors (one of whom is now director of the Institute for Public Policy Research) is essential reading for New Zealand progressives as well. They begin their analysis this way:

Historically, social democracy has succeeded when it has achieved two things: first, when it has raised the living standards of the broad mass of the population; and second, when it has complemented this “materialism” with a national popular project, embedded in the cultural aspirations and attachments of the British people. Today, neither of these components is in place.

I encourage you to go and read the full article! It raises some really important challenges, many of which have points in common with things that David Craig and I have written at this site.

Matthew Yglesias – Challenging The Public Sector To Be All It Can Be

An interesting post by US blogger Yglesias where he counsels against getting caught up with the underlying structural inequalities and barriers in society to the extent that we lose sight of the ability of existing public initiatives to make practical incremental change.

Paul Krugman – Brother, Can You Paradigm?

Leading progressive economist Paul Krugman argues that our current economic travails were perfectly predictable using good old-fashioned Keynesian analysis.

Patrick Wintour (Guardian) – Labour leadership ballot closes with Miliband brothers neck and neck

But who will win? We’ll find out this weekend!

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Reconceiving the welfare state (part three)

Thursday, September 23rd, 2010

This is the conclusion of David Craig’s conceptual analysis — parts one and two were published over the last two weeks.

Towards a wellbeing society? Market- oriented social wellbeing beyond ‘social inclusion’ and workfare

I argued in earlier posts that the relations between state, society and markets have continued to shift, with market power now strongly institutionalized and in many ways built into people’s subjective and normative expectations of work and welfare.

Overall, I think it crucial that we start re-thinking based on this shift, and that we actively re-consider how the best can be made of it.

Social democratic responses to this shift have tended to rely heavily on state intervention to deliver quick and controllable change. This intervention has been effective in a number of areas, but it has also been in some ways top down and technocratic, reliant on an elite control of the executive function inherited from previous neoliberal ambits (which captured state power to push through marketising reforms). Enacted by a professional political machine using polling and other restricted modalities of participation, this engagement has not really taken advantage of any real shifts in the social order emerging from neoliberalism which might have underpinned a more thorough shift of ground for the welfare state. These shifts include the emergence of a re-commodified labour market reaching further down than ever into families’ lives, time, assets and incomes.

On the other hand, many conceptions of the social which have been activated in policy contexts have been relatively lame and reactionary: Third way governments have played to the communitarian, to moral reaction, to punition and a shrill work ethic, while failing to see anything in the social that might provide a stronger basis for representational political action. The state doing some things for poor people is important, but it can also be self defeating for social democrats seeking to engage and mobilize low paid workers and households whose real living conditions are dictated by market outcomes.

Overall then, here is a call for a conception of the social much more closely linked to markets and market outcomes, but also as viscerally involved and engaged on a day-to-day basis with carving out a stronger niche within those arrangements. The state surely has a role legislating this, as do political managers in making smart policy around it. I suggested that gendered labour (and wider structural and institutional dimensions of the labour market and its governing), the early childhood and family environment, education (especially early education) and the housing market could all be fruitfully examined as sites where this kind of renewed engagement with the social and markets might have traction.

In all these fields we need above all to construct strong historical narratives which avoid dull thirdway notions such as social inclusion, partnership or (simple work or community) participation, and cut to the wider political economic chase in terms of the major forces shaping social and market relations.

These narratives need, in other words, to comprehend some of the following: and also to show people clearly what they have to do with their own past, present and future. They need, in other words, to:

1. Recognise and draw attention to the big picture political economic drivers behind changes including asset, income, intergenerational, health and neighbourhood inequality (ghettoisation), alongside the widening obligation for individual agency and responsibility.

Core to this will be historically understanding the effects of market mechanisms in basic areas (labour, capital, land), how these have been set up and regulated, and what social effects they have had. The housing market, for example, driven by a range of factors including favourable tax policies for landlords and a wider concentration of income in the top deciles, has over time delivered a polarised situation in which home ownership levels are falling while overall housing costs are rising faster than real wages. Asset concentration follows income inequality, and many families are the poorer for this, as the following (before and after housing costs) graphs from Bryan Perry’s 2010 survey of Household incomes illustrate.

Proportion of all individuals in low-income households by age, 60% REL threshold (Before Housing Costs)

Proportion of all individuals in low-income households by age, 60% REL threshold (AHC)

2. Help rebuild and refocus understanding of the roles of state and society, by:

  • raising wider debate around the actual costs of rising inequalities, making voters more aware of who these costs impact on, and how the social order and outcomes has been structurally changed by these shifts;
  • Building understanding about the real potential social bases of embedding and shaping of market forces, and the ways market arrangements can be more smartly managed to produce better social outcomes;
  • Linking, in robust policy terms, the social and political economic drivers to individual and family lived experiences, especially in terms of inequality, control, stress, resilience;
  • Building recognition of the real costs of labour market commodification, day to day;
  • Building recognition of the limits of the state’s role on the social development side (without weakening that role into mere monitor or bankroller).

From such a debate might emerge, if we are lucky, a plausible conception of wellbeing in relation to markets, social processes, and the scope of state intervention.

This conception would of some necessity go beyond the notion of a welfare state, without losing sight of that entity’s core social security capabilities.

In this context, I don’t think it’s naïve to talk over time about founding some new, durable understandings around something like a wellbeing society (rather than just a welfare state). Perhaps, and this is worth debating, it is not naïve either to talk about the real scope of market-oriented wellbeing. If we can even begin to do this in ways that go beyond the narrow social inclusion-ism of thirdway workfare, we will already be making progress.

We need venues for this discussion to happen, here, in NZ and more widely: Policy Progress seems to me to be a great starting point.

——-

David Craig is senior lecturer in Sociology at the University of Auckland, where he teaches around the history and political economy/ sociology of liberalism; colonialism and development; and urban sociology. His previous posts for Policy Progress were State subsidisation of low wages, Reconceiving the welfare state (part one) and Reconceiving the welfare state (part two).

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Commentary round-up

Wednesday, September 22nd, 2010

A regular feature spotlighting new writing (and audio) from top commentators Rod Oram, Colin James and Brian Easton.

There are five new items on Brian Easton’s website this week. One of them is Costs and Benefits and Alcohol Policy, a note for a symposium in Barcelona next month. It follows on from his previous work in this area, as discussed by Ayesha Verrall in her Policy Progress guest-post last week. He also publishes an index of alcohol and related studies.

Easton has also produced two pieces that touch on the Canterbury earthquake: The Canterbury Earthquake and the South Canterbury Meltdown and Christchurch as a Global City. From the latter:

At the moment the focus is on reconstruction of the city; that effort gives you a little time to think about how you might pursue your vision for Christchurch. Sure the earthquake was a shock but the reconstruction provides an opportunity to continue Canterbury’s tradition of respect for its past with an excitement about its future. Turn the shakes into an opportunity.

And his Listener column is The Bottom Line (“Selling products around the world is much more complicated than it once seemed.”)

Colin James writes on How ACT could help Labour to win in 2011 and how not (Otago Daily Times), which has a look at the electoral arithmetic, and New ways of thinking about water and the environment (Fairfax papers), which looks at the Land and Water Forum:

The forum is composed of 57 groups with an interest in water ranging from iwi and conservation lobbies to dairy farmers and Fonterra. Its brief: through a “small group” of 20, to talk its way to consensus on new foundations for water policy.

This is a new way of doing policy, potentially useful for knotty issues because it promises a more durable foundation for policy than the ideology and instincts of one major party plus small parties — which was Labour’s approach, with the Greens and New Zealand First, in legislating the ETS and then National’s, with the Maori party, in softening it. Seesaw policy is bad for business and democratic stability.

Labour couldn’t make the leap to the outside-consensus route. Smith cottoned on and got the cabinet to go along on water. Ministers had to agree to tell interest groups not to come to them while the forum was meeting. Iwi still had their Treaty of Waitangi pipeline to Key but they played ball inside the forum.

Water policy is a recurring theme of James’s:

Living in a wet country, New Zealanders have thought of water as “free”, with plenty for heritage, spiritual, recreational, tourism, personal sustenance, land based industries, manufacturing, commercial and electricity uses.

But not any more. In places it is over-allocated. And spreading more water to grow more cows mucks up waterways and risks damaging high-end tourism, coastal aquaculture and drinking-water — and the fresh-natural-safe country brand.

Rod Oram’s Star-Times column says the New Zealand accountancy profession is out of step internationally in its neglect of sustainability. To some extent it’s taken its cue from the current Key-English-Hide government:

. . . the government doesn’t understand the practical, immediate benefits of sustainability or the way this field is becoming the bedrock of good businesses and the driver of new ones such as clean technology.

It hates the word sustainability, even though the term is used worldwide. As soon as it took office in 2008, it banned the word from government and axed or drastically cut supporting programmes.

Sadly, many businesses took their cue from government and backed off on sustainability. The local accounting profession followed suit, walking away from the leadership role its colleagues are playing overseas.

And on Nine to Noon, he once again looks at the Auckland local body election from a business and economic perspective.

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The top issues for District Health Boards

Tuesday, September 21st, 2010

This week’s column had been scheduled to be on ‘The Third Way’ as part of our Theoretical Foundations series. But a lot of my time over the last few days has been taken up with my campaign for election to the Capital and Coast District Health Board in the local body elections that are now underway (the voting period finishes on Saturday 9 October).

So, as a substitute, I present below a cross-post from my Care not Cuts campaign website, setting out what I consider to be the five top issues in the DHB elections. I hope you will find it of interest. While the description is framed primarily in relation to the Capital and Coast district, the issues are broadly applicable to all DHBs. I also feel that this post, when placed in the Policy Progress context, provides a useful complement to Dr Ayesha Verrall’s excellent recent guest-post Why the Left values health.


1. Funding adequacy

The current government has cut back health funding increases to fund tax cuts, and the Capital and Coast community has been particularly hard-hit. The DHB’s well-respected chief executive Ken Whelan recently resigned, saying he could not cut any more: “I cannot see where any more major efficiency can come from without negatively impacting on services.”  A Dominion Post editorial has said, “unless the Government changes its mind, health board administrators will have no option but to reduce the quantity or quality of services on offer to residents of the Wellington region”. This is not acceptable.

The District Health Board has to manage its finances prudently, and that can be mean hard decisions. We also need to work for smart solutions to the charges for building the New Regional Hospital and ensure we are properly funded to act as a tertiary referral centre for the whole region.

But the Board also needs to be clear, honest and direct with the Minister of Health and you the public about the level of funding that is needed to adequately address our community’s health – and what the consequences will be if that is not met. I commit to ensuring this.

2. Addressing health inequalities

The District Health Board needs to be continually aware of health inequalities within the communities it serves and invest in services in a way that helps to address them. We know that people in poorer communities suffer poorer health than those who are wealthier. This is compounded through lower access to or take-up of health services – poorer communities have a higher rate of hospitalisations that would have been avoidable through good primary care or outpatient care. As a consequence, as New Zealand has become a more unequal society over the 1980s and 1990s, disparities have widened – new research published in the New Zealand Medical Journal shows the gap in life expectancy between low income and high income widened by 2.1 years for males and 1.4 years for females between 1981 and 2001.

At a time of tight budgets, it is vital for the Board to prioritise the preservation and expansion of initiatives that have been shown to reduce health inequalities. These will tend to include community health, health promotion and illness prevention, and measures to make primary health care more accessible in poorer communities.

3. Giving priority to child health

Sadly, inequalities have become particularly severe in child health, where New Zealand compares poorly internationally. The Public Health Advisory Committee describes some of New Zealand’s disease patterns among children as “closer to those of developing countries”. The Capital and Coast community is by no means immune to these disparities: Porirua children are admitted to hospital for serious respiratory and skin infections at twice the rate of Wellington children. Even worse, children living in Eastern Porirua (Cannon’s Creek and Waitangirua) have the highest rate of rheumatic fever in New Zealand.

I support the development of a plan of action to address child health disparities in high need communities, which will require meaningful additional investment.

4. Listening to the whole range of health professionals

District Health Board members have a governance role and a duty to reflect the priorities and needs of the communities they serve. Obviously that doesn’t mean micro-managing the organisation or making clinical decisions.  To do this, we need to respect and listen to the health professionals within the organisation and in the community – and to insist that DHB managers do the same. That means nurses, doctors, rehabilitation professionals, midwives, heath promotion workers, social workers, cleaners and all the people working together to ensure your care is of an excellent standard.

5. Being connected with the community

Legislation currently before Parliament would change some of the ways that District Health Boards operate. One of the troubling aspects is a move to remove communities’ rights to consultation when the boards’ annual plans are developed. I’m committed to meaningful community consultation — whether the law requires it or not. And I think we need to develop better and more modern ways to reach out to a wide range of people and involve them in the decisions that are being made about health services in their communities. If elected, I’ll use my website – carenotcuts.org.nz – to keep people informed about the issues the board is grappling with and the debates we’re having in (the public parts of) our meetings. And I’ll be pushing for the whole board – and the media – to be promoting stronger engagement with you the public with what we’re doing, particularly when contentious decisions are being taken.

Authorised by F Fitzsimons, 608/120 Courtenay Place, Wellington.

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Weekend reading, 17 September 2010

Friday, September 17th, 2010

A version of this list of recommendations also comes out earlier in the day as part of the weekly Policy Progress e-newsletter.

Rethinking welfare for the twenty-first century – conference presentations
Welfare policy issues are very topical right now, with the Key government’s Welfare Working Group (WWG) process underway. This webpage from the recent conference hosted by the Child Poverty Action Group (CPAG) and the Retirement Policy and Research Centre (Auckland University) contains a wealth of presentations from speakers including Susan St John, Mike O’Brien (of the Alternative WWG), Cindy Kiro and Keith Rankin.

Also well worth reading are dissections of the WWG discussion document from CPAG and the Alternative WWG’s Paul Dalziel.

Ambrose Evans-Pritchard (Daily Telegraph) – The backlash begins against the world landgrab
Fascinating stuff:

Last week’s long-delayed report by the World Bank suggests that purchases in developing countries rose to 45m hectares in 2009, a ten-fold jump from levels of the last decade. Two thirds have been in Africa, where institutions offer weak defence.

As is by now well-known, sovereign wealth funds from the Mid-East, as well as state-entities from China, the Pacific Rim, and even India are trying to lock up chunks of the world’s future food supply. Western agribusiness is trying to beat them to it. Western funds – many listed on London’s AIM exchange – are in turn trying to beat them.

I wonder if this is relevant to developments in New Zealand. In any case, the author concludes:

Land is not a commodity. It has an atavistic pull in most cultures, and is semi-sacred everywhere. Absentee landlords who amass chunks of the earth – however well-intentioned – will be expropriated. Politics always prevails.

(Hat-tip: Bernard Hickey)

Also:
An optimist’s errata: now there’s a novel solution (hat-tip: Paul)
What’s the difference, Mili-brothers?
Beautiful fractals and ugly inequality (hat-tip: Paul Krugman)

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Don’t mix your drinks, or your taxes

Friday, September 17th, 2010

This perspective on alcohol taxes was prompted by the mention of economist Brian Easton’s advice to the Law Commission on this site.[i]

It is now widely reported that the government will not adopt the Law Commission’s recommendation to increase excise duty, or tax, on alcohol.  The Law Commission’s deliberations addressed price as it is known to be such an important determinant of alcohol consumption. The commission considered both setting a minimum price for alcohol as well as raising duties.  Dr Easton’s submission to the Law Commission (re-published here[ii]) argued that while setting a minimum price would have the desirable effect of increasing the price of the cheapest drinks, the unfortunate effect would be returning these profits to the alcohol industry, not to the government.  Consequently Easton proposed an excise draw back scheme that effectively results in a greater tax on cheap drinks, but comparatively little on expensive drinks, with all revenue going to the state. He argues that this will discourage heavy drinking and youth drinking, because these groups are more price sensitive, while not effecting those “further up the price hierarchy who will not be doing much harmful drinking”. David’s brief response was that this seemed “a little regressive”.

I share David’s concern about constructing a policy that will effectively be a greater burden on the price sensitive (read poor or working class), but not for the reasons that are usually relevant to discussions around issues like income tax. Let me explain and take this issue as a starting point for discussing the rationale for alcohol excise duty as outlined in the Law Commission’s Report[iii].  Redistribution is not the point of Pigouvian taxes[iv] like those on alcohol or tobacco., instead there are two other mandates for this type of taxes. Firstly the taxes protect citizens by reducing access to a harmful substance. Secondly, and perhaps more importantly given the current government stance against paternalism, Pigouvian taxes can deal with negative externalities associated with alcohol use (i.e. to pay for emergency services to scrape the intoxicated off the street, for street cleaners to mop up the mess and the hospital to patch up the rest). In an approximate sense society at large can be compensated for some of these harms. In any cases these taxes don’t exist to redistribute wealth, something best achieved through the income tax system rather than guessing the income of those who drink Mount Difficulty versus those who drink Lion Red. So my objection to Dr. Easton’s approach is more the assumption that this policy will accurately target harmful drinking. Is it really the case that a young or poor binge drinker is more concerning than a wealthy adult – what if that adult is an on duty pilot or surgeon?

This theoretical distinction between the basis for collecting income tax versus alcohol duties has an important practical consequence: if these taxes are collected for different purposes should the government then handle them differently? Specifically, should tax revenue from alcohol be earmarked exclusively for paying for alcohol related harm and prevention services?  It is an important question – how often do we hear that a high proportion of long-term sickness beneficiaries have drug and alcohol problems? In which case increasing alcohol taxes could fund rehabilitation services and be a potent circuit breaker in the cycle of long-term unemployment and substance dependency. Both Brian Easton’s column and the Law Commission’s report on alcohol regulation favour alcohol tax revenues supplementing government income. This is preferable is so far as it prevents revenues going to alcohol companies (as would be the case with establishing a minimum price for alcohol) but it does have the negative consequence of government profiting from harm to its citizens. Treasury informed the Law Commission that $580 million was collected in alcohol excise duty in 2002; a large enough figure to make a government think twice before abolishing this income stream by addressing problem drinking, and also enough to buy a lot of rehab time, professionals, support groups, brief interventions and advertising campaigns.  Earmarking taxes is often criticised as committing future governments to the spending priorities of today. That’s true, but in the case of alcohol that effect is precisely what we need – more spending when there’s a big problem, less when we drink in moderation. And what’s wrong with tying the hands of future governments – isn’t it preferable to their being beholden to high levels of alcohol sales to fund other public services?

Many have characterised the government’s refusal to contemplate raising excise duty on alcohol as a missed opportunity.  Certainly we have been denied what experts agree is the most potent and evidence-based intervention.  The government appears to want to shift attention to youth and binge drinking, in the hope of finding a fig leaf to mask this failure of leadership. Youth binge drinking is certainly an important problem. But it’s only part of the problem, and it’s an easy target.

Doctors often joke among ourselves that ‘an alcoholic is anyone who drinks more than their doctor’. It’s cynical humour that contains an important germ of truth – when dealing with someone else’s drinking, we all want to define the problem in a fashion that doesn’t draw attention to our own habits. This tendency is writ large in the government’s response – targeting measures such as youth binge drinking is a cowardly and tokenistic measure that allows us to avoid confronting the harmful behaviour that exists at all levels of our society.

But it’s not just bad politics, it’s also bad science. I suspect our readiness to believe that such distinctions can be drawn demonstrates the extent of our dependence on alcohol as a mass drug.  Fifty years after research demonstrated tobacco caused lung cancer, we incorporated messages that ‘every cigarette is doing you damage’ into public health messages. I suspect in a more enlightened future we will pay attention to evidence like that from the World Health Organization’s International Agency for Research on Cancer that states there is no safe threshold for alcohol consumption. That’s not to say I’m a prohibitionist – I’m not. I’m merely stating the fact that policies defined by legal limits – such as age, tax rates, blood alcohol, premise licensing – are not perfect predictors or preventers of alcohol related costs or harms. Regulation will always be somewhat arbitrary.  But arbitrary regulation can still be fair and honest. An across the board increase in excise duty is preferable to the hypocrisy inherent in regulating to control the drinking of ‘anyone but me’, while spouting the rhetoric of ‘culture change’.

Because as every reformed drinker will tell you, the first step is to acknowledge you have a problem.  We are yet to take that step.

____________

Ayesha Verrall is an infectious diseases doctor and bioethicist currently at large in New York. Her previous post for Policy Progress was Why the Left values health.

[i] http://www.policyprogress.org.nz/2010/08/commentary-round-up-9

[ii] http://www.eastonbh.ac.nz/?p=1259

[iii] www.lawcom.govt.nz

[iv] http://en.wikipedia.org/wiki/Pigouvian_tax

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Reconceiving the welfare state (part two)

Thursday, September 16th, 2010

A continuation of David Craig’s conceptual analysis, which commenced in last week’s guest-post.

Some new and shifting elements in social development and the state/ society relations

In the previous post I suggested that the role of the state in relation to two core areas of the welfare state — decommodification of labour and provision of a social wage — had come under a kind of popular revision in recent years, wherein at least some kind of engagement with the labour market per se was seen as a kind of social good, a normative standard against which many NZers would like to see as many of us as possible measured (and rewarded). In consequence, state action in this and other areas needed to learn to work better with and around the market mechanism: not in a merely reactive way, but in a way that leveraged real market relations, market efficiency and market power in labour market relations. It needed too to reconsider what social relations might mean in relation to markets and the state, and whether in some different conceptions of society and the social (and even in notions like the UK Conservatives’ “Big Society”) are some other levers for producing better outcomes. This, NOT just by not by throwing in ‘local community’ as a substitute for a bigger picture of society as comprised of different groups, classes, families, individuals, all making their way together and separately.

Overall here I want to pursue this reconsideration of state-market- society relations a little more widely. James Purnell recently argued that a feature of progressive policy in this area in recent years has been a polarisation, wherein on the one hand the market (perhaps in the guise of ‘globalisation’, the ‘knowledge economy’ or marketised monetary policy and exchange rates) was seen as a kind of formidable unchallengeable arbiter, but where at the same time the state was seen as the preferred intervention mechanism, where intervention was seen as badly needed. Thirdwayism, I would suggest, will be remembered for being beholden to/ in awe of the market, and yet for falling back on the heavy hand of the state when it needed action. Some of this was captured early on in Tony Blair’s famous 1999 Chicago statement. There he argued,

“We are all coping with the same issues: achieving prosperity in a world of rapid economic and technological change; social stability in the face of changing family and community mores; a role for Government in an era where we have learnt Big Government doesn’t work, but no Government works even less.”

In response, he outlined “the new political agenda we stand for:

  1. Financial prudence as the foundation of economic success. In Britain, we have eliminated the massive Budget deficit we inherited; put in new fiscal rules; granted Bank of England independence – and we’re proud of it.
  2. On top of that foundation, there is a new economic role for Government. We don’t believe in laissez-faire. But the role is not picking winners, heavy handed intervention, old-style corporatism, but: education, skills, technology, small business entrepreneurship.

As the policy rolled out, the state’s roll was at first reinforced through heavy handed management and targeting, and then after 2003 thrown wide open by a swathe of hardly-thought-through communitarian and quasi-market solutions, which Brown felt he had to rein in. Now, under the Conservatives, the institutional pluralisation will continue, perhaps as an experiment, perhaps as something which is increasingly driven down privatisation pathways by a government urgent for ‘results’, and believing its own idealisations.

So, what now? Can we do better than that, and work some of these relations in more reasoned ways?

State, market, society: what scope for new policy relations?

Overall, the solutions seem to me to need robust understandings of the market, the social, the state, and the individual. We must throw in the community and local government there too, on the proviso that we try to remain really clear about what capabilities they can and can’t have!

To offer one starting point: a great deal of work in social aspects of health, child development, and its social and affective psychology in recent years has pointed to the intermediation of not just material wellbeing factors (these are crucial, and arguably depend on state mediation), but also to the intermediation of a range of social mechanisms operating more proximately to the person involved. Here, personal development and responsibility run head-on into big social factors like inequality.

The early family environment is one such area: another is early childhood education. In both cases, the wider social settings — inequality, work, housing — set big causal parameters, and require a solid understanding of what the state can and can’t do to make these aspects tractable. But there is also something much more subtle and close to home at work here. Here, care, stimulation and safety are seen as key, as useful and important whatever the socio-economic background — indeed, as the socio economic background worsens, these are seen as core bases of resilience, self control, and what gets called emotional (self-) regulation. Here the important discourses refer to early identification and intervention, as well as to the support of resilient, strength based parenting. Much of this MUST happen at at least arm’s length from the state per se.

Here is a (ok, pretty obvious) context of the social and security in which the state needs to be where big picture settings driving asset and income markets and security are established; but where closer in (and outside of abuse crisis) the social and individuals need distance and respect, while markets need some accessing (to say the least) but also some taming, in terms of their impact on family time, stress, etc. Hence again a background role for the state: enabling parents to care (though tax/ paid parental leave, etc), early childhood education, early intervention when things get out of hand… all until some kind of reengagement with the labour market  can be considered.

What happens inevitably in this kind of setting is a level of hybridization between state, community, market and family. Experience to here indicates that it’s really easy to set things up so these relations skew off in one direction or another. But too, that doing nothing is a recipe for missed opportunities.

Something that’s already happened is that these programming activities, which can be run by reliable professionals and scaled up from little or nothing, become a market activity and domain in their own right, and as such become a major real expression of the social contract in these settings. For all their social impact, they are liable, in other words, to capture by core market actors working in the name of community. Early intervention around children is one area the nanny state seems a bit more welcome: such interventions are popular for their talk about intervention, their aunty-style didacticism (in relation to ‘recalcitrant’ parents), their monitoring, their promotion of personal resilience and responsibility whatever the economic base, they can also represent and reinforce the wider hegemony of middle class perspectives and interests over the material wellbeing of the poor, and can come as a burden rather than as relief.

Clearly then there are risks and wins to be had here. I think we have to be prepared to explore, and I suggest that early childhood intervention and education is the place to consciously do it: with as much conscious, knowing participation of everyone (but especially families themselves) as possible.

A second area relates more directly to the labour market and its governing arrangements. Here is an area where a real social wage and real decommodification can be re-constructed, but only if it happens within a form of reconstituted market arrangements. I see real progress coming in gendered middle class dimensions of the labour market, in terms of family friendly workplace arrangements which can enable flexible juggling of work and family economies of time and place: lots of room here for active innovation, involving families themselves in shaping real decisions in workplaces and policy. A new policy compact in this area could come from an extended, active participatory policy process here, involving workers, employers, parents, children . . .

Beyond this, the basic issue of overall wage levels is much more thorny, especially at the bottom. There are legislative and institutional ways to strengthen the market power of workers (minimum wages, employment commissions): but pushing for a new social/ living wage compact will require a great deal more imagination: despite from the fact that, as the Australian experience indicates, everyone can emerge from such as winners. As I argued last time, people have come to trust, to some extent or another, the market to set some (but not other) parameters here. How to better leverage, then, issues like family and local living wages back into the agenda? Productivity is already a core element in workplace agreement discussions; but there is surely scope for these discussions to become more like substantive negotiations. A new and flexible tripartism in these areas would be quite an achievement: it might take some prompting from political/ state actors, but they would also need to know when to get out of the way.

A third area is the housing market. Simply here, income inequalities and tax arrangements have skewed market outcomes heavily in favour of the rich, undermining basic class social securities, and giving rise to all sorts of flow-on negatives: ghettoisation, undermining of local schools, and more, sending housing affordability tumbling while failing to reduce rents, at least in Auckland. There needs, simply, to be a new housing market compact hit upon. A part of this compact will no doubt be community sector housing providers : community housing trusts, complementing the state’s social housing roles, and, in some areas, replacing it. What the community sector genuinely does off here is a level of local engagement, much needed entrepreneurialism, and a responsive working relationship with tenets which can go a long way further than Housing NZ has been able to, for a range of reasons.

One step further will surely involve a revisiting of another state subsidy in the housing market, the accommodation supplement currently paid for low income families in housing they can’t quite afford. For a good while now, many on the left have regarded this simply as a subsidy to landlords, which worked in a classic subsidisation way to ensure higher rents all around: and thus add another driver to the housing market. Here is an area where a closer engagement with market actors and economics  needs to be a part of the solution: and by this I don’t mean the facile and largely failed supply-side economics of the kind that got us into the negative gearing/ asset ownership concentration mess we are in.  So far, we’ve seen a poor referencing of markets here, linked to a dull conception of possible state machinery.  The role of families as social actors in all this has been similarly restricted: if they can’t cut it in the ownership market, here’s  a non-capitalisable, bandaid  handout to help you be a tenant: which you hand on to your landlord, who will invest it in a way that will make sure you stay a tenant, too.

Room for improvement? Yes, but there’s no simple state or market fix here, to be sure!

Part three of “Reconceiving the welfare state” will be published next week. In the meantime, leave your thoughts and comments below.

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David Craig is senior lecturer in Sociology at the University of Auckland, where he teaches around the history and political economy/ sociology of liberalism; colonialism and development; and urban sociology. His previous posts for Policy Progress were State subsidisation of low wages and Reconceiving the welfare state (part one).

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