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The Spirit Level versus the ‘investment state’

Tuesday, November 30th, 2010


Written by two epidemiology researchers, Richard Wilkinson and Kate Pickett, The Spirit Level has become the progressive publishing sensation of the last couple of years. Based on a broad range of cross-country comparisons, it takes the progressive championship of inequality to a new level.

According to Wilkinson and Pickett, greater equality doesn’t just produce better outcomes (life expectancy, educational performance, mental health etc) for the poor. They claim that (as their subtitle asserts) “equality is better for everyone”. In other words, even relatively well-off citizens are likely to achieve better outcomes in more equal societies than in less equal ones.

Why? Because, they say, more unequal societies suffer from higher levels of insecurity and status-related anxiety. This is associated with a focus on self-promotion and a weaker sense of community. These characteristics permeate the whole society, and afflict rich and poor alike. So even those who in a material sense may have ‘done better’ out of inequality may be sicker, less happy and generally less well-off as a result.

Such a theory strikes at the heart of anti-progressive political outlooks, in both their traditional-conservative and free-market manifestations. It is no wonder then, that while avowedly non-political (and occasionally cited approvingly by UK Conservative leader David Cameron), The Spirit Level has come under heavy barrage from the political ‘Right’. Policy Exchange and the Democracy Institute have each published counter-publications, by Peter Saunders and Christopher Snowden respectively, aiming to discredit it.

My main interest, however, is not the threat that The Spirit Level poses to the ‘Right’, but the challenges it presents to the theoretical foundations of much of modern progressive thinking.

Because another central plank of the Spirit Level platform is that the beneficial effects of economic growth in the advanced capitalist countries have now largely been exhausted.

The graph above illustrates that as countries develop economically, there is a reasonably close relationship with life expectancy — as the country grows and develops, its population lives longer. But the graph also suggests that, beyond a certain point, that relationship breaks down: among the rich countries life expectancy is not related to national differences in average income. The same pattern, say Wilkinson and Pickett, applies with happiness and other measures of wellbeing as well:

Sooner or later in the long history of economic growth, countries inevitably reach a level of affluence where ‘diminishing returns’ set in and additional income buys less and less additional health, happiness or wellbeing. A number of developed countries have now had almost continuous rises in average incomes for over 150 years and additional wealth is not as beneficial as it once was . . .

At the same time as the rich countries reach the end of the real benefits of economic growth, we have also had to recognise the problems of global warming and the environmental limits to growth . . .

We are the first generation to have to find new answers to the question of how we can make further improvements to the real quality of human life. What should we turn to if not to economic growth? (pp. 10-11)

Moreover, they go on to argue that the cultural logic of economic growth is intrinsically bound up with the unhealthy ’status anxiety’ that permeates unequal societies.

This, I would argue, is a major challenge to mainstream progressive thinking. Similar propositions have been put solely in ecological terms, but this takes the argument right into the heart of progressive territory: concerns about poverty and inequality.

It is hard to exaggerate how much of a departure this implies from standard Marxian, Keynesian and ‘third way’ prescriptions. (Although Marx, Keynes and Giddens themselves do each, in their own ways, conceptualise a post-materialist end-point).

This is particularly true of the ‘third way’. The success of Keynesian social democracy came from its perceived ability to keep the ‘motor’ of the economy going by acting as the ‘consumer of last resort’. As Przeworski writes, ”it was a theory that suddenly granted an universalistic status to the interest of workers” as a way of stimulating aggregate demand.

But the ‘third way’ went further, framing the idea of an ‘investment state’ whose job it was to work hand-in-glove with capital to achieve the most innovative, competitive, productive, successful national economy possible. Areas like education and science were seen more strongly than ever before as mechanisms to be used to attain national competitive advantage.

And social goals were largely seen as being achieved through the tax dividend from all this growth. Rather than worrying about an economy that was driving increasingly unequal conditions in the marketplace, the state would focus on ameliorating those effects through redistribution (via tax credits like Working for Families in New Zealand, other targeted assistance, and social spending designed to combat inequalities).

The theory and prescription of Wilkinson and Pickett stands starkly opposed to the logic of this approach, which can be seen as essentially Rawlsian.

John Rawls was perhaps the most important liberal political philosopher of the late 20th century. His “difference principle” held that inequality could be justified insofar as it contributed to general prosperity in a way that made even the poorest members of society better-off than they would be in a more equal society.

To be fair to Rawls, this could be interpreted as permitting only a very small amount of inequality. But, in practice, the Rawlsian approach was primarily taken up by those who accepted that there was a capitalist equality-prosperity trade-off, but that some of the fruits of that prosperity should be invested in making the poorest better off. They were, in other words, what John Kay has called ‘redistributive market liberals’.

And to a large extent ‘redistributive market liberalism’, and a Rawlsian view of economic growth, were at the heart of the ‘third way’.

The Spirit Level, on the other hand, seeks to turn the ‘difference principle’ on its head. Rather than inequality-generating growth being good even for the poorest, it is to be seen as detrimental even for the very richest.

Rather than the state trying to run ever faster to ameliorate inequality after the fact, Wilkinson and Pickett counsel us to abandon the culture of consumerism and reorientate towards a steady-state economy in which everyone has much more equal shares.

To this it might be objected that, even if such an approach were desirable, it is not feasible. The basic logic of a modern capitalist economy, it can be argued, is not compatible with a steady-state — without growth, it would become unstable and generate increasing levels of unemployment. This is the dilemma that Tim Jackson in his book Prosperity without Growth has sought to address with a new ecological macro-economics. And it is to this work I will turn in next week’s post.

Links:

  • Wilkinson and Pickett’s Equality Trust website.
  • Perhaps the best example of the debate over The Spirit Level — a session at the Royal Society for the Arts (RSA) where Wilkinson and Pickett squared off against Saunders and Snowden [audio and presentation slides].
  • A recent policy forum at the Institute of Policy Studies in Wellington entitled Does Inequality Matter? started with a video-linked presentation from Wilkinson, and spurred me to write this post. [presentation slides plus audio/slides for Wilkinson] The presentation by Tony Blakely (University of Otago Wellington) is one of the best critiques of The Spirit Level I’ve come across (and comes from a broadly progressive perspective).
  • My earlier post discussing Przeworski’s view of Keynes.
  • Four posts I’ve written on the ‘third way’: (1) (2) (3) (4)
  • Wikipedia on John Rawls’ A Theory of Justice.
  • An earlier post I did on Tim Jackson.
  • Two posts I did on James Purnell’s arguments about the limits of the redistributive strategy are also relevant: (1) (2).

Further Reading:

  • Richard Wilkinson and Kate Pickett, The Spirit Level: Why Equality is Better for Everyone (revised edition, 2010).
  • John Rawls, A Theory of Justice (1971).

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Postscript on ‘The New Politics’

Wednesday, November 24th, 2010

One must of course be careful about reading too much into titles and labels. I shared an advance copy of yesterday’s post with Peter Harris and Chris Eichbaum and they advised me that the ‘Third Way’ subtitle to their book was included largely at the urging of their publishers, who wanted to connect the book more explicitly to the global ‘third way’ debate. The original title had been something like “The New Politics: the search for a post-Washington consensus in NZ”.

Nonetheless, they went along with the idea, reasoning that (as they say in the book) NZ had had its first and second ways with Muldoonist statism, and the neo-liberalism of Douglas, Richardson & co. So a ‘third way’ was relevant here too, even though NZ Labour needed distance from its past for rather different reasons to UK Labour.

They did insist on the subtitle being “a third way” rather than “the third way” though! (Which is consistent with the specifically NZ ‘third way’ character that I’ve tried to outline.)

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Did the ‘third way’ give New Zealand ‘a new politics’?

Tuesday, November 23rd, 2010

This is the last in a series of three posts about the ‘third way’ strand of progressive thinking in New Zealand. Part one looked at Helen Clark’s perspective, while part two looked at Steve Maharey’s identification with the ‘third way’. An earlier post introduced the ‘third way’, looking at its leading UK theorist, Anthony Giddens.

Although Steve Maharey was the Cabinet minister most identified with the ‘third way’, the most indepth account of what a New Zealand ‘third way’ approach might mean can be found in a book that was published immediately before the 1999 election that brought Helen Clark and the Fifth Labour Government to power.

Entitled The New Politics: a Third Way for New Zealand, it was written by a group of eight academics and trade unionists and produced with the assistance of a progressive thinktank, the Gamma Foundation, that was active at the time (the Public Service Association and FinSec also provided support).

Although the book doesn’t have any identified editors, both the preface and concluding chapters were co-written by Peter Harris and Chris Eichbaum. Harris had been the economist for Council of Trade Unions (and prior to that for the PSA), while Eichbaum was a Massey University academic (who also had credentials with the union movement and as a former Labour staffer). Both would go on to become highly-placed ministerial advisors during the first term of the Fifth Labour Government, Harris for the second-ranked Labour minister Michael Cullen and Eichbaum for the third-ranked Labour minister Steve Maharey. Eichbaum then did a stint in the Prime Minister’s office before returning to academia. Harris later chaired the Ministerial Savings Product Working Group, which formed the basis for the establishment of the KiwiSaver scheme.

Therefore, The New Politics can be seen as reflecting a perspective that was very compatible with that of the Fifth Labour Government itself. In addition to Harris and Eichbaum, its authors included Peter Conway, who replaced Harris as CTU economist and is now their general secretary; Paul Dalziel, Canterbury university (later Lincoln) economist and brother of Cabinet minister Lianne Dalziel (he is currently a member of the Alternative Welfare Working Group); and academics Srikanta Chatterjee (Massey), Bryan Philpott (Victoria, now deceased) and Richard Shaw (Massey).

As it happens, I have worked with both Harris and Eichbaum and know them fairly well now, but I hadn’t met them at all when I read their book in 1999. (And I wouldn’t automatically ascribe exactly the same views to them today.) Going back and re-reading The New Politics, a few themes stood out for me with the benefit of hindsight.

In his chapter, Peter Harris writes:

There is a core idea that marks out the Third Way: people need jobs. It is a core part of their social persona, it contributes to more stable family life and so on. Dependency can never be a satisfactory long-term status and creates intergenerational cycles of dependency and despondence.

. . . A new consensus has to be built around some form of social concordat. In reducing previous protections via deregulation, privatisation and a free flow of finance and trade, the government assumes an obligation to make it easier for the displaced to get other jobs . . . The other side of the deal is that those who are dislocated must be active participants in job readiness and job search programmes.

Harris also sets out ’subsidiarity’ as a defining characteristic of the ‘third way’:

The principle of subsidiarity means that a decision should not be taken at a higher level if it can be more appropriately be taken at a lower level. For example, the state should not make a decison on what a school community can more appropriately make.

. . . There are two dimensions to this. One is that the state should not intrude in some areas. it should not absorb and stifle when there is no need to do so. The other is that the state should not be expected to do everything. There are structural levels of responsibility – individual, family, community, etc. that need to be both respected and expected. Subsidiarity involves the state ‘helping out’ by contributing indirectly to the ability of the social networks to contribute to that notion of public good.

Similarly, Eichbaum in his chapter writes:

The renewal of civil society, through the refurbishments of democratic institutions and the kind of institutional ‘in-building’ suggested by the stakeholder model [advanced by Will Hutton], is central to the new economics as well as to the new politics.

. . . The neo-liberal project is one that denies the legitimacy of interests within the policymaking apparatus on the grounds that credible policy must be manifestly independent of any ‘vested’ interests . . . In seeking a renewal of civil society, the Third Way holds out the prospect of a political economy that provides the kinds of structures capable of sustaining fexibility and commitment.

And on macroeconomic policy he takes issues with Giddens, arguing that it must go beyond simply “macro stability” to address “the institutional environment with which policy is developed and implemented” and recognise the importance of the “institutions of macroeconomic management”.

If we add to these prescriptions Maharey’s focus on the ‘knowledge society’, then it is possible to see ‘third way’ ideas as permeating much of the Fifth Labour Government’s activity, even though it was not framed as such at the time.

The focus on employment as the “best social policy”, which was reinforced and validated by historically rates of employment growth, became a lead feature of social development policy, and informed the design of Working for Families, which was at least partly founded on the conception of making work pay.

It also fed into Jim Anderton’s idea of the economic development portfolio as a ‘jobs machine’. But this area also reflected an attempt to answer the question about how to operate the “institutions of macroeconomic management”.

And increasingly it also reflected an effort to conceptualise and achieve a New Zealand ‘knowledge society’. This also inflenced the new institutional framework for tertiary and science policy.

The way the government went about things also reflected the emphasis on stakeholders and the rejection of the neo-liberal delegitimation of ‘vested interested’. Consultation and partnership became watchwords for the public service, and periodic efforts were made to improve the footing of community sector. (It’s worth noting that Harris and Eichbaum’s final chapter includes an admirably clear-eyed and prescient account of the likely challenges that increased reliance on the community and voluntary sector would bring.)

On the other hand, the principle of subsidiarity made only an intermittent appearance. More often, it seems to have been eclipsed by the centralising tendencies of the state in general and Labour instincts in particular.

What is also intriguing is how many specific proposals made in The New Politics seem to only be making it onto the policy agenda now, ten years later, in the post-defeat post-’global financial crisis’ Labour Party:

  • Chatterjee, Dalziel and Eichbaum all called for reform of monetary policy;
  • Dalziel argued for workers at a particular worksite to be allowed to vote by a suitable majority for compulsory union membership at their site (a ‘closed shop’);
  • Philpott argued for tighter controls on the overseas purchase of existing assets including land;
  • Dalziel advocated for a greater involvement of the government in capital production; and
  • Harris, Eichbaum, Chatterjee and Dalziel all talked about the urgent need to “restore some order to finance markets”.

Perhaps, in fact, the real ‘third way’ is not an historical relic. The name may have been discarded, but it may be that it is only now really beginning to take root.

Another way of looking at it is to identify three different components to ‘third way’ thinking.

Firstly, there is the partial accommodation to the Right’s critique of the capacity and effectiveness of the state. This is where the UK ‘third way’ has drawn most criticism from other progressives. As we have seen, however, ‘third way’ thinking in New Zealand included some rather more extensive revisiting of neo-liberal ‘nostrums’, though much of this wasn’t taken up in government at the time. In this sense, post-Crisis progressive rethinking may involve more continuity with its ‘third way’ tradition in New Zealand than was the case elsewhere.

A second component relates a particular style of government (subsidiarity, partnership, reverence for ‘civil society’). Some aspects of this got more traction than others, and some of it has gone out of fashion, but the appropriation of this approach by the Right in the UK (David Cameron’s ‘Big Society’) suggests that it still has quite a bit of mileage left.

Thirdly, the idea of an ‘investment state’ informed thinking about a ‘knowledge society’, the primacy of employment and the ‘institutions of macroeconomic management’. Some of the language and the framing of ’strategies’ has faded a little, and economic conditions no longer as propitious for a focus on employment growth as a driver. Nevertheless, this was a central and generally still well-regarded aspect of the Fifth Labour Government’s tenure.

In my next series of posts, however, I want to explore some emerging trends in progressive thinking that may amount to a significant move away from the ‘investment state’ approach.

Further Reading:

Srikanta Chatterjee, Peter Conway, Paul Dalziel, Chris Eichbaum, Peter Harris, Bryan Philpott and Richard Shaw, The New Politics: a Third Way for New Zealand (1999) — available online from Wheelers Books.

Brian Easton, The Model Economist: Bryan Philpott (1921-2000) (2000)

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Steve Maharey and New Zealand’s third way

Tuesday, November 16th, 2010

This post is the second of three posts on New Zealand’s relationship to the ‘third way’ strand of progressive thought, as theorised by sociologist Anthony Giddens and made famous by Tony Blair. In part one, we looked at Helen Clark’s statements about the third way.

Disclosure: the author worked for six years as a ministerial advisor to Steve Maharey.

By the end of its tenure, there were two differing perceptions about the Fifth Labour Government. The general public saw it as a one-person show dominated by Helen Clark. People who considered themselves more informed saw it as a two-person outfit, co-steered by Michael Cullen (with the real insiders adding in Helen’s chief of staff Heather Simpson for good measure).

All perspectives are partial and subjective, including my own, but I tended to see the Fifth Labour Government as more pluralist than that. There were a handful of senior ministers who seemed to have a fair bit of autonomy over their own portfolios and some ability to influence the wider agenda (the influence of the Alliance in the first term is not to be disregarded either). The most visible of these to me were Trevor Mallard (who Helen early on had mooted as her possible successor) and Steve Maharey.

Steve Maharey is of particular interest in this context, as he is the New Zealand politician most associated with the ‘third way’. As Colin James said in 2001,

Steve Maharey earnestly read the new social democratic texts, the “third way” tracts, but few of his colleagues have.

To my mind, the most direct and personal statement that Maharey made while in government about the ‘third way’ approach was a lecture he gave to a group of Massey University students in June 2003, entitled “The Third Way and how I got on to it”.

In this lecture, he traces his intellectual pathway back to the 1980s, where he distinguishes his perspective from that of other, more traditionalist critics of Rogernomics:

I found myself in a curious position. The left opposed Rogernomics and as someone who regarded himself as part of the left I felt sympathetic. Yet it seemed to me that the defensive posture adopted by the left would lead nowhere. While I accepted that the traditional left values of solidarity, collectivity and social justice remained valid, new ways of delivering them were needed.

I took up a rather isolated position in the debate that raged during the 1980s criticizing both the right and the left. I wanted to see social democrats acknowledge the need for change and offer a new political agenda based on social democratic values. The British politician and academic David Marquand called this – old values, new politics.

This stance, he says, led him to the New Times thesis (associated with Martin Jacques and Stuart Hall). He also cites as influences Giddens, Geoff Mulgan (who co-founded the Demos thinktank with Jacques), Charlie (Living on Thin Air) Leadbeater, Swedish sociologist Goran Therborn, ‘communitarian’ writers Amitai Etzioni and Robert Putnam, Clinton’s dissident Secretary of Labor Robert Reich, and Australian Labor politician Mark Latham.

Maharey seeks to correct what he sees as two misconceptions about the ‘third way’. Similarly to Giddens and many others seen as associated with the ‘third way’, he states:

It is often said that the Third Way is just a compromise between the concerns of the market and social justice. I do not agree. Or at least I would argue that the Third Way does not need to be reduced to a political agenda that appears to be just a clever mixture of ideas from across the political spectrum. What has antagonized its critics is that so often it has in practice turned out this way.

Also, the ‘third way’ was not monolithic; there was not one single version. Rather, what united its proponents was:

an understanding that new times demand new answers from social democratic politicians. They could see that right wing neo-liberal politics had dominated the 80s and 90s by appearing to respond to social change and they wanted to “modernize” their own parties.

He lists a range of challenges that make up these ‘new times’ (renewing democracy, international engagement, inequality, etc.) but the prevailing theme is around the implications of technological change. While ‘third way’ social democracy’s ‘egalitarian project’ is unchanged, he says,

the means by which we intend to further the project have altered. The focus now is on the creation of a knowledge society and investment in policies that make this goal a reality.

Citing Latham, he describes the ‘third way’ as:

an attempt to answer the core challenge of Information Age politics: is it still possible to practice the shared bonds and responsibilities of a good society? Is collectivism still viable? The Third Way thinks that it is.

And he quotes Leadbeater to emphasise that this has significant, and progressive, consequences:

The goal of becoming a knowledge-driven society, however, is radical and emancipatory. It has far-reaching implications for how companies are owned, organized and managed; for the ways in which rewards are distributed to match talent, creativity and contribution; for how learning and research are organized; and for the constitution of the welfare state and the political system.

In terms of Maharey’s own portfolios, this had ramifications for tertiary education, where he sought to institute a more strategic approach. And, with regard to social welfare, or ’social development’ (as he reframed the porfolio), he says:

if everyone is to be included in the kind of knowledge based future at the heart of Third Way thinking the focus of traditional models of welfare on the transfer of income is not enough . . . Achieving social justice requires the extension of economic opportunity as much as the redistribution of wealth.

The new social democracy places the welfare state, or the new welfare state, at the confluence of economic and social justice.

How far beyond Maharey’s own areas did this thinking go, though? He is frank that, notwithstanding Helen Clark’s willingness to identify herself with it, “During its period of renewal, New Zealand Labour did not consciously decide to become a Third Way party.”

Nevertheless, if we take this ‘knowledge society’ project as central to a ‘third way’ approach (perhaps even moreso here than elsewhere) then we can see it as a recurring thread through the Fifth Labour Government: from the Knowledge Wave conference, through the Growth and Innovation Framework, and on to the Economic Transformation Agenda.

For Maharey, there was a particular imperative for New Zealand in seizing the knowledge society agenda. On other occasions (in May 2003 for instance), he said that a “‘developmental’ approach, seeing New Zealand as essentially a ‘developing nation’ whose circumstances can and must be transformed, is a distinguishing characteristic of this Government”.

That particular metaphor wasn’t one that other Cabinet colleagues used. But, even so, something of the approach that it implied can be seen as a distinctive (though perhaps somewhat tentative) New Zealand dimension to the ‘third way’ project of achieving a knowledge society.

In part three: we look at the 1999 New Zealand ‘third way’ manifesto, The New Politics.

Links:

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Clark and Miliband (2003)

Friday, November 12th, 2010

It’s been interesting going back and reading some of Colin James’s columns from the last decade as I was preparing my post this week. Events and people in them take on different significance when you know what’s happened since.

I was particularly struck by this passage from a February 2003 column:

A short paper by a Scottish Labour MP, David Miliband, has been circulating among the Labour intelligentsia. It has had a stimulatory effect, including on a senior minister or two and, I am told, even on Heather Simpson, Clark’s most intimate and influential adviser.

Miliband reckons Tony Blair’s Labour government has “overperformed on most of its formal targets”. But this “ticking boxes” is not enough. “Themes, not policies, win elections… Themes without policies lack substance but policies on their own are arid”. In any case, adds Fabian Society secretary Michael Jacobs, in another circulating paper, policies often take a long time to work and are little understood by voters.

The famous Blair “third way”, says Miliband, despite its worldwide influence on once-socialist parties, is “defined negatively “. To turn Labour into “an all-pervasive political movement”, the party must:

  • develop “civic and social institutions that provide opportunity and security for all” and become known for those institutions,
  • build a machine capable of winning not just elections but “campaigns” (for example, for accessible health care) that “anticipate changes in the economy and society”,
  • strengthen local government and
  • be “alive to the politics of insecurity” arising from the “economy, crime, public services, finance, identity and foreign policy” (or the right will exploit them) — to which you might add for this country, the Treaty.

And, Miliband says, Labour people “need to ensure our values drive our politics” and establish “clear goals” based on those values. “Ideas are more important than ever.”

David Miliband, of course, went on to become the heir apparent to the leadership of the UK Labour Party, although he lost out at the last moment to his own brother, Ed.

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The Work of Our Own Hands

Thursday, November 11th, 2010






In this TEDx talk, frequent Policy Progress contributor James Caygill offers a high-speed history of the progressive movement through the Kevin Bacon framework.

(TEDx is a program of local, self-organised events based on the TED (Technology Entertainment and Design) set of conferences, established to disseminate “ideas worth spreading”.

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Was Helen Clark a ‘third way’ Prime Minister?

Tuesday, November 9th, 2010

This post follows on from an earlier one entitled Looking back on the Third Way, which examined the ‘third way’ strand of progressive thinking through the writings of its leading theorist Anthony Giddens.

The Fifth Labour Government in New Zealand led by Helen Clark came to power a few years after Tony Blair’s ‘New Labour’ in the United Kingdom. Can it also be seen as a ‘third way’ administration?

And if so, what did this mean in the New Zealand context, particularly with regard to the role of the state and ideas about the desirability and efficacy of state action?

The two leading figures of the Fifth Labour Government were Helen Clark and her deputy Michael Cullen. But only limited guidance can be gleaned from their public statements and writings.

This reflects the rather pragmatic and practical style that their government adopted. Veteran political commentator Colin James has written extensively over the years about the intellectual influences of successive governments including this one. His columns over the 2000s repeatedly trace its leaders reaching tentatively towards an overarching project or distinctive philosophy, only to pull back again.

“They are not a theoretical lot, even the boss herself with her political scientist’s training.” (May 2001)

“Clark and Deputy Prime Minister Michael Cullen have shied away from visions and proclamations of philosophy. Attempts to engage them in that sort of conversation don’t often get far.” (February 2003)

Perhaps most strikingly of all, he quotes “one Labour grandee” as saying on the topic of ‘vision’, “Hitler had one of those and look where it got the world”. (May 2005)

Even so, Helen Clark did from time to time describe her government in ‘third way’ terms, at least at first. (Michael Cullen never did, so far as I could find.)

In 2000 she said to the Auckland Chamber of Commerce that hers was “a classic Third Way government – committed to a market economy, but not to a market society”, and told that year’s Labour Party conference that their’s was “a third way approach” to dealing with the issues of how to adapt to globalisation and new technologies. In a 2002 address at the London School of Economics, she explicitly linked her government to the  writings of Anthony Giddens.

Two of her most specific explanations however came in speeches to the Local Government Conference in 2000 and the annual conference of the Meat Industry Association in 2001, respectively:

our third way government is seeking a new role, built around that concept of partnership, acknowledging the limitations of government, but also accepting the responsibility of leading, facilitating, enabling, brokering, and funding where appropriate to get results. (July 2000)

Labour takes the view that neither the excesses of hands-on nor of hands-off have served New Zealand well. That’s why we have articulated a third way for the state in the economy. That third way sees government as a leader, a facilitator, a co-ordinator, a broker, and a partner. It is a strategic role which also sees us apply funding where there is a public interest and/or market failure. (September 2001)

These statements are certainly consistent with Giddens’ conception of the ‘third way’. But to get further elaboration, including a sense of any specific New Zealand dimension to the ‘third way’, we will need to look elsewhere.

In part two of this discussion I will turn to the articulation of New Zealand’s ‘third way’ put forward by Steve Maharey, who Colin James at the time described as “Cabinet’s thinker” and Labour’s “most theoretical minister” (February 2005). Then, in part three I’ll look at the 1999 publication The New Politics: a Third Way for New Zealand.

Links:

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On the 2010 Defence White Paper

Friday, November 5th, 2010

Okay, so we’ve finally got our Defence White Paper. Time then to take a look at this one under the hood.

I’ve only the space to touch on the various issues – I’d love to drill deeper, but that’ll have to wait for either comments or more posts.

The first issue I see is with when we might go to war. The White Paper equivocates on exactly when we’d use military force. While the standard list of situations is there (see para 2.6), the next para seems to suggest that legality is not an overriding concern, merely one of a number of factors. This is effectively the “we’d go into Iraq” caveat, and one that leaves me uncomfortable.

Second is our emerging relationship with NATO, which is left annoyingly ambiguous in such an important document. I understand the language of diplomacy, and indeed its subset International Defence Relations (IDR), but I think in documents as important as these, governments need to be more explicit – too often the direction of this relationship is left unclear – particularly in light of the caveats placed on the use of military force.

Moving swiftly on to the strategic environment, I largely agree with the assessment, but for two areas. Paras 3.10 and 3.11 discuss the future of proliferation of WMD, and blithely assert that the next 35 years will see an environment of greater proliferation of these weapons. No evidence is presented, and frankly I’m sceptical that in our own strategic environment this is going to be a major issue. International efforts at non-proliferation and indeed disarmament are paramount to New Zealand’s interests, and I’m unhappy that this is so softly treated in this White Paper.

Secondly in discussing the strategic environment in the Pacific it seems to me that the Paper once again equivocates. It wants to highlight China as a threat, but can’t quite bring itself to do so. It refers to relations with France as a regional partners, but not the US, which is odd, given that the US gets a look in frequently throughout the document. And as for Australia, it asserts (para 3.38) that Australia’s greater investment in the military will increasingly drive an operability gap between our two countries, and leaves the sentiment there….bizarre. The Americas and Europe get no mention at all, not even the Pacific Rim, and Africa apparently only exists in so much as it forms part of the Middle East. Disappointing, given some of the contextual strategic issues raised, such as resource competition, immigration Antarctica etc.

But now we get to the meat of the document, what all this means for the New Zealand Defence Force (NZDF). NZDF has been operating at a high operational tempo for the last decade, and it’s taken its toll, both in terms of dollars, personnel turnover, and ongoing capability.

I’m in favour of the changes indicated in the proposed force structure (para 5.22) for the Army (a few upgrades of equipments and refocusing), and the Airforce (3 more A109 Light Utility Helicopters – Labour chickened out on buying enough). Tactical airlift gets spuriously upgraded to “Strategic Airlift” – which it isn’t, but either way the acknowledgement of a need to look beyond the life of our C-130s is sensible. No mention of an air combat element which is good, but no mention of drones and UAVs which is bad. As for the Navy, I’m not sure they’ve actually committed to the full amount of work HMNZS Canterbury needs, and it does need it, but moving swiftly along we now get to the really hard bit…

CONTROVERSIAL STATEMENT – If we actually want a Naval Combat element, then we need to resource one. We’ve been operating, ever since the decision to purchase the ANZACs back in the eighties, with our fingers in our ears. If projection of sea lane protection is important, and I personally think it is, then we need to get serious about our frigates. First, the ANZAC frigates need to be properly upgraded – and this will cost a lot (although it looks like this is signalled). But more importantly we actually need two more frigates. The best solution to my mind is purchasing two more relatively soon. That way we have two ANZACs and two others (probably Scandinavian or Canadian) the lifetimes of which overlap, as two are up for replacement, the other two are only reaching their half-life upgrade. It’s the easiest way to avoid block obsolescence while balancing inter-operability and maintaining the capability. But it costs far more than we’ve been willing to spend recently. /CONTROVERSIAL STATEMENT

Finally the move to consolidate bases around Ohakea is interesting, but only if the government really is interested in properly funding this. The costs of properly moving the Air Force out of Whenuapai to Ohakea are very very large – Labour baulked each time the decision came near Cabinet. It’s all very well saying they’ll close Linton and move the Army to Ohakea too, but that doesn’t make it cost-saving or even remotely cheap. I’m all for getting rid of Whenuapai and perhaps even Papakura, Woodbourne and Linton – but it’s got to be done appropriately, and I don’t get the sense that this government is going to sit around and want to hear about the expenses involved in doing it right. PPPs (if that’s really what you want to call them) might make sense for housing, but not for much else.

And now we arrive at that perennial problem – how to afford it? I’m very very sceptical of claims that lots of money can be saved. First off, one of the biggest costs for NZDF is capital and depreciation – these aren’t easy to push down, indeed I think the idea of doing more with less in this area is simply fiction. Labour did a good job trying to come to grips with defence spending in a medium-term sense, but ultimately the project stalled and it failed to get both Capital and Operational budgets on 10-year rolling budgets, which is where they should be.

Too often the debate about spending levels falls back to trotting out old chestnuts like defence spending as a percentage of GDP or of govt spending. Such figures are meaningless. Treasury knows they are meaningless, something for which I was eternally grateful for when I worked in this area. Yet so called experts and this White Paper persist in using them (para 5.10). It’s a real shame, because it actually tells you nothing; nothing about current spending; little about past spending; and less than nothing about comparative spending between countries, which is actually where it’s most often used. A shame really, because it detracts from actual arguments about appropriate spending levels.

The truth is defence costs a lot, and yet not very much for a country with modest goals like NZ. I personally believe that we should think of defence differently to other policy areas. We should look at what we want to do, how much it might cost, and then do it; rather than looking at what we want to do, cost it and then prioritise. It’s very very difficult to expand quickly: if you think you might need a capability in the next ten years, then get purchasing now. And it’s a core role of government – if you don’t defend your citizens, you don’t have legitimacy as a State (let’s leave the underlying political philosophy of that last sentence to another time).

As for where the money should come from – well that’s an interesting argument all on its own, but given my statement above, I believe it needs to come from somewhere, not finding it isn’t an answer.

All in all it’s much better than I thought it might be – but the proof of the pudding will be in the tasting of the budgeting. Until then, this is all just talk.

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Changes at Policy Progress

Thursday, November 4th, 2010

As we’ve started nearing the end of 2010, I’ve been thinking about Policy Progress’s (ahem) progress to date, what’s been achieved, and what else I’d like to get done before the end of the year. And how to manage to do that, taking into account other commitments — including of course my recent election to the Capital & Coast District Health Board.

One thing that I’m very keen to do is to put together some actual reports. I’m thinking PDF-format online publications, and in most case compiling (and possibly re-editing) material that’s been published on the blog, rather than all-new content. (Although, there may be an exception or two to that).

I think that some our writings may find a slightly different audience in that format. And some of it might take on a slightly different character for existing readers, too, when presented all in one place.

My top priority is a report with the (very tentative) working title of Theoretical Foundations: Decline and Renewal in Progressive Thought. This is based on my posts in the Theoretical Foundations category, as foreshadowed here.

But I’d also like to put something together based on my posts about the size and nature of New Zealand’s economic challenge. And I’d like do something with a few of the guest-posts as well.

In order to make some time to get this done, however, I’ve had to take a hard look at the Policy Progress blog and where I can cut back.

First of all, I’ve decided to discontinue ‘Commentary round-up’. I’ve enjoyed tracking Brian Easton, Colin James and Rod Oram each week, and I hope you have too. And, as I said at the beginning, it’s been a good prompt to keep up to date with each of these thoughtful and interesting writers, despite them not being easily RSS-able. But something had to give.

I’m also cutting back on ‘Recommended Reading’. I couldn’t bring myself to discontinue this completely, but I am going to pare it back quite a bit, particularly in terms of description of the articles, at least for now. And I’ll no longer be putting this shortened list up as a post, so you’ll have to subscribe to the Policy Progress newsletter if you want to keep reading my referrals.

Like many of the policy issues that Policy Progress discusses, these changes involve a trade-off, but hopefully as the reports come out you’ll feel that it’s been one worth making.

As always, thanks for reading.

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What made New Zealand Labour different? (part two)

Wednesday, November 3rd, 2010

Harry Holland, 1922 (Turnbull Library)

In part one, I asked how the New Zealand Labour Party (NZLP) in the 1930s had avoided the mistakes of their British counterpart under Ramsay MacDonald, and rejected the orthodox ‘austerity’ prescription for the Depression. I started by looking at the roles of Savage, Fraser and Nash. In part two, I also consider generational and culture factors.

I’ve argued previously that Ramsay MacDonald and his contemporaries’ fatal lack of engagement with how to manage a capitalist economy stemmed from a belief that their role was simply to usher in socialism when the conditions were right. As it turns out, NZLP leader Harry Holland suffered from the same mindset, according his biographer Patrick O’Farrell:

It was as if Holland was afflicted with that malaise which, according to [Rex] Mason [writing to Nash], had overtaken ‘most of our men’ in 1929: the idea that ‘victory will come from a concurrence of favourable external circumstances rather than from our own efforts’. Holland did believe capitalism was collapsing. He also thought that the economic consequences of that collapse were beyond the power of even a Labour government to rectify immediately. To discharge its true mission Labour must await the final disintegration of capitalism and build anew from the ruins. To take office during the process of collapse was to risk a disastrous involvement in the wreck. But what of immediate problems, the human suffering occasioned by the collapse, the good will of the people? Could Labour neglect these? For Holland, here was an enervating, crippling dilemma. (O’Farrell, p. 177)

The histories of the period recount both tensions between Holland and his three colleagues over policy directions and also a certain degree of disengagement from the weary Holland. In any case, however, he died suddenly in 1933 and it was Savage who lead the NZLP to victory in 1935.

Holland was only two year younger than Ramsay MacDonald, whereas Savage was six years younger, and Nash and Fraser were sixteen and eighteen years younger, respectively. They brought different experiences and perspectives to bear in the development of the NZLP’s policy.

There is also some possibility that New Zealand’s specific history and political culture may have had an affect. Bassett and King note (p. 121) Fraser’s “faith in the capacity of governments to fix social problems”. As early as 1927-8 they describe him (p. 114) as “honing his skills as a social engineer” and making speeches that “displayed a faith in the government’s ability to legislate and regulate for the public good”. More generally, they say the NZLP leadership of the time “became more extravagant with promises of state assistance to all sectors of the community” (ibid.).

Rather than being unique to the NZLP, though, such tendencies reflects what, according to Gary Hawke, is a general New Zealand trait:

New Zealand governments carried the principle [that governments legitimately intervened on behalf of the weak and powerless] so far as to leave doubt over whether there was any area in which the government did not have a genuine interest.

. . . Central government was always accessible and the colonial instinct was to use its powers and institutions wherever they were likely to be useful, irrespective of European ideas of propriety. European observers thought that New Zealanders practised socialism without doctrines, but they thought in European terms. New Zealanders simply found new roles for government in a pioneering society. (Hawke, quoted in James, p. 13)

Perhaps it was this Kiwi pragmatism that impelled the 1930s generation of Labour leaders to turn their considerable intellects to how the state could be used to fix the economic problems of the day, in a realistic and achievable way.

But the simplest answer to the question of what made New Zealand Labour different is: Savage, Fraser and Nash.

That this success lay so much with individuals and not institutions may in some way explain why the next major crisis, in the 1980s, was not handled so well.

Further Reading:

  • Michael Bassett and Michael King, Tomorrow Comes The Song: A Life of Peter Fraser (2000).
  • P. J. O’Farrell, Harry Holland: militant socialist (1964).
  • Colin James, The Quiet Revolution: Turbulence and Transition in Contemporary New Zealand (1986).

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