Author Archive

« Older Entries
Newer Entries »

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:

Tags: , , , , , ,
Posted in Theoretical Foundations | 4 Comments »

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.

Tags: ,
Posted in KiwiWatch | Comments Off

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:

Tags: , , ,
Posted in Theoretical Foundations | 1 Comment »

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.

Tags:
Posted in Overview | Comments Off

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).

Tags: , , , ,
Posted in Theoretical Foundations | Comments Off

What made New Zealand Labour different? (part one)

Tuesday, November 2nd, 2010

Fraser, Savage and Nash (1935) (Nash papers)

This two-part column is a sequel to Know your economics before you get into power, which described how in 1929 the British Labour government led by Ramsay MacDonald rejected Keynes’ economic prescription of fiscal stimulus to fight the Depression in favour of ‘the Treasury view’, as it became known.

The First Labour Government in New Zealand did not repeat British Labour’s mistake. They rejected the ‘balanced-budget’ dogma in favour of public works, spending on social services and a major extension of the welfare state with the passage of the Social Security Act in 1938.

Why was New Zealand Labour different? To some extent it was probably a case of learning from MacDonald’s mistakes, especially since Labour did not come to power here until in 1935. Even so, the New Zealand Labour Party (NZLP) seems to have come to a rejection of the ‘Treasury view’ far earlier than the British Labour Party.

I would argue that this reflected primarily a willingness and ability on behalf of the leadership of the NZLP to understand and engage with economic theory and debates.

The NZLP had been very lucky with the calibre of men (they were all men) in those top roles. The historian Keith Sinclair has written that Walter Nash, Peter Fraser and (Savage’s predecessor as Labour leader) Harry Holland all “read very widely in political and general economic literature”, adding, “There were few people in New Zealand as well read as these unschooled men.” (Sinclair, p. 71). Sinclair also described how Nash, the financial spokesperson, was close friends with and sought advice from a handful of top New Zealand economists including A.G. B. (Allan) Fisher of Otago University (Nash was best man at his wedding; pp. 79-80).

Michael Joseph Savage too was well-read on economic issues. His biographer Barry Gustafson notes that he was citing Keynes as early as 1925 and 1927, and his speeches continually emphasised the idea of ‘underconsumption’ as an economic ill (“He insisted that the root cause of the economic crisis was a lack of purchasing power in the domestic economy”) (Gustafson, pp. 144-5). The ‘underconsumption’ diagnosis is now most associated with Keynes but it had also been advanced by others Savage had read such as John A Hobson, an English economist who went on to become a strong critic of MacDonald’s 1929 government. (Hobson also influenced Edward Bellamy, whose Looking Backward: 2000-1887 was very popular with the New Zealand Left.)

As a result of this, the NZLP’s economic policy was carefully developed. Bassett and King write in their biography of Fraser (p. 123):

As he travelled about the country Nash’s speeches revealed a fine mind wrestling with the conundrums generated by steady deflation. By 1931, with the help of Fraser and Savage, he had drafted the essentials of a financial position. This was further refined over the next two years. The policy called for government planning to ensure there was enough purchasing power in everyone’s hands so people could buy the abundance of goods and services available in New Zealand.

The strength and coherence of their thinking was honed not only by arguing against the financial orthodoxy of the day, but also from defending their prescription against alternative strategies being put forward on the Left. Chief amongst these were the Social Credit theories of C. H. Douglas, which had a number of adherents in the Labour caucus, most notably John A Lee:

They believed that once the Reserve Bank had been nationalised in April 1936, all that had been needed to fund social reforms was a Minister of Finance with enough strength to turn the handle of the printing press . . . Since 1929, when [Fraser] fought to bring Nash into the Labour caucus, the two of them had opposed social-credit tendencies. (Bassett and King, p. 148)

The ‘credit men’ claimed that Fraser and Nash had (like MacDonald) been too orthodox. Similiarly, though from a very different perspective, the economic historian (and architect of the Fourth Labour Government’s tertiary reforms) Gary Hawke argues that, “In the economy, 1935-8 were years mostly of continuation of earlier policies in more favourable conditions.” (Prominent leftwing economist Bill Sutch, who served under the previous Finance Minister, Gordon Coates, also gives him credit as a precursor to the NZLP’s reforms.) Hawke adds, “It was the response of the Labour government to an exchange crisis in 1938, rather than its election in 1935, which marks a significant change in economic management in New Zealand.” (Hawke, p. 161; Sutch, pp. 37-50.)

Whether any or all of these judgments about Labour’s first term were correct is less important, for our purposes here, than the fact that when the pressure went on in 1938, its leadership responded by becoming more rather than less willing to intervene. In part this would have been because they had developed an economically-literate rationale for their actions.

It is, however, worth canvassing two other possible factors. One is generational, the other cultural. We look at each in turn in part two, tomorrow.

Further Reading:

  • Michael Bassett and Michael King, Tomorrow Comes The Song: A Life of Peter Fraser (2000).
  • Barry Gustafson, From the Cradle to the Grave: a biography of Michael Joesph Savage (1986).
  • G. R. Hawke, The Making of New Zealand: An Economic History (1985).
  • Keith Sinclair, Walter Nash (1976).
  • W. B. Sutch, Colony or Nation? Economic Crises in New Zealand from the 1860s to the 1960s (1966).

Tags: , , , , ,
Posted in Theoretical Foundations | 6 Comments »

Weekend reading, 29 October 2010

Friday, October 29th, 2010

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

Jon Cruddas - Taking Back the Big Society
A rich, sprawling and very worthwhile speech from UK MP Cruddas, the unofficial leader of the Labour left over there. A few extracts:

Across Europe social democracy has been reduced to parties of the public sector and the liberal middle class.

. . . The task at hand is for Labour to rebuild its identity grounded in ordinary, everyday working class culture.

. . . Labour built new schools and hospitals; a massive social investment. An historic achievement. No-one seems very grateful.

Labour in government pursued efficiency, ‘value for money’, and ‘customer satisfaction’ but it did not take care of the human relationships and trust that lie at the heart of public services. It used the market and the state as heartless instruments of reform. People felt excluded. They did not feel an ownership of the new grand buildings.

With embarrassing speed the Conservatives detached Labour from its own achievements. The market failure of the banks was turned into a crisis of public debt and blamed on Labour.

. . . In our history Labour has always responded to dispossession; to economic and social loss. It must do so again by rediscovering a warmth and generosity; especially in England by learning from our previous generations who have all dealt with the same patterns of loss. As such, Labour’s Good Society lies deep in the English struggle for popular democracy. (Read more)

John Kearne – Decline, fall and rebirth
This lengthy essay from The Australian presents an account of the history and evolution of social democracy and asks whether we are “living through a rare period of rupture” in which social democracy will be eclipsed by the green movement. Kearne traces some similar developments to those I’ve discussed in my Theoretical Foundations series of posts, though perhapsin a pithier style.

John Quiggin - Cosmopolitan social democracy

The left needs to offer a transformational vision of a better society if it is to motivate the kind of enthusiasm needed to overcome a rightwing politics of tribalism and (often misperceived) self-interest . . . We need a world view that extends the solidarity of social democracy to the whole of humanity. (Read more)

Dan Hind - The Media, the crisis, and the crisis in media
An intriguing suggestion from Hind, a former publisher and now author:

Clearly the media are in crisis. But if the current system doesn’t work, and the widely circulated proposals for reform won’t make a significant difference, what should we do? In The Return of the Public I make the case for a system of public commissioning. Instead of relying exclusively on professional commissioning editors all citizens take some responsibility for directing journalistic inquiry ourselves.

. . . To fund this system of public commissioning a sum of money could be taken from tax revenues or from licence fees and allocated to regional trusts. Journalists, academics and citizen researchers would post proposals for funding with these trusts . . . The public would then vote for the proposals that it wanted to support. (Read more)

Gordon Campbell – On The Hobbit finale
I’m not keen to get drawn into all the ins and outs of Hobbit-gate on this site, but this suggestion from Campbell, the veteran political columnist now with Scoop, was rather interesting:

In one important sense, The Hobbit experience has given New Zealand a second chance. What LOTR offered was an opportunity to build an entire industry off the back of what Peter Jackson had achieved. We could have created a wide ranging knowledge industry of a sort that bypassed the usual tyranny of New Zealand’s distance from its markets. Almost by accident from a national planning point of view, the film industry could have become exactly the sort of business cluster that Harvard University marketing guru Michael Porter had – decades ago – urged New Zealand to create.

Did we take full advantage of that opportunity? Hardly. . . . successive governments have left the private player (Jackson) to do all the heavy lifting, while keeping the Film Commission on starvation rations . . . We have a world leading FX shop, and little else of any stature . . . Keeping The Hobbit now gives us a second chance to re-balance the mix, because film seems to be what we do best. It is our knowledge economy forte.

This is not a case of picking winners. The winner, in the shape of Weta Digital at least, has already galloped past the post and picked up the Cup for being a globally recognized star performer. The strategy now should be to seriously fund and foster the growth of spinoffs – in gaming, in animation, design shops etc – that will enable the industry to expand out horizontally. To pull its weight properly in this process the Film Commission needs more funding – under conditions that ensure it meets cultural and commercial objectives from micro-budget features to mainstream theatrical releases. (Read more)

Paul Krugman - Falling Into the Chasm
Martin Wolf – Why US voters are suing Dr Obama
Krugman:

If Democrats do as badly as expected in next week’s elections, pundits will rush to interpret the results as a referendum on ideology. President Obama moved too far to the left, most will say . . . But the truth is that if the economic situation were better — if unemployment had fallen substantially over the past year — we wouldn’t be having this discussion.

Wolf:

With a political stalemate expected, further action will now be blocked. A lost decade seems quite likely. That would be a calamity for the US – and the world.

Also:
John Kay – Why you can have an economy of people who don’t sweat
Jake Brewer – The Tragedy of Political Advocacy

Tags: , , , , , ,
Posted in Miscellaneous | Comments Off

Commentary round-up

Wednesday, October 27th, 2010

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

In Labour fails to convince on economic policy (Star-Times), Rod Oram is rather harsher than his earlier Nine to Noon radio spot (covered last week). He is particularly critical of Labour’s new policy on foreign investment:

. . . if foreign investors help the New Zealand dairy industry shift to far more sophisticated, higher-value products, there is a good case for having them here. Labour says those are the land investors it will approve, while it bans the rest.

It will be very difficult, though, for the government to pick the right projects. Other countries such as Ireland have learnt how to make difficult decisions about which foreign investments to support. Labour must convince us it can learn and apply them. If it doesn’t, its agricultural land policy will be a big liability in the business community.

I find this a little ironic, in light of Oram’s own suggestions on foreign investment on Nine to Noon a few weeks ago, as covered in my round-up at the time:

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.

If anything, that sounds rather more difficult to operationalise than what Labour is proposing. Though perhaps he has backed away what may have just been an off-the-cuff musing at the time. In any case, he concludes:

“John Key has no game plan for our cities and our farms so that we can compete and win in the global economy,” Goff told the conference. “I do.”

No he doesn’t. But at least he and his Labour colleagues are working on it.

(Oram’s Nine to Noon spot didn’t appear this week, due to the short week.) (Thanks, Samuel Parnell!)

Colin James looks at the Maori Party in The foreshore party’s long growth into realist politics (Fairfax papers):

What does this say to the Maori party as it gathers on Saturday? That it has reached or is close to the limits of what it can extract from National. National will not agree to a “Treaty-based constitution”, except in the formal sense that the Treaty is the founding document legitimising the imposition of constitutional colonial government.

. . . So on Saturday there will be congratulations for the leadership on the totemic wins. But the farsighted will ask what can be extracted from National for a second term after next year’s election which has not already been dealt with or set in train.

And in Science, John Key and the Singapore syndrome (Otago Daily Times) he continues last week’s discussion on science policy:

So what’s stopping Key deciding to lift the game? He could, for example, add $200 million new spending each year for five years, which would get us to around 1 per cent of GDP.

. . . Of course, it also means either taking money off somewhere else or delaying a return to a budget surplus. And many RS&T ideas produce no return and those that do can take up to 10 years for a return, whereas hip operations, national superannuation at age 65 and the like are here-and-now politics.

Nothing new from Brian Easton this week.

Tags: , , , ,
Posted in KiwiWatch | 1 Comment »

Material living standards in New Zealand and Greece

Tuesday, October 26th, 2010

A while back, I did a comparison of material living standards in New Zealand with those of Australia, a very similar country but one with 33% more GDP per capita in buying power terms. (There are links at the end to the posts on the Australia-New Zealand comparison, which also outline the methodology for this analysis.)

In this post, I’d like to complement that by comparing New Zealand to Greece, which is a country with (as at 2005) very similar buying power per capita but a less similar lifestyle and culture.

When we looked at Australia we found broadly similar patterns of expenditure on many items, with much of Australia’s ‘growth dividend’ over New Zealand being reinvested in health, education and gross fixed capital expenditure. How, then, do we look alongside Greece?

As we can see in this first graph, New Zealand earned somewhat more than Greece did in pure GDP per capita terms, but when you take into account buying power (i.e. things were a little cheaper in Greece on average), then the Greeks were a little better off than we were. The difference is noticeable but not huge, about $1,500 a year ($29 a week).

This is complicated somewhat by the fact that Greece and New Zealand differed somewhat in the way they allocated their income across the large categories of actual individual consumption, collective consumption, gross fixed capital consumption, change in stocks and net exports.

Greece spent more than New Zealand across both forms of consumption and capital formation, but nearly half of this was financed by them running an even more negative trade balance than New Zealand’s. (Events over the last year may suggest that this was not a sustainable strategy for Greece.)

Looking more specifically at actual individual consumption, which is the aspect of our material standard of living that we experience most directly, the Greeks were spending $1,022 a year more each in New Zealand buying-power terms than us. That equates to about $13 dollars more a week.

But once again we see a differing pattern of consumption, rather than this dividend being spread thinly across all categories. As we see below, the Greeks spent a great deal more than us on food, drink and clothing — much moreso than the considerably richer Australians. (And, remember, these figures are in buying-power terms; they don’t reflect food, drink and clothing being more expensive there, but rather more and/or higher-quality consumption.)

On the other hand, there are number of categories where New Zealanders spent more than Greeks, most notably recreation and culture where we spend on average $32 a week more.

And then there are categories where we spent roughly the same amount (including health and education).

There are of course many, many caveats needed with an analysis such as this. For one thing, these per capita figures tell us about the mean, but they don’t necessarily say much about the lives of the average (i.e. median) Greek or New Zealander — especially if we don’t know about the income distribution of the respective countries.

Nevertheless, this analysis does suggest some broad differences between New Zealand and Greece, and possibly other southern European countries with broadly similar GDP per capita. Underneath the similar aggregates, we appear to be more modest in terms of our food and clothing (as are the Australians) but to spend more on recreation and transport. However, the latter may not necessarily reflect better outcomes for us but may simply mean that they have access to cheaper alternatives that might be just as good or better (the Acropolis and the Metro rather than the rugby match and the private car).

Links:
The earlier analysis can be found in Staring at the gap and If we do catch Australia, what’s the prize?
SourceOECD data on the 2005 Purchasing Power Parity Benchmark results

Tags: , , ,
Posted in Progressive Path to Prosperity | Comments Off

Weekend reading, 22 October 2010

Friday, October 22nd, 2010

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

Ben Baumberg – Should we defend the middle class welfare state?
An interesting and challenging post on Left Foot Forward from Ben Baumberg of the LSE and the group-blog Inequalities. He concludes:

[UK Labour leader Ed] Miliband somehow needs to avoid several temptations: not to give in to the siren call of means-testing everything, nor to universally defend universalism. To help him in this, we need to think through the welfare state systematically, rating the impact of targeting and means-testing against a complete set of principles – and come up with a plan for targeted universalism that is both affordable and which defends the key achievements of the middle-class welfare state.

John Quiggin - Five Zombie Economic Ideas That Refuse to Die
Progressive Australian economist John Quiggin has a new book out called Zombie Economics: How Dead Ideas Still Walk among Us which looks interesting and accessible. This article from Foreign Policy provides a useful introduction to some of what he has to say.

Big Cake – What if greenies are right? Growth: we can’t live with it, can’t live without it. Another great TED talk
Local blogger (and friend of Policy Progress) Big Cake’s take on Tim Jackson (who I discussed here).

OECD - Business as usual is not an option
Interesting to see this from as ‘establishment’ an organisation as the OECD:

“Business as usual” is not an option. That’s why the OECD is developing a Green Growth Strategy to help governments design and implement policies that can shift our economies onto greener growth paths. Central to this is identifying sources of growth which make much lighter claims on the biosphere. This will require fundamental changes to the structure of our economies, by creating new green industries, cleaning up polluting sectors and transforming consumption patterns.

Seth Godin – What does ‘pro-business’ mean?
Author Seth Godin makes a distinction between ‘pro-business’ policies and ‘pro-factory’ policies.

Also:
David Cunliffe – Cactus Kate on FDI
No Right Turn – Choice
Keith Ng - Did you know we’re in a recession?
John Kay - Barbarians at the gates of complexity
Matthew Yglesias – Global Economic Impact of Immigration

And on the ‘to read’ pile:
Brendan Mai, John Janssen, Geoff Lewis, Simon McLoughlin - Taking on the West Island: How does New Zealand’s labour productivity stack up? (New Zealand Treasury Productivity Paper 10/01)

Tags: , ,
Posted in Miscellaneous | Comments Off

« Older Entries
Newer Entries »