tag:blogger.com,1999:blog-38837256343850149992024-02-19T17:57:57.778-08:00The Irascible CurmudgeonA blog devoted to analysis of the news at a deeper level than that currently favoured by the media.Unknownnoreply@blogger.comBlogger273125tag:blogger.com,1999:blog-3883725634385014999.post-43303255300315630982015-05-19T21:03:00.000-07:002015-05-19T21:03:20.429-07:00Investor Protection: The Secret Corporate Takeover: Joseph Stiglitz on the TPPA.<div dir="ltr" style="text-align: left;" trbidi="on">
Investor Protection: The Secret Corporate Takeover<br /><br />by Joseph Stiglitz on 14 May 2015 @JosephEStiglitz<br />Joseph Stiglitz<br /><br />Joseph Stiglitz<br /><br />The United States and the world are engaged in a great debate about new trade agreements. Such pacts used to be called “free-trade agreements”; in fact, they were managed trade agreements, tailored to corporate interests, largely in the US and the European Union. Today, such deals are more often referred to as “partnerships,” as in the Trans-Pacific Partnership (TPP). But they are not partnerships of equals: the US effectively dictates the terms. Fortunately, America’s “partners” are becoming increasingly resistant.<br /><br />It is not hard to see why. These agreements go well beyond trade, governing investment and intellectual property as well, imposing fundamental changes to countries’ legal, judicial, and regulatory frameworks, without input or accountability through democratic institutions.<br /><br />Perhaps the most invidious – and most dishonest – part of such agreements concerns investor protection. Of course, investors have to be protected against the risk that rogue governments will seize their property. But that is not what these provisions are about. There have been very few expropriations in recent decades, and investors who want to protect themselves can buy insurance from the Multilateral Investment Guarantee Agency, a World Bank affiliate (the US and other governments provide similar insurance). Nonetheless, the US is demanding such provisions in the TPP, even though many of its “partners” have property protections and judicial systems that are as good as its own.<br /><br />The real intent of these provisions is to impede health, environmental, safety, and, yes, even financial regulations meant to protect America’s own economy and citizens. Companies can sue governments for full compensation for any reduction in their future expected profits resulting from regulatory changes.<br /><br />This is not just a theoretical possibility. Philip Morris is suing Uruguay and Australia for requiring warning labels on cigarettes. Admittedly, both countries went a little further than the US, mandating the inclusion of graphic images showing the consequences of cigarette smoking. The labeling is working. It is discouraging smoking. So now Philip Morris is demanding to be compensated for lost profits.<br /><br />In the future, if we discover that some other product causes health problems (think of asbestos), rather than facing lawsuits for the costs imposed on us, the manufacturer could sue governments for restraining them from killing more people. The same thing could happen if our governments impose more stringent regulations to protect us from the impact of greenhouse-gas emissions.<br /><br />When I chaired President Bill Clinton’s Council of Economic Advisers, anti-environmentalists tried to enact a similar provision, called “regulatory takings.” They knew that once enacted, regulations would be brought to a halt, simply because government could not afford to pay the compensation. Fortunately, we succeeded in beating back the initiative, both in the courts and in the US Congress.<br /><br />But now the same groups are attempting an end run around democratic processes by inserting such provisions in trade bills, the contents of which are being kept largely secret from the public (but not from the corporations that are pushing for them). It is only from leaks, and from talking to government officials who seem more committed to democratic processes, that we know what is happening.<br /><br />Fundamental to America’s system of government is an impartial public judiciary, with legal standards built up over the decades, based on principles of transparency, precedent, and the opportunity to appeal unfavorable decisions. All of this is being set aside, as the new agreements call for private, non-transparent, and very expensive arbitration. Moreover, this arrangement is often rife with conflicts of interest; for example, arbitrators may be a “judge” in one case and an advocate in a related case.<br /><br />The proceedings are so expensive that Uruguay has had to turn to Michael Bloomberg and other wealthy Americans committed to health to defend itself against Philip Morris. And, though corporations can bring suit, others cannot. If there is a violation of other commitments – on labor and environmental standards, for example – citizens, unions, and civil-society groups have no recourse.<br /><br />If there ever was a one-sided dispute-resolution mechanism that violates basic principles, this is it. That is why I joined leading US legal experts, including from Harvard, Yale, and Berkeley, in writing a letter to President Barack Obama explaining how damaging to our system of justice these agreements are.<br /><br />American supporters of such agreements point out that the US has been sued only a few times so far, and has not lost a case. Corporations, however, are just learning how to use these agreements to their advantage.<br /><br />And high-priced corporate lawyers in the US, Europe, and Japan will likely outmatch the underpaid government lawyers attempting to defend the public interest. Worse still, corporations in advanced countries can create subsidiaries in member countries through which to invest back home, and then sue, giving them a new channel to bloc regulations.<br /><br />If there were a need for better property protection, and if this private, expensive dispute-resolution mechanism were superior to a public judiciary, we should be changing the law not just for well-heeled foreign companies, but also for our own citizens and small businesses. But there has been no suggestion that this is the case.<br /><br />Rules and regulations determine the kind of economy and society in which people live. They affect relative bargaining power, with important implications for inequality, a growing problem around the world. The question is whether we should allow rich corporations to use provisions hidden in so-called trade agreements to dictate how we will live in the twenty-first century. I hope citizens in the US, Europe, and the Pacific answer with a resounding no.<br /><br />© Project Syndicate<br /><br /><br />Joseph Stiglitz is University Professor at Columbia University and a Nobel laureate in Economics.<br /><br /></div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3883725634385014999.post-65125928502834919312015-04-26T16:37:00.000-07:002015-04-26T17:25:38.633-07:00Pony-tails, panic and PR spin.<div dir="ltr" style="text-align: left;" trbidi="on">
<h2 style="text-align: left;">
<b>How Crosby-Textor propose to rescue Key from the fall out over his casual Pony-Tail stroking.</b></h2>
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<br />
Rumour has it that the Crosby-Textor spin machine that elevated John Key to the leadership of the National Party and thence to Prime Minister of NZ has been hard pressed to find a convincing argument to justify Key’s penchant for stroking and pulling young women’s hair.<br />
<br />
The current line that John is simply being “casual Key” or the he was indulging in “a little horse play and good fun” at the cafe he and his wife frequent has not gone down well with the general public despite what their focus groups of loyal National Party members indicated.<br />
<br />
Key’s Crosby-Textor advisors have been left non-plussed and confused by the <a href="http://m.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11436981" target="_blank">over whelming criticism</a> of Key combined with the argument, presented by ex-<a href="http://www.radionz.co.nz/news/political/271953/taking-stock-after-ponytail-pulls" target="_blank">National Party MP, Marilyn Waring</a>, that his behaviour was one of<a href="http://foreignaffairs.co.nz/2015/04/22/ponytail-gate-council-of-women-send-open-letter-to-john-key/" target="_blank"> </a><a href="https://www.blogger.com/null" target="_blank">sexual harassment</a>. <br />
<br />
However, rumour has it that a solution to this conundrum has been found. <br />
The Crosby-Textor spinmeisters have been doing a considerable amount of research and now believe that they have the answer which will kill the antagonism towards Key immediately.<br />
<br />
According to caucus leaks <a href="http://thestandard.org.nz/the-waitress-the-bloggers-and-the-main-stream-media/" target="_blank">Crosby-Texto</a>r are to arrange, on Key’s return from touring Saudi Arabia, a series of nation wide tours in which ordinary multi-millionaire money speculator John Key will offer to stroke any ordinary lower caste New Zealander’s pony tail or long hair offered to him so that the stroke can benefit from the holy aura that emanates from him. <br />
<br />
This holy aura, initially thought to have been confirmed through his success with Merril Lynch as a money trader but now understood to have been bestowed upon Key through his stroking of the Windsor corgis, swapping a barbecued sausage with William Windsor and admiring the royal offspring is reputed to cure diseases and restore the sufferer to the National Party fold. <br />
<br />
Crosby-Textor have designed the following structure for the The Key Cure tours. <br />
<br />
John Key will arrive in an electorate and set up a grotto in a local shopping mall or other cathedral to capitalism where he will call on those who wish to have their hair stroked, pulled or tugged and thus be cured of any belief in socialism, Labour Party policies or concern about the sale of state assets. <br />
<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgyykVdgFS5UrG8Z3iePodb9W20R4GaU5tJ2YpCVi38Llw9IidXhyZN8dAeUPZ9ucqQuU6jR9kGlY18esSO4dsTOyASwBjn-qrW6Gh46rSWtUh2Kh0ANK8SFrZny28xPz7MeJBbwhLUmL1D/s1600/Key+cures+scrofula.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgyykVdgFS5UrG8Z3iePodb9W20R4GaU5tJ2YpCVi38Llw9IidXhyZN8dAeUPZ9ucqQuU6jR9kGlY18esSO4dsTOyASwBjn-qrW6Gh46rSWtUh2Kh0ANK8SFrZny28xPz7MeJBbwhLUmL1D/s1600/Key+cures+scrofula.jpg" height="132" width="200" /></a></div>
<br />
There will be four distinct elements to the process: <br />
<br />
1) John Key shall touch (or, alternatively, stroke) the hair of the infected person.<br />
2) John Key will hang a medal around the person's neck. The medal to have a picture of John Key and The Deficit Dragon on one side while the reverse will have a picture of the local National Party MP kissing Key's feet. The recipient will be instructed to wear it at all times so that any anti-National thoughts will be warded off.<br />
3) Passages from the Gospel of Mark (16: 14–20) and the Gospel of John (1: 1–14) are to be read. Mark 16 contains themes that confirm John Key’s immunity to infectious political beliefs: "They shall take up serpents; and if they drink any deadly thing, it shall not hurt them; they shall lay hands on the sick, and they shall recover." Mark 16:18<br />
4) Membership of the National Party will be offered.<br />
<br />
While there has been some concern raised among those caucus members seeking to become leader of the Party in the wake of growing disenchantment with Key they have been over-ruled by the supreme council of the National Party. <br />
<br />
The belief is that as this process once sustained both the French and British monarchies for several centuries it is highly possible that once John Key begins the hair stroking “Key Cure Progress” he should be able to rise above the present criticism of his casual approach to the ordinary New Zealanders and thus cement in the National Party right to rule and thus assume undisputed rule of the country.<br />
<br />
<br />
The Country awaits the whole hearted endorsement of this campaign by Mike Hosking, Paul Henry, Patrick Gower and other obedient opinionistas employed by the MSM in New Zealand as their blessings will be seen by Crosby-Textor as essential to giving credibility to the Key Cure Progresses.<br />
<br />
<br /></div>
Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-3883725634385014999.post-1268023725331850792015-04-11T19:33:00.000-07:002015-04-11T19:33:44.755-07:00Why Tackling Inequality is of such Importance. from Social Europe Journal<div dir="ltr" style="text-align: left;" trbidi="on">
<h2 style="text-align: left;">
<b>Why Tackling Inequality is of such Importance</b></h2>
<br />
<div class="entry-content" itemprop="text">
<div class="wp-caption alignleft" id="attachment_14732" style="width: 260px;">
<img alt="Stewart Lansley" class="size-full wp-image-14732" height="200" src="http://cdn.socialeurope.eu/wp-content/uploads/2011/11/stewart-lansley.jpg" width="132" /><div class="wp-caption-text">
Stewart Lansley</div>
</div>
<div style="text-align: justify;">
<strong>It has long been recognised that
extreme inequality has many serious social consequences, as well as
causing economic fragility and weakness – now the time has surely come
to act.</strong></div>
<div style="text-align: justify;">
There’s a lot of talk about inequality.
From Pope Francis to the Bank of England’s Mark Carney, a rising number
of global figures have declared verbal war on today’s yawning income
gaps. But talk, it seems, is as far as it goes.</div>
<div style="text-align: justify;">
In the absence of action, inequality has
continued to grow through the crisis, domestically and globally. In the
UK, the gap between the top and the rest has continued to widen. In the
United States, nearly all the gains from recovery – over 90% – have
been colonised by the very top.</div>
<div style="text-align: justify;">
There are a number of reasons for this
gap between rhetoric and reality. Although inequality has been racing up
the political agenda, ‘inequality denial’ remains a potent force,
notably but not just in the US. As the London Mayor, Boris Johnson, puts
it the rich are a ‘put-upon minority` and should be feted and given
‘automatic knighthoods’.</div>
<div style="text-align: justify;">
Big corporations and the global
financial elite retain an immense grip over the political classes,
enabling them to dictate on swathes of economic policy, from tax to
business regulation. As the distinguished American economist, Avinash
Persaud, has put it, ‘the regulators have been captured by the
regulated`.</div>
<div style="text-align: justify;">
What is at work is a form of
double-speak. World leaders espouse anti-inequality sentiments, while
being complicit in actions that aggravate the income divide. Time and
again, the head of the IMF, Christine Lagarde, has made high profile
attacks on inequality: ‘Excessive inequality is corrosive to growth; it
is corrosive to society.’ Yet the New York based Fund continues to apply
policies that greatly exacerbate the problem. In return for bail-out
loans, for example, the IMF has enforced draconian austerity measures on
a number of southern European states that have impoverished large
sections of their populations.</div>
<div style="text-align: justify;">
In part because of the continuing
failure to translate talk into action, the Paris-based OECD has warned
that inequality is set to continue to grow. The average OECD nation, it
predicts, faces ‘an increase in (pre-tax) earnings inequality by 30% in
2060, facing almost the same level of inequality as is seen in the
United States today.’</div>
<div style="text-align: justify;">
This echoes the prediction at the heart of Thomas Piketty’s highly influential <em>Capital in the Twenty-First Century</em>,
of ‘a fundamental force for divergence’. Piketty argues that the great
narrowing across western nations – from the early 1930s to the mid-1970s
– was a one-off and we are back to the historic norm of persistently
high and growing inequality.</div>
<div style="text-align: justify;">
Does this mean that current levels of
inequality are inevitable and can only continue to deepen? The answer is
no. The historical process is not quite as deterministic as implied in
these pessimistic scenarios. As recognised by Piketty, models of
capitalism are not set in stone. Social and political forces are dynamic
and do change direction. There have been two seismic shifts of
political economy over the last century: the first, the shift from the
pre-war classical market model to the post-war era of regulated,
egalitarian capitalism; then, another fundamental turning point,
triggered by the stagflation crisis of the 1970s, ushered in the era of
inequality-biased market fundamentalism. That model is still largely in
place.</div>
<div style="text-align: justify;">
Narrowing today’s yawning income gaps
will require a similar dose of transformative politics. Tinkering here
and there through minor changes on tax and the level of the minimum
wage, slightly more generous doses of redistributive welfare and the
like – will not be enough to turn the rising inequality tide.</div>
<div style="text-align: justify;">
So, might history turn again, bringing
another shift in direction to a more progressive, pro-egalitarian era,
and confounding the idea that the post-war era was a one-off, special
case? The big shifts of the 1930s and 1970s were dependent, in each
case, on four central forces: severe economic shock, the intellectual
collapse of the existing model, a loss of faith by the public with the
existing system and a ready-made and credible alternative.</div>
<div style="text-align: justify;">
All these factors are at work today,
though to varying degrees. We have been through a severe global crisis.
The market orthodoxy of the last thirty years has a decreasing number of
friends, while most of its central tenets have been discredited. There
is growing public disenchantment with the current model.</div>
<div style="text-align: justify;">
What perhaps is missing is a coherent,
ready-made and widely endorsed alternative that would command sufficient
public support. But this was also true of the 1930s and 1970s. The
elements of a new model were being developed and debated in those
decades but did not take a clear shape until many years later. Today,
the precise shape of an alternative and progressive economic and social
settlement is equally uncertain.</div>
<div style="text-align: justify;">
Nevertheless, the central elements of an alternative political economy are likely to include:</div>
<ul style="text-align: justify;">
<li>A new democratic settlement aimed at spreading power as a counter to
big business – to the workforce, town halls, consumers and small
business. Taming runaway and unaccountable corporate power and
rebuilding collective bargaining are essential to achieving greater
equality.</li>
<li>The dispersal of capital ownership more widely through encouraging
alternative business models based around partnerships, co-operatives,
social and mutual enterprise and the introduction of collectivised
social wealth funds, drawing on other examples such as the <a href="https://www.opendemocracy.net/ourkingdom/angela-cummine/citizen%E2%80%99s-income-and-wealth-fund-for-uk-lessons-from-alaska">Alaskan sovereign wealth fund</a> and the Swedish wage earner fund.</li>
<li>Accepting the centrality of the ‘distribution question` in economic
and social policy making, with policies that raise the share of output
going to labour, which raise the earnings floor and lower its ceiling,
and which ensure that the proceeds of growth are more fairly shared.</li>
<li>The remodeling of the financial services industry with new measures
to check rent-seeking activity and steer more resources into wealth
creation through greater financial support for investment and the
establishment of a State Investment Bank.</li>
<li>A war on tax avoidance and the building of a more progressive tax
system – through for example the greater taxation of unearned wealth,
buttressed by a greater emphasis on international co-operation for
dealing with tax avoidance.</li>
</ul>
<div style="text-align: justify;">
Such a mix would represent a major
departure from the existing Anglo-Saxon model of capitalism and from New
Labour’s third way politics. So what are the chances of another key
turning point that would usher in a more progressive and pro-equality
model of capitalism? There are, perhaps, two key potential catalysts for
such a change.</div>
<div class="wp-caption aligncenter" id="attachment_38690" style="width: 760px;">
<img alt="Movements such as Occupy have helped to bring inequality onto the political agenda but there is still a lack of concrete action." class="size-full wp-image-38690" height="498" src="http://cdn.socialeurope.eu/wp-content/uploads/2015/04/inequality.jpg" width="750" /><div class="wp-caption-text">
Movements
such as Occupy London have helped to bring inequality onto the
political agenda but there is still a lack of concrete action.</div>
</div>
<div style="text-align: justify;">
The first is the intensity of political
pressure for a progressive alternative. As the American labour
journalist, Sam Pizzigati, has argued in his book <em>The Rich Don’t Always Win</em> the
evolution of a more equal and fairer society after the war depended on
the way ‘egalitarians had battled, decade after decade, to place and
keep before us a compelling vision of a more equal – and better
– society’. Across large parts of the globe, the post-2008 crisis has
brought an upsurge in grass roots political protest in opposition to the
status quo and in support of a broadly social democratic and
egalitarian alternative.</div>
<div style="text-align: justify;">
In the UK, there have been high profile
citizens’ based campaigns against tax dodging companies, for the living
wage and in opposition to austerity measures. Students from 25 countries
are rebelling against the dominance of narrow free-market theories in
university economic courses. The US has seen a sustained wave of
co-ordinated industrial walkouts demanding a higher minimum wage.</div>
<div style="text-align: justify;">
Yet, while these protest movements have
pushed the inequality question up the political agenda, they have, to
date, been too piecemeal to trigger the unstoppable momentum for change
necessary to force a more significant rupture in political and economic
thinking. While some have dismissed such movements – the writer John
Gray, for example, claims they show ‘the impotence of opposition and the
absence of alternatives` – such protests are a sign that public
patience with the status quo is thinning and that we may be getting
closer to the political and social limits of inequality. If so,
governments are likely to face a much harder ride unless there is a more
even sharing of the economic pie.</div>
<div style="text-align: justify;">
Nevertheless, more, much more, is needed
to force the political hand of what one group of Belfast anti-poverty
campaigners has called ‘the big people`. For that reason, the most
significant catalyst for change is likely to come from the impact of
inequality on economic stability. There is now a growing body of
evidence that extreme inequality breeds fragility, weakens growth and
promotes instability. It was a central factor in driving the global
economy over the cliff in 2008 and has contributed to the depth and
longevity of the crisis.</div>
<div style="text-align: justify;">
Over the last three decades, the rise in
inequality has been driven in the main by the steady shift in economic
rewards away from labour and in favour of capital. The OECD has shown
that, from 1990 to 2009, the typical wage share across all 34 OECD
nations fell from 66.1 per cent to 61.7 per cent, resulting in a great
surge in corporate and private cash holdings and leading to what Guy
Ryder, the Director-General of the ILO, has called a ‘<a href="http://www.ilo.org/global/about-the-ilo/newsroom/comment-analysis/WCMS_234482/lang--en/index.htm">dangerous gap between profits and people</a>.’</div>
<div style="text-align: justify;">
According to market orthodoxy, this
shift from wages to profits should have led to faster growth and more
stable economies. Instead, it has created a number of highly damaging
distortions, fracturing demand, promoting debt-fuelled consumption and
raising economic risk. Static and falling real wages have cut
wage-financed consumption while booming profits have been associated
with a <a href="https://www.tuc.org.uk/sites/default/files/tucfiles/How%20to%20Boost%20the%20Wage%20Share.pdf">catastrophic fall in investment</a>.</div>
<div style="text-align: justify;">
The effect has been to make growth
increasingly dependent on artificial stimulants, from the mass printing
of money by central banks to the growth of personal debt. While these
provide a temporary economic boost, they eventually lead to
unsustainable hikes in property and business values and stock markets
and so to economic collapse.</div>
<div style="text-align: justify;">
Today’s model of capitalism is
dysfunctional. Because of the power of capital, too much economic
activity is geared to the extraction of existing rather than the
creation of new wealth with consequences that have been toxic for
consumers, the workforce, taxpayers and the wider economy. The
distinction between wealth creation and wealth diversion has long been
recognised. As Adam Smith warned in 1776, because of their love of quick
money, ‘the prodigals and projectors’ could lead the economy astray. In
the 1930s it was Keynes who called for the ‘euthanasia of the
rentier`. In a modern-day equivalent, the leading World Bank economist
Branko Milanovic has distinguished between <a href="http://www.demos.org/blog/11/14/14/income-inequality-interview-branko-milanovic">‘good’ and ‘bad’ inequality</a>.</div>
<div style="text-align: justify;">
Despite these long acknowledged dangers,
the ‘distribution question` – of how the cake is divided – once central
to economic thinking, has been buried by the post-1979
counter-revolution in economic thinking. ‘Of the tendencies that are
harmful to sound economics, the most poisonous is to focus on questions
of distribution’, wrote Robert E Lucas, Nobel Prize winner and one of
the principal architects of the pro-market, self-regulating school, in
2003. Today, that question is creeping back onto the agenda, but too
slowly to have yet rebalanced the application of policy.</div>
<div style="text-align: justify;">
If we are to build a fairer and more
sustainable economic model, the distribution question needs to be
restored to the heart of economic management. Economies built around
poverty wages and huge corporate and private surpluses are
unsustainable. In that sense, restoring the balance between wages and
profits, and cutting the great income divide, is not just a matter of
social justice and proportionality it is an economic imperative. As long
as national economic cakes are divided so unevenly, economies will
continue to slide from crisis to crisis.</div>
<div style="text-align: justify;">
<em>This column was <a href="https://www.opendemocracy.net/ourkingdom/stewart-lansley/talk-is-not-enough-tackling-inequality-is-now-economic-imperative" target="_blank">first published on OpenDemocracy</a></em></div>
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<strong><em><br /></em></strong></div>
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About <span itemprop="name">Stewart Lansley</span></h4>
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Stewart Lansley is the author of 'The Costs of Inequality: Three Decades of the Super- Rich and the Economy', Gibson Square.<br />
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Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3883725634385014999.post-73280398492739042892015-04-07T16:02:00.000-07:002015-04-07T16:02:28.285-07:00Satire- the great weapon of insightful commentary.<div dir="ltr" style="text-align: left;" trbidi="on">
I came across the website of John Holcraft (illustrator) recently. His illustrations encapsulate the effect of the anti-worker zero hour contracting legislation so beloved of the NZ National Party. Here are a few of Holcraft's illustrations that demonstrare the effects of the casualisation of labour that John Key and his cronies have encouraged.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjxiiVKskd7FzFxfYhyjGWTXanePXgjKfK6RaAZ9fghLkTy6x3SrF8ni24Mfhkb7BtJPIs_T3k3wJKJxovz0xTZnoqTmpZEOVa0s7vGpdw0Xpg7KVQcTq2MCVyOY7iKWGj-0FVF6gLFOx4l/s1600/54.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjxiiVKskd7FzFxfYhyjGWTXanePXgjKfK6RaAZ9fghLkTy6x3SrF8ni24Mfhkb7BtJPIs_T3k3wJKJxovz0xTZnoqTmpZEOVa0s7vGpdw0Xpg7KVQcTq2MCVyOY7iKWGj-0FVF6gLFOx4l/s1600/54.jpg" height="203" width="320" /></a></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhey7uvdqRsrtUtP-JzoqcN6Do3uGUPOACOezTltD2v8bycsxV3VM5X-W0ULUZKS920gjDqhsEKcL5iz6EIuBUaUqSBF9yKRwFLhv7n9KDXJgxarABaANsjsW2Kc1AiuJQfeK9jjz51959T/s1600/64.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhey7uvdqRsrtUtP-JzoqcN6Do3uGUPOACOezTltD2v8bycsxV3VM5X-W0ULUZKS920gjDqhsEKcL5iz6EIuBUaUqSBF9yKRwFLhv7n9KDXJgxarABaANsjsW2Kc1AiuJQfeK9jjz51959T/s1600/64.jpg" height="320" width="222" /></a></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjMaqW3ZfWDZcwRMpWnM_73uhvAJAYL3VoZZQMKPE7UbOzjWJdtl0f2rJ4ZMUvnLxbfnagnWiacZYbSd9HhqYtg2Gr9Td-8LdMZSItBDeLz2Kh8lyIRwx2yd5HwfKYMesjvcTSzMuGYgOTc/s1600/75.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjMaqW3ZfWDZcwRMpWnM_73uhvAJAYL3VoZZQMKPE7UbOzjWJdtl0f2rJ4ZMUvnLxbfnagnWiacZYbSd9HhqYtg2Gr9Td-8LdMZSItBDeLz2Kh8lyIRwx2yd5HwfKYMesjvcTSzMuGYgOTc/s1600/75.jpg" height="286" width="320" /></a></div>
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Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3883725634385014999.post-90525744801834449192015-04-05T18:40:00.002-07:002015-04-05T18:40:41.934-07:00The economic collapse of Middle Earth. John Key's failure writ large.<div dir="ltr" style="text-align: left;" trbidi="on">
This article is republished from The Automatic Earth blog site. It makes very revealing reading especially as the writer dissects the economic failure that is John Key and his off siders Bill English and Steven Joyce.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhOH3T8kkuOxDMozxldUUH3-UnTpDXFeZEbxgrRp8dOfhcvrYwWtMMuPI_F7-GKER8KCRFZmn5rQ1jNNsANfUdYNGzYyEABoBvpTzVLbrEBd1TU6ssFAeRdZFNLtx7tNn6_J9tk9UGgxnub/s1600/11102716_10206757256995021_5886383935962869510_n.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhOH3T8kkuOxDMozxldUUH3-UnTpDXFeZEbxgrRp8dOfhcvrYwWtMMuPI_F7-GKER8KCRFZmn5rQ1jNNsANfUdYNGzYyEABoBvpTzVLbrEBd1TU6ssFAeRdZFNLtx7tNn6_J9tk9UGgxnub/s1600/11102716_10206757256995021_5886383935962869510_n.jpg" height="212" width="320" /></a></div>
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<h1 class="posttitle">
<a class="entry-title" href="http://www.theautomaticearth.com/2015/04/theres-trouble-brewing-in-middle-earth/" rel="bookmark" title="There’s Trouble Brewing In Middle Earth">There’s Trouble Brewing In Middle Earth</a></h1>
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<span class="post-format-icon"> </span><div class="postdata line">
<span class="line-date"><span class="icon"> </span>April 5, 2015</span>
<span class="author"><span class="icon"> </span>Posted by <span class="vcard"><a class="url fn" href="http://www.theautomaticearth.com/author/ilargi/" rel="author">Raúl Ilargi Meijer</a></span> at 11:01 am</span><span class="category"><span class="icon"> </span><a href="http://www.theautomaticearth.com/category/finance/" rel="category tag" title="View all posts in Finance">Finance</a></span><span class="tags tax"><span class="icon"> </span>Tagged with: <a href="http://www.theautomaticearth.com/tag/auckland/" rel="tag">Auckland</a>, <a href="http://www.theautomaticearth.com/tag/china/" rel="tag">China</a>, <a href="http://www.theautomaticearth.com/tag/dairy/" rel="tag">dairy</a>, <a href="http://www.theautomaticearth.com/tag/fonterra/" rel="tag">Fonterra</a>, <a href="http://www.theautomaticearth.com/tag/home-prices/" rel="tag">home prices</a>, <a href="http://www.theautomaticearth.com/tag/logging/" rel="tag">logging</a>, <a href="http://www.theautomaticearth.com/tag/milk/" rel="tag">milk</a>, <a href="http://www.theautomaticearth.com/tag/new-zealand/" rel="tag">New Zealand</a>, <a href="http://www.theautomaticearth.com/tag/timber/" rel="tag">timber</a>, <a href="http://www.theautomaticearth.com/tag/tourism/" rel="tag">tourism</a></span></div>
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For the second time in three years, I’m fortunate enough to spend
some time in New Zealand (or Aotearoa). In 2012, it was all mostly a
pretty crazy touring schedule, but this time is a bit quieter. Still get
to meet tons of people though, in between the relentless Automatic
Earth publishing schedule. And of course people want to ask, once they
know what I do, how I think their country is doing. <br />
My answer is I think New Zealand is much better off than most other
countries, but not because they’re presently richer (disappointing for
many). They’re better off because of the potential here. Which isn’t
being used much at all right now. In fact, New Zealand does about
everything wrong on a political and macro-economic scale. More about
that below.<br />
I’ve been going through some numbers today, and lots of articles, and
I think I have an idea what’s going on. Thank you to my new best friend
Grant here in Northland (is it Kerikeri or Kaikohe?) for providing much
of the reading material and the initial spark.<br />
To begin with, official government data. We love those, don’t we,
wherever we turn our inquisitive heads. Because no government would ever
not be fully open and truthful. This is from Stuff.co.nz, March 19
2015:<br />
<div style="margin-left: 20px;">
<a href="http://www.stuff.co.nz/business/industries/67444019/nz-gdp-grew-33pc-last-year" target="new"><span style="color: #ff2222; font-size: 13px; font-weight: bold;"> New Zealand GDP grew 3.3% last year </span> </a> </div>
<blockquote>
<i> New Zealand’s economy grew 3.3% last year, the
fastest since 2007 before the global financial crisis, Statistics NZ
said. Most forecasts expect the economy to keep growing this year and
next, although slightly more slowly than in the past year. For the three
months ended December 31, GDP grew 0.8%, in line with Reserve Bank and
other forecasts. That was led by shop sales and accommodation. </i></blockquote>
That sounds great compared to most other nations. But then we find
out where the alleged growth has come from (I say alleged because other
data cast a serious doubt on the ‘official’ numbers):<br />
<blockquote>
<i> The economy grew a revised 0.9% in the September
quarter, down from 1% reported earlier. Retail and accommodation
increased 2.3% in the December 2014 quarter, buoyed by <b>a 15% increase in international tourist spending</b>, as reported on Wednesday. New Zealand household spending also increased 0.6%. [..] </i><br />
<i>
</i><i>“Spending by Chinese, US, and UK visitors all increased in
2014, though Australians spent less.” Australia is New Zealand’s biggest
tourism market, but the New Zealand dollar has been high against the
Australian currency, trading at A96.5c on Thursday. The exchange rate
was under A80c at the start of 2013. <b>Total visitor spending last year hit $7.4 billion, up 13% on the previous year.</b> [..] </i></blockquote>
(Note: $1 US = $1.3156 NZ today.)<br />
<blockquote>
<i> Increased banking activity was reflected in a 1.1% rise in financial services this quarter, while <b>housing investment rose 5.2%. </b> </i><br />
<i>
</i><i>[..] The figures also showed the first fall in real incomes
since the middle of 2012. The inflation-adjusted purchasing power of
disposable income was down 0.5% in the December quarter. </i></blockquote>
We’ll get back to housing in a bit. And by all means, keep those last
few numbers in mind: while the economy ostensibly grew by 3.3%,
disposable income was down. That’s what you call a warning sign.<br />
But let’s focus first on tourism and especially on China. While
overall tourist spending rose 15% in 2014, as part of a later quote in
this article we will even see that <i>“tourism from China was up 40% in the first two months of this year from a year ago..”</i><br />
Still, that cannot make up for that other big trade with China,
exports, in particular of New Zealand’s biggest industry, dairy, and the
second biggest, timber. There things are not looking nearly as rosy.
And after reading the next piece, I’m wondering how the economy could
possibly have grown by 3.3%. More from Stuff.co.nz, dated March 25:<br />
<div style="margin-left: 20px;">
<a href="http://www.stuff.co.nz/business/industries/67500758/dairy-slump-hits-nz-exports-to-china" target="new"><span style="color: #ff2222; font-size: 13px; font-weight: bold;"> Dairy Slump Hits New Zealand Exports To China </span> </a> </div>
<blockquote>
<i>New Zealand posted a small trade surplus of just $50
million in February with dairy exports down heavily, especially to
China, New Zealand’s top export market. Some economists had expected a
monthly surplus of about $350 million. The trade shortfall for the year
ended February 2015 was a deficit of $2.2 billion. Exports to China have
boomed in the past few years, but melted down last year as dairy
product prices plunged. <b>Total exports to China in February were down more than 36% on the same month last year</b>.</i><br />
<i>
</i><i>China remains New Zealand’s biggest export market, worth almost $9b in the past year, just slightly ahead of Australia. But <b>the trend for exports to China has been falling for the past year, and is down 45% from the peak in late 2013</b>.
In fact, it has returned to levels seen in 2012. [..] Total exports
were worth $3.9b for the month, just barely ahead of monthly imports
which were also about $3.9b.</i></blockquote>
So sure, the 3.3% was over 2014, and this piece concerns this year. But it also says <i>‘the trend for exports to China has been falling for the past year,’</i> and <i>‘..The trade shortfall for the year ended February 2015 was a deficit of $2.2 billion..’</i> and that can only leave me wondering again what real GDP growth was. This is from RadioNZ, April 3:<br />
<div style="margin-left: 20px;">
<a href="http://www.radionz.co.nz/news/business/270328/export-drop-rattles-companies" target="new"><span style="color: #ff2222; font-size: 13px; font-weight: bold;"> Export Drop Rattles Companies </span> </a> </div>
<blockquote>
<i>Confidence among manufacturers and exporters has taken a hit with <b>export sales in February down 27% compared with a year ago</b>.
A survey found net confidence – which includes measures of cash flow,
profitability, investment, staff and sales – fell into negative
territory for the first time since April 2013. Net confidence was minus
13, down from 21 in January. The sample of Manufacturers and Exporters
Association members covered companies with combined annual sales of $178
million, with 68% of those from exports. Association president Tom
Thomson said currency volatility was the biggest issue for exporters,
with the big jump in the US dollar forcing up the price of some raw
materials. </i></blockquote>
Now I’m wondering which raw materials this fine man has in mind. See,
I can imagine currency volatility being a bit of a drag, but not too
much for New Zealand manufacturers, because as far as I can see the
country’s exporters don’t seem to import much in the way of raw
materials. The main exports, as I said, are dairy and timber, with a bit
of meat thrown in, none of which require raw materials imports, and
what the US dollar drives up in there would help New Zealand more than
hurt it. That the New Zealand dollar itself has gained vs various other
currencies, while true, is a whole other story.<br />
New Zealand’s dairy industry has been thrown together since the start
of the century in co-op Fonterra, good for 30% of global dairy exports –
most dairy farmers are shareholders (mind you, no country the size of
New Zealand should ever even think of exporting 30% of the world’s
anything, of course, unless it’s something unique on the planet and it
comes in small quantities). Fonterra’s by far biggest clients are the
lactose-intolerant Chinese, who import about all the milkpowder – for
their babies – they can lay their hands on, following a domestic tainted
milk scandal a few years back. Still, to establish your biggest
industry around one single client is obviously a very risky venture. And
now there’s the added problem of dropping prices. The New Zealand
Herald, April 2:<br />
<div style="margin-left: 20px;">
<a href="http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11426548" target="new"><span style="color: #ff2222; font-size: 13px; font-weight: bold;"> World Dairy Prices Slide 10.8% On Supply Concerns</span> </a> </div>
<blockquote>
<i>International dairy prices continued to reverse gains
made early this year at this morning’s GlobalDairyTrade (GDT) auction,
putting downward pressure on Fonterra’s $4.70 a kg farmgate milk price
forecast and raising concerns about next season’s likely payout. The GDT
price index fell by 10.8% compared with the last sale a fortnight ago,
when prices dropped by 8.8%. Big falls were recorded for the key
products of wholemilk powder – down 13.3% to US$2,538 a tonne, skim milk
powder – down 9.9% to US$2,467/tonne. </i></blockquote>
That 10.8% price drop occurred in just 2 weeks. There can be no doubt
that if your economy depends so much on one sector and one client,
you’re vulnerable. Probably as much as oil producers, who saw their
prices drop more, but who mostly have higher profit margins. What hasn’t
helped New Zealand dairy farmers is the Russian ban on EU milk
products; these will now have to be sold on world markets. What won’t
help either is the recent lifting of EU milk quotas, which will bring a
huge flood of additional milk on the market. A market that is already
drowning in milk. RadioNZ, April 2:<br />
<div style="margin-left: 20px;">
<a href="http://www.radionz.co.nz/news/political/270279/govt-world-%27awash-with-milk%27" target="new"><span style="color: #ff2222; font-size: 13px; font-weight: bold;"> World ‘Awash With Milk’ </span> </a> </div>
<blockquote>
<i>The Government is blaming a slump in milk prices on
the world market being awash with milk. But New Zealand First leader
Winston Peters said National’s economic policies and the high value of
the New Zealand dollar were not helping dairy farmers. In the Global
Dairy Trade auction prices dropped 10.8% overnight to $US2746 a tonne,
the second fall in a fortnight. Mr Peters said he predicted the fall and
it was a sign of rural areas lagging behind. “I’ve been saying it for a
long long time – what you’ve got is a fixation with Auckland, hollowing
out the provincial economies and sucking all the attention and money to
Auckland and that is not going to go on any longer.” </i><br />
<i>
Mr Peters said New Zealand had a free market system that no other
country followed and he would legislate to control the exchange rate,
similar to Singapore’s system. <b>“The one country that’s not devaluing at the moment is New Zealand – every other economy has.</b>
[..] Economic Development Minister Steven Joyce firmly rejected that
idea. “Well, with the greatest respect to Winston I am old enough, and
so is he, to remember the last time we tried to set the exchange rate in
this country and it wasn’t that successful… <br />
</i><i>“What he is basically saying is that he would legislate,
presumably, to put the exchange rate at a level it won’t naturally go
and that means effectively increasing costs for the consumer and
decreasing costs for exporters.” [..] Meanwhile, the Fonterra
Shareholders Council said some frustrated farmers were considering
leaving the co-operative due to the price slump.</i></blockquote>
For more than a few farmers, the situation has already proved too much. NZ Herald, Jan 11:<br />
<div style="margin-left: 20px;">
<a href="http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11384751" target="new"><span style="color: #ff2222; font-size: 13px; font-weight: bold;"> Stress Too Much For Farmers </span> </a> </div>
<blockquote>
<i>At least four farmers have taken their lives since
Fonterra cut its milk payout forecast for the coming season. On December
10, the dairy giant dropped its payout forecast for 2014-15 to an
eight-year low of $4.70 a kilogram of milk solids. That’s nearly half
the $8.40 paid in the 2013-14 season and is estimated to mean an income
drop for farmers of $6.6 billion. Federated Farmers dairy industry group
vice-chairman Kevin Robinson confirmed to the Herald on Sunday that it
was aware of the December deaths. “There’s been discussion through
Federated Farmers email about them,” he said.</i><br />
<i>
Several industry experts blame high levels of rural debt for increased stress on farmers. In total, <b>14 farmers have taken their lives in the past six months</b>,
Chief Coroner Judge Neil MacLean said. The most recent four deaths were
also confirmed by Te Aroha farmer Sue McKay, the administrator of a
private Facebook-based support group. She added: “I also know some local
hospitals have a number of farmers in them from attempted suicide. If
there’s three in one ward alone, there will be more in other hospitals.”<br />
</i><i><b>Whole milk powder prices were down 11% in the month and 52% lower than a year earlier</b>. Cheese also dropped 5% over the month.</i></blockquote>
But New Zealand also has a whole different side. If anything could
explain the 3.3% GDP growth number for 2014, I’m guessing it must be
this: a real estate bubble that would put most of Charles Ponzi’s heirs
to shame. Not 10 years ago, mind you, Americans, but today. Will they
never learn, you ask? No, they will have to have their faces pushed
squarely through the stucco walls. And they’ll probably still have hope
for a recovery when they come out at the other side. NZ Herald, April 5:<br />
<div style="margin-left: 20px;">
<a href="http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11427944" target="new"><span style="color: #ff2222; font-size: 13px; font-weight: bold;"> Hot Properties: Auckland Valuations Out Of Date Within Months </span> </a> </div>
<blockquote>
<i>Council valuations are already out of date, with <b>homes selling in Auckland’s overheated property market on average for more than 15% above their figure of six months ago</b>.
And previously unfashionable suburbs have recorded some of the biggest
spikes as desperate buyers look for their first home. Mt Roskill made
the biggest jump in the Real Estate Institute figures, which are based
on Auckland sales in February and compared against capital valuations
made in July last year. The valuations, which do not involve a property
inspection or include chattels, were made public on October 1.</i><br />
<i>
Even suburbs among the 10 with lowest rises, such as Remuera and Te
Atatu Peninsula, were up 13%. Properties sold by Bayleys Real Estate
last month included a West Harbour home bought for $700,000 more than
its capital valuation of $900,000 and a Glendowie home with a capital
value of $1.13m that sold for $1.575m. An Avondale home sold for
$590,000 — $130,000 above valuation.<br />
</i><i>REINZ chief executive Colleen Milne wasn’t surprised because
city fringe suburbs were now out of reach for many. The hot market made
it hard for capital values to keep up, Milne said. <b>“There has been a 19.9% median movement in Auckland in the last 18 months</b>.
I thought the CVs seemed to be quite appropriate at the time, but the
whole thing is just supply and demand — we have a lack of houses,” she
told the Herald on Sunday.</i></blockquote>
A ’19.9% median movement in Auckland in the last 18 months’ is about
13.25% per year, a doubling time of just over 7 years. Auckland
apartment prices in the Trade.me graph below, which covers February
2014-February 2015, would double every 3-4 years. <br />
<center>
<a href="http://www.trademe.co.nz/" target="new"><img border="0" src="http://www.theautomaticearth.com/wp-content/uploads/2015/04/NZHomePrices.jpg" /></a></center>
It must be an Anglo-Saxon disease. You can see it in London, in
Sydney, Melbourne, New York, Toronto. The new normal way to make your
failing economy look ‘healthy’ is to sell assets to any rich foreigner
or investment fund who comes knocking, no matter what the consequences,
short term or long term. In all these cities, young people can forget
about buying a home, that allegedly government supported dream. <br />
And everyone but the rich are pushed out ever further into the
boondock burbs. It’s a ‘policy’ that kills cities, of necessity. Cities
need people, real people, all people, poor and rich and old and young,
that have grown up where they live, they love where they live, they are
interested in making it look good and feel good. This is an ongoing and
organic process, because cities are alive, and yes, you can kill them.
But that’s for another story. <br />
Back to New Zealand’s reality for the vast majority of people, who
will never be able to fork over 100s of 1000s of dollars for a house.
People like the workers in the timber industry, who see slowing Chinese
demand translated into job cuts both for those who cut the trees and
those who transport them. <br />
Again, a dumb idea to base a whole industry around one client, but
the men and women who did the job were just glad they had work. And now
they don’t anymore. Jobs that in all likelihood will never come back
again. China won’t have another debt-financed growth spurt, and there
are no other candidates waiting on the horizon.<br />
And that’s all a big shame. New Zealand is not poor, but it’s by no
means as rich as Australia or Canada or Germany or the US. What it does
have is the potential to be largely self-sufficient. A potential that is
being squandered in order to play with the big boys of globalized
trade. <br />
New Zealand has only 4.5 million citizens, one third of which live in
Auckland. It has vast tracts of productive land that are now used to
feed export oriented cows and American pines, neither of which are even
native. It could have a great shoe industry, plenty of leather, and a
textile industry, plenty of wool. But New Zealand, like everyone else,
imports such basic needs from China. While having scores of unemployed
people. When will that light go off?<br />
The country’s prime minister since 2008, John Key, used to work at
Merrill Lynch and the New York Fed, and that sort of background
guarantees valiant efforts to sell anything in the country that’s not
bolted down, and take an axe to what is. It also guarantees zero
initiative to become self-sufficient. <br />
But then there are many tragic countries and societies in the world
who all suffer from the same maladie. I’ll leave you with some
reflections by the man who I’m told is New Zealand’s best business
writer, Bernard Hickey in the NZ Herald:<br />
<div style="margin-left: 20px;">
<a href="http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11427924" target="new"><span style="color: #ff2222; font-size: 13px; font-weight: bold;"> New Zealand’s Economic Winds Of Change </span> </a> </div>
<blockquote>
<i> Chaos theory calls it the butterfly effect. It’s the
idea that a butterfly flapping its wings in the Amazon could cause a
tornado in Texas. The New Zealand economy has plenty of its own
butterflies changing the weather for GDP growth, jobs, interest rates,
inflation and house prices. [..] One of the flappiest at the moment is
the global iron ore price. </i><br />
<i>
It’s barely noticed here but it’s an indicator of growing trouble
inside our largest trading partner, China, and it is knocking our
second-largest partner, Australia, for six. It fell to a 10-year low of
almost US$50 a tonne this week and is down from a peak of more than
US$170 a tonne in early 2011. <br />
China embarked on an infrastructure spree after the global financial
crisis. Over the three years to 2013, China poured 6.4 gigatonnes of
concrete, which was more than was poured in the US in the entire 20th
century. All that concrete needed reinforcing with steel and China
didn’t have enough iron ore and coking coal to make it. That building
boom created a glut of apartments and debt, which China now needs to
digest. [..]<br />
.. iron ore production in Australia has only now ramped up to its
peak levels. Weak demand met high supply to produce a price slump. This
all may seem irrelevant to New Zealand, but it’s not. The Australian
dollar has fallen in response to the iron ore crash, while New Zealand’s
dollar has remained strong because our economy is humming along, thanks
to building surges in Christchurch and Auckland and plenty of spending
and investment. <br />
That divergence between the Australasian economies drove the New
Zealand dollar to a record high of well over AUD$98 this week. Dollar
parity would make all those winter holidays on the Australia Gold Coast
and trips to shows in Sydney and Melbourne cheaper and generate a fierce
headwind for manufacturing exporters and tourism businesses here that
sell to Australians. <br />
President Xi has reinforced the contrasting effects of the changes in
China on Australia and New Zealand by encouraging consumers and
investors to spend more of China’s big trade surpluses overseas. <b>Tourism from China was up 40% in the first two months of this year from a year ago</b>, and there remains plenty of demand from investors in China for New Zealand assets.<br />
The dark side of this tornado in New Zealand after the flapping of
the butterfly’s wings in China was felt in Nelson this week. The
region’s biggest logging trucking firm, Waimea Contract Carriers, was
put into voluntary administration owing $14m, partly because of a slump
in log exports to China in the past six months. <br />
</i><i>That’s because New Zealand’s logs are now mostly shipped to
China to be timber boxing for the concrete being poured in its new
“ghost” cities. The Chinese iron ore butterfly has flapped and now we’re
seeing Gold Coast winter breaks become cheaper and logging contracts
rarer.</i></blockquote>
</div>
</div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3883725634385014999.post-45414536936467090772015-03-17T11:19:00.000-07:002015-03-17T11:19:45.528-07:00Robert Reich on why austerity and tax cuts for the rich are bad economics.<div dir="ltr" style="text-align: left;" trbidi="on">
This talk by Robert Reich, courtesy of Social Journal Europe, demonstrates the fallacies that underpin the economic policies entrenched in the National Party and their fellow conservative poltical allies.<br />
It makes rivetting viewing and provides even more reasons why NZ needs to be looking at more socially responsible and responsive policies.<br />
http://www.socialeurope.eu/2015/03/the-3-biggest-economic-myths/<br />
<br /></div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3883725634385014999.post-27843082720190021182014-12-16T16:15:00.000-08:002014-12-16T16:15:14.505-08:00Equality, Efficiency and Economic Theory (Social Journal Europe)<div dir="ltr" style="text-align: left;" trbidi="on">
<br />
<div class="wp-caption alignleft" id="attachment_29195" style="width: 260px;">
<img alt="Dani Rodrik, Good And Bad Inequality" class="wp-image-29195 size-full" height="200" src="http://cdn.social-europe.eu/wp-content/uploads/2013/09/dani-rodrik.jpg" width="186" /><div class="wp-caption-text">
Dani Rodrik</div>
</div>
<div data-line-id="4cecc4c3a7e44e53bba2c4e493732696" style="text-align: justify;">
In
the pantheon of economic theories, the tradeoff between equality and
efficiency used to occupy an exalted position. The American economist
Arthur Okun, whose classic work on the topic is called <em><a href="http://www.brookings.edu/research/books/1975/equalityandefficiency" target="_blank">Equality and Efficiency: The Big Tradeoff</a></em>,
believed that public policies revolved around managing the tension
between those two values. As recently as 2007, when New York University
economist Thomas Sargent, <a href="https://files.nyu.edu/ts43/public/personal/UC_graduation.pdf" target="_blank">addressing the graduating class</a> at
the University of California, Berkeley, summarized the wisdom of
economics in 12 short principles, the tradeoff was among them.</div>
<div data-line-id="103f0644386144d493813ca208b34fd4" style="text-align: justify;">
The
belief that boosting equality requires sacrificing economic efficiency
is grounded in one of the most cherished ideas in economics: incentives.
Firms and individuals need the prospect of higher incomes to save,
invest, work hard, and innovate. If taxation of profitable firms and
rich households blunts those prospects, the result is reduced effort and
lower economic growth. Communist countries, where egalitarian
experiments led to economic disaster, long served as “Exhibit A” in the
case against redistributive policies.</div>
<div data-line-id="b97344fc1f914db5a4e1212bd12585bc" style="text-align: justify;">
In
recent years, however, neither economic theory nor empirical evidence
has been kind to the presumed tradeoff. Economists have produced new
arguments showing why good economic performance is not only compatible
with distributive fairness, but may even demand it.</div>
<div data-line-id="e660bb7ecf7145468fd2b639e1537d8c" style="text-align: justify;">
For
example, in high-inequality societies, where poor households are
deprived of economic and educational opportunities, economic growth is
depressed. Then there are the Scandinavian countries, where egalitarian
policies evidently have not stood in the way of economic prosperity.</div>
<div data-line-id="0e28344cf8c54450a6559af39f6e72f1" style="text-align: justify;">
Early this year, economists at the International Monetary Fund produced <a href="http://www.imf.org/external/pubs/ft/sdn/2014/sdn1402.pdf" target="_blank">empirical results</a> that
seemed to upend the old consensus. They found that greater equality is
associated with faster subsequent medium-term growth, both across and
within countries.</div>
<div class="vision-pullquote-1 align">
In high-inequality societies,
where poor households are deprived of economic and educational
opportunities, economic growth is depressed. </div>
<div data-line-id="93b193eba7074249bc0fa0b954009a81" style="text-align: justify;">
Moreover,
redistributive policies did not appear to have any detrimental effects
on economic performance. We can have our cake, it seems, and eat it,
too. That is a striking result – all the more so because it comes from
the IMF, an institution hardly known for heterodox or radical ideas.</div>
<div data-line-id="2b613536ec8f440a9c2f40a57ef2a158" style="text-align: justify;">
Economics
is a science that can claim to have uncovered few, if any, universal
truths. Like almost everything else in social life, the relationship
between equality and economic performance is likely to be contingent
rather than fixed, depending on the deeper causes of inequality and many
mediating factors. So the emerging new consensus on the harmful effects
of inequality is as likely to mislead as the old one was.</div>
<div data-line-id="46b9539a087f4a5f95e737658382a486" style="text-align: justify;">
Consider,
for example, the relationship between industrialization and inequality.
In a poor country where the bulk of the workforce is employed in
traditional agriculture, the rise of urban industrial opportunities is
likely to produce inequality, at least during the early stages of
industrialization. As farmers move to cities and earn higher pay, income
gaps open up. And yet this is the same process that produces economic
growth; all successful developing countries have gone through it. In
China, for example, rapid economic growth after the late 1970s was
associated with a significant rise in inequality. Roughly half of the
increase was the result of urban-rural earnings gaps, which also acted
as the engine of growth.</div>
<div class="wp-caption aligncenter" id="attachment_30326" style="width: 760px;">
<img alt="According to Dani Rodrik, we have to distinguish between good and bad inequality. " class="size-full wp-image-30326" height="350" src="http://cdn.social-europe.eu/wp-content/uploads/2013/12/inequality.jpg" width="750" /><div class="wp-caption-text">
According to Dani Rodrik, we have to distinguish between good and bad inequality.</div>
</div>
<div data-line-id="063c8f0007d645748259bb5cbb35c54b" style="text-align: justify;">
Or
consider transfer policies that tax the rich and the middle classes in
order to increase the income of poor households. Many countries in Latin
America, such as Mexico and Bolivia, undertook such policies in a
fiscally prudent manner, ensuring that government deficits would not
lead to high debt and macroeconomic instability.</div>
<div data-line-id="4d64abebb0084c84a1031e0652816d0b" style="text-align: justify;">
On
the other hand, Venezuela’s aggressive redistributive transfers under
Hugo Chávez and his successor, Nicolás Maduro, were financed by
temporary oil revenues, placing both the transfers and macroeconomic
stability at risk. Even though inequality has been reduced in Venezuela
(for the time being), the economy’s growth prospects have been severely
weakened.</div>
<div data-line-id="3056aeb5df064071945048dff0961f0f" style="text-align: justify;">
Latin
America is the only world region where inequality has declined since
the early 1990s. Improved social policies and increased investment in
education have been substantial factors. But the decline in the pay
differential between skilled and unskilled workers – what economists
call the “skill premium” – has also <a href="https://ideas.repec.org/p/tul/wpaper/1314.html" target="_blank">played an important role</a>. Whether this is good news or bad for economic growth depends on why the skill premium has fallen.</div>
<div data-line-id="68127e57d60845b98ddeeaaeaa21f482" style="text-align: justify;">
If
pay differentials have narrowed because of an increase in the relative
supply of skilled workers, we can be hopeful that declining inequality
in Latin America will not stand in the way of faster growth (and may
even be an early indicator of it). But if the underlying cause is the
decline in demand for skilled workers, smaller differentials would
suggest that the modern, skill-intensive industries on which future
growth depends are not expanding sufficiently.</div>
<div class="vision-pullquote-1 alignright">
It is good that economists no longer regard the equality-efficiency tradeoff as an iron law. </div>
<div data-line-id="891c0546be034f609af6387fc60913d2" style="text-align: justify;">
In the advanced countries, the causes of rising inequality are <a href="http://www.project-syndicate.org/focal-points/unequal-at-any-speed">still being debated</a>.
Automation and other technological changes, globalization, weaker trade
unions, erosion of minimum wages, financialization, and changing norms
about acceptable pay gaps within enterprises have all played a role,
with different weights in the United States relative to Europe. Each one
of these drivers has a different effect on growth. While technological
progress clearly fosters growth, the rise of finance since the 1990s has
probably had an adverse effect, via financial crises and the
accumulation of debt.</div>
<div data-line-id="31bf3ff92cb64b24ac795ae7d6addd25" style="text-align: justify;">
It
is good that economists no longer regard the equality-efficiency
tradeoff as an iron law. We should not invert the error and conclude
that greater equality and better economic performance always go
together. After all, there really is only one universal truth in
economics: It depends.</div>
<div data-line-id="31bf3ff92cb64b24ac795ae7d6addd25" style="text-align: justify;">
<a href="http://www.project-syndicate.org/commentary/equality-economic-growth-tradeoff-by-dani-rodrik-2014-12http://www.project-syndicate.org/commentary/equality-economic-growth-tradeoff-by-dani-rodrik-2014-12" target="_blank"><em>© Project Syndicate</em></a></div>
</div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3883725634385014999.post-668266529541749022014-10-24T13:51:00.000-07:002014-10-24T13:51:14.340-07:00Tory Austerity mythology exposed ( from The Guardian & Social Europe Journal )<div dir="ltr" style="text-align: left;" trbidi="on">
The same neo-liberal mythology which declares National as the best manager of New Zealand's economy is used in the UK to boost the credibility of the Conservative Party with disaster-ous consequences.<br />
This article from The Guardian and reproduced in Social Europe Journal gives debunks the mythology and gives Labour Parties world wide the argument necessary to shift the political debate from the grasp of the Tory myth makers.<br />
<br />
<header class="entry-header"><h1 class="entry-title" itemprop="headline">
Why Did Britain’s Political Class Buy Into The Tories’ Economic Fairytale?</h1>
</header><div class="wp-caption alignleft" id="attachment_33341" style="width: 260px;">
<img alt="Ha-Joon Chang, Political Class" class="wp-image-33341 size-full" height="228" src="http://cdn.social-europe.eu/wp-content/uploads/2014/07/Ha-Joon-Chang.jpg" width="250" /><div class="wp-caption-text">
Ha-Joon Chang</div>
</div>
<div style="text-align: justify;">
Falling wages, savage cuts and sham
employment expose the UK recovery as bogus. Without a new vision we’re
heading for social conflict.</div>
<div style="text-align: justify;">
The UK economy has been in difficulty since the <a href="http://www.theguardian.com/business/2008/dec/28/markets-credit-crunch-banking-2008" title="">2008 financial crisis</a>.
Tough spending decisions have been needed to put it on the path to
recovery because of the huge budget deficit left behind by the last
irresponsible Labour government, showering its supporters with social
benefit spending. Thanks to the coalition holding its nerve amid the
clamour against cuts, the economy has finally recovered. True, <a href="http://www.theguardian.com/society/2014/oct/18/under-30s-priced-out-of-uk-alan-milburn" title="">wages have yet to make up the lost ground</a>, but it is at least a “job-rich” recovery, allowing people to stand on their own feet rather than relying on state handouts.</div>
<div style="text-align: justify;">
That is the <a href="http://sharethefacts.conservatives.com/post/94526284420/you-cant-trust-labour-with-the-figures-or-the" title="">Conservative party’s narrative on the UK economy</a>, and a large proportion of the British voting public has bought into it. They say they <a href="http://www.theguardian.com/politics/2014/oct/06/voters-trust-cameron-osborne-most-with-the-economy-poll-finds" title="">trust the Conservatives more than Labour by a big margin when it comes to economic management</a>.
And it’s not just the voting public. Even the Labour party has come to
subscribe to this narrative and tried to match, if not outdo, the
Conservatives <a href="http://press.labour.org.uk/post/98137818419/speech-by-ed-balls-mp-to-labour-party-annual" title="">in pledging continued austerity</a>. The trouble is that when you hold it up to the light this narrative is so full of holes it looks like a piece of Swiss cheese.</div>
<div class="vision-pullquote-3 align">
Even the Labour party has come to
subscribe to this narrative and tried to match, if not outdo, the
Conservatives in pledging continued austerity. </div>
<div style="text-align: justify;">
First, let’s look at the origins of the
deficit. Contrary to the Conservative portrayal of it as a spendthrift
party, Labour kept the budget in balance averaged over its first six
years in office between 1997 and 2002. Between 2003 and 2007 the deficit
rose, but at 3.2% of GDP a year it was manageable.</div>
<div style="text-align: justify;">
More importantly, this rise in the
deficit between 2003 and 2007 was not due to increased welfare spending.
According to data from the Office for National Statistics, social
benefit spending as a proportion of GDP was more or less constant at
about 9.5% of GDP a year during this period. The dramatic climb in
budget deficit from there to the average of 10.7% in 2009-2010 was
mostly a consequence of the recession caused by the financial crisis.</div>
<div style="text-align: justify;">
First, the recession reduced government
revenue by the equivalent of 2.4% of GDP – from 42.1% to 39.7% – between
2008 and 2009-10. Second, it raised social spending (social benefit
plus health spending). Economic downturn automatically increases
spending on many social benefits, such as unemployment benefit and
income support, but it also increases spending on things like disability
benefit and healthcare, as increased unemployment and poverty lead to
more physical and mental health problems. In 2009-10, at the height of
the recession, UK public social spending rose by the equivalent of
3.2% of GDP compared with its 2008 level (from 21.8% to 24%).</div>
<div class="wp-caption alignleft" id="attachment_35680" style="width: 760px;">
<br /><div class="wp-caption-text">
David Cameron’s economic policy is wrong and the narrative a fairytale according to Ha-Joon Chang.</div>
</div>
<div style="text-align: justify;">
When you add together the
recession-triggered fall in tax revenue and rise in social spending,
they amount to 5.6% of GDP – almost the same as the rise in the deficit
between 2008 and 2009-10 (5.7% of GDP). Even though some of the rise in
social spending was due to factors other than the recession, such as an
ageing population, it would be safe to say that much of the rise in
deficit can be explained by the recession itself, rather than Labour’s
economic mismanagement.</div>
<div style="text-align: justify;">
When faced with this, supporters of the
Tory narrative would say, “OK, but however it was caused, we had to
control the deficit because we can’t live beyond our means and
accumulate debt”. This is a pre-modern, quasi-religious view of debt.
Whether debt is a bad thing or not depends on what the money is used
for. After all, <a href="http://www.theguardian.com/news/datablog/2014/mar/21/explained-triple-tuition-fees-no-extra-cash" title="">the coalition has made students run up huge debts for their university education</a> on the grounds that their heightened earning power will make them better off even after they pay back their loans.</div>
<div style="text-align: justify;">
The same reasoning should be applied to
government debt. For example, when private sector demand collapses, as
in the 2008 crisis, the government “living beyond its means” in the
short run may actually reduce public debt faster in the long run, by
speeding up economic recovery and thereby more quickly raising tax
revenues and lowering social spending. If the increased government debt
is accounted for by spending on projects that raise productivity –
infrastructure, R&D, training and early learning programmes for
disadvantaged children – the reduction in public debt in the long run
will be even larger.</div>
<div style="text-align: justify;">
Against this, the advocates of the
Conservative narrative may retort that the proof of the pudding is in
the eating, and that the recovery is the best proof that the
government’s economic strategy has worked. But has the UK economy really
fully recovered? We keep hearing that national income is higher than at
the pre-crisis peak of the first quarter of 2008. However, in the
meantime the population has grown by 3.5 million (from 60.5 million to
64 million), and in per capita terms UK income is still 3.4% less than
it was six years ago. And this is even before we talk about the highly
uneven nature of the recovery, in which real wages have fallen by 10%
while people at the top have increased their shares of wealth.</div>
<div style="text-align: justify;">
But can we not at least say that the
recovery has been “jobs-rich”, creating 1.8m positions between 2011 and
2014? The trouble is that, apart from the fact that the current <a href="http://www.theguardian.com/business/2014/oct/15/uk-unemployment-falls-6-percent-lowest-lehman-brothers" title="">unemployment rate of 6%</a> is nothing to be proud of, many of the newly created jobs are of very poor quality.</div>
<div style="text-align: justify;">
The ranks of workers in “time-related
underemployment”, doing fewer hours than they wish due to a lack of
availability of work – have swollen dramatically. Between 1999 and 2006,
only about 1.9% of workers were in such a position; by 2012-13 the
figure was 8%.</div>
<div class="vision-pullquote-3 alignright">
The success of the
Conservative economic narrative has allowed the coalition to pursue a
destructive and unfair economic strategy, which has generated only a
bogus recovery largely based on government-fuelled asset bubbles in real
estate and finance. </div>
<div style="text-align: justify;">
Then there is the <a href="http://www.theguardian.com/commentisfree/2014/oct/16/lord-freud-crass-self-employment-wages" title="">extraordinary increase in self-employment</a>. Its share of total employment, whose historical norm (1984-2007) was 12.6%, <a href="http://www.theguardian.com/news/datablog/2014/aug/20/why-is-uk-self-employment-at-a-record-high" title="">now stands at an unprecedented 15%</a>.
With no evidence of a sudden burst of entrepreneurial energy among
Britons, we may conclude that many are in self-employment out of
necessity or even desperation. Even though surveys show that most newly
self-employed people say it is their preference, the fact that these
workers have experienced a far greater collapse in earnings than
employees – <a href="http://www.resolutionfoundation.org/media/press-releases/self-employed-see-plunge-earnings-even-numbers-surge/" title="">20% against 6% between 2006-07 and 2011-12</a>,
according to the Resolution Foundation – suggests that they have few
alternatives, not that they are budding entrepreneurs going places.</div>
<div style="text-align: justify;">
So, in between the additional people in
underemployment (6.1% of employment) and the precarious newly
self-employed (2.4%), 8.5% of British people in work (or 2.6 million
people) are in jobs that do not fully utilise their abilities – call
that semi-unemployment, if you will.</div>
<div style="text-align: justify;">
The success of the Conservative economic
narrative has allowed the coalition to pursue a destructive and unfair
economic strategy, which has generated only a bogus recovery largely
based on government-fuelled asset bubbles in real estate and finance,
with stagnant productivity, falling wages, millions of people in
precarious jobs, and savage welfare cuts.</div>
<div style="text-align: justify;">
The country is in desperate need of a
counter narrative that shifts the terms of debate. A government budget
should be understood not just in terms of bookkeeping but also of demand
management, national cohesion and productivity growth. Jobs and wages
should not be seen simply as a matter of people being “worth” (or not)
what they get, but of better utilising human potential and of providing
decent and dignified livelihoods. Ways have to be found to generate
economic growth based on rising productivity rather than the continuous
blowing of asset bubbles.</div>
<div style="text-align: justify;">
Without a new economic vision
incorporating these dimensions, Britain will continue on its path of
stagnation, financial instability and social conflict.</div>
</div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3883725634385014999.post-91156555108855278172014-10-24T13:41:00.001-07:002014-10-24T13:43:20.705-07:00Neo-Liberal Economics and the danger to nations' sovereignty. From Social Europe Journal.<div dir="ltr" style="text-align: left;" trbidi="on">
The TPPA debate has echoes in Europe as <a href="http://www.social-europe.eu/2014/10/juncker-commission/" target="_blank">Neo-Liberal </a>economists conspire to remove national sovereignty through the Juncker Commission.<br />
<br />
<br />
<header class="entry-header"><h1 class="entry-title" itemprop="headline">
Will The Juncker Commission Continue To Entrench Neoliberal Policies?</h1>
</header><div class="wp-caption alignleft" id="attachment_35685" style="width: 260px;">
<img alt="Lukas Oberndorfer, Juncker Commission" class="wp-image-35685 size-full" src="http://cdn.social-europe.eu/wp-content/uploads/2014/10/Lukas-Oberndorfer.jpg" height="224" width="250" /><br />
<div class="wp-caption-text">
Lukas Oberndorfer</div>
</div>
<i>A few days ago, the designated European Commission finally showed
its true colours: It wants to make sure that its economic policy
recommendations become enforceable. Deregulation of rent setting
systems, adjusting the retirement age to account for life expectancy and
increased flexibility in wage-setting mechanisms were mere
recommendations in 2014. That is supposed to change now. Its instruments
are the competitiveness pacts 2.0 and a separate budget for the Euro
area, even though there is no legal basis for such a measure. A decision
is going to be made at upcoming meetings of the European.</i><br />
Convergence and Competitiveness Instrument; Competitiveness Pacts;
Partnerships for Growth, Jobs and Competitiveness – as numerous as their
names are the attempts of the European Council to create consensus
about binding contracts for neoliberal structural reforms.<br />
Angela Merkel – the organic intellectual of a “reform alliance”
consisting of trade associations, the financial industry, national
ministries of finance and the economy, the EU Commission, neoliberal
heads of state and government and the ECB – has been pursuing such plans
since the beginning of 2013.<br />
But is this about the countries who face financing difficulties on
the financial markets or about the economies that show excessive trade
deficits? No. For those countries, <a href="http://bit.ly/1zcKJQA">instruments were already put in place</a>
in the wake of the economic crisis that obligated them to accept the
standards of the neoliberal reform alliance as economic policy.<br />
<h2>
The Neoliberal Reform Alliance Is Targeting The Remaining Countries</h2>
Now, the competitive pacts aim to include the remaining countries,
such as France, Germany and Italy. For all Euro states, a mechanism
shall be created that will, <a href="http://bit.ly/1zcKJQA">in the words of the Commission</a>,
overcome “political [...] deterrents to reform”: In binding contracts,
the countries shall commit to “structural reforms of the labour market,
the social security and health care systems and of retirement
regulations”. Countries with timely adoption shall receive “financial”
incentives.<br />
No mention shall be made of the abuse that corporations inflict on social systems through tax evasion, which <a href="http://ec.europa.eu/taxation_customs/taxation/tax_fraud_evasion/index_en.htm">deprives public coffers of one billion euros yearly</a>,
according to estimates by the Commission itself. No mention of the ever
quicker redistribution of wealth from the bottom to the top. And
no mention of the erosion of democracy, in both economy and society,
that is driven by financial markets. Rather, the competitiveness pacts
strengthen those actors who have spent years calling for “painful but
necessary” reforms of the social infrastructure. In times of tight
budgets, who can afford to leave money in Brussels?<br />
But for now, voting in the European Council has not been unanimous,
as would be required for the competitiveness pacts. Resistance by the
unions and by transnational alliances such as <a href="http://english.europa-geht-anders.eu/petition">“Another Europe is possible,”</a> among others, was too strong and the outgoing Commission too weak.<br />
<div class="wp-caption aligncenter" id="attachment_35686" style="width: 760px;">
<br />
<div class="wp-caption-text">
Will Jean-Claude Juncker’s Commission continue the push to entrench neoliberal economic policies? (photo: <a href="https://creativecommons.org/licenses/by-sa/2.0/" target="_blank">CC BY-SA 2.0</a> <a href="https://www.flickr.com/photos/110900366@N07/" target="_blank">euranet_plus</a>)</div>
</div>
<h2>
Old Ideas, New Candour: Enforceability For The Commission’s Recommendations</h2>
That is supposed to change now. Just a few days ago, the <i>Handelsblatt</i>
reported that EU commissioners Moscovici and Dombrovskis, who have been
suggested as heads of the relevant departments, want to “ensure that
governments follow the EU’s economic recommendations, which have so far
been accorded little attention”. Even though this was “one of Merkel’s
ideas which had been regarded as rejected,” parts of the proposal are
new:<br />
1) Up to now, the Commission has shied away from stating explicitly
that its country-specific recommendations should be the object of the
pacts.<br />
2) In order to provide the financial incentives for fulfilment of the
competitiveness pacts, a separate budget for the Euro zone shall be
established in the medium term.<br />
But what, exactly, is the content of the country-specific
recommendations? Since the competitiveness pacts, according to all
proposals to date, must be concluded between “the member states of the
euro zone <i>and the Commission</i>,” it is worthwhile to take a look
at the recommendations that the Commission issued in 2014, before they
were toned down by the Council:<br />
<a href="http://ec.europa.eu/europe2020/pdf/csr2014/csr2014_belgium_en.pdf">Belgium</a>,
for example, should aim for a “reform of the wage-setting system,
including wage indexation [and] to provide for effective automatic
corrections when needed”. <a href="http://ec.europa.eu/europe2020/pdf/csr2014/csr2014_bulgaria_en.pdf">Bulgaria</a> is advised to lower its minimum wage. <a href="http://ec.europa.eu/europe2020/pdf/csr2014/csr2014_france_en.pdf">France</a>
should commit itself to the German model: The unemployment benefit
system shall be “reformed” in such a way that “incentives to return to
work” are strengthened. <a href="http://ec.europa.eu/europe2020/pdf/csr2014/csr2014_germany_en.pdf">Germany</a>, in turn, shall lead the way once more and “[increase] incentives for later retirement”. <a href="http://ec.europa.eu/europe2020/pdf/csr2014/csr2014_slovakia_en.pdf">Slovenia</a> and <a href="http://ec.europa.eu/europe2020/pdf/csr2014/csr2014_croatia_en.pdf">Croatia</a> are called upon to privatize and <a href="http://ec.europa.eu/europe2020/pdf/csr2014/csr2014_sweden_en.pdf">Sweden</a> is even asked to deregulate its rent setting system in order to ensure “more market-oriented rent levels”. For <a href="http://ec.europa.eu/europe2020/pdf/csr2014/csr2014_austria_en.pdf">Austria</a>,
the Commission envisions linking the statutory retirement age to life
expectancy and harmonizing the statutory retirement age for women and
men sooner.<br />
But are the competitiveness pacts really about a contest between the
EU and the nation state? No. Rather, nation state actors belonging to
the neoliberal reform alliance are trying to use the European level to
further their interests — to push through demands that are, to date, not
enforceable within the democracies of the nation states due to <a href="http://bit.ly/1zcKJQA">a power balance that does not favour these interests that strongly</a>.<br />
<h2>
Overcoming Democratic Obstacles</h2>
The manner in which the competitiveness pacts are to be established
makes it obvious that the main conflict is not between “the EU” and,
say, “France,” but rather between the executive (both on the European
and the national level) and representative democracy. Jean Claude
Juncker, the new president of the Commission, lets us know on that
point: “I want to launch legislative and non-legislative initiatives to
deepen our Economic and Monetary Union during the first year of my
mandate. These would include [...] proposals to encourage further
structural reforms, if necessary through additional financial incentives
and a targeted fiscal capacity at Euro zone level [...].”<br />
The wording suggests that the competitiveness pacts are to be
implemented through a regulation. However, the European Treaties clearly
do not grant the Commission authority to establish competitiveness
pacts or to pay out the financial incentives associated with them. It
seems that also the new president of the Commission has chosen the path
of <a href="http://bit.ly/1zcKJQA" target="_blank">authoritarian constitutionalism</a> which will weaken both national parliaments and the European parliament by circumventing regular treaty amendment procedures.<br />
Yet, you cannot accuse the Commission of being dishonest. For two
years now, it has clearly articulated what this is all about: overcoming
political obstacles. It remains to be seen, however, if the heads of
states will join in this new instance of bypassing the parliaments where
the <a href="http://bit.ly/1zcKJQA">wage-earning population is able to advance their interests with comparative ease</a>. A landmark decision will probably be made at one of the next two upcoming European Councils (October 23 or December 18, 2014).</div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3883725634385014999.post-49834833194244968832014-10-11T13:11:00.002-07:002014-10-11T13:15:32.939-07:00NEW THOUGHTS ON CAPITAL - Thomas Piketty (From TED Talks)<div dir="ltr" style="text-align: left;" trbidi="on">
I found this TED talk to be thought provoking and a challenge to us all as we witness the further stripping of State Assets being signalled in New Zealand.<br />
<br />
<br />
http://www.ted.com/talks/thomas_piketty_new_thoughts_on_capital_in_the_twenty_first_century/transcript?language=en<br />
<br />
<br />
http://video.ted.com/talk/podcast/2014S/None/ThomasPiketty_2014S-480p.mp4<br />
<br />
<br />
<br /></div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3883725634385014999.post-35530537852719407452014-10-01T12:42:00.000-07:002014-10-01T12:42:55.787-07:00Trickle Down Economics? No way. Rather it's wealth capture by the selfish few. (From Social Journal Europe)<div dir="ltr" style="text-align: left;" trbidi="on">
<div class="linkedin sharrre" data-text="If You Look At One Graph About Inequality Look At This!" data-title="Share" data-url="http://www.social-europe.eu/2014/09/look-one-graph-inequality-look/" id="linkedin-before-35327">
<div class="box">
<a class="count" href="http://www.social-europe.eu/2014/09/look-one-graph-inequality-look/#"></a><h1 class="entry-title" itemprop="headline">
If You Look At One Graph About Inequality Look At This!</h1>
</div>
</div>
<div class="wp-caption alignleft" id="attachment_33465" style="width: 260px;">
<img alt="Henning Meyer" class="size-full wp-image-33465" height="222" src="http://cdn.social-europe.eu/wp-content/uploads/2014/07/Henning-Meyer.jpg" width="250" /><div class="wp-caption-text">
Henning Meyer</div>
</div>
You might have heard about recent reports stating that <a href="http://www.nytimes.com/2014/07/20/upshot/income-inequality-is-not-rising-globally-its-falling-.html?abt=0002&abg=1" target="_blank">global inequality is decreasing</a>.
This is a nice example of constructing the comparison according to the
result you would like to see. Yes, inequality between countries has
declined but the most important comparison is what is happening to
inequality within countries as this tells you how the distribution
system, that is under direct political control, works. And if you look
at this you can only shake your head in disbelief.<br />
<br />
<a href="https://twitter.com/ptcherneva/" target="_blank">Pavlina Tcherneva</a> tweeted two graphs from her research that were <a href="http://www.vox.com/xpress/2014/9/25/6843509/income-distribution-recoveries-pavlina-tcherneva" target="_blank">also picked up by Vox.com</a>.
The graphs answer a simple question: Who actually got what share
of growing national income in different periods of time? Here is the
answer for the US:<br />
<img alt="p1" class="aligncenter size-full wp-image-35328" height="531" src="http://cdn.social-europe.eu/wp-content/uploads/2014/09/p1.jpg" width="750" /><br />
Is there any question that there is something fundamentally wrong
with this distribution? And if you think this is only the case in the US
look at the equivalent graph for Sweden:<br />
<img alt="p2" class="aligncenter size-full wp-image-35329" height="544" src="http://cdn.social-europe.eu/wp-content/uploads/2014/09/p2.jpg" width="750" /><br />
Something is going seriously wrong here! If you look at one graph
that tells you all you need to know about income inequality look at who
actually takes home the gains of economic growth.</div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3883725634385014999.post-3483898520945269682014-09-29T15:31:00.000-07:002014-09-29T15:31:53.565-07:00Th Austerity Disaster and its impact - Lessons for New Zealand? (From Social Europe)<div dir="ltr" style="text-align: left;" trbidi="on">
<header class="entry-header"><h1 class="entry-title" itemprop="headline">
Europe’s Austerity Disaster</h1>
<div class="entry-meta">
<time class="entry-time" datetime="2014-09-29T09:00:30+00:00" itemprop="datePublished">29/09/2014</time> by <span class="entry-author" itemprop="author" itemscope="itemscope" itemtype="http://schema.org/Person"><a class="entry-author-link" href="http://www.social-europe.eu/author/joseph-stiglitz/" itemprop="url" rel="author"><span class="entry-author-name" itemprop="name">Joseph Stiglitz</span></a></span></div>
</header><div class="share-before share-filled share-small" id="share-before-35315">
<br /></div>
<div class="wp-caption alignleft" id="attachment_4497" style="width: 310px;">
<img alt="Joseph Stiglitz, Austerity Disaster" class="wp-image-4497 size-large" height="225" src="http://cdn.social-europe.eu/wp-content/uploads/2010/06/stiglitz-300x225.jpg" width="300" /><div class="wp-caption-text">
Joseph Stiglitz</div>
</div>
<div data-line-id="20acbd887b4840deb447f21f5ebe9f52" style="text-align: justify;">
“If
the facts don’t fit the theory, change the theory,” goes the old adage.
But too often it is easier to keep the theory and change the facts – or
so German Chancellor Angela Merkel and other pro-austerity European
leaders appear to believe. Though facts keep staring them in the face,
they continue to deny reality.</div>
<div data-line-id="9fcef8d65b894243bff2fa6c353da3e4" style="text-align: justify;">
Austerity
has failed. But its defenders are willing to claim victory on the basis
of the weakest possible evidence: the economy is no longer collapsing,
so austerity must be working! But if that is the benchmark, we could say
that jumping off a cliff is the best way to get down from a mountain;
after all, the descent has been stopped.</div>
<div data-line-id="11ab439b708a4c9d88285369d6f868d7" style="text-align: justify;">
But
every downturn comes to an end. Success should not be measured by the
fact that recovery eventually occurs, but by how quickly it takes hold
and how extensive the damage caused by the slump.</div>
<div data-line-id="dc029ede0e0a47348a97b6f2f853d8f0" style="text-align: justify;">
Viewed
in these terms, austerity has been an utter and unmitigated disaster,
which has become increasingly apparent as European Union economies once
again face stagnation, if not a triple-dip recession, with <a href="http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/3-29082014-AP/EN/3-29082014-AP-EN.PDF" target="_blank">unemployment</a> persisting at record highs and <a href="http://epp.eurostat.ec.europa.eu/tgm/refreshTableAction.do?tab=table&plugin=0&pcode=tsdec100&language=en" target="_blank"><em>per capita</em> real (inflation-adjusted) GDP</a> in
many countries remaining below pre-recession levels. In even the
best-performing economies, such as Germany, growth since the 2008 crisis
has been so slow that, in any other circumstance, it would be rated as
dismal.</div>
<div class="vision-pullquote-3 align">
Austerity has been an utter and
unmitigated disaster, which has become increasingly apparent as European
Union economies once again face stagnation. </div>
<div data-line-id="1891c26a6ee44d308ccf15251b760c38" style="text-align: justify;">
The
most afflicted countries are in a depression. There is no other word to
describe an economy like that of Spain or Greece, where nearly one in
four people – and more than 50% of young people – cannot find work. To
say that the medicine is working because the unemployment rate has
decreased by a couple of percentage points, or because one can see a
glimmer of meager growth, is akin to a medieval barber saying that a
bloodletting is working, because the patient has not died <em>yet</em>.</div>
<div data-line-id="be2bbeda35564600a547de82074cf161" style="text-align: justify;">
Extrapolating
Europe’s modest growth from 1980 onwards, my calculations show that
output in the eurozone today is more than 15% below where it would have
been had the 2008 financial crisis not occurred, implying a loss of some
$1.6 trillion this year alone, and a cumulative loss of more than $6.5
trillion. Even more disturbing, the gap is widening, not closing (as one
would expect following a downturn, when growth is typically <em>faster </em>than normal as the economy makes up lost ground).</div>
<div data-line-id="59a2c73ba94743dd9f4b4782bfc8f652" style="text-align: justify;">
Simply
put, the long recession is lowering Europe’s potential growth. Young
people who should be accumulating skills are not. There is overwhelming
evidence that they face the prospect of significantly lower lifetime
income than if they had come of age in a period of full employment.</div>
<div class="wp-caption aligncenter" id="attachment_35316" style="width: 760px;">
<div class="wp-caption-text">
The European economy is still in major trouble and the policy direction is making matters worse, according to Joseph Stiglitz.</div>
</div>
<div data-line-id="5ed5691e195b4867a7596366453287b5" style="text-align: justify;">
Meanwhile,
Germany is forcing other countries to follow policies that are
weakening their economies – and their democracies. When citizens
repeatedly vote for a change of policy – and few policies matter more to
citizens than those that affect their standard of living – but are told
that these matters are determined elsewhere or that they have no
choice, both democracy and faith in the European project suffer.</div>
<div data-line-id="12ad35bbccd44a5dacd73f912a522512" style="text-align: justify;">
France
voted to change course three years ago. Instead, voters have been given
another dose of pro-business austerity. One of the longest-standing
propositions in economics is the balanced-budget multiplier – increasing
taxes and expenditures in tandem stimulates the economy. And if taxes
target the rich, and spending targets the poor, the multiplier can be
especially high. But France’s so-called socialist government is lowering
corporate taxes and cutting expenditures – a recipe almost guaranteed
to weaken the economy, but one that wins accolades from Germany.</div>
<div data-line-id="c404d24dbfbc4e3e873c1a2189691092" style="text-align: justify;">
The
hope is that lower corporate taxes will stimulate investment. This is
sheer nonsense. What is holding back investment (both in the United
States and Europe) is lack of demand, not high taxes. Indeed, given that
most investment is financed by debt, and that interest payments are
tax-deductible, the level of corporate taxation has little effect on
investment.</div>
<div class="vision-pullquote-3 alignright">
The hope is that lower
corporate taxes will stimulate investment. This is sheer nonsense. What
is holding back investment (both in the United States and Europe) is
lack of demand, not high taxes. </div>
<div data-line-id="e87f9968d9fc482781601539dee4d86f" style="text-align: justify;">
Likewise,
Italy is being encouraged to accelerate privatization. But Prime
Minister Matteo Renzi has the good sense to recognize that selling
national assets at fire-sale prices makes little sense. Long-run
considerations, not short-run financial exigencies, should determine
which activities occur in the private sector. The decision should be
based on where activities are carried out most efficiently, serving the
interests of most citizens the best.</div>
<div data-line-id="7f9b4d650ab14bd59c9857f107b99cc0" style="text-align: justify;">
Privatization
of pensions, for example, has proved costly in those countries that
have tried the experiment. America’s mostly private health-care system
is the least efficient in the world. These are hard questions, but it is
easy to show that selling state-owned assets at low prices is not a
good way to improve long-run financial strength.</div>
<div data-line-id="7db7a16b56734b169aeebac493ebb604" style="text-align: justify;">
All
of the suffering in Europe – inflicted in the service of a man-made
artifice, the euro – is even more tragic for being unnecessary. Though
the evidence that austerity is not working continues to mount, Germany
and the other hawks have doubled down on it, betting Europe’s future on a
long-discredited theory. Why provide economists with more facts to
prove the point?</div>
<a href="http://www.project-syndicate.org/commentary/joseph-e--stiglitz-wonders-why-eu-leaders-are-nursing-a-dead-theory" target="_blank"><em></em></a></div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3883725634385014999.post-41454237360156442842014-09-29T15:23:00.001-07:002014-09-29T15:25:16.412-07:00The Damage Fallacies of Neo-Liberal economics cause<div dir="ltr" style="text-align: left;" trbidi="on">
The on-going and recent scandals (Judith Collins & Oravida, Maurice Williamson & Donghua Lui, John Key & Dirty Politics....) in New Zealand that have swirled around the neo-liberal National Party government of Key, supported by the discredited political parties of ACT and United Futures, with a combined total of 18000 nation wide, and the Maori Party did not prevent their re-election in the September election. The result is still being analysed and the fall-out worried over by those on the Left of the political spectrum. However, I think that <a href="http://www.theguardian.com/commentisfree/2014/sep/29/neoliberalism-economic-system-ethics-personality-psychopathicsthic" target="_blank">this article</a> in The Guardian best explains why, despite the National Party offering no visible policy direction for New Zealand except for a "steady as she goes...don't rock the boat" campaign which, late in the campaign, held out the possibility of tax cuts in 2017 the electorate cast their Party vote for National.<br />
<br />
The description of the personality that dominates the Neo-Liberal society is an exact description of those, like Key, Joyce, Collins, and Bennett, who are now stitching up deals with the "support parties" like ACT and United Futures to consolidate the striping of the State we have seen since 2008.<br />
<div id="article-header">
<div id="main-article-info">
<h1 itemprop="name headline ">
Neoliberalism has brought out the worst in us</h1>
<div class="stand-first-alone" data-component="Article:standfirst_cta" id="stand-first" itemprop="description">
An economic system that rewards psychopathic personality traits has changed our ethics and our personalities</div>
</div>
</div>
<ul class="article-attributes trackable-component b4" data-component="Article:byline">
<li>
<a href="http://www.theguardian.com/profile/paul-verhaeghe" itemscope="" itemtype="http://schema.org/Person" rel="author">
<img alt="Paul Verhaeghe" class="contributor-pic-small" src="http://static.guim.co.uk/sys-images/Guardian/Pix/pictures/2014/9/26/1411731859565/Paul-Verhaeghe.jpg" height="60" title="Contributor picture" width="60" />
</a>
</li>
<li id="contrib-shift"><ul>
<li class="byline">
<div class="contributor-full">
<span itemprop="author" itemscope="" itemtype="http://schema.org/Person"><span itemprop="name"><a class="contributor" href="http://www.theguardian.com/profile/paul-verhaeghe" itemprop="url" rel="author">Paul Verhaeghe</a></span></span> </div>
</li>
<li class="article-attributes-social-buttons">
<span class="social-buttons-twitter-contributor trackable-component" data-component="Twitter Follow Journalist"></span>
<span class="social-buttons-twitter-brand trackable-component" data-component="Twitter Follow Brand"></span>
</li>
<li class="publication">
<a href="http://www.theguardian.com/" itemprop="publisher">theguardian.com</a>,
<time datetime="2014-09-29T09:00BST" itemprop="datePublished" pubdate="">Monday 29 September 2014 09.00 BST</time>
</li>
</ul>
</li>
</ul>
<div class="flexible-content">
<div class="block" data-id="b4588d05-f84c-4ec5-998c-1ce425f8dab1" id="mainblock">
<div class="block-elements">
<br />
<br />
<figure class="element element-image" data-media-id="gu-fc-fad9cf26-f5d1-437e-a8e4-d302b40063f3">
<img alt="City of London and Canary Wharf" class="gu-image" src="http://static.guim.co.uk/sys-images/Guardian/Pix/pictures/2014/9/26/1411743716882/City-of-London-and-Canary-011.jpg" height="276" width="460" />
<figcaption>
<span class="element-image__caption">'<i>We are forever
told that we are freer to choose the course of our lives than ever
before, but the freedom to choose outside the success narrative is
limited.' Photograph: Lefteris Pitarakis/AP</i></span>
</figcaption>
</figure>
</div>
</div>
<div class="flexible-content-body" data-display-hint="">
We tend to perceive our identities as stable and largely separate
from outside forces. But over decades of research and therapeutic
practice, I have become convinced that economic change is having a
profound effect not only on our values but also on our personalities.
Thirty years of neoliberalism, free-market forces and privatisation have
taken their toll, as relentless pressure to achieve has become
normative. If you’re reading this sceptically, I put this simple
statement to you: meritocratic neoliberalism favours certain personality
traits and penalises others.<br />
<br />
There are certain ideal characteristics needed to make a career
today. The first is articulateness, the aim being to win over as many
people as possible. Contact can be superficial, but since this applies
to most human interaction nowadays, this won’t really be noticed.<br />
<br />
It’s important to be able to talk up your own capacities as much as
you can – you know a lot of people, you’ve got plenty of experience
under your belt and you recently completed a major project. Later,
people will find out that this was mostly hot air, but the fact that
they were initially fooled is down to another personality trait: you can
lie convincingly and feel little guilt. That’s why you never take
responsibility for your own behaviour.<br />
<br />
On top of all this, you are flexible and impulsive, always on the
lookout for new stimuli and challenges. In practice, this leads to risky
behaviour, but never mind, it won’t be you who has to pick up the
pieces. The source of inspiration for this list? The psychopathy
checklist by <a href="http://www.hare.org/" title="">Robert Hare</a>, the best-known specialist on psychopathy today.<br />
<br />
This description is, of course, a caricature taken to extremes. <b><i>(Hardly, sounds exactly like those at the head of the NZ National Party.)</i></b>
Nevertheless, the financial crisis illustrated at a macro-social level
(for example, in the conflicts between eurozone countries) what a
neoliberal meritocracy does to people. Solidarity becomes an expensive
luxury and makes way for temporary alliances, the main preoccupation
always being to extract more profit from the situation than your
competition. Social ties with colleagues weaken, as does emotional
commitment to the enterprise or organisation.<br />
<br />
Bullying used to be confined to schools; now it is a common feature
of the workplace. This is a typical symptom of the impotent venting
their frustration on the weak – in psychology it’s known as displaced
aggression. There is a buried sense of fear, ranging from performance
anxiety to a broader social fear of the threatening other.<br />
<br />
Constant evaluations at work cause a decline in autonomy and a
growing dependence on external, often shifting, norms. This results in
what the sociologist <a href="http://www.richardsennett.com/site/SENN/Templates/Home.aspx?pageid=1" title="">Richard Sennett</a>
has aptly described as the “infantilisation of the workers”. Adults
display childish outbursts of temper and are jealous about trivialities
(“She got a new office chair and I didn’t”), tell white lies, resort to
deceit, delight in the downfall of others and cherish petty feelings of
revenge. This is the consequence of a system that prevents people from
thinking independently and that fails to treat employees as adults.<br />
<br />
More important, though, is the serious damage to people’s
self-respect. Self-respect largely depends on the recognition that we
receive from the other, as thinkers from <a href="http://en.wikipedia.org/wiki/Georg_Wilhelm_Friedrich_Hegel" title="">Hegel</a> to <a href="http://en.wikipedia.org/wiki/Jacques_Lacan" title="">Lacan </a>have
shown. Sennett comes to a similar conclusion when he sees the main
question for employees these days as being “Who needs me?” For a growing
group of people, the answer is: no one.<br />
<br />
Our society constantly proclaims that anyone can make it if they just
try hard enough, all the while reinforcing privilege and putting
increasing pressure on its overstretched and exhausted citizens. An
increasing number of people fail, feeling humiliated, guilty and
ashamed. We are forever told that we are freer to choose the course of
our lives than ever before, but the freedom to choose outside the
success narrative is limited. Furthermore, those who fail are deemed to
be losers or scroungers, taking advantage of our social security system.<br />
<br />
A neoliberal meritocracy would have us believe that success depends
on individual effort and talents, meaning responsibility lies entirely
with the individual and authorities should give people as much freedom
as possible to achieve this goal. For those who believe in the fairytale
of unrestricted choice, self-government and self-management are the
pre-eminent political messages, especially if they appear to promise
freedom. Along with the idea of the perfectible individual, the freedom
we perceive ourselves as having in the west is the greatest untruth of
this day and age.<br />
<br />
The sociologist <a href="http://en.wikipedia.org/wiki/Zygmunt_Bauman" title="">Zygmunt Bauman</a>
neatly summarised the paradox of our era as: “Never have we been so
free. Never have we felt so powerless.” We are indeed freer than before,
in the sense that we can criticise religion, take advantage of the new
laissez-faire attitude to sex and support any political movement we
like. We can do all these things because they no longer have any
significance – freedom of this kind is prompted by indifference. Yet, on
the other hand, our daily lives have become a constant battle against a
bureaucracy that would make Kafka weak at the knees. There are
regulations about everything, from the salt content of bread to urban
poultry-keeping.<br />
<br />
Our presumed freedom is tied to one central condition: we must be
successful – that is, “make” something of ourselves. You don’t need to
look far for examples. A highly skilled individual who puts parenting
before their career comes in for criticism. A person with a good job who
turns down a promotion to invest more time in other things is seen as
crazy – unless those other things ensure success. A young woman who
wants to become a primary school teacher is told by her parents that she
should start off by getting a master’s degree in economics – a primary
school teacher, whatever can she be thinking of?<br />
<br />
There are constant laments about the so-called loss of norms and
values in our culture. Yet our norms and values make up an integral and
essential part of our identity. So they cannot be lost, only changed.
And that is precisely what has happened: a changed economy reflects
changed ethics and brings about changed identity. The current economic
system is bringing out the worst in us.</div>
</div>
</div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3883725634385014999.post-27289637314914170562014-07-25T14:52:00.000-07:002014-07-25T14:55:40.051-07:00Why the Super-Rich need Governments. (from Social Europe Journal) <div dir="ltr" style="text-align: left;" trbidi="on">
<div data-line-id="b7f9007b3e4f4bbda30beeec8b9a406a" style="color: black; text-align: justify;">
<span style="font-size: large;"><b> WHY THE SUPER-RICH NEED GOVERNMENTS</b></span></div>
<div data-line-id="b7f9007b3e4f4bbda30beeec8b9a406a" style="color: black; text-align: justify;">
Dani Rodrik</div>
<div data-line-id="b7f9007b3e4f4bbda30beeec8b9a406a" style="color: black; text-align: justify;">
<br /></div>
<div data-line-id="b7f9007b3e4f4bbda30beeec8b9a406a" style="color: black; text-align: justify;">
The very rich, F. Scott Fitzgerald <a href="http://fullreads.com/literature/the-rich-boy/" style="color: inherit;" target="_blank">famously wrote</a>,
“are different from you and me.” Their wealth makes them “cynical where
we are trustful,” and makes them think “they are better than we are.”
If these words ring true today, perhaps it is because when they were
written, in 1926, <a href="http://www.pewresearch.org/fact-tank/2013/12/05/u-s-income-inequality-on-rise-for-decades-is-now-highest-since-1928/" style="color: inherit;" target="_blank">inequality in the United States</a> had reached heights comparable to today.</div>
<div data-line-id="72ed1a1b16a2446298af892029adfb94" style="color: black; text-align: justify;">
During
much of the intervening period, between the end of World War II and the
1980s, inequality in the advanced countries was moderate. The gap
between the super-rich and the rest of society seemed less colossal –
not just in terms of income and wealth, but also in terms of attachments
and social purpose. The rich had more money, of course, but they
somehow still seemed part of the same society as the poor, recognizing
that geography and citizenship made them share a common fate.</div>
<div data-line-id="710e9a3b78634adea6448c8a603f2dc6" style="color: black; text-align: justify;">
As the University of Michigan’s <a href="http://www.hup.harvard.edu/catalog.php?isbn=9780674072992">Mark Mizruchi points out in a recent book</a>,
the American corporate elite in the postwar era had “an ethic of civic
responsibility and enlightened self-interest.” They cooperated with
trade unions and favored a strong government role in regulating and
stabilizing markets. They understood the need for taxes to pay for
important public goods such as the interstate highway and safety nets
for the poor and elderly.</div>
<div data-line-id="f432239650964f1cb51cecf3c1a992e6" style="color: black; text-align: justify;">
Business
elites were not any less politically powerful back then. But they used
their influence to advance an agenda that was broadly in the national
interest.</div>
<div data-line-id="2700608893b64abd98495e73b0377bf6" style="color: black; text-align: justify;">
By contrast, today’s super-rich are “moaning moguls,” to use James Surowiecki’s <a href="http://www.newyorker.com/talk/financial/2014/07/07/140707ta_talk_surowiecki" style="color: inherit;" target="_blank">evocative term</a>.
Exhibit A for Surowiecki is Stephen Schwarzman, the chairman and CEO of
the private equity firm the Blackstone Group, whose wealth now exceeds
$10 billion.</div>
<div class="vision-pullquote-3 align">
The venture capitalist Tom
Perkins and Kenneth Langone, the co-founder of Home Depot, both compared
populist attacks on the wealthy to the Nazis’ attacks on the Jews. </div>
<div data-line-id="3bf75fe578b24355a2f2ded44b732f1c" style="color: black; text-align: justify;">
Schwarzman
acts as if “he’s beset by a meddlesome, tax-happy government and a
whiny, envious populace.” He has suggested that “it might be good to
raise income taxes on the poor so they had ‘skin in the game,’ and that
proposals to repeal the carried-interest tax loophole – from which he
personally benefits – were akin to the German invasion of Poland.” Other
examples from Surowiecki: “the venture capitalist Tom Perkins and
Kenneth Langone, the co-founder of Home Depot, both compared populist
attacks on the wealthy to the Nazis’ attacks on the Jews.”</div>
<div data-line-id="aef005e44a394f1fbda66962713f0208" style="color: black; text-align: justify;">
Surowiecki
thinks that the change in attitudes has much to do with globalization.
Large American corporations and banks now roam the globe freely, and are
no longer so dependent on the US consumer. The health of the American
middle class is of little interest to them these days. Moreover,
Surowiecki argues, socialism has gone by the wayside, and there is no
need to coopt the working class anymore.</div>
<div data-line-id="332402ebbf1f4a2f930e94ca0f106950" style="color: black; text-align: justify;">
Yet
if corporate moguls think that they no longer need to rely on their
national governments, they are making a huge mistake. The reality is
that the stability and openness of the markets that produce their wealth
have never depended more on government action.</div>
<div class="wp-caption alignleft" id="attachment_33382" style="width: 760px;">
<img alt="Super-Rich" class="wp-image-33382 size-full" src="http://cdn.social-europe.eu/wp-content/uploads/2014/07/super-rich.jpg" height="500" width="750" /><br />
<div class="wp-caption-text">
The super rich are now more separated from the rest of society than ever before (photo: CC 4WheelsofLux Photography on Flickr)</div>
</div>
<div data-line-id="9762a6388ae847d1817887b1bd2b56ce" style="color: black; text-align: justify;">
In
periods of relative calm, governments’ role in writing and upholding
the rules by which markets function can become obscured. It may seem as
if markets are on autopilot, with governments an inconvenience that is
best avoided.</div>
<div class="vision-pullquote-3 alignright">
As former Bank of England
Governor Mervyn King aptly put it in the context of finance, “global
banks are global in life, but national in death.” </div>
<div data-line-id="055d8b08564a4ceca3716f4149903a07" style="color: black; text-align: justify;">
But
when economic storm clouds gather on the horizon, everyone seeks
shelter under their home government’s cover. It is then that the ties
that bind large corporations to their native soil are fully revealed. As
former Bank of England Governor Mervyn King aptly put it in the context
of finance, “global banks are global in life, but national in death.”</div>
<div data-line-id="41a1b436fe7346d4a01c0e5c13333c94" style="color: black; text-align: justify;">
Consider
how the US government stepped in to ensure financial and economic
stability during the global financial crisis of 2008-2009. If the
government had not bailed out large banks, the insurance giant AIG, and
the auto industry, and if the Federal Reserve had not flooded the
economy with liquidity, the wealth of the super-rich would have taken a
severe blow. Many argued that the government should have focused on
rescuing homeowners; instead, the government chose to support the banks –
a policy from which the financial elite benefited the most.</div>
<div data-line-id="c575fcdbb0f14d7fbf63db30e1fcbcdb" style="color: black; text-align: justify;">
Even
in normal times, the super-rich depend on government support and
action. It is largely the government that has financed the fundamental
research that produced the information-technology revolution and the
firms (such as Apple and Microsoft) that it has spawned.</div>
<div data-line-id="6ade7481f28f46c7926432bd595f446d" style="color: black; text-align: justify;">
It
is the government that enacts and enforces the copyright, patent, and
trademark laws that protect intellectual property rights, guaranteeing
successful innovators a steady stream of monopoly profits. It is the
government that subsidizes the higher-education institutions that train
the skilled work force. It is the government that negotiates trade
agreements with other countries to ensure that domestic firms gain
access to foreign markets.</div>
<div data-line-id="0e82ee9377ba46b78c7a7f844b8807c5" style="color: black; text-align: justify;">
If
the super-rich believe that they are no longer part of society and have
little need of government, it is not because this belief corresponds to
objective reality. It is because the prevailing story line of our time
portrays markets as self-standing entities that run on their own fuel.
This is a narrative that afflicts all segments of society, the middle
class no less than the rich.</div>
<div data-line-id="ab61980486a741ef85ef22150e6b11e5" style="color: black; text-align: justify;">
There
is no reason to expect that the super-rich will act less selfishly than
any other group. But it is not so much their self-interest that stands
in the way of greater equality and social inclusion. The more
significant roadblock is the missing recognition that <a href="http://www.social-europe.eu/2014/07/rent-seeking/" target="_blank">markets cannot produce prosperity</a> for long – for anyone – unless they are backed by
healthy societies and good governance.</div>
<div style="text-align: justify;">
<i style="color: black;"><a href="http://www.project-syndicate.org/commentary/dani-rodrik-explains-why-the-super-rich-are-mistaken-to-believe-that-they-can-dispense-with-government">© Project Syndicate</a></i></div>
</div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3883725634385014999.post-5406995795084745472014-07-08T14:48:00.000-07:002014-07-08T14:48:38.475-07:00YESTERDAY'S RUBBISH..why is a minimum wage different from Free Trade?<div dir="ltr" style="text-align: left;" trbidi="on">
<div class="wp-caption alignleft" id="attachment_29836" style="width: 260px;">
<img alt="Andrew Watt" class="size-full wp-image-29836" height="220" src="http://www.social-europe.eu/wp-content/uploads/2013/11/Andrew-Watt.jpg" width="250" /><div class="wp-caption-text">
Andrew Watt</div>
</div>
<div style="text-align: justify;">
Germany’s first post-war Chancellor Konrad Adenauer is usually held to be the origin of an often-quoted phrase „<em>Was kümmert mich mein Geschwätz von gestern?</em>“.
Roughly: why should I be concerned about the rubbish I talked
yesterday? Whatever the rights and wrongs of this attribution, the
phrase – used to draw attention to someone who places political
flexibility over intellectual consistency – has occurred to me numerous
times over recent months in the context of Germany’s debate over the
introduction of a statutory minimum wage.</div>
<h2 style="text-align: justify;">
The statutory minimum wage in Germany</h2>
<div style="text-align: justify;">
The decision was finally taken yesterday in the <a href="http://www.ft.com/intl/cms/s/0/68a7a822-02ce-11e4-a68d-00144feab7de.html?siteedition=intl">Bundestag</a>.
Germany will, for the first time in its history, apply a statutory
minimum wage of EUR 8.50 to almost all workers from the start of 2015.
It is estimated that up to 3.7 million workers will benefit, and given
very pronounced wage inequality at the bottom of the German labour
market, the wage rises for some workers will be <a href="http://www.social-europe.eu/2013/10/the-german-minimum-wage-debate-lessons-from-an-eu-comparison/">substantial</a>.
There is a two-year transition phase for pre-existing sectoral
collective agreements. A number of groups of workers have been excluded,
some permanently the majority for a transition period, from the minimum
wage requirement, which has given rise to an intense debate in the
country.</div>
<div style="text-align: justify;">
This debate about
exemptions, as with the battle over the minimum wage more generally, has
centred, unsurprisingly, on possible negative employment effects. Once
the minimum wage has been introduced it will be possible to analyse its
employment effects, even if this will be difficult because its impact
will not be easy to disentangle from that of other factors happening at
the same time. For the moment, one has to rely on studies focusing on
past minimum wage introductions and increases in other countries. The
thrust of that literature is that, provided the minimum wage is at a
“reasonable rate”, it is very hard to identify negative employment
effects in the aggregate. (For a discussion of whether EUR 8.50 is
“reasonable” in the German context see <a href="http://library.fes.de/pdf-files/id-moe/10558.pdf">here</a>.)</div>
<div style="text-align: justify;">
What
we will see though is a lot of “argument by anecdote”. Firm A in region
B has been forced into bankruptcy by wage increases necessitated by the
minimum wage. Worker C in city D was happy about the minimum wage when
it was being discussed, but now he is furious because instead of a job
paying EUR 6.50 he is unemployed. Indeed, we are already seeing this
argument being deployed in the form of threats and predictions. <em>Handelsblatt</em>, the German business daily, recently had a piece whose title asks whether the minimum wage will lead to bankruptcies (“<em>Pleiten dank Mindestlohn?</em>”, <em>Handelsblatt</em>,
15.05.14). The article answers the rhetorical question in the
affirmative, based on the opinions of the director of the hotel and
catering lobby organisation, the board chairman of a chain of
hairdressers, and the president of the German employers association BDA.
And this concern has been expressed by many liberal economists, by
employer-linked think tanks such as the <em>Initiative Neue Soziale Marktwirtschaft</em>[1], and, not least, by the German Council of Economic Advisers.[2]</div>
<h2 style="text-align: justify;">
Political flexibility or intellectual consistency?</h2>
<div style="text-align: justify;">
What
I find interesting here is less the specific arguments put forward
(which are rather weak) than the fact that the basis for the arguments
is completely at odds with the way that employers’ representatives[3],
and certainly liberal economists, normally position themselves. It is as
if, on the issue of the minimum wage they are collectively saying: why
should I be concerned about the rubbish I talked yesterday?</div>
<div style="text-align: justify;">
Consider
the debate on free trade. A country has tariffs that protect a sector
of its economy. They are removed, leading to job losses and bankruptcies
in the least productive firms in that sector. Do employer
representatives and liberal economists favour an anecdotal approach here
and call for the reimposition of tariffs in order to protect jobs and
companies? On the whole they take a very different line. The production
and employment protected by the tariffs is “inefficient”. Free trade
brings a welcome does of competition. It enables higher incomes and a
shift of production to areas in which the country has a comparative
advantage. Workers who lose their jobs move to more productive
occupations or regions and everyone is better off. (At least, the more
sophisticated would add, this is the case after an intervening
adjustment period.) Focusing on protecting “old” jobs is a barrier to
productivity and progress. One cannot judge from individual job losses
that the overall employment level must fall.</div>
<div style="text-align: justify;">
A
similar argument is put forward with respect to technological change.
Yes, some workers are thrown out of work when new, more efficient
machinery and production processes are introduced. Others have to adjust
through training. But here, too, the overall impact is beneficial
(after a lag), because lost employment can be recouped elsewhere in the
economy, as higher-productivity jobs pay higher wages that in turn
expand employment opportunities for workers in other parts of the
economy. If you are against technological change you are a Luddite and
economically illiterate.</div>
<div style="text-align: justify;">
This begs
the question why different standards seemingly apply in the case of the
minimum wage. Firms facing a rise in labour costs in the wake of its
introduction have a number of ways to adjust. (These are not mutually
exclusive in practice but can be separated for expositional purposes.)
They can increase prices. Given that the minimum wage applies across the
whole economy (i.e. will not just affect individual firms) this is
likely to happen. Relative prices will adjust: the prices of goods and
services produced with the use of large quantities of low-skilled labour
will increase relative to those using more high-skill labour and
capital. The economic (not technical) productivity of the low-wage
workers will rise, thanks to higher product and service prices, to match
the increase in their wages. Or firms can raise their productivity (in
the technical sense), through innovation and reorganisation, just like a
firm facing a dose of wholesome foreign competition because tariffs
have been cut. Companies may also accept a lower profitability, and the
wage share would rise somewhat. (If nothing else, this would make Thomas
Picketty happy).</div>
<div style="text-align: justify;">
But, undoubtedly,
in some firms these adjustment strategies may not be practicable or
sufficient. Some may lay off workers and others be forced to close. This
is the basis for the anecdotal argument. But surely, given their normal
argumentative pattern, business representatives and liberal economists
should be vociferously pointing out that this is actually not a problem,
certainly not an inevitable one. For as we have seen a minimum wage has
very similar effects to a bracing dose of foreign competition or the
“creative destruction” associated with technology. Induced productivity
gains and higher wages generate additional income that sustains
employment in firms across the whole economy. Those employers that
cannot keep up are forced out of business. And the labour that is
displaced will, or at least should[4], be rapidly deployed to other
regions or sectors where it can be put to more productive use.</div>
<h2 style="text-align: justify;">
Yesterday’s rubbish?</h2>
<div style="text-align: justify;">
From
the macroeconomic point of view it makes no sense at all to lock a
large proportion of the workforce into low-paid, low-productivity jobs.
If they were consistent, liberal economists and employers’ front
organisations should be making that point. But they are not. It could be
that they have suddenly abandoned liberal views as yesterday’s rubbish.
This is implausible, however. The argument still applies in other
areas; see for example the salutatory effects that such commentators
ascribe to the TTIP (Transtlantic Trade and Investment Partnership).</div>
<div style="text-align: justify;">
Rather
the discrepancy is presumably because the same effect is produced by
two different causes: trade or technological change, on the one hand,
which are seen as <em>market outcomes</em>, and the minimum wage, on the other, which is perceived as an <em>market intervention</em>.
This dichotomy is wrong, or at least oversimplistic, of course. Trade
and technology are also highly regulated, while many economists argue
that the minimum wage (at a reasonable level) is correcting a market
imperfection that gives undue power to employers. But even those who
believe in it should be aware of the inconsistency of using anecdotal
argument from individual companies as a stick with which to beat the
minimum wage.</div>
<div style="text-align: justify;">
It will be quite some
time before careful studies, with all the required controls, are made of
the employment impacts of the introduction of the statutory minimum
wage in Germany. Until they are done, expect a lot of heart-rending
anecdotal argument about job losses and bankruptcies. And when you hear
or read them, remember to confront those making such arguments with
Konrad Adenauer, or whoever it was who said: <em>Was kümmert mich mein Geschwätz von gestern?</em></div>
<br />
[1] In its „<a href="http://www.insm.de/insm/kampagne/mindestlohn/8-fakten-zum-mindestlohn.html">eight facts about the minimum wage</a>“
the INSM states baldly (translation mine) „ The introduction of a
minimum wage, whatever ist level, destroys all those jobs that no longer
pay. And a job no longer pays when the employer gets less from it than
he pays the worker. And so it is clear: the higher the minimum wgae, the
greater the job losses.“<br />
[2] In their <a href="http://www.sachverstaendigenrat-wirtschaft.de/aktuellesjahresgutachten-2013-14.html">annual report 2013/2014</a>.
It is worth emphasising that one of the „Five wise persons“, Peter
Bofinger, dissented from the majority view on the minimum wage issue.<br />
[3]
The following may not apply to heads of individual companies, who can
be very protectionist, but it usually does to those representing
employer interests at national level.<br />
[4] The word “should” here
can be understood in the sense that redeployment will happen if
appropriate measures are in place to maintain aggregate demand and
smooth the adjustment process through active labour market policies. And
of course provided the increase in the minimum wage is “reasonable” so
that the employment reallocation system is not completely overwhelmed.</div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3883725634385014999.post-55056849394663054792014-07-07T16:50:00.000-07:002014-07-07T16:51:17.684-07:00Robert Reich on the 7 big lies told by neo-liberal politicians.<div dir="ltr" style="text-align: left;" trbidi="on">
This video is worth watching and listening to as Robert Reich exposes the fallacies that underpin the neo-liberal economics so beloved by John Key and his asset stripping cronies. <br />
<br />
<a href="http://youtu.be/mM5Ep9fS7Z0" target="_blank">http://youtu.be/mM5Ep9fS7Z0</a><br />
<br /></div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3883725634385014999.post-2122796863672879902014-06-27T14:46:00.002-07:002014-06-29T01:15:54.969-07:00The Herald and Key duck, scuttle and run as Donghua Liu story loses credibility<div dir="ltr" style="text-align: left;" trbidi="on">
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiUm6Xst0AfCwueLPS8VW5vWMITWJl5g2qYki7pfRx1IZpEJNT-Ednn2ld8rm658YcfDWkwDbCLm-u6ujIaQOyaAQn4o9lZMkQb9jCtV0wyC2TDSYBgfeILkPIJ6N_vONydNWgZzwuqCqIQ/s1600/6a00d83451d75d69e2017c385495b4970b-pi.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiUm6Xst0AfCwueLPS8VW5vWMITWJl5g2qYki7pfRx1IZpEJNT-Ednn2ld8rm658YcfDWkwDbCLm-u6ujIaQOyaAQn4o9lZMkQb9jCtV0wyC2TDSYBgfeILkPIJ6N_vONydNWgZzwuqCqIQ/s1600/6a00d83451d75d69e2017c385495b4970b-pi.png" height="265" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">The anatomy of Dirty Tricks.</td></tr>
</tbody></table>
<br />
It looks like the powers that be on the Herald's editorial board are <a href="http://thestandard.org.nz/the-people-respond-to-the-herald-editorial-on-donghua-liu/" target="_blank">starting to realise</a> that being a paid shill for the Key owned National Party is not as wise a move as they thought. Particularly as the realisation that the allegations fed from John Key and those around Donghua Liu are proving to be a quicksand that is sucking the already doubtful credibility of the paper as a crusading, principled record of fact away from it.<br />
<br />
The <a href="http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11282539" target="_blank">self parodying </a>editorial (27.6.14) was the beginning of the duck strategy and, today, the normally rabid Key adoration puffer, <a href="http://www.nzherald.co.nz/opinion/news/article.cfm?c_id=466&objectid=11283276" target="_blank">Fran O'Sullivan</a>, began to drop the blame for the fiasco on Key's desire to extract utu on Cunliffe for daring to reveal the extent to which National Party cabinet ministers have been prepared to go in the quest for largesse from foreign property speculators and "investor immigrants". Her comments that:<br />
<br />
<i>It was lack of discipline when he recently fuelled the journalistic
flames on the so-called Donghua Liu donations scandal from the
comfortable distance of the US.</i><br />
<i> </i><i>He appeared to have forgotten a
basic rule of politics — don't fan the flames of scandal unless you are
sure where it will finish up. It's understandable that Key was tempted
to indulge in some gotcha politics himself after a torrid month where he
had to put Judith Collins on Cabinet leave after the Oravida affair and
ask for Maurice Williamson's ministerial resignation after he
intervened in a police matter involving the Chinese business investor.</i><br />
<i> </i><i>It
must have been pure utu to watch while the proverbial was thrown back
all over Labour after Immigration Minister Michael Woodhouse informed
Key there was an 11-year-old pro forma letter in the files that showed
Cunliffe wrote to authorities on Liu's behalf over his residency
application.</i><br />
<i> </i><i>The Prime Minister wasn't the direct source of the
Liu "revelations" (I use that word advisedly as many of the more
hyperbolic <b>Liu claims have since proved to be a mirage</b>).</i><br />
<i> </i><i>Herald
investigative journalist Jared Savage, who broke the story which led to
Williamson's resignation, had already sought Liu's immigration file
under the Official Information Act. But it is <b>instructive in that it was
sources close to National who shopped the story of Liu's anonymous
donations to Labour elsewhere after Woodhouse had accessed the file.</b></i><br />
<i> </i><i>National has not played a straight bat on this story.</i><br />
<i>Woodhouse has yet to explain why he initially told porkies by denying
he had informed Key about the Cunliffe letter — something that may have
been literally true but skated over the fact he had told the prime
minister's staff about the letter (and one from former Labour MP Chris
Carter) and his office had provided both letters to Key's office.</i><br />
<i> </i><b><i>While
Cunliffe was obviously stitched up over the Liu letter, the political
donor's subsequent "misstatements" have left thoughtful people wondering
whether it was indeed Labour that had proven tricky — as National's
meme invites us to believe — or the governing party.</i></b><br />
<br />
reveal some deep disquiet emerging within the party political PR machine behind Key and the National Party.<b><i> </i></b><br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgIMHLNaUmnPdElppf7_XyfqU1pkcCW_RRnnL4rtEXLNqOByTp5jPFcwNQenBz5zI4bzFctFOcnPN7iSlB-pcwLcL6HeqSmz0JX466JkAT4QMo6aiJXOConxgqIAd-b-HS_dbp8M30YZYiD/s1600/BnFqAvWCEAIE7AO.png-large.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgIMHLNaUmnPdElppf7_XyfqU1pkcCW_RRnnL4rtEXLNqOByTp5jPFcwNQenBz5zI4bzFctFOcnPN7iSlB-pcwLcL6HeqSmz0JX466JkAT4QMo6aiJXOConxgqIAd-b-HS_dbp8M30YZYiD/s1600/BnFqAvWCEAIE7AO.png-large.png" height="138" width="200" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">"Smile, Wave, brain-fade, scuttle and run" The stategists in confrence?</td></tr>
</tbody></table>
<br />
The history of the Donghua Liu scandal is revealing, as commented on in earlier postings and by other commentators<i>, </i>because of its obvious links to the scandal spreading blog sites closely connected to the Ninth Floor of the Beehive and the readiness of The Herald to swallow without due diligence the statement given it by, to quote Fran O'Sullivan, <a href="http://www.stuff.co.nz/510500/Nats-secret-advisers-accused-of-dirty-tricks-in-Aussie?fb_action_ids=10201220929924163&fb_action_types=og.likes&fb_ref=s%3DshowShareBarUI%3Ap%3Dfacebook-like" target="_blank">those close to National</a> ... after Woodhousehad accessed the file.<i> </i><br />
<i><br /></i>
And, now, as the allegations begin to unravel and there is colder, closer and more focused examination of the apparent deliberate <a href="http://thestandard.org.nz/bryan-gould-an-impartial-press/" target="_blank">anti-Labour</a> campaign being waged by the opinionista in The Herald the classic Key strategy of "smile, wave, brain fade, scuttle and run" is being followed in an attempt to extricate the news-sheet from the mess it helped create<i>.</i></div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3883725634385014999.post-17122126002684366472014-06-24T21:44:00.002-07:002014-06-27T01:49:37.573-07:00The Ground gets boggier under Key's shifting feet<div dir="ltr" style="text-align: left;" trbidi="on">
The <a href="http://thestandard.org.nz/key-and-herald-embarrassed-as-liu-statement-changes/" target="_blank">Donghua Liu saga</a> has just got even more dangerous for the John "drop the insinuation then duck" Key as The Herald is forced to publish an <a href="http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11281460" target="_blank">altered statement</a> from Mr Liu that changes much of his original statement.<br />
<br />
It now appears that Mr Liu is claiming to have donated $2000.00 to the Hawkes Bay Rowing Club Branch of the NZ Labour Party and $60,000+ to The Yangzte Concrete Factory Branch of the NZ Labour Party to give the "honorable members a luxury cruise as a reward for their hard work making concrete for honorable building projects."<br />
<br />
The claim that he purchased a bottle or bottles of wine at a Labour Party Auction on June 3 2007 has also been <a href="http://thedailyblog.co.nz/2014/06/25/the-donghua-liu-affair-threatens-to-unravel-pm-and-nz-herald-caught-up-in-a-dirty-trick-campaign/" target="_blank">shot down</a> in flames as searchers have now identified the <a href="http://tizwine.com/index.php/ps_pagename/newsdetail/pi_newsitemid/478" target="_blank">auction</a> being one run by The Midland's Hawkes Bay Wine Charity at which <a href="http://www.tizwine.com/index.php/ps_pagename/newsdetail?pi_newsitemid=548" target="_blank">no wine </a>was sold at the inflated price Mr Liu claims to have bid. The Herald's new story now has Rick Barker receiving the bottle of wine from Mrs Liu rather than, as was originally alleged "giving it to her." The Herald is certainly <a href="http://polity.co.nz/content/completely-unravelling" target="_blank">back tracking</a> all over the place on this story.<br />
I look forward to the front<a href="http://thedailyblog.co.nz/2014/06/27/the-donghua-liu-affair-the-impending-final-act-and-curtain-fall-in-this-smear-campaign/" target="_blank"> Page apology</a> to David Cunliffe, the NZ Labour Party and the long suffering NZ public who have had to put up with irresponsible reporting from the paper for far too long.<br />
<br />
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<figure>
<img alt="Left, Rick Barker receiving a bottle of wine from Donghua Liu's (top right) partner Juan Zhang. Photo / Supplied, NZ Herald" src="http://media.nzherald.co.nz/webcontent/image/jpg/201426/liuagain_620x310.jpg" />
</figure>
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<div class="articleMedia ">
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<br />
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<figcaption class="caption">Left, Rick Barker <i><b>receiving a bottle of wine</b></i> from Donghua Liu's (top right) partner Juan Zhang. Photo / Supplied, NZ Herald</figcaption>
</div>
<br />
The questions need to be asked loudly, clearly and many, many times to John "Scuttle and Run" Key, Cameron Slater, Jami-Lee Ross and others close to Maurice Williamson and Donghua Liu "Who wrote the original statement for Mr Liu and who fed it to Key and Jared Savage?" and "Did Mr Liu really understand what he was signing because, as Mr Williamson claims Mr Liu speaks and reads minimal English?"<br />
<br />
POST SCRIPT: 1) The <a href="http://www.stuff.co.nz/national/politics/opinion/10200453/Liu-saga-hits-harder-when-Labours-down" target="_blank">Fairfax stable</a> is now asking questions about the Herald's reporting and the Key involvement in the Donghua Liu situation. About time the blow torch was applied to the links between The Herald and the Ninth Floor of the Beehive.<br />
2) Radio New Zealand Morning Report Political journalist declares that the Liu story doesn't stack up (27.6.14).<br />
3) <a href="http://www.nzherald.co.nz/opinion/news/article.cfm?c_id=466&objectid=11282539" target="_blank">NZ Herald</a> attempts to back off from its inept reporting by <a href="http://thedailyblog.co.nz/2014/06/27/true-to-form-deconstructing-this-mornings-herald-editorial/" target="_blank">lampooning </a>itself in an editorial claiming to be a crusading, reputable news-sheet and reducing the alleged "donations" from Liu to $38,000 in a series of anonymous donations over several years to different un-named MPs. </div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3883725634385014999.post-24971351971170132722014-06-22T02:42:00.000-07:002014-06-23T12:33:38.514-07:00Murkier and murkier - What happened on Sunday June 3rd 2007?<div dir="ltr" style="text-align: left;" trbidi="on">
The latest "revelation" dropped from the PR machine employed by the National Government is classic Bellmanism.<br />
For those unaware of the Bellman's persuasive technique it can be summed up as: "I've told you three times so it must be true." And so it is with the<a href="http://thedailyblog.co.nz/2014/06/23/the-donghua-liu-timeline-damn-lies-dirty-tricks-and-a-docile-media/" target="_blank"> National Party-Liu connections</a> and the allegations that Liu was "generous" to the Labour Party one Sunday evening (3 June 2007). (Addendum: The Herald is now claiming the escape clause of an American date writing (appropriate since Key sold the country to the USA over the past week) so the fund raiser could have been held on Tuesday the 6th of March 2007. A date that would be as highly unlikely as the Sunday event as, in my experience, the major fund raisers are invariably Friday or Saturday events in order to maximise attendance. - Yet another example of slack investigation by the Herald hacks.)<br />
<br />
The question that should be raised is: "What is the difference between a bid at an auction for an item and a donation / gift of money to the National Party?<br />
<br />
The answer is that a bid at an auction is not a donation even though the bid price accepted may result in an artifically high price. A donation / gifting of cash is a transaction in which one party accepts a sum of money from another without ostensibly purchasing anything tangible. On this basis a journalist would recognise the difference and realise that they're being spun a line and not reporting accurately.<br />
<br />
But, No, the journalists accepted the story that, according to Mr Liu there was a large fundraising wine auction that Sunday at which he bid crazy money for a signed bottle of wine and a signed biography of Helen Clark. Apart from the unlikelihood of a fund raising event being held on a Sunday the claims of crazy money bidding for a bottle of wine and a biography have a distinctly invented look to them.<br />
<br />
Despite all enquiries and dredging the memories of any body involved with fund raising in 2007 <a href="https://www.labour.org.nz/media/statement-moira-coatsworth-labour-party-president-donghua-liu-reported-allegations-summary" target="_blank">no one has identified a fund raiser held in June 2007 t</a>hat resulted in such a large sum of money. As <a href="http://thedailyblog.co.nz/2014/06/22/facts-about-that-mystery-100-000-bottle-of-wine-and-standards-of-journalism-in-nz/" target="_blank">Martyn Bradbury</a> says if such an event with single bids like those alleged by Mr Liu then the story would have been <a href="http://thestandard.org.nz/nz-herald-again-that-curious-lack-of-detail/" target="_blank">member talk</a> almost immediately and been common talk for months and months but he had never heard any amazed talk in all his involvement within the Party.<br />
<br />
An alert reporter / editor would ask the question: "If Mr Liu claims he paid $100,000 for a bottle of wine at a Labour Fund Raiser in 2007 surely we would have heard about such ridiculous money being bid for abottle of wine because such a sum would have been buzzing around the newsrooms at the time. Didn't we write up a sensational headline back then about the Labour Party having money being rained upon it? We'd better search the morgue to find the story all the better to substantiate Mr Liu's allegation." Obviously there was no report or rumour on record within the Herald's story morgue or else they would have republished their sensational rumour of 2007.<br />
<br />
Again, an alert Editor would have noted that Mr Liu also claimed that the staff function he invited Rick Barker to on his visit to China was to be seen as a "donation" to the Labour Party. Again, an alert and responsible editor would've recognised such a claim as being (a) an invention in order to create the illusion of an $150,000 "donation" and (b) a deliberate attempt to confuse a previously arranged staff function to which he invited Mr Barker into a luxury cruise perk to give the PR company a further spin point for the lazy MSM to fasten their word processors to.<br />
<br />
<br />
There are so many inconsistencies in Mr Liu's statement that any reporter / journalist worth his or her salt would have checked, checked and checked again before accepting the rumours dropped from the lips of John Key while he was muppeteering in America as being gospel.<br />
<br />
The whole story stinks of Crosby-Textor dark ops aimed at distracting from an election fought on policies to one fought on innuendo.<br />
<br />
<br />
<br />
<br />
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Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3883725634385014999.post-69582186990482505832014-06-19T17:18:00.000-07:002014-06-19T17:18:41.541-07:00Thomas Piketty on why Austerity & wealth Inequality is bad for the economy.<div dir="ltr" style="text-align: left;" trbidi="on">
Here's a good thinking person's article to give further ammunition as to why a Labour vote is important this year.<br />
<h2 class="entry-title">
<a href="http://blogs.lse.ac.uk/europpblog/2014/06/18/five-minutes-with-thomas-piketty-interview-capital-in-the-21st-century-we-dont-need-19th-century-style-inequality-to-generate-growth-in-the-21st-century/">Five minutes with Thomas Piketty: “We don’t need 19th century-style inequality to generate growth in the 21st century”</a></h2>
<em><a href="http://blogs.lse.ac.uk/europpblog/2014/06/18/five-minutes-with-thomas-piketty-interview-capital-in-the-21st-century-we-dont-need-19th-century-style-inequality-to-generate-growth-in-the-21st-century/#Author"><img alt="" class="alignleft wp-image-27480 size-full" height="108" src="http://blogs.lse.ac.uk/europpblog/files/2014/06/ThomasPiketty18junportrait.jpg" width="80" /></a>In an interview with EUROPP’s editor Stuart Brown and British Politics and Policy at LSE’s editor Joel Suss, </em><a href="http://blogs.lse.ac.uk/europpblog/2014/06/18/five-minutes-with-thomas-piketty-interview-capital-in-the-21st-century-we-dont-need-19th-century-style-inequality-to-generate-growth-in-the-21st-century/#Author"><strong>Thomas Piketty </strong></a><em>discusses
the rise in income and wealth inequality outlined in his book, Capital
in the Twenty-First Century, and what policies should be adopted to
prevent us returning to the kind of extreme levels of inequality
experienced in Europe prior to the First World War. <em>Professor Piketty recently gave a lecture at the LSE, the video of which can be seen online <a href="http://www.lse.ac.uk/newsAndMedia/videoAndAudio/channels/publicLecturesAndEvents/player.aspx?id=2514%20">here</a>.</em></em><br />
<strong>Your research has shown that inequality is rising and that
without government action this trend is likely to continue. However, are
we correct to assume that inequality is a fundamentally negative
development in terms of its consequences on society?</strong><br />
There is no problem with inequality per se. In actual fact, up to a
point inequality is fine and perhaps even useful with respect to
innovation and growth. The problem is when inequality becomes so extreme
that it no longer becomes useful for growth. When inequality reaches a
certain point it often leads to the perpetuation of inequality over time
across generations, as well as to a lack of mobility within society.
Moreover, extreme inequality can be problematic for democratic
institutions because it has the potential to lead to extremely unequal
access to political power and the ability for citizens to make their
voice heard.<br />
There is no mathematical formula that tells you the point at which
inequality becomes excessive. All we have is historical experience and
all I have tried to do through my research is to put together a large
body of historical experience from over twenty countries across two
centuries. We can only take imperfect lessons from this work, but it’s
the best that we have. One lesson, for instance, is that the kind of
extreme concentration of wealth that we experienced in most European
countries up until World War One was excessive in the sense that it was
not useful for growth, and probably even reduced growth and mobility
overall.<br />
This situation was destroyed by World War One, the Great Depression,
and World War Two, as well as by the welfare state and progressive
taxation policies which came after these shocks. As a consequence,
wealth concentration was much lower in the 1950s and 1960s than it was
in 1910, but this did not prevent growth from happening. If anything,
this probably contributed to the inclusion of new social groups into the
economic process and therefore to higher growth. So one important
historical lesson from the 20<sup>th</sup> century is that we don’t need 19<sup>th</sup> century-style inequality to generate growth in the 21<sup>st</sup> century, and we therefore don’t want to return to that level of inequality in Europe.<br />
<strong>How would you respond to those who doubt whether there is sufficient evidence to draw this kind of conclusion? </strong><br />
This will always be an imperfect inference because we are in the
social sciences and we should not have any illusions about what is
possible. We can’t run a controlled experiment across the 20<sup>th</sup>
century or replay the century as if World War One and progressive
taxation never occurred. All we have is our common historical
experience, but I think this is enough to reach a number of fairly
strong conclusions.<br />
The lesson we have already mentioned – that we don’t need the kind of extreme inequality of the 19<sup>th</sup>
century in order to have economic growth – is simply one imperfect
lesson, but there are other important lessons if you look at, for
instance, the rise of inequality in the United States over the past 30
years. For example, is it useful to pay managers a ten million dollar
salary rather than only one million dollars? You really don’t see this
in the data: the extra performance and job creation in companies which
pay managers ten million dollars rather than one. In the United States
over the past 30 years almost 75 per cent of the aggregate primary
income growth has gone to the top of the distribution. Given the
relatively mediocre productivity performance and the per capita GDP
growth rate of 1.5 per cent per year, having nearly three quarters of
that going to the top isn’t a very good deal for the rest of the
population.<br />
This will always be a complicated and passionate debate. Social
science research is not going to transform the political conflict over
the issue of inequality with some kind of mathematical certainty, but at
least we can have a more informed debate using this historical
cross-country evidence. Ultimately that is all my research is aiming to
do.<br />
<strong>What specific policies can be used to prevent us returning to the kind of extreme levels of inequality you have discussed? </strong><br />
There are a large number of policies which can be used in combination
to regulate inequality. Historically the main mechanism to reduce
inequality has been the diffusion of knowledge, skills and education.
This is the most powerful force to reduce inequality between countries:
and this is what we have today, with emerging countries catching up in
terms of productivity levels with richer countries. Sometimes this can
also work within countries if we have sufficiently inclusive educational
and social institutions which allow large segments of the population to
access the right skills and the right jobs.<br />
However while education is tremendously important, sometimes it’s not
sufficient in isolation. In order to prevent the top income groups and
top wealth groups from effectively seceding from the rest of the
distribution and growing much faster than the rest of society, you also
need progressive taxation of income and progressive taxation of wealth –
both inherited and annual wealth. Otherwise there is no natural
mechanism to prevent the kind of extreme concentration of income and
wealth that we’ve seen in the past from happening again.<br />
Most of all, what we need is financial transparency. We need to
monitor the dynamics of all of the different income and wealth groups
more effectively so that we can adapt our policies and tax rates in line
with whatever we observe. The lack of transparency is actually the
biggest threat – we may end up one day in a much more unequal society
than we thought we were.<br />
<em>A video of Thomas Piketty’s recent LSE lecture is available <a href="http://www.lse.ac.uk/newsAndMedia/videoAndAudio/channels/publicLecturesAndEvents/player.aspx?id=2514">here</a></em><br />
<a href="http://blogs.lse.ac.uk/europpblog/about/comments-policy/"><em>Please read our comments policy before commenting</em></a><em>.</em><br />
<em>Note: This article gives the views of the interviewee, and not
the position of EUROPP – European Politics and Policy, nor of the London
School of Economics.</em><br />
<em>Shortened URL for this post: </em><a href="http://bit.ly/1l0xKZV"><strong>http://bit.ly/1l0xKZV</strong></a></div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3883725634385014999.post-83446787176685047592014-06-18T03:29:00.002-07:002014-06-18T03:29:18.784-07:00The murk around Donghua Lui grows each day.<div dir="ltr" style="text-align: left;" trbidi="on">
The comment on <a href="http://thestandard.org.nz/good-news-national-are-afraid-of-david-cunliffe/" target="_blank">The Standard </a>tonight about the continuing connections between Donghua Lui are interesting especially the note that perhaps the journalists might like to chase the invisible Botany MP - Jami-Lee Ross who is only known to emerge from perpetual hibernation once every three years in order to play pass the microphone at hastily arranged public meetings designed to give the impression that he is doing something while leaving the attending public in a haze of wondering what it was Jami was offering as a solution to the mess that is East Auckland public transport.<br />
<br />
From The Standard: <br />
<span style="font-size: x-small;"><i>" First things first, this Donghua Liu thing is a set-piece smear from the National party, it could be nothing else.</i></span><br />
<span style="font-size: x-small;"><i>
</i></span><span style="font-size: x-small;"><i>The classic signs of National’s comms stick out like dogs balls….</i></span><br />
<span style="font-size: x-small;"><i>
</i></span><ul>
<li><span style="font-size: x-small;"><i>timed the breaking of the story for when John Key is out of the country, keeps him clear of the dirt.</i></span></li>
<li>
<span style="font-size: x-small;"><i>info was leaked to the tentacles of National’s comms (whaleoil,
farrar) as was clearly hinted by barnsley bill (Cameron Slater’s
right-hand man) who couldn’t keep his mouth shut on <a href="http://dimpost.wordpress.com/2014/06/18/entities/">dimpost</a> a couple of days ago.</i></span><br />
</li>
<li>
<span style="font-size: x-small;"><i>the perfectly timed OIA release.</i></span><br />
</li>
<li>
<span style="font-size: x-small;"><i>and the fact that Donghua Liu is still tight with National.</i></span><br />
</li>
</ul>
<span style="font-size: x-small;"><i>
</i></span><span style="font-size: x-small;"><i><b>Reliable sources have also told me that Donghua is still donating
cash to National too. (Any journos reading might like to ask Jamie-Lee
Ross about this)</b></i></span><br />
<span style="font-size: x-small;"><i>
</i></span><span style="font-size: x-small;"><i>It’s no accident that this was released a couple of days before the 3
month interval that Claire Trevett covered in the herald. Interestingly
Farrar made a big deal about this the other day.</i></span>"<br />
<br />
Given that the sources noted in The Standard are reliable then questions should be asked:<br />
<br />
"What are the connections between the East Auckland National Party and the disgraced Chinese businessman Donghua Liu?"<br />
<br />"How much money has flowed into electorate coffers from Mr Liu to support his campaign to gain citizenship and access to the Key led Cabinet members?"<br />
<br />
Following on from the Standard sourced story one could be driven to ask: "has Mr Ross ever been involved in joining Maurice Williamson in lobbying for Mr Liu?" Botany electors would certainly like to know.<br />
<br />
The suspicion of murky and suspect dealings by the National Party in Botany haven't disappeared with the departure of Pansy Wong, whose use of the tax-payers' money to boost her husnband's business interests in China led to her resignation and the by-election that put the Slater supported Jami-Lee into Parliament.</div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3883725634385014999.post-43896346959861325642014-06-10T12:55:00.000-07:002014-06-10T12:55:23.845-07:00“HANG IN THERE” IS NOT A POLICY IT’S ECONOMIC SUICIDE. MAMEDOV.<div dir="ltr" style="text-align: left;" trbidi="on">
Last night the Botany National MP played pass the mocrophone at a public meeting he'd organised to inform the residents of Botany about National's transport policies. Instead he simply played pass the microphone to his selected panel which included the ACT supporting councillor, Quax and others. Jami-Lee had no answers to any of the questions from the increasingly frustrated audience apart from coming up with a grandiose plan to build separate high speed motorways eclusively for heavy trucks to race up and down between Tauranga, Hamilton Auckland and Whangarei.<br />
<br />
The reaction from the local Labour candidate is quite appropriate.<br />
<br />
“HANG IN THERE” IS NOT A POLICY IT’S ECONOMIC SUICIDE. MAMEDOV.<br /><br />Hang in there is not a policy. It’s National Party economic suicide. Last night’s panel meeting with Jami-Lee Ross gave Botany residents little hope for the immediate future except to expect more heavy trucks on the roads.<br /><br />Public transport has been totally ignored by the National government and never been effectively lobbied for by the present MP for the electorate says Tofik Mamedov, Labour Party candidate for Botany.<br /><br />“Despite my opponent’s protestations at his recent meeting the poor planning and lack of investment in South East Auckland as it struggles to cope with 150,000 people moving into the area is an inditement on the National government and its local body allies who have always been in favour of promoting Heavy trucking, congestion, social isolation and transport induced poverty on Botany residents.”<br /><br />Mamedov says that Botany residents waste hundreds of hours a year sitting in traffic struggling to get to work while stripping thousands of dollars from their household budgets in petrol and car maintenance a year because of National’s reluctance to foster efficient and effective co-ordinated public transport systems.<br /><br />“Despite all of my opponent’s protestations and promises National has no policies, no plans and no inclination to lift Auckland’s public transport system into the 21st century. It is ridiculous to see that the new Ormiston Town Centre has been designed without any real integration with rapid transit such as incorporating a busway.<br /><br />Since National has been in office (5 and a half years), there have been no significant public transport infrastructure projects initiated by National – as all the the electric trains, and rail upgrades were begun under the last Labour government.<br /><br />Botany electors have a clear choice this year - a funded, planned and delivered public transport system under Labour or more muddle and confusion under the present government.” says Mamedov<br /><br /><br />Mamedov said that a Labour government is supportive of the Congestion Free Network’s proposals http://www.congestionfree.co.nz/ and will be pushing forward with the development of the Panmure-Botany Busway with a high frequency network of buses every 10 minutes seven days a week as soon as possible on taking over government in September this year to ensure that the people of Botany can enjoy efficient and planned public transport.<br /><br /><br /></div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3883725634385014999.post-14227610355606311432014-05-14T12:29:00.001-07:002014-05-14T12:29:28.616-07:00Spinning the wheel with PR.<div dir="ltr" style="text-align: left;" trbidi="on">
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiCbxRq9l20_IbQ9ZX4lY2dN60VFgiGJ_4rKd5snjZWKbtOj8UOZUDhM4u9mK96ZaAB5NFXQmhA8CUh8q_Drjda3QfhLSBo1YjC5_roizkFoNMJDL0XCVLBozvtalruiKOmbINW5pFXrWhE/s1600/10045728_600x400.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiCbxRq9l20_IbQ9ZX4lY2dN60VFgiGJ_4rKd5snjZWKbtOj8UOZUDhM4u9mK96ZaAB5NFXQmhA8CUh8q_Drjda3QfhLSBo1YjC5_roizkFoNMJDL0XCVLBozvtalruiKOmbINW5pFXrWhE/s1600/10045728_600x400.jpg" height="251" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">From the ship-wrecked economy the horizon looks rosy for Key & English.</td></tr>
</tbody></table>
<br />
Tom Scott sums up all that NZ can expect from the Key - English PR spun economic management. An illusionary "surplus" with promises of a reduced economy from tax cuts for a "middle class"that has been squeezed out of existence by the wealth accumulators and employment removers.</div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3883725634385014999.post-83115287626352710832014-05-13T12:22:00.000-07:002014-05-13T12:22:22.163-07:00On Income Inequalities and Global Capitalism<div dir="ltr" style="text-align: left;" trbidi="on">
<header class="entry-header"><h1 class="entry-title" itemprop="headline">
How To Combat Inequalities Produced By Global Capitalism</h1>
<div class="entry-meta">
<time class="entry-time" datetime="2014-05-12T12:45:49+00:00" itemprop="datePublished">12/05/2014</time> by <span class="entry-author" itemprop="author" itemscope="itemscope" itemtype="http://schema.org/Person"><a class="entry-author-link" href="http://www.social-europe.eu/author/guy-standing/" itemprop="url" rel="author"><span class="entry-author-name" itemprop="name">Guy Standing</span></a></span></div>
</header><div class="entry-content" itemprop="text">
<div class="wp-caption alignleft" id="attachment_32349" style="width: 260px;">
<img alt="Guy Standing, Global Capitalism" class="wp-image-32349 size-full" height="268" src="http://socialeurope2.wpengine.netdna-cdn.com/wp-content/uploads/2014/05/Guy-Standing.jpg" width="250" /><div class="wp-caption-text">
Guy Standing</div>
</div>
<div style="color: #0f0f0f; text-align: justify;">
<i>Rising inequality is one of the most salient issues in global and European politics. </i><em><a href="http://blogs.lse.ac.uk/europpblog/2014/05/05/a-precariat-charter-is-required-to-combat-the-inequalities-and-insecurities-produced-by-global-capitalism/#Author" style="color: red;">Guy Standing<b> </b></a></em><i>writes
that what we have witnessed in recent decades is not simply an increase
in inequality, but also the emergence of a new globalised class
structure. A key component of this structure is what he terms ‘The
Precariat’: a new class comprising those who lack economic security and
stable occupational identities, which has systematically been deprived
of some of the fundamental rights afforded to citizens. He argues that a
new ‘Precariat Charter’ is required to combat these insecurities,
including provision for a basic income as a right of citizenship.</i></div>
<div style="color: #0f0f0f; text-align: justify;">
Next year is the 800<sup>th</sup> anniversary
of the Magna Carta, the first class-based charter of liberties against
the state. Today, we need a Precariat Charter to advance the rights of
the precariat and substantially reduce the inequalities and insecurities
in society. This is the theme of my new book, <a href="http://www.amazon.co.uk/gp/product/1472510399/ref=as_li_qf_sp_asin_il_tl?ie=UTF8&camp=1634&creative=6738&creativeASIN=1472510399&linkCode=as2&tag=lsreofbo-21" style="color: red;"><i>A Precariat Charter: From Denizens to Citizens</i></a><i> </i>(Bloomsbury)<i>.</i></div>
<div style="color: #0f0f0f; text-align: justify;">
The context is clear. We
are in the midst of a Global Transformation, in which a globalised
market system is under painful construction. In its dis-embedded phase,
the transformation was dominated by the interests of financial capital,
just as was Karl Polanyi’s <em>Great Transformation</em>. Inequalities
multiplied, economic insecurity became pervasive. Above all, a new
globalised class structure took shape. All economic and social analysis
of the growth of inequality that ignores the class dimension is like
trying to play Hamlet without the Prince.</div>
<div style="color: #0f0f0f; text-align: justify;">
The emerging mass class
is the precariat, looking up in income terms to a tiny
plutocracy-cum-oligarchy striding the world, manipulating democracy and
raking in rental income, and looking up to the salariat between them,
receiving more and more of its income from capital and the state. The
old proletariat, the old working class in numerical decline is rapidly
losing its labour securities and non-wage forms of economic security.</div>
<div style="color: #0f0f0f; text-align: justify;">
The precariat has
distinctive relations of production (unstable labour, lack of
occupational identity, a high ratio of work-for-labour to labour, and so
on), distinctive relations of distribution (depending on money wages
that are stagnant at best, and volatile as the norm, living on the edge
of unsustainable debt), and distinctive relations to the state. This
last aspect has received too little attention. The precariat is the
first mass class in history that has been systematically losing the
acquired rights of citizenship – civil, cultural, political, social and
economic. The precariat consists of supplicants, being forced to beg for
entitlements, being sanctioned without due process, being dependent on
discretionary charity.</div>
<div style="color: #0f0f0f; text-align: justify;">
More and more people,
not just migrants, are being converted into denizens, with a more
limited range and depth of civil, cultural, social, political and
economic rights. They are increasingly denied what Hannah Arendt called
‘the right to have rights’, the essence of proper citizenship.</div>
<div style="color: #0f0f0f; text-align: justify;">
This is key to
understanding the precariat. Its essential character is being a
supplicant, a beggar, pushed to rely on discretionary and conditional
hand-outs from the state and by privatised agencies and charities
operating on its behalf. For understanding the precariat, and the nature
of class struggle to come, this supplicant status is more important
than its insecure labour relations.</div>
<div class="wp-caption alignleft" id="attachment_32351" style="width: 760px;">
<img alt="Guy Standing argues in favour of a 'Precariat Charter' for workers. (photo: CC Zoriah on Flickr)" class="size-full wp-image-32351" height="354" src="http://socialeurope2.wpengine.netdna-cdn.com/wp-content/uploads/2014/05/worker.jpg" width="750" /><div class="wp-caption-text">
Guy Standing argues in favour of a ‘Precariat Charter’ for workers. (photo: CC Zoriah on Flickr)</div>
</div>
<h2>
The Precariat And Global Capitalism</h2>
<div style="color: #0f0f0f; text-align: justify;">
The precariat’s position
must be understood in terms of the changing character of global
capitalism and its underlying distribution system, something that <a href="http://blogs.lse.ac.uk/europpblog/2014/04/17/a-global-progressive-tax-on-individual-net-worth-would-offer-the-best-solution-to-the-worlds-spiralling-levels-of-inequality/" style="color: red;">Thomas Piketty</a> did not address. In the 20<sup>th</sup> century,
uniquely in human history, the distribution of income was primarily
between capital and labour, between profits and wages, mediated by the
state with its taxation, subsidies and benefits. The bargaining over the
respective shares was won on points by the representatives of employees
in the post-1945 period, but after the late 1970s was won decisively by
capital. Everywhere the functional distribution of income became more
unequal, with labour’s share of national income dropping dramatically,
nowhere more so than the emerging market economies, including China most
of all.</div>
<div style="color: #0f0f0f; text-align: justify;">
However, the key to
understanding the challenge ahead is that two factors have changed the
context completely. Historically speaking, from the 1980s onwards the
labour supply to the global open labour market quadrupled, with all the
newcomers being habituated to labouring at one-third or less of the
median income of the workers in OECD countries. This led to the start of
the Great Convergence. It was facilitated by the new technological
revolution, which among other things allowed the corporation to
unbundle, shifting production and tasks to wherever costs were lowest.</div>
<div style="color: #0f0f0f; text-align: justify;">
In this new context,
rental income has become a major and growing component of total income.
This is far more important than patrimonial capitalism, which Piketty
identifies as the main feature of modern capitalism. Rent comes in
several forms, notably by possession of so-called intellectual property,
through patents, and through privileged possession of scarce
commodities and natural resources. Last year was the first year in which
over two million patents were registered, guaranteeing trillions of
dollars to their owners stretching on average twenty years.</div>
<div style="color: #0f0f0f; text-align: justify;">
The rental economy
extends all the way down to pay-day loans, whereby members of the
precariat are exploited by disgustingly high interest rates, often
exceeding 5,000 per cent. It includes the vast array of subsidies given
by the state to corporations and the affluent in the salariat and elite.</div>
<div style="color: #0f0f0f; text-align: justify;">
What the precariat must
demand now is little less than a new distribution system, not just a
tinkering on marginal or average tax rates. Indeed, the weakest aspect
of Piketty’s analysis is his prognosis. The likelihood of very high
marginal direct tax rates is remote. Structural changes are required.</div>
<div style="color: #0f0f0f; text-align: justify;">
A Precariat Charter must
start from understanding the nature and depth of insecurities faced by
the precariat, and also from understanding the aspirations that exist in
the more educated component of the precariat. It would be quite wrong
to imagine that the precariat wants a return to the old norms of
full-time stable wage labour.</div>
<div style="color: #0f0f0f; text-align: justify;">
It wants to build a good
society, resurrect a sense of “a future” and create institutional
networks that would enable more and more to pursue a life of work,
labour and leisure. That means building their own sense of occupation,
in which ecological values of reproductive work predominate over the
resource-depleting values of labour.</div>
<div style="color: #0f0f0f; text-align: justify;">
The assets that need to
be redistributed are not like the old socialist project of a hundred
years ago, when the proletariat was emerging as the mass class. The
assets underpinning a Precariat Charter are basic security, control of
time, quality space, education, financial knowledge and financial
capital. A key demand is for moves towards the realisation of a basic
income as a right of citizenship. Without basic security, none of us can
be expected to be rational and socially responsible. Let us find ways
of going on that road.</div>
<div style="color: #0f0f0f; text-align: justify;">
<i>For a longer discussion of this topic, see Guy Standing’s latest book, </i><a href="http://www.amazon.co.uk/gp/product/1472510399/ref=as_li_qf_sp_asin_il_tl?ie=UTF8&camp=1634&creative=6738&creativeASIN=1472510399&linkCode=as2&tag=lsreofbo-21" style="color: red;"><i>A Precariat Charter: From Denizens to Citizens</i></a><i> (Bloomsbury). This column was first published by <a href="http://blogs.lse.ac.uk/europpblog/2014/05/05/a-precariat-charter-is-required-to-combat-the-inequalities-and-insecurities-produced-by-global-capitalism/">EUROPP@LSE</a>.</i></div>
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Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3883725634385014999.post-79839922520620006152014-05-10T15:17:00.000-07:002014-05-11T02:24:44.033-07:00The Bellman tolls for Judith Collins... who will be next in the Nats' power struggle?<div dir="ltr" style="text-align: left;" trbidi="on">
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjhvuzITKCwK1p5dQTMhDbdeID0Ht6rU6xRM832Rc19LrOyNne6_7RYKDJNmjcnSj-Ay6W-ncFaSyuyuhHYDXoXoxsO92EhhBwbb6HtKbBjf7WB0zRwMxOLUuuj33UZeGySdgNibM-xkwbp/s1600/emmerson.JPG" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjhvuzITKCwK1p5dQTMhDbdeID0Ht6rU6xRM832Rc19LrOyNne6_7RYKDJNmjcnSj-Ay6W-ncFaSyuyuhHYDXoXoxsO92EhhBwbb6HtKbBjf7WB0zRwMxOLUuuj33UZeGySdgNibM-xkwbp/s1600/emmerson.JPG" height="270" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Cash for access "fund raiser dinners" provide more evidence of the arrogance and crony legislation that has swirled around John Key since 2008.</td></tr>
</tbody></table>
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Ever since John Key came to power concerns about <a href="http://gordoncampbell.scoop.co.nz/2014/05/09/gordon-campbell-on-the-cash-for-access-scandals/" target="_blank">crony capitalism </a>and legislating for those who weilded the big cash stick have been a feature of speculation across the blogs and political activists. While it was conveniently swept under the carpets by the MSM the scandals around Collins, Williamson, Woodhouse and Key have forced the MSM to reveal what they have known about the questionable tactics practised by the National Party from the period of the Waitemata trust on. The result has been to bring to light the fighting factions within the National Party.<br />
<br />
It is very interesting to note that the factions within the National Party have reformed and begun to marshall their forces around the various pretenders for the empty suit that Crosby-Textor created for John, Pinokeyo, Key back in 2008 now that Judith Collins has reduced her aspirations to leadership to a shadow after her <a href="http://m.nzherald.co.nz/wanganui-chronicle/opinion/news/article.cfm?c_id=1503423&objectid=11253018" target="_blank">Oravida s</a>candal <a href="http://gordoncampbell.scoop.co.nz/2014/05/06/gordon-campbell-on-judith-collins-rest-and-recuperation-leave/" target="_blank">allegations </a>and her obvious inability to handle criticism and scrutiny in both the House and by the public.<br />
<br />
Audrey Young, in the Herald (usually a mouth piece for the National Party), has put the boot into Collins' credibility in her article " <a href="http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=11252568" target="_blank">A Big Question Hanging over Judith Collins</a>" and, in so doing, reveals that Collins' support is from the extreme right of the National Party backed up by the Slater family whose credibility is somewhat questionable when one considers the Palino Mayoraltyscandal / Whaleoil connections. Even the <a href="http://metromag.co.nz/current-affairs/the-queen-is-dead/" target="_blank">Metro Magazine </a>is rolling out the tumbril.<br />
<br />
Young's criticisms are echoed by John Armstrong who <a href="http://www.nzherald.co.nz/election-2014/news/article.cfm?c_id=1503581&objectid=11252571" target="_blank">ponders </a>on why the wheels are falling off the National Party's election wagon and lays the blame firmly on the public scandals around Collins and <a href="http://gordoncampbell.scoop.co.nz/2014/05/02/gordon-campbell-on-maurice-williamsons-brand-of-after-sales-service/" target="_blank">Williamson</a> and then hammers home the "Cash for Access Fund-Raising scams" and obvious deep pocket cronyism that is the feature of the Key owned National Party.<br />
<br />
One, however, does wonder at credibilty the proposition of Paula "whack a beneficary for fun" Bennett as a possible Deputy Leader of the National Party put forward by the opinionistas .. but then then the paucity of leadership possibilities within the current National Party then anything is possible.<br />
Now that the <a href="http://thestandard.org.nz/the-herald-is-turning-against-the-government/" target="_blank">Herald</a> has begun to shine a torch into the dark and murky corners of the National Party closet the possibility of the PR gloss being scraped off the Key government may reveal more of the arrogant cronyism which has disenfranchised the ordinary working voters being exposed and thus giving more incentive to go and vote the Key owned National Party out on the 20th of September.<br />
<br />
The rumours of a palace coup being brewed in the National Party Closets that have circulated for much of year are obviously proving to have more truth than rumour to them. <br />
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Unknownnoreply@blogger.com0