It is a long time since NZ had such a popular and charismatic leader. Jacinda’s popularity is not only a national phenomenon. The respect she has generated overseas would give NZ a significant advantage were it to attempt any of the international diplomatic initiatives of which the global community is in such desperate need.
There is a downside to her international acclaim. It will cause some unease among members of the western alliance that might feel the growth in her stature diminishes theirs. Trump mocks Her prestige is such that it is now more important than ever to fellow Anglo-Saxon nations to keep NZ on side in their developing confrontation with China. Heavy pressure will be exerted to ensure that NZ conforms to their anti-China campaign, much of which now seems to be being channeled through the Five Eyes alliance.
The western allies have good reason to be worried. In contrast to other members of the alliance, the political power of the Pakeha (of Caucasian ethnicity) within the NZ constitution is increasingly shared with Maori and other Pacific and Asian communities. Together with its trading patterns and it’s isolated, Asia-Pacific geographic location, this makes NZ much more open to Asian culture and ideas and that much less susceptible to Western anti-China propaganda.
From the point of view of the Five Eyes’ directorate in Washington, NZ is clearly the weakest link in the chain and the one most likely to break: last on – first off! A more enlightened view would see NZ as a potential bridge for conciliation and improved understanding between the competing camps. Such conciliation and global cooperation will be essential if the world is to be saved from the worst effects of climate change and be able to scale down the threats of resource depletion, mass famine, future pandemics and nuclear war. However, NZ is hardly in a position to attempt such a role while its impartiality remains compromised by its membership of the Five Eyes and its overt support for the western alliance’s ‘rules-based-order.’ Hyprocrisy
In the midst of this unprecedented period of multiple global crises, the newly elected government of New Zealand has only a three year term before it has to again ask the electorate to approve of its performance. The new government , which currently enjoys an overwhelming majority, has to make a fundamental choice. It can sit possum-like in the oncoming headlights while making only small incremental changes to keep onside with the majority of the electorate, with its natural distaste for change. Alternatively, with the majority it holds, it could risk its second term by embarking on the radical changes in national direction that the present crises call for?
As whichever of the impending crises of climate, pandemic, recession and war make themselves felt, the resilience of the New Zealand community will be tested. A good measure of its likely success will be the extent to which the community is united and harmonious. Since the adoption of neo-liberalism, there has been a rapid growth in inequality and the gap in income and wealth between the top and bottom percentiles of the population. This is well illustrated in this index. Gini The government should be trying to follow the example of Scandinavian countries rather than the less trammeled capitalism of the other Anglo-Saxons nations. In Scandinavia the average earnings of the top ten percentile are around 6.5 times that of the bottom ten percentile. In NZ the figure is 12.4 times, the UK 13.8 and the USA a whopping 18.5.
From a cultural perspective, NZ is proving more successful in integrating the indigenous population into its community than are other Anglo-Saxon ex-colonial nations. With that potential cause of disharmony much reduced, the government now needs to pursue a policy of convergence for all members of New Zealand society in terms of opportunity, income and wealth.
Radical changes have happened in the past without proving fatal to the party in power. Labour, under Lange and Douglas radically transformed both NZ’s foreign relations (for the better) and economic direction (arguably for the worse) in the 1984 Labour government’s first term. They were then easily re-elected for a second term.
A government’s first duty is to the country; not to the welfare of the party that happens to be in power. If it believes that a policy is in the best interests of the country, it has the responsibility to implement it, irrespective of future electoral penalties that might follow. It would seem logical that if risks are to be taken, they should be taken at the earliest possible stage of a government’s term, thus leaving as much time as possible to bring the electorate around to acceptance.
Seeing it is the time for New Year resolutions, I have attempted to compose a list of some of those that the Labour leadership might choose to commit to.
On the domestic front, there is one intellectual hurdle that if successfully negotiated would considerably reduce the height of the many other obstacles that lie ahead. It is a bold step for government to openly adopt Modern Monetary Theory (MMT.) There are countless articles available on the Web, that allow the researcher a better understanding, such as this Spinoff MMT If you google Geoff Bertram you will gain good insight as to how MMT can be applied to New Zealand. Another highly recommended work is Stephanie Kelton’s The Deficit Myth. Kelton
In outline, the theory argues that national debt is qualitatively different from household or corporate debt. Parties advocating fiscal and monetary prudence based on traditional, tea-pot, household values impose unnecessary constraints that do unnecessary damage to a society. Provided a country is in control of its own currency and doesn’t recklessly increase overseas held debt, the only limits to a country’s expenditure are the physical constraints on the resources, labour, raw materials and foreign earnings available. Such a government has full sovereignty over its debts and can, if it so decides, repay them by simply creating more money.
The validity of the theory would seem to be vindicated in the aftermath of the Christchurch and Kaikoura earthquakes: there was no austerity, minimal increase in overseas debt and the necessary reconstruction was completed at vast cost and no visible fiscal pain. MMT theory has it that provided there is spare capacity available in the economy (and the measures required to control global warming should ensure that there is) there is further room for government expenditure.
When a government prints money it can either cover it with internal debt or through taxation. Bertram argues that a government choosing to raise money with internally owed debt, rather than through taxation, limits society’s ability to control how its wealth should be distributed. Ultimately, this leads to a very unequal society with many undesirable social manifestations.
Not the least of these dysfunctions, looking at the US example, is the ability of extreme wealth to buy the media, elections, their elected politicians and their legislation. The resultant acceleration of inequality provides a perfect vicious circle that can lead to a nation with a population so bemused by the elite’s control of its media that it acquiesces to policies disastrous to the national interest. Alternatively, If thought control is inadequate to achieve uniformity, the outcome is a fractured and dysfunctional community ill-suited to coping with calamity.
I am, not an economist and could be seriously misguided. However, there is clearly enough virtue in MMT to warrant serious and expert debate with a view to the government being able to embark on this course. Probably the most difficult part of the decision will be striking the right balance between taxation and internal debt. An obvious way of raising taxation is to use it to channel corporate and household decisions in environmentally friendly directions.
Provided the dangers are understood and anticipated, it would seem that somewhere within MMT theory and sensibly applied, could be found the resolution of many of the social equity problems facing NZ. In turn, this would give government the confidence to pay attention to and exert a beneficial influence on the global problems posing the most significant dangers to the nation.
Ultimately we could be looking at a variant of the Swedish model, where government provides excellent services that are matched by high taxation, with the contented population recognising that it is a fair exchange. In NZ, neo-liberal doctrine has divided the population so it falls between the two incompatible stools of those that believe we should be enjoying Scandinavian social benefits and services – and those that believe that we should be paying US, neo-liberal levels of taxation.
Once the intellectual leap to acceptance of MMT has been made, a government would be free to implement multiple, much-needed social policies. It would be able to check the currently accelerating and socially dysfunctional inequality that is poisoning our once egalitarian community. It could ease the situation of those in society who will inevitably be disadvantaged as a result of government policies for the mitigation of and adaptation to the now inevitable climate change. Health and education could be generously funded. Full employment, or a Universal Basic Wage would be feasible and homelessness, child poverty etc., would disappear. If opposition parties could make the same intellectual leap, parliamentary business would become that much more productive.
Once all strata of society no longer have to struggle with acute poverty and a precarious livelihood, they will be better positioned to participate in their democracy. The government should act to ensure consideration is given to maximising the NZ community’s involvement and commitment to that process. This will result in a commensurate improvement in the quality of decision making and the implementation of policy . Were this government to embark on the required deliberations followed by a constitutional convention, it would represent a major step forward. Needless to say, this would be a bold decision for politicians to make; by its nature, it could place their careers in jeopardy! transitional democracy
With its home-base firmly secured, a confident nation would be able to venture forth and contribute constructively to the overseas problems facing the global community. Recent blogs on this site have gone into much detail on matters such as the need for a publically funded think-tank devoted to questions of peace and disarmament, nuclear disarmament, NZ’s disentanglement from the western alliance, the recovery of its sovereign independence and the taking of a neutral position from where it can realistically advocate reform of the institutions of global governance.
The first step would be to greatly enhance NZ’s diplomatic service and its powers of outreach. This should be matched with a commensurate reduction in military expenditure. NZ requires armed forces sufficient to protect the area within its maritime boundaries and contribute to disaster relief operations within its neighbourhood. However, its armed forces should be reduced to a point from which future politicians are immune from seduction into, or being cudgeled into overseas military involvements.