Aspiring Northland

Finance Minister Bill English got it half right when he said recently that models of government intervention that had been applied in the Far North over the last thirty years had “disempowered them rather than helped them”.

 Mr English told the Finance and Expenditure Select Committee that there had been a culture and a climate in Northland “where aspirations have been killed off by the way the governments dealt with them”. The obvious irony of course is that it has been a very long time since a general electorate MP from any party other than National has ‘represented’ the North’s interests in Wellington.

 English must be given credit for his honesty, which was also in evidence when he correctly identified New Zealand prisons as ‘moral and fiscal failures’.  But if anything has killed aspiration it would be the very policies that National has overseen like tax cuts for the rich alongside the hike in GST that disproportionately affected people in Northland on lower incomes.

 The billion dollar tax cut the Key Government gave to the most wealthy has exacerbated the divide between rich and poor in New Zealand. This extreme wealth gap has been the fastest growing in the OECD over the last 30 years, and NZ has gone from being one of the most equal to become one of the most unequal countries in the developed world.

 The notion that wealth will ‘trickle down’ is a myth that has failed a generation of New Zealanders, not least of all in our Northland communities.

 Northlanders aspire to have a fair and equitable government that will listen to, support and empower local communities and businesses in the North.  They want to see sustainable jobs and industries that don’t threaten our land, water and sea, leaving our people worse off than when they started.

 We need a 50-100 year plan that will enable all of the Northland region to benefit socially, environmentally and economically, not a series of ad hoc measures implemented with an eye to a three year electoral cycle. We need to focus on building a strong and resilient regional economy based on what we can produce from the land and water, and adding value using our knowledge, vision and creativity.

 Northland doesn’t lack for aspiration, but when people are told that the only way forward is to allow corporate exploitation of your land and sea with extraction industries like toxic mining, risky ultra deep sea oil drilling, it’s easy to see why locals would find it tough to get motivated.

 A model that invites large multinationals to exploit the North’s resources and send the wealth produced overseas is a jobs-poor option that will come at the long-term detriment of local communities, and will inevitably degrade the environment that sustains us.

I look forward to campaigning in Nortthland for a fairer, more sustainable model that will empower and liberate the enormous potential that lies within the North’s land and people.

 

29 thoughts on “Aspiring Northland

  1. Good on yer

    Can you please put a little more definition around your model of a fairer, more sustainable model that will empower and liberate the enormous potential that lies within the North’s land and people?

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  2. In fact, I think the last non-National mp up here was Social Credit, way before my time.
    The National recipe as you describe it has seen the removal of Ministry of Works, forestry, post offices, schools, increasing centralisation of local government (and we are currently being presented with yet another reduction in democracy)and otherwise general neglect of education at all levels.
    It is as much the way things are done as what is done that is the problem: no genuine consultation or understanding of aspirations of the community, just ideology rolled out without regard to the place or the people.
    As for employment, we’ve had a prison put on a thermal site – staffed mostly from outside and sourcing its food from Whangarei while putting strain on Kaikohe’s water and sewage systems.
    When CBEC ( a genuine commumity-based group) applied for the management of waste across the district (they’ve successfully managed the Kaitaia area for decades) they were turned down in favour of a huge multi-national based in Auckland.
    We no longer run our own ferry or maintain our own roads – all contracts are sourced outside the district.
    We hang onto the Polytech but there is always a sword over it and cuts are annual. Arts courses are cut to the bone, some removed altogether – this is not about numbers, but about the kind of outcomes that National recognises: individuals paying tax within six months after graduation. Never mind the value that art galleries add to the local economy in the form of tourism and the ability of local artists now to market themselves via the internet so they earn at least a part-time income from their work.
    We hang onto our community-owned and run hospital, but funding has been cut there too. We are the cheapest health system on a per-capita basis in the country and health promotion and disease prevention sees to that – but still we will be given less.
    In the cases of both education and health, I suspect we are the victims of their mania for privatisation, even where it is totally inappropriate.
    Currently, we are battling the onset of Toxic hard-rock mining for gold (isn’t there enough gold above ground?) at Puhipuhi and the deep-sea drilling for oil off the west coast. Both are likely to be detrimental in the short term, harmful to the planet in the longer term (climate change in the case of oil) and neither offers genuine sustainable employment options for local people.
    Shane Jones of course is trumpeting the opposite and some people are clutching at that straw, but there is no genuine analysis of his and National’s position on this – it has nothing to do with creating jobs and everything to do with making money by the already wealthy corporations.
    I wonder what they are going to do to us next?

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  3. I think Clendon’s taken a trip to Colorado and sampled the wacky weed.

    …but when people are told that the only way forward is to allow corporate exploitation of your land and sea with extraction industries like toxic mining, risky ultra deep sea oil drilling,…

    Having your land mined is not, by and large, incompatible with other commercial enterprise.

    The dirty rotten truth is that, again, by and large, the rich people who you hate build businesses to get richer on the back of the labour and intellect of those who can’t, won’t, or don’t have the capability to do the same thing themselves. One of those rich people you hate so much who has the gumption to start a business is not going to not start a business because he’s told it wont work by the government.

    Jeez.

    You have to start asking why someone would build a portable business in when in reality they have the choice of starting a business anywhere. Obviously, if you’re mining, you need to go where the stuff is. Someone could build a mine in my back yard, but (as far as I know!) there isn’t any gold down there, so they’d be wasting their time and money.

    So, what does Northland have to offer the portable business? Things that aren’t the same anywhere else in the country?

    (Yes, there are exceptions to this; sometimes people build businesses in places that the book says is sub-optimal, but they like the place)

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  4. Janine lists: Ministry of Works, post offices, schools, local government, education, prison, Polytech, hospital

    And:

    Toxic hard-rock mining for gold, deep-sea drilling for oil off the west coast.

    There is a difference between these two lists of things.

    The first is all public services; these are industries that don’t produce anything sale-able, or generally not a sale-able service (school fees excepted). They produce outcomes that socially, we want, and that, socially, we are happy to pay for through our taxes, but they are all just “necessary”, rather than desirable. For example, we don’t really want hospitals, we want is to be well. If we didn’t get ill there would be no need for hospitals. But we do get ill, and thus we want somewhere we can go to get it fixed.

    The second group involve some corporation putting up money to do the work, making money on the job, and paying people salaries, and paying taxes and perhaps other governmental fees. They generate wealth by adding value.

    This second group of employers pay the wages and costs of BOTH groups. We may not like the evil corporations they often represent, but without them there would be…. well….. back to the stone age.

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  5. The businesses we do have, mainly farming, fishing, tourism, horticulture are all to some extent threatened by the mining and drilling. The hard-rock mining proposed for Puhipuhi is in a high-rainfall area with farms and rivers – the incomes of people there are under threat from that, it is not to their advantage to have it happen. It is not a question of not liking the corporations, it is a question of what business we have being threatened by them.
    For the rest, education is both an investment in the community economy by upskilling people and a money-earner in its own right – people pay to learn stuff.
    Some business we used to have: freezing works for example, was mostly closed by absentee owners, leaving much of a town unemployed. Things are happening there, but with little support from government which is instead supporting the miners.
    I don’t think you really understand the situation up here.

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  6. The dirty rotten truth is that with “economic reforms” GDP has steadily grown to phenomenal levels, while real household income adjusted for inflation is flat or in decline. Isn’t it fair to ask why the people who live in NZ do not get a fair share of this new wealth generated in NZ?

    The dirty rotten truth is that National represents businesses, not the people- and those businesses that not foreign owned are in debt up to their ears to foreign investors. Just look at the account balances. The last statistics generated by the reserve bank before they were discontinued in 2012 indicated that NZ has debt 120% larger than our GDP. Listening to National rhetoric, one might think that it is government that has been mortgaging our future, but no. Corporate overseas debt is 4 times that of the government (200 billion owed, compared to 52 billion owed by the government)- Don’t believe me? See the last E3 New Zealand overseas debt xls file published by the reserve bank.

    One might think that those businesses are returning wealth to NZ because they must pay taxes too. Right? Well wrong. The dirty little secret is that the wealth generated goes to pay those enormous finance charges being sent overseas. And corporations are only taxed on their profit.

    Pretty neat trick, eh. Foreign corporations get Kiwi resources, wealth generated, and pay miniscule taxes while people who actually work in NZ see their incomes steadily decline.

    National would have you think that progressives are clueless about economic matters. On the contrary, it is National who is oblivious to economic realities. Do they care that small businesses are being forced to lay off workers because NZ workers are paid 15 times what Chinese workers receive? Everywhere you look it is the same. Owners are taking their designs to China and having the goods manufactured there at a fraction the cost of what the cost of production would be in NZ. What does that do to the Kiwi owner who is trying to keep Kiwi workers employed? It wipes him out along with the jobs he is protecting, that’s what. That’s the irony about National’s name. They are not for National businesses, and national jobs. They are for anyone who wants to cannibalize national businesses and export the wealth overseas.

    Mortgaging the future and selling any national asset possible is what National is all about. And this goes for fossil fuel extraction. The science is unequivocal about the real economic costs of climate change. If we think that the cost of Christchurch has been crippling, take a guess of the economic costs when over half of Auckland is underwater due to sea level rises. Is this cost being factored in to the expected “profits” from drilling? Of course not. For National, that is not a figure that appears on the balance sheet.

    But unless anyone wants to dispute the science, that figure is real, the payment is unavoidable and catastrophically expensive. Only a fool would make that kind of business decision. But National and Labour favour drilling.

    Simultaneously, Greens are accused of not being sensible about economics.

    If it were not so sad, this often repeated political trope would be hilarious.

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  7. I just had a “revelation” of sorts.

    http://www.henrygeorge.org/isms.htm

    Which goes well with “money represents work done”, but more importantly tells us one of the things we are doing so very very wrongly.

    Which explains why a few people benefit from the drilling and mining and we all instinctively know that we are being taken advantage of even when the economic benefits to the country are touted as being large.

    You knew they were lying.. but now I have a clue as to why I knew.

    respectfully
    BJ

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  8. Money is points. It is a creation of governments whose value is tightly regulated to achieve the goals of those who control the government. We simply do not have any points that are bankable assets awarded for doing Green things- like buying an electric car that is a little more expensive, or installing Solar which is a little more expensive than burning coal.

    The Georgian split would be nice if we were in the 19th and early twentieth century when industry was labour intensive. Modern farming and drilling techniques require very few workers, and other available work can easily be offshored to workers on other continents who will toil for a fraction of the wages expected by Kiwi workers. Even those foreign factories are automating.

    The problem with this equation was understood by some enlightened businessmen like Henry Ford. The reason why he decided to pay his workers double what he had to is that he understood people are valuable not just as sources of labour but are needed as consumers. If there is no middle class, there is no market.

    In his time, Henry Ford received no bankable points for doing something socially positive (building the middle class). Today, economics are driving the destruction of the middle class. This is true in every mature economy. GDP growth goes up, but none of that growth in wealth flows to the middle class. Middle class incomes are flat or going down when adjusted for inflation.

    But we are told we should be debating a flag change, not the sale of Kiwi assets, or the Trans Pacific Partnership Treaty which is designed to reduce the ability of nations to legislate for the well-being of its people. This means that corporations will be able to overturn Kiwi laws even when National is voted out of power.

    The wealthy will rent their property to us, and they will rent their money to us (interest). Under the Georgian reduction, we are still out of luck. We will have out labour and our votes, but both are being rendered irrelevant.

    Perhaps we should engage in more “polite” political subjects offered by National- like discussing what’s on the flag. Or maybe circumstances dictate we need to be less polite while New Zealand is being robbed.

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  9. But we are told we should be debating a flag change, not the sale of Kiwi assets, or the Trans Pacific Partnership

    WELL DONE!!! Damned right. … and who was it brought up this distraction?

    …a former currency trader, wasn’t he?

    http://www.zerohedge.com/news/2013-12-19/define-efficient-market-irony-when-jpmorgans-chief-currency-dealer-head-fx-manipulat

    The blatant manipulations here are far too obvious. Someone has to call this for what it is, and do so loudly.

    Well done indeed.

    respectfully
    BJ

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  10. John makes a steller observation:

    The dirty rotten truth is that with “economic reforms” GDP has steadily grown to phenomenal levels, while real household income adjusted for inflation is flat or in decline. Isn’t it fair to ask why the people who live in NZ do not get a fair share of this new wealth generated in NZ?

    This isn’t just a question for New Zealand; it is true, and the same question being asked, in many territories.

    John then goes on in the following post to provide a goodly part of the answer:

    The Georgian split would be nice if we were in the 19th and early twentieth century when industry was labour intensive. Modern farming and drilling techniques require very few workers, and other available work can easily be offshored to workers on other continents who will toil for a fraction of the wages expected by Kiwi workers. Even those foreign factories are automating.

    The GFC was a funny thing. Because industrial and commercial demand plummeted, companies found themselves with more staff than necessary, and many people were made redundant. Yet at the same time, lending rates were low, in some cases historically low, so there was never a better time to borrow to invest in the business. So business adopted the “work smarter not harder” mantra, and invested in smarter, with the result that many of the jobs previously required would never be required again.

    And thus as demand began to recover, companies were able to respond, and made good money doing so, but there was no accompanying job recovery. Business was better than ever.

    So when John asks the question “Isn’t it fair to ask why the people who live in NZ do not get a fair share of this new wealth generated in NZ”, the answer is that these people are not contributing to generating wealth; perhaps more than any time in history it is the invested capital that is the core of the wealth generation. Under the current arrangements (and this is true for red or blue party at the helm) these folks are bystanders whose lot does not improve.

    There are solutions, but they are so “big” that they wont come about by a simple change of government.

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  11. Janine notes

    I don’t think you really understand the situation up here.

    You’re right; I probably don’t.

    Some business we used to have: freezing works for example, was mostly closed by absentee owners, leaving much of a town unemployed.

    This is a story that thousands of communities around the globe can tell. Town becomes reliant on one employer (or industry – see Detroit) and when it shuts up shop, that action trashes the community, and then the town.

    The answer to this is supposed to be a mobile labour force, but that only works if there is a significant, unmet demand for jobs, and now, despite the unemployment rate dropping (“plunging” if you believe the Nelson Mail), the unemployment “rate” is, of course, an average across the country; in some places the rate is much much higher, and there is no reasonable expectation that it’ll drop any time soon.

    (As to “absentee” owners: Pretty much every business beyond a few employees have “absentee” owners, its only little businesses (and franchisees) where generally the owners are directly involved. For bigger businesses, owners are usually not directly involved. For many, that’s pretty much the idea of being a big business owner; you don’t want to actually have to do the work, you want to live off the benefits of business ownership. Its a good thing really, otherwise there would be (for example) no Ford motor company, as Henry died some years back, and so Henry is clearly no longer involved in the business.)

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  12. It’s not just International Banking centers like New York and London. Fraud is big business in New Zealand. Retired Chief executive of the Serious Fraud Office Adam Feeley states that fraud is widespread in NZ and that there are widespread misconceptions about corruption in NZ.* In fact, in Price Waterhouse Cooper’s survey of corporate crime in 78 countries, NZ was near the top of the heap- ranking 4th in corporate fraud.**

    That’s right- 4th.

    What’s to stop them? National believes in self-regulation. But look at Labour- they follow in the same line of Tony Blair’s “third way” of rejecting government intervention in economic matters in favor of allowing the market to achieve social goals on its own. Underpinning classical and neoliberal economic theory is a belief in the forces of rational self interest- that a government role in combating “white collar” crime is unnecessary since it is in a corporation’s self interest to protect its profitability. According to this theory, Adam Smith’s “Invisible Hand” will eliminate the companies who indulge in fraud or practices viewed unfavorably in a society. Yet the reality is that financial fraud is big business and financial institutions have accumulated so much economic power that they are not only too big be allowed to fail, they are too big to prosecute. To date, not a single member of financial institutions responsible for the credit default swap fraud at the heart of the global meltdown has gone to jail.

    Not one.

    So in practical terms it is fair to ask if Adam Smith’s “Invisible Hand” theory is working. If it isn’t, then we need to examine pragmatic alternatives that do work.

    This gets at the simple query posted by “A supporter” at the top of this thread. What are the particulars of Green Party’s economic model for unlocking the economic potential of the Northland region?

    I have offered auxiliary currency as a tool for consideration. It is true that this generally employs market forces to achieve social ends- which has superficial resemblance to the advocacy of market forces by Labour/UK’s Blair/US’s Clinton-Obama approaches to economics. But the notion of having an auxilliary currency to measure what the society says is socially valuable fundamentally alters the empirical calculation of value by the market- allowing those forces to seek optimal solutions to achieving those values. This represents a substantial intervention in economic activity- but is radically different from the approaches of a centrally planned economy or that of regulated monopolies.

    For example, with the NZ dollar as the only measure of value, market forces unleashed by so called reforms in the 1980s have resulted in Māori and Pasifika incomes declining substantially. Today, half of all children living in poverty are from Māori or Pasifika families. It can safely be said that no one on the right or left believe this is a valuable outcome. Yet the playing field is tilted towards this market outcome. How would a Commons Currency correct this market imbalance? By awarding bankable Commons Currency dollars to companies based on whether or not their percentage of payroll dollars is greater than the percentage of these groups in the general population. All companies have an employment tax only payable in Commons Currency. Those companies with high payroll dollars going to Maori and Pasifica peoples have more Commons Currency dollars than they need for their taxes. Those with fewer must go to the financial markets to buy needed Commons Currency dollars. This provides a cash incentive for companies to hire peoples from disadvantaged groups. As mean household family incomes in the lower deciles achieve parity, the Common Credits are no long paid out.

    So who decides the rate of awarding and charging these Commons Credits? My opinion is that the people should decide by direct vote.

    Why is this different than government giving explicit economic incentives- for example through tax policy denominated in NZ dollars? It’s because Commons Currency is property and is politically a strong defensive position. Right wing forces seeking to dismantle this system would be faced with the opposition of groups of people and corporations with reserves of Commons Currency in their bank accounts. It is relatively simple to attack “tax giveaways” under the guise of “tax reform” of “spendthrift” liberal politicians. It is an extremely difficult obstacle to take away the property of individual citizens and corporations. That’s why some system of Commons Currency which measures things of social value is a politically powerful hammer to employ on issues of concern to the Green Party.

    —— Notes —-
    * New Zealand Management Magazine Cover story, September 2012 management.co.nz/Editorial.asp?eID=61744&Wcat=102
    ** PricewaterhouseCoopers report: The 2011 Global Economic Crime Survey results for New Zealand Fraud, fraudsters and cybercrime, page 4 pwc.co.nz/KenticoFiles/b2/b2ba49bb-785c-493c-aefe-a39a52803dc5.pdf

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  13. The prior post was in response to BJ’s observation about financial crime.

    Dbuckley made two additional posts continuing to advance the case that the wealthy are the wealth creators. On the contrary, my example of Henry Ford demonstrates that a healthy and growing middle class are the wealth creators. DBuckley is examining their value as labour, and misses their value as consumers.

    DBuckley acknowleges that NZ labour is not valuable. Capital is. But he is looking at capital investment. What happens when when Consumers are paid less and less. The ledger sheet says the value of their labour compared to that available elsewhere does not justify prior salaries. But there is a hidden cost there. As companies aggressively seek the most optimal operation, they will close up their joinery shops, their trailer manufacturing, and so on and move it overseas. They will ship logs overseas to have them milled rather than mill them domestically.

    So what happens is that with declining middle class incomes, there is a decline in sales of products. It is a market failure. The thing is, using current accounting, just like the social cost of climate change, this cannibalization effect is not empirically measurable on a corporate balance sheet except in the long term. Therefore managers who defend a high domestic payroll are dismissed as Fezziwigs.

    If I have erred in this analysis, show me where.

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  14. John notes

    …continuing to advance the case that the wealthy are the wealth creators

    That’s not actually what I stated: what I said was “it is the invested capital that is the core of the wealth generation”, which is a subtlety different thing.

    John, now let me start from the end of your piece.

    I’m not for declining incomes at all, I’m for more income across the board. But, as a right wing contributor who doesn’t seem to be around any more used to (quite correctly) remind us, you cant just pay people more, that just creates inflation. To improve salaries then more value needs to be generated.

    A big problem in New Zealand is we are stuffed to the gunnels with what I call “low value” businesses, those that economists declare to have “low productivity”. [sidenote: our two biggest sectors, agriculture and tourism, both have productivity below the OECD average. Thus, ridiculous as it sounds, the more we do of our biggest sectors, the less well the country performs compared to our OECD neighbours]

    This productivity isn’t down to how hard these people work (as they often do work really hard, and are personally really productive) but the end result of their labours is not actually very much. So when you say I say that “NZ labour is not valuable” that is a comment not on the people, but on what they do.

    But as I noted above, labour (as in “work done”) isn’t the key to value. There was a time when it was, as folks used to say, work hard, and you will be rewarded. That simply is no longer true.

    A milker of cows, a driver of trucks, a surgeon, a man who slices up lamb in a meat works, a McDonalds burger flipper. All these people do either or both of work hard, and do a job that needs doing. But we (as in we the people) have demonstrated that each of these jobs can be undertaken by machines, and in time, will be. These are careers that wont exist in years to come.

    They are being replaced – today – by capital investment.

    Finally, Henry Ford. His workforce truly “added value”, by the standards of today. But do you think for half a millisecond that if Henry could have choosen between men in cloth caps (who he paid well) or robots he would have chosen human labour? He did what he had to do. He was a smart man. But the folklore that he paid people well so they could afford his cars is 90% bullshit, have a read of some history.

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  15. Oh? Is it BS that the rise of middle class consumer economy was due to Henry Fords paying middle class wages. Perhaps it is you that has been sampling the wacky weed. I will grant your hypothetical that Henry Ford would have used the highest technology possible. But there never would have been a middle class if the technology of the time did not put labour in high demand. And without the emergence of expanded middle class markets for goods we would not have seen the exceptional expansion of wealth in the West.

    So really, you misunderstand the thrust of the observation. You are making an elementary point about productivity, as if the problem would be solved if NZ labour generated more value for each salary dollar paid. This is a fallacy. The capital investment for enhancing worker productivity can be used in plants in countries where labour is cheap, or where labour is expensive. Take a guess where the capital will go.

    Note the technology point I made. High technology is not labour intensive. Would NZ’s problems be solved if we had more companies like Twitter, where 300 employees deliver a product to 200 million customers generating $242 million USD in revenue. That’s pretty phenomenal productivity. You go to a modern factory and what you will see is lots of robotic machines and very few workers. That results in pretty phenomenal productivity per worker.

    You are quite correct that capital is the driver, but it is capital in the hands of consumers. There can be no capital investment to boost production if there is no demand for product. There is no demand for product as labour is being priced out by automation and outsourcing.

    So the middle class consumer economies in the West are experiencing jobless recoveries because expensive labour is progressively being made obsolete.

    To address this, we must regard middle class purchasing power as the driver of economies. It is a public resource like water from rivers- if companies along the river pump more water from the river than they return and is being added through rains, then the river goes dry and all the companies fail. Maintenance of the purchasing power of the global middle class is in every corporations interest because without that source of capital driving demand, there will be no justification for investing their accumulated capital resources.

    Right. Study history. Labour intensive technologies of the 19th and 20th century built the middle class, and 21st century technologies are destroying middle class jobs. In Europe and the US were labor statistics are being collected, what we are seeing is the same U shaped curve. Slight job growth in the very high paying, very high skilled positions, large job growth in the lowest paying janitorial type/ fast food serving non automatable jobs, and large losses of jobs in the middle income jobs whose repetitious tasks are trivially automated or offshored.

    So really the position that capital investment is the driver of economic success is utter nonsense. Capital investment follows demand. Without middle class consumers, there is no demand. QED. Destroy middle class payrolls and you kill the goose that laid the golden egg.

    The massive stimulus necessary for Christchurch rebuilding has masked the ugly reality of NZ jobs. They are being eliminated in the face of automation and outsourcing. NZ middle class income is being cannibalized in the misguided pursuit of short term profits. We can’t educate our way out of it because high technology simply does not require rows after rows of workers to operate the machines.

    —- Further Reading —-
    David Autor, David Dorn. “The Growth of Low-Skill Service Jobs
    and the Polarization of the US Labor Market”. European studies making a similar observation are cited in this PDF. url= economics.mit.edu/files/1474

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  16. Why does anyone’s existence have to be justified by a paid job? AS DB points out, there are fewer and fewer occupations that have to be done by people.
    But: society is not just about production and money; it is about people and relationships, with each other, with their community and the planet we share.
    Much of the REAL work, as opposed to jobs, is about those relationships: nurturing, educating, feeding, planting, building, maintaining. All of this is needed, whether done by people or machines.
    What is happening up here and many other places is the alienation of people from the wider society because of their relative money poverty. The young especially are made to feel useless because they have no “job” and they are brainwashed to believe they need lots of stuff which they can only buy if they have enough money.
    There is plenty to do, but little recognition or support to do it if it isn’t recognised as a “job”.

    You ask why anyone would come up here if they didn’t have to. Because it is beautiful, warm and easy to grow more or less anything.
    The wealth we have is not just expressed in the form of farms and businesses, but in the very environment we live in, the social structures we have, the creative talents of the people here.

    If you reduce everything to a dollar value, then you are missing the true values in life…
    I know this is incoherent, but I think neither you nor the current government have an appreciation of what an economy truly is, only the money bit. An economy is made up of all those things that need doing and includes all the people in a community. By that false dichotomy of “production” and “social” you endorse the current government’s agenda of handing over our country to unelected corporations regardless of their effect on our communities and our environment.
    If capital investment doesn’t serve people and environment well, then it is part of the problem and that is why Northlanders protest against toxic mining and off-shore oil drilling and want investment back into our communities to enable all of us to learn and create and develop appropriately.

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  17. Ford paid above average wages to reduce employee turnover, in a working environment that was hard and dangerous, pure and simple. Anything else was a byproduct. Staff turnover of over 300% per annum was unsustainable. Ford paid decent wages, and solved his problem at a stroke. That’s the truth. (And some think it was a plot to stop the unions getting a foothold, but that is unproven)

    It’s a lesson that is still true today; employers claim they can’t get staff. They could, if they offered higher wages.

    Contrast Ford’s simple self-centered approach with, for example, the Lever Brothers.

    You are making an elementary point about productivity, as if the problem would be solved if NZ labour generated more value for each salary dollar paid

    Again, wrong; I’m arguing that with more productivity we could, for those in employment, have more salary dollars paid. Of course, higher salaries mean more tax dollars, which mean the ability to have better health and education spending.

    Right. Study history. Labour intensive technologies of the 19th and 20th century built the middle class…

    Yep, that is the industrial revolution. I’ve argued that there are two ongoing revolutions since that one [eg here], and these are the revolutions that are having the effects you describe, at which point we are violently agreeing. Almost. I don’t think the growth in low end jobs is sustainable, as eventually, we’ll automate most of those too. The revolution is working from the middle both down and up.

    So whereas we may not agree the terminology and drivers, the end results we do agree on, which is a destruction of purchasing power across low and middle income families. Truman had the Americans “spend, spend, spend” to rebuild industry after WW2, but if the people don’t have the money then that is not an option.

    Even if New Zealand could “spend, spend, spend”, then we’ll have Tony along reminding us that growth is undesirable, and BJ noting that we live in a finite world.

    You ask:

    Would NZ’s problems be solved if we had more companies like Twitter…

    We have companies (a bit) like Twitter already, and they do have great productivity. The late Sir Paul Callaghan’s famous call for a hundred companies to change our destiny rings very true with me.

    However, even if we do solve the productivity problem, we’ll still be left with a lot of unemployed people. We (in common with pretty much the rest of the world) do not have an approach to tackle this, my favorite elephant in the room…

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  18. Stop being naive about the economics of 21st century technology: High tech is NOT labour intensive. A hundred Twitters is ridiculously unrealistic fantasy and even if possible would represent 9000 jobs.

    Nonetheless, our common ground is that purchasing power is being destroyed and threatens our economy.

    Say that destruction of purchasing power was a ledger-able item for corporations. Specifically, Commons Currency is awarded for returning in in excess of their fair share of payroll as a percentage of their revenues. Some companies by their nature are labor intensive and so would generate an excess of such Commons Currency dollars. Other companies are free to extract resources and income employing a minimum of NZ workers, but since they are returning nothing in terms of NZ consumer purchasing power they have little or no Commons Currency dollars to pay their annual Commons Currency tax. This means they have to buy those dollars on the market and thus supplement the income of the labor intensive industries, or those who decline to ship NZ jobs overseas.

    It is a market based solution to a market failure. Progressives who employ such a tool or some alternative will save corporations from cannibalizing the economy.

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  19. There are two aspects to this. The Geoist perspective tells us that the economic rent advantage is real, remains real and is not really taxed at all, so the “landowners” are getting real wealthy real fast. That seems to be true. No?

    The second part is that it isn’t all the same as it was. The Capital and Labour balance that used to exist is mostly gone. There are people who are going to be entirely unemployable for the foreseeable future. Half the population is by definition, below average in its abilities and most of the good jobs need someone at least 1 standard deviation above the curve to make them work. That is ALSO true, no?

    Yet they are part of the society. They are willing to work, and there isn’t any way to just ignore them, or any moral basis to just tell them to go away… there isn’t any “away”. Used to be we had work for them. Not any more.

    The UBI solution beckons. A land tax beckons.

    The notion that paying more requires more productivity ignores the fact that the profits ARE increasing. It is basically a short way of saying that geeks who are still working like “mexicans with cellphones” are too stupid to realize that they are being taken advantage of by the owning class… not smart enough to organize.

    Probably right too.

    Then there is a third part. The taxes on the Capital and the Labour aren’t well distributed. They favor (still) the Capital investor and the guy who works gets it in the shorts. The methods vary but Real-Estate remains a popular vehicle. The taxation is also not nearly as progressive as it ought to be. A single tax percentage, 30%, from 80K to 80M? What is that? Capital Gains taxes? Spare me, I just bought this for my Mother to live in (*… for about 3 months), I have no intention of renting it out and making money off it… or some similar rort that throws the IRD off the track.

    At some point we have to work out that rewarding work in this country is the best way to have an economy that works for its workers… too.

    Not under any of the governments I’ve seen since I arrived though.

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  20. Given that owners of capital and owners of land tend to be sets with substantial intersection, the combination of a lack of a land tax and a lack of a capital gains tax, coordinating with a low progressive tax rate, a high GST and the inevitable effects of automation (which advantages the capitalist who, properly, buys automation instead of labor)… what in this actually tends to help us hold down inequality?

    We’ll have to pull pretty hard on the wheel to get turned out of the rut we’ve dug in the ratrace track.

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  21. We also have to break ourselves of the habit of valuing individuals as part of our society, based on the work they can do. As part of the SOCIETY we are all equal according to our treatment of and respect for one another. That’s one of the reasons we need the UBI.

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  22. Is this where a comprehensive Transaction Tax should be fluttering her sexy eyelashes at us?
    Should she be the only tax in town?
    What about non-financial stuff, like water quality, for example? How do we put a cost/value on those things?

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  23. It would be nice if these prior attempts at using tax policy actually were effective at addressing unfair concentration of wealth. Some of us have the idea that making the tax code less regressive coupled with a high technology boom would be the solution to NZ’s economic challenges. While I am 100% for eliminating our reliance on regressive taxation, I want to emphasize the point I was making to DBuckley about common illusions about High Tech.

    Let’s say we didn’t get 30 new Twitters in NZ but DBuckley’s full fantasy of 100. And let’s be generous and say these companies have a very high percentage of people with 6 figure salaries compared to others who are doing standard support things like running the office, counting beans and so on. Let’s say that these companies are so generous that half of the employees are earning in the top decile range of incomes for NZ (greater than $80K). So what does that get us in terms of redistributable tax receipts? Instead of 352,000 rate payers earning over $80K, you have 367,000.

    So even if we had a full bag of fairy dust and there were ten times the number of Twitter type companies emerging in the global market and they all happened to emerge in NZ, you will have barely moved the needle. No amount of education in high tech skills is going to change the fact that high tech companies simply don’t employ a lot of people. So all we will wind up with is a lot of people with Biotech, chemical engineering, and software degrees driving taxis and fixing people’s broken computers- that is- those who elect to remain in NZ.

    So I can hear you saying, not so fast- what about the tax revenue from these corporations. Well- familiarize yourself with the economics of these companies. Twitter received $252 million in revenue- sure- but they did that globally. Due to double taxation agreements with other countries, we get very little tax dollars from revenue earned in those countries. So the corporate tax dollars you get are from the Kiwi companies who paid advertising money (the Twitter business model) or from Kiwi consumers (assuming a user pay model like Zynga games or off the shelf products from biotech engineered pharmaceuticals). Kiwi source contribution to that revenue stream is going to be miniscule so you still wind up with a teensy tiny amount of tax dollars from them.

    So no matter how hard you squeeze you will never get enough redistributable tax revenues from high tech. Okay? People have been chanting the High Tech Fairy story for over a decade. Coming from the high tech field, I would be the last person to say that we should not emphasize rigorous education standards and fostering more NZ competence in competing in global markets in these fields. I am simply saying that it will at best have a modest impact on our competitiveness and growing our tax base.

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  24. Well sure Samiam, I’ve always been a sucker for that long legged beauty.

    :-)

    John, I know what you’re saying and that’s one of the reasons I don’t regard simply altering the taxes as the end game. The combination I want to throw has a government issued money (that right being removed from the banks), an emphasis on local production of locally consumed goods, and NZ value added (support for OUR sawmills and furniture manufacture… we have the wood, why are we loading it onto ships?)… etc. etc. etc. A realization that the comparative advantage as understood by Ricardo is now GROSSLY misunderstood by most New Zealanders.

    CO2 and other resource taxes and related tariffs to compensate where other countries do not have them.

    Fair is a good thing but we have a problem with how we determine what a member of our society is worth as a member of the society, as opposed to an economic unit.

    That is over and above the actual productivity and tax arrangements.

    respectfully BJ

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  25. I’m not just advocating a specific policy tool, but demonstrating a way of turning the rhetorical tables on conservatives. They are generally effective with the electorate in convincing people that liberal progressives are well intentioned, but not sensible enough to be entrusted with money matters. (Subtext- so vote for National and be both well intentioned and sensible).

    What I tried to demonstrate is that you can show that National policies are not economically sensible. Opponents are typically quite unaccustomed to this line of attack. If they choose to fight, what they are fighting is the science of climate change or economic statistics regarding the destruction of the middle class by market forces. On the latter issue- that is how you advance the cause of regions hit by wealth inequality. Because as reports like the MIT one I cited above, who is the biggest loser in the accelerating gap between rich and poor? It’s the middle class. Take those votes away from National and like minded conservatives and you’ll win elections.

    So like on the TPP, you hit them on what it is doing to small businesses and the middle class. Arcane points on comparative advantage may be valid, but are generally ineffective in winning votes. The attack on progressive policies is predictable- that we favour a return to trade protectionism and managed economy. But it is not protectionist. The Commons currency approach or and similar tax policies say that all businesses have a common interest in maintaining the purchasing power of consumers for long term maintenance of their profitability. So because there is no favoritism it is not a protectionist policy that can be sanctioned by the WTO. All corporations domestic and foreign would be required via tax policy to return a percentage of their gross revenues to kiwi consumers in the form of middle class payroll. I have suggested a tax policy whose structure insures greater tenacity during conservative governments. But we may settle on some other more optimal alternative that enjoys a greater consensus. But I do think that we have to dismantle the conservative meme that we are not sensible with economics. The facts back up the position that it is the conservatives who are being reckless with NZ economic future.

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  26. John, I’m not (and neither was Sir Paul) arguing for 100 twitters, just lots more decent companies. Why: because we need to do something, and of all the possible somethings one can think of (and some have been mentioned in this thread) more decent companies is a something that has a chance of happening, and of actually doing something useful, instead of continuing the downward trend that New Zealand has experienced since the 1950s.

    Why has our standard of living fallen pretty much year on year since the late fifties? Because other countries changed, and we didn’t. All we did was continue to farm and show off our pretty country. We have FIFTY PLUS YEARS of deficit to overcome. That is a very tall order indeed, and one, given our track record, we are most unlikely to achieve.

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