• Noise Pollutes

    Yesterday was wonderfully warm and sunny at Ohiwa Beach where we live in the Eastern Bay of Plenty. Our enjoyment of the winter sunshine, as we sat on our deck overlooking the beach, was however ruined by the noise made by a small motor cycle as it roared up and down the beach for a couple of hours.

    The bike was ridden by a boy of school age who obviously relished the sense of freedom and speed produced by riding at full throttle. He would no doubt have been surprised to be asked to desist, on the ground that he was spoiling the enjoyment of many others (and not least that of a seal sunning itself on the beach); and in today’s selfish age, he would not have thought for a moment of doing so.

    The incident brought home to me, however, a truth that can easily be overlooked. At a time when we are becoming more conscious of our environment, we may not always recognise that one of the most pervasive forms of pollution is noise pollution.

    There is of course growing evidence that high levels of persistent noise pollution can be very bad for one’s health, but I do not go so far as to suggest that yesterday’s young motorcyclist and his joyriding were a threat to our health or to the wider environment. But I am very much aware that there are others in our society for whom incessant high levels of noise are a real obstacle to the quiet enjoyment of their living space.

    Those who live close to Auckland airport, for example, put up with the sound of aircraft landing and taking off every few minutes throughout the daylight hours and beyond. Many would no doubt say – “what do you expect if you live near to an airport?” But the affected residents reply that the noise levels have, over recent years, risen to intolerable levels and frequency, and that, since no one seems concerned to do anything about it, the prospects are that it will get even worse.

    The general reaction to complaints about this phenomenon is that it is the price “we” (or at least “they”) must pay for the boom in tourism and for the greater efficiencies achieved by our airlines, and by Air New Zealand in particular – and there is no doubt that these factors have played an important part in creating a greater noise nuisance for those living under the flight paths.

    There are now many more aircraft in the air, but there are other factors that have – the residents say unnecessarily – made the problem worse than it need be. The planes themselves are bigger and, in order to save fuel (and fuel costs), they fly lower and slower – and therefore more noisily) as they come in to land.

    The technology that enables them to fly safely as they land has also developed and changed. New navigational systems (such as Next Gen) allow the incoming planes to fly more precisely so that they can land in greater numbers in a shorter time; the residents find the increase in the number of aircraft movements an additional burden to bear.

    It is not hard to identify those who benefit from such developments. Air New Zealand has been able to produce record profits, and has been congratulated and thanked for doing so by its principal shareholder, the government.

    And so, the issue resolves itself in the end into a familiar trade-off – on the one hand, the ordinary citizen and the environment in which he or she attempts to live a good and enjoyable life and, on the other, the interests and profitability of big business and the willingness of the wider public to see the one sacrificed for the other.

    Our fellow-citizens are surely entitled to expect from the government they have elected to represent their interests, not least against the rich and powerful, (isn’t that the point of democracy?) that a better and fairer balance will be struck. To shrug the shoulders and say “too bad” or “that’s the way it is” is not good enough.

    It’s time we understood that the argument that “it’s good for business” is not and should not be the last word, and leads us into a dead end.

    Bryan Gould
    13 July 2018


  • What Brexit Is Really About


    The current turmoil in British politics, with leading Cabinet members resigning over the progress, or lack of it, in the talks over Brexit, will have left many readers in this part of the world confused as to what it is all about. Any attempt to clarify the issues will, of course, be greatly influenced by the views and prejudices of the person making the attempt, but what follows is my explanation – based on my close involvement in the unfolding saga over many decades.


    The modern story must begin, of course, with the unexpected result of the referendum conducted in Britain in 2016, when the British people – asked if they wanted to remain in the European Union – replied with a narrow but clear majority for leaving. That verdict on over 40 years of membership no doubt owes much to the fact that, as I and many others had argued at the time, the original deal offered to Britain was a very bad one.

    The Common Market, as it was then known, had been formed on the basis of a Franco-German deal, which offered the French the huge advantage of the Common Agricultural Policy in return for free trade in manufactured goods which was of great benefit to German manufacturing. The deal was so advantageous to those two original members that General de Gaulle was determined to make it stick and therefore vetoed Britain’s belated application to join until it had been concreted into place.

    The result was always going to be a disaster for Britain (as I could see by virtue of a birds-eye view from my role, first, in the Foreign Office and then from my desk in the British Embassy in Brussels); instead of a rational trading pattern in which they imported efficiently produced food and raw materials from countries that offered them in return preferential treatment for British manufactures, the British taxpayer was required to subsidise inefficient French agriculture and then to pay again as a consumer by way of higher food prices – thereby negating Britain’s one major cost advantage as a manufacturing economy – while British manufacturers lost their preferential markets and had to compete in the same market as powerful and efficient German producers.

    The outcomes were inevitable (although ignored by those enthusiasts for whom “Europe” had become the promised land). The British “trade gap” widened alarmingly, British manufacturing was decimated, the British taxpayer continued to pay large sums into the EU coffers, and Britain’s links with its traditional trading partners were weakened. These burdens bore most heavily on working people who found, in addition, that their employment prospects, available housing, and public services were greatly reduced and weakened by the influx of migrants from eastern Europe who were keen to exercise their right as EU citizens to settle in the UK.

    The outcome of the referendum should not really, therefore, have come as a surprise – but it did. The bien-pensants – those who “know best” – were greatly attached to the notion of a Europe that carried with it a kind of cultural cachet, and they were remarkably insouciant about the price that was being paid. They were reluctant to accept the result of the referendum which they attributed to the “ignorance” and “racism” of those who “didn’t really understand” what a wonderful ideal “Europe” (which they conflated with the particular arrangement known as the European Union) really was.

    They therefore set about doing all they could to reverse the result, through a sustained campaign (particularly in the pages of The Guardian, which gave up all pretence of impartiality on the issue) to hold a second referendum in which the “mistake” could be rectified. In doing so, they gave of course great comfort to the EU bureaucracy which was encouraged to believe that Brexit wouldn’t really happen.

    That bureaucracy of course had its own agenda. They were terrified that other countries – like Greece and Spain, even now Italy – that had suffered terribly as a result of the undemocratic and banker-driven intransigence of EU rules and institutions might also want to leave. They determined therefore to show other backsliders that exit was not an easy option.

    The result? The “Europe” held up as the key to a wonderful future proved to be remarkably impervious to the ideal of unity and more concerned with protecting its own structures and institutions than with building a cooperative arrangement with a departing Britain. The combination of a misguided rearguard action at home and a determination in Brussels to punish the British for their temerity in leaving has made the negotiation of a sensible arrangement almost impossible.

    If these problems are to be overcome, the answers are to be found at least as much in Brussels as in Westminster and Whitehall. Those with hearts and minds that are big enough could take the Brexit talks as an opportunity to build a new “Europe” that could fix its many current failings by becoming more democratic and less wedded to the neo-liberal prescriptions of its central banks and bureaucracies. But, on the evidence so far, sadly, that seems unlikely and a goal that had seemed so inspiring looks certain to become mired in its own short-sightedness.

    Bryan Gould
    11 July 2018


  • Finding the Money

    So, the chickens are coming home to roost – and with a vengeance.  The tragedy for the new government is that the chickens were bred and raised by the previous government, and are only now flying in, in large numbers and with hefty price tags.

    We are now getting some idea of the price that has to be paid for those “business-friendly” policies that were celebrated for their success in producing a “surplus” (at least for the government).

    That price includes large numbers of underpaid public servants – nurses, teachers, midwives, care workers, Inland Revenue workers – and underfunded public services – health care, schools, keeping our water and rivers clean, and bio-security at our borders.  The bio-security failure alone will cost the current government around $900 million – the amount awarded by the courts for the previous government’s negligence in allowing PSA to decimate the kiwifruit industry (and that’s to say nothing of the cost of the myco-plasma bovis outbreak).

    Through no fault of its own, the new government is having to pay up for the mess made by its predecessor, and that costs money that cannot, it seems, be easily found.  Every dollar paid to clean up the mess is said to be a dollar less for the government’s real aims – to improve our public services, to rescue our environment, to save families from poverty, to provide recent housing for everyone.

    But is that really the case?  There may be other shortages – labour or land, or skills or technology, or materials – but a shortage of money should not be one of them.  How do we know that?  Because, as an increasing number of experts recognise, and as our own experience teaches us, the government of a sovereign country need never be short of money.

    This is because money, in a developed economy, is what the government says it is.  Indeed, it is often called fiat money because it exists only by the say-so of the government – and, as the economist, Ann Pettifor, says, that means that “we can afford what we can do.”

    Most of the money in our economy sits in bank accounts, and a large proportion of that money is created by the banks when they makes loans, usually on mortgage.  The fact that the commercial banks create over 90% of the money in circulation out of nothing is still disputed by some (including by those who should know better) but is now attested to by the world’s central banks, by top monetary economists (such as Lord Adair Turner, former Chair of the UK’s Financial Services Authority and a leading advocate of “helicopter money”) and by leading economic journals such as the Financial Times and The Economist.

    This raises the question – if the banks are allowed to create money out of nothing (and then to charge interest on it), why should governments be inhibited about doing so?  And indeed, they are not so inhibited – governments all around the world have over recent years pursued policies of “quantitative easing”, and on a very large scale – and “quantitative easing” is just another way of describing the creation of new money.

    The money created in this way has been directed to building up the balance sheets of the banks in the wake of the Global Financial Crisis, but there is no reason why it should not be applied to other (and more productive) purposes – as it has been in many countries, as well as New Zealand, in the past.  Japan, for example, both today and immediately after the Second World War, used this technique to get their economy moving and to build the strength of their manufacturing industry ; in doing so, they followed the precepts of the great Japanese economist, Osamu Shimomura, who is virtually unknown in the West.

    The Chinese government today follows similar policies.  President Roosevelt in the US did likewise, before the US entered the Second World War, so as to build the strength of American industry and military capability; and, in New Zealand, Michael Joseph Savage authorised the Reserve Bank to issue interest-free credit in the 1930s so as to take us out of recession and finance the building of thousand of state houses.

    All that inhibits our current government from using this technique is the fear that some will disapprove and regard it as taking risks with inflation.  But, as John Maynard Keynes observed, “there may be good reasons for a shortage of land but there are no good reasons for a shortage of capital.”   He went on to say that, if an increase in the money supply is applied to productive purposes so that output is increased, it cannot be inflationary.

    As the new Labour-led government faces financial constraints not of its own making, why not emulate Michael Joseph Savage and authorise the issuing of interest-free credit to be applied to investment in stimulating new production?   The Provincial Growth Fund would seem to be an ideal vehicle; funding investment in new infrastructure in this way would free up financial resources that could then be applied to current expenditure, such as paying the nurses and teachers what they deserve.


  • The Demise of the West

    Students of the global economy have foreseen for a couple of decades that the centre of economic gravity was about to move from what we used to call “the West” – a shorthand term for the USA and Europe and their respective spheres of influence – to Asia, (now not just Japan, but China, South Korea, Singapore, India and others as well).  Few would have expected, though, that one of the principal drivers of this development would turn out to be the American President himself.

    But Donald Trump has committed himself to a series of policy initiatives which seem destined, if not designed, not “to make America great again” but to “make China great again”.  The most obvious manifestation of this supposed “strategy” is the launching of trade wars against America’s traditional trading partners in Canada, and Europe, as well as against China.

    Trade wars, according to Trump, are “good and easy to win”; but he is about to find out that they are dangerous, messy and destructive.  They are destructive not just in economic terms but in geo-political terms as well.  For the West’s leaders, they signal the end of the close alliance that has exerted great influence in world affairs – and that significant turning point has been given added impetus by Trump’s decisions to abandon his traditional friends by withdrawing from the Iranian nuclear deal and from the Paris climate change agreement.

    The demise of “the West” was emphasised by the recent G7 summit, when Trump refused to sign the closing communique and found himself in disagreement with virtually all of his allies when he urged the re-admission of Russia.  His attack on the Canadian Prime Minister was simply further evidence of his lack of concern for the damage he had caused.

    The irony of all this is that the vacuum that has been created by America’s withdrawal will be quickly filled by the other potential global superpower, China.  The increase in China’s influence – welcome or otherwise – is already clearly apparent, not least in the Asia-Pacific region.  The recent Australian legislation, beefing up security against foreign influence was clearly directed at Chinese interference in Australian domestic affairs.

    But it is not just in the international sphere that America has abandoned its long-held leadership role.  An important element in the Western hegemony that has dominated the world scene for so long has been the sense that the West represents the best way of doing things – that factors such as democracy, the rule of law, human rights and civil liberties, a free press, are all essential aspects of a successful society.

    Yet it is precisely these aspects of American society on which Trump has launched his most bitter assaults, with the result that the US is no longer seen or held up as an exemplar of all that is best in Western values – quite the reverse.  Trump has succeeded in demonstrating that America democracy is deeply flawed, and can no longer be seen as shining a beacon light for the rest of the world.

    Trump’s surrender of any claim to American moral leadership is of course entirely consistent with his personal moral stance – his lies, his racism and his attitudes to women are as unacceptable to most people as his policy of separating children from their parents and holding them in cages.

    It is hard to believe that the American people can stand idly by and allow such damage to be done to their history and values.  If American democracy is to mean anything, it must rapidly re-discover itself.

    Bryan Gould

    2 July 2018

  • Business Confidence – Or Confidence Trick?

    Business is a centrally important part of our economy – and business leaders, who are assumed to understand it, are usually listened to with great respect.

    At the same time, it is understood that business leaders are not necessarily impartial commentators on the public scene.  They have of course “their own axe to grind” – they are, not surprisingly, pretty much in favour of profits and capital gains, and they don’t like trade unions or workers’ rights or higher wages very much.

    In the wider political landscape, they tend to locate themselves in the camp that believes that the market is always right and should not be challenged and they are somewhat resistant to the notion that government should do what the market cannot or does not do, and should intervene to ensure that the market does not produce outcomes that are unfair and that leave some of our fellow-citizens behind.

    When it comes to general elections, business leaders – though not all of them – will throw their weight behind parties of the right; if those parties don’t win power, then business is disappointed and is not slow to say so.

    We saw all of these attitudes and prejudices played out in last year’s general election.  It is a fair bet that the result was not the one hoped for by most business leaders.

    But the story does not end there.  Whereas most people, on the principle that – in a democracy – “you win some, you lose some”, will have accepted the result whether they liked it or not, many business leaders still seem to be “grieving” over the loss of the National government which had so clearly tilted the playing field in their favour.

    They continue to try to turn back the tide, by warning that they “lack confidence” in what the new government is doing.  So constant has that refrain become that it has assumed considerable significance in charting our economic future.

    Almost all economic commentators agree that our economy is doing well and is likely to go on doing so – with Trump’s “trade wars” the only really dark cloud on the horizon.  But, at the same time, we are constantly told that surveys of business confidence show that business lacks confidence in the economic future, to such an extent that the supposed lack of confidence has become – in itself – a possible threat to that future.

    Business sentiment, in other words, is not based on anything concrete but is rather a reflection of the disappointment felt by business leaders at having to deal with a Labour-led government – a matter of political prejudice rather than economic fact.

    It is almost as if, having lost the election, they want a second crack at it, to see whether they can unsettle the elected government and push it off its stride, through the simple mechanism of proclaiming that they don’t like it and would have preferred to carry on with the easy ride offered by the previous government.

    The tactic will not work if it is seen for what it is.  But the danger is that expressions of doom and gloom can all too easily become self-fulfilling; business leaders could end up convincing (and depressing) themselves, as well as everyone else, and important investment decisions could be delayed or abandoned for no good reason, so that a short-term political tantrum on the part of a few becomes a long-term economic loss for the rest of us..

    There is a further danger – that the new government will be so keen to gain at least some support from business (at least to the extent that the bad-mouthing will stop), that they will abandon the reforms they have undertaken – reforms that, as every day that goes by shows, are long overdue and desperately needed.  The last thing the country needs is a new government resigned, for fear of upsetting business, to continuing the mistakes we thought we had got rid of.

    We now need a government willing to fund a safe environment, better and healthier housing, more effective schools, an end to child poverty, and a health system that looks after the most vulnerable.  Business can support or oppose such goals, but – like the rest of us – business will benefit when they are achieved and suffer if they are not.

    Bryan Gould

    27 June 2018