• Brexit Explained

    For most New Zealanders, Brexit remains an impenetrable mystery – and, as the saga lurches from one crisis to the next, (most recently, with the rejection of Theresa May’s “exit deal” by the House of Commons) – the British are equally at a loss.

    As someone who was – as both diplomat and politician in Britain – closely involved with these issues over a period of decades, I have the temerity to attempt an explanation of why they are so confused and difficult to resolve.

    What is called “Brexit” in fact covers three separate but obviously linked issues. First, is the decision by a majority in the 2016 referendum that the UK should leave the European Union. Secondly, is the exit deal that has to be negotiated with the EU – that is, the terms on which the UK will be permitted to leave. And thirdly, there is the “political declaration” – an agreed statement by the UK and the EU as to how they see their future post-exit relationship developing.

    Much of the difficulty that the ordinary public, in both the UK and New Zealand, has in understanding the issues arises because various parties with conflicting objectives have a common interest in jumbling together these three separate issues.

    To take the referendum decision in favour of leaving the UK first. That decision must be regarded, whether one agrees with it or not, as the definitive judgment by the British people on their more than 40 years experience (not a snap judgment therefore) of being part – not of “Europe” but of a particular organisation that has evolved to become the European Union.

    That judgment was a negative one, and one that only the people could make. They may be told by “experts”of various sorts that they got it wrong, that they “don’t understand” and that they were misled. But only they had the day-today experience over decades of seeing their jobs disappear, of feeling that the country they lived in was no longer their own because all the decisions that mattered were made in Brussels, of seeing their streets and neighbourhoods, schools and health clinics taken over by immigrants from Eastern Europe.

    It is no accident that the pro-Brexit votes were delivered in large numbers in the north of England rather than in the more affluent south where people were less exposed to the daily reality of these downsides.

    It is not as though the facts do not support the popular concerns. Over the period of EU membership, Britain’s manufacturing industry was decimated and Britain’s trade languished in perennial deficit – so much for the supposed economic benefits of EU membership – and that is to say nothing of the large taxpayer-funded annual subscription paid into EU coffers.

    These consequences had been forecast by commentators such as myself at the point when Britain joined what was then the Common Market in 1973. It was clear to us that Common Market membership would require Britain to give up its access to preferential treatment for its manufactures in Commonwealth countries and to efficiently produced food and raw materials from those same countries, and to face up to direct competition from German manufacturing in their own home market – with consequent damage to British living standards, trade and manufacturing.

    Those who oppose Brexit, however, choose not to recognise these consequences of EU membership and have focused instead on trying to overturn the referendum decision. Both the EU itself and Remainers in Britain have sought to discredit the case for Brexit by praying in aid the quite separate issue of the difficulties posed in the way of withdrawal. It has served both their purposes to discredit the whole idea of Brexit – (an issue that had surely been resolved by the referendum) – by emphasising the problems raised by the process of withdrawal.

    For the unelected EU bureaucrats, it has been necessary to show to other members that withdrawal is not an easy option. Their concern has been to deter others (of whom there are many) who are unhappy at the way that the European Union has operated and, in particular, has weakened and in some cases destroyed the economies of countries like Greece, Spain and even Italy.

    They have been encouraged to make withdrawal as difficult as possible by those elements of domestic opinion which retain the hope of re-opening the whole issue. Neither seems to realise that the difficulties placed in the way of withdrawal will simply confirm to the British people the value of getting out of an entanglement that threatens to throttle them.

    Similar forces have been at work in the difficulty Theresa May has had in securing support from the British Parliament for her exit deal. Her problem has been the convergence of very different interests on the part of those who have their own (differing) reasons for resisting the exit deal. There are the members of her own party and of Parliament in general who oppose Brexit and the referendum decision and want to see it overturned. Conversely, there are also many in her party who believe that her exit deal does not go far enough in breaking Britain’s links with the EU. Add to these, the normal Parliamentary opposition from the Labour Party and the concerns of the DUP – the Government’s coalition partners from Norther Ireland – and throw in the ambitions of those in her own Party who want to replace her as leader and you have a toxic mixture of anti-deal votes.

    The dilemma now facing the British Parliament is that no next step is likely to resolve the problem. Replacing Theresa May as Prime Minister or the Tories as the government would leave the Brexit situation exactly where it is now – that is, unresolved. A second referendum would be no better, representing, as it would, the additional downside that it would be seen as a denial of the democratic decision taken by British voters and reinforcing the sense they had from the outset that their voices were not being listened to.

    The short-sighted decision taken in Westminster means that the most likely outcome is a no-deal exit – one that is undoubtedly risky and potentially damaging. Those who have engineered it have no one to blame but themselves.

    Bryan Goud
    16 January 2019

     

  • The Meaning of Inequality

    When I stepped down as Vice-Chancellor of Waikato University in 2004, I was fortunate enough to spend a few months in Oxford as a Visiting Fellow of Nuffield College. The Warden of the College at that time was Professor A.B. (later Sir Tony) Atkinson, who was a renowned economist and the world’s leading authority on inequality, its causes and consequences.

    The Nuffield College magazine has, in its latest issue, carried a range of articles in his memory and as a tribute to the work he did. The issue is entitled “Inequality Is A Choice”, reflecting one of his principal conclusions – that inequality doesn’t just happen but is the consequence of deliberate choices made by policy-makers, choices either to act or not to act.

    Sir Tony was able to show that levels of inequality vary from country to country and from time to time. Those countries with governments that put in place measures to counteract inequality exhibit, not surprisingly, a smaller degree of inequality than those where the interests of the wealthy and privileged prevail without restriction.

    He demonstrated that (as the French economist, Thomas Piketty, also pointed out) a market economy will show a natural tendency for the rich to get richer and for the poor to get (comparatively) poorer. This because the return on capital is almost always faster than the growth of the economy as a whole, so that an increasing proportion of any new wealth created goes to those who already have money. We can see this exemplified in the increasing share taken by profits and the decreasing share of wages in our economy.

    It is only when a government (as in the case of the post-war Labour government in Britain) sets out to change this trend that inequality ceases to increase. If governments are relaxed about, or perhaps even welcome, this trend, (as they have recently in New Zealand) then inequality grows.

    Sir Tony was of course talking about economic inequality and accordingly focused on matters of comparative wealth and income and the shares of both going to different parts of society. But there has been a growing recognition over recent times that inequality is not to be defined only in economic terms, but is equally important in other senses as well. Someone who is homeless or who has limited educational opportunities or access to health care or whose working day is organised to suit his employer without regard for his own interests can also be regarded as less than equal with his more fortunate fellow-citizens.

    And there is increasing interest in topics that are seen to be related to inequality – topics such as the value (other than the monetary value) we give to certain kinds of contributions to society as opposed to others. How, for example, do we rate the contributions of successful business leaders against those of top sportspeople, or brilliant musicians or painters, or of caring parents or solid citizens and volunteers? And that leads us to recognise that there is a range of policies, not just economic policies, policies such as the rights of workers in the workplace, that will directly influence the level of inequality.

    Equality (and inequality) have often been seen as inevitably linked to issues of individual freedom in the sense that greater equality, it is argued, can be achieved only by limiting the freedom of those who are doing better than others – it is a topic on which I have myself written. Current approaches to this issue show a greater recognition of the truth that someone whose value to society is not properly understood or rewarded is not only less equal but also less free than he would otherwise be. Freedom, in other words, is not just an abstract concept but has a real practical meaning; it means the power and ability to do things, to realise potential and to make choices.

    A society in which only a privileged few have choices while everyone else has to “like it or lump it” is not only unequal but also less free. The best way to test the level of freedom in a society is to assess the degree of freedom available to those who might be regarded as the least free. We have a long way to go – and may even be heading in the wrong direction – if we are to claim on that basis that we are free and equal.

    Bryan Gould

    15 January 2019

     

  • Lachie

    The turn of the year is usually a joyous time for my wife and me. We celebrate our wedding anniversary at that time – this year was our 51st – and there is the New Year and its promise to look forward to. This year, however, has been a little different. We have just learned that our ten year-old West Highland White terrier, Lachie, has an incurable cancer and has only a few weeks to live.

    Having pets always, of course, brings its sadness. Lachie is our sixth Westie – they have been with us for almost all of our married life. His five predecessors – Dougal, Angus, Fergus, Bridie and Jock – are all buried on the hillside behind our house – and the passing of each of them has brought its particular heartache.

    In their cases, however, their deaths occurred suddenly and unexpectedly – causing grief and shock – but Lachie’s case is different. We are steeling ourselves to watching our little friend decline over the next weeks; I am not looking forward to seeing his bright eyes dim.

    We will of course provide him with all the love and comfort we can muster. He is for the time being in good spirits. He continues to monitor and conform to the daily routine that is so important to dogs. He knows to the minute when his meal-times are, and when it is time for his regular walks on the beach. He gets excited, for reasons known only to him, when I dive into our swimming pool and he watches me carefully until I re-surface.

    And he continues to discharge his self-appointed task of patrolling the boundaries of our property, repelling all invaders by land and air. Small birds are tolerated but anything larger, and especially hang gliders and planes, must be chased away, with much barking and springing into the air.

    He is constantly teased by the wekas that peck their way across our front lawn. The wekas are very relaxed about being chased by Lachie; they know precisely where their escape routes are and they are confident that they can out-run him. Lachie knows this as well; it is the fun of the chase that he enjoys. He has no intention or realistic prospect of catching them and wouldn’t know what to do with them if he did.

    His most important role, though, is as our constant companion. He is never more than a step or two away. He always joins us for morning coffee or afternoon tea or a pre-dinner aperitif and is always ready to accept a titbit – a fragment of a home-cooked cheese biscuit is his favourite . We enjoy spoiling him, now more than ever.

    He is not a great conversationalist but he has an uncanny ability to interpret what we say to him and to respond appropriately. We greatly enjoy our “conversations” with him.

    My wife and I are both cancer survivors. We have some idea of the trials and tribulations he now faces. The one great comfort to us is that he has no idea that he is ill and that his days are numbered. For him, life is still good; when that is no longer the case, we will not let him suffer and we will know what to do.

    When that time comes, we will reflect that the years of pleasure, of loyalty, affection and companionship he gave us far outweigh the grief we will then feel. Until then, we will show him the love that he so richly deserves. Only when he goes, no doubt, will we fully understand the gap in our lives that he has left behind.

    Bryan Gould
    5January 2019

     

  • No More One-Man Bands

    As we are, and should be, constantly reminded, democracy is about more than elections. An election is simply a means of deciding which of perhaps several contenders should assume the powers of government. But the important part of the democratic process is what then happens.

    The questions that then arise are as to the actual identity of the winners, what powers do they have, who shares in the exercise of those powers and what are the limits to them. In most democracies, the answers are not as clearcut as most people assume. Each democracy will have rules so that those exercising power are subject to checks and balances. Without such provisions, we are, as Lord Hailsham famously observed, in danger of falling victim to an “elective dictatorship.”

    We should never forget that Hitler was elected and then established a dictatorship by dismantling all of the constitutional provisions that limited his power. Many of Donald Trump’s critics fear that he is engaged in a similar process, with his attacks on a free press and an independent judiciary and his apparent belief that, as President, he can do anything he likes.

    Whatever the truth of that, we have – in New Zealand – put in place our own measures to make sure that a person or a party that wins an election does not exercise unbridled power. The whole point of MMP was to make sure that a party that gained a bare majority of votes and seats did not assume that it could ignore every other interest and simply impose its will on every one else.

    One of the most obvious consequences of the shift to MMP is that coalition government becomes much more likely. Many people have not yet adjusted to that reality and persist in believing that the party with the greatest number of votes and /or seats should, even if they and their allies fall short of a majority, form the government and exercise all the powers of a government.

    But the shift in perception that is required as a consequence of MMP dos not stop there. Many people who regard themselves as democrats secretly yearn for what they might describe as a “strong” leader, by which they mean a Prime Minister who calls all the shots, whips everyone into line, and “tells it like it is”.

    But, in a Wesminster-style democracy such as ours, that is not, and should not be, the role of a Prime Minister. As Edmund Burke had it, a Prime Minister, in our system, is primus inter pares – the first among equals. That means that he or she should give proper respect and responsibilities to fellow ministers and allow them to speak for themselves on their areas of particular responsibility. In a proper democracy, in other words, power is not to be exercised by a single person, but should be shared with others in a collective exercise.

    We may have become accustomed, as in the case of a Muldoon or a Key, to a “one-man band”, but in a modern-day coalition government we should expect and welcome a more collegial approach. We need not expect to see our Prime Minister speaking for the government every day or on every issue.

    Jacinda Ardern has, on occasion, paid a price for sharing power in this way, particularly when the minister concerned is inexperienced and perhaps not up to taking the required responsibility. But her approach will strengthen her government in the long term and helpfully reduce the pressure that she must otherwise bear alone.

    As John Roughan has recently pointed out, the feminisation of politics has become a familiar and welcome phenomenon, not least in New Zealand. We can therefore expect to see a much less macho approach to government in the future and to see less of a single dominating figure – and we will all be better off as a result.

    Bryan Gould
    29 December 2018

  • A Well-being Budget

    The announcement by the Minister of Finance that the budget he presents next year will be what he described as a “well-being” budget may have been dismissed by Simon Bridges as of no interest and little consequence but it represents, on the contrary, an important break with what has gone before.

    Political announcements about budgets may lead to eyes glazing over for most people, but this one is different. We have had years, not to say decades, of budgets that have focused on the state of the government’s books rather than the health of the wider economy in which we all live and whether that economy is delivering what it should for the people as a whole.

    It was always a curious misapprehension that the main responsibility of a Minister of Finance was to balance the government’s books. The government’s finances are only one part – an important one admittedly – of the total economy; it is perfectly possible (and indeed has been, over a long period, par for the course) to see a preoccupation with the government’s bit of the economy being accompanied by a disappointing performance by all the other bits, the totality of which matters greatly.

    There is little comfort to be gained from a government surplus (so loudly trumpeted over recent years) if at the same time the country is failing to pay its way (as evidenced by a perennial trade deficit). And the point becomes even more telling if the indications about future performance, such as a sluggish growth in productivity, suggest that there is little chance of the real economy shifting up a gear.

    It is therefore a welcome and refreshing change to see a Minister of Finance taking account of how the economy is performing in a wider sense and being willing to look beyond the accountant’s obsession with the financial out-turn in just one part of the economy.

    What, under the new approach now announced, is meant by a “well-being” economy? The first point to register is that it does not imply, as some critics are bound to proclaim, that the government is about to let go control of the government’s finances. On the contrary, the latest Treasury report shows the government’s finances in very good shape, with a healthy surplus.

    What Grant Robertson is saying, however, is that there are other measures of economic performance that should also come into the reckoning. In his willingness to take this wider view, he is, incidentally, reflecting an increasing international interest in measurements other than Gross Domestic Product to tell us about how well we are doing. Many countries are beginning to look at various forms of what might be called “happiness” indices as an alternative to GDP and as a guide to what economic success really means.

    But Grant Robertson has gone further, and has spelt out what he thinks are the important elements of “well-being” that should be taken into account in framing his next budget – and he focuses particularly on those elements that he believes have received inadequate attention in the past.

    He cites, for example, the mental health of our people, particularly young people, and he looks specifically at how we are responding to the environmental challenges we face. He also points, more orthodoxly, to the standards of service delivered by public services such as education, health care and public housing, and indicates correctly that child poverty is a major negative when assessing the economy’s performance.

    A “well-being” budget will, he says, focus on outcomes, and not just on inputs and outputs. It will take a “whole of government” approach to issues such as the skill training of our workforce, the regional disparities we suffer, and the particular needs of Maori and Pasifika – all of which have been neglected to the general detriment for far too long.

    A “well-being” approach promises a welcome change in the way we identify and focus on our economic goals; that change may be the key to doing better than we have so far managed. More power to Grant Roberson’s elbow – his commitment to well-being may well prove to be a welcome New Year present for us all.

    Bryan Gould

    24 December 2018