• A Merry Pohutukawa Christmas

    In 1962, a Rhodes Scholarship took me to Oxford University – and I didn’t get round to coming back home for another 32 years.  Those 32 years in England have of course left their marks, one of which is my abiding expectation that Christmas means cold temperatures and warm fires.  After being home again now for 23 years, I confess that I still can’t quite get used to Christmas on the beach.

    Perhaps it is the prospect of the cold and dreary months of January and February that makes the lights and music and good cheer of a northern winter Christmas so welcome and memorable.  The Christmas festivities play an important role in lifting the spirits when that is most needed.

    Barbecues and picnics in the sunshine, enjoyable as they are, don’t have quite the same buzz.  But there is one aspect of a New Zealand Christmas that never fails to please me – especially in the wonderful Bay of Plenty where I grew up.  I am always delighted to see the riot of colour when the pohutukawas blossom as Christmas approaches.  As we walk along our beach, the great trees that cling to and support the cliff faces are ablaze, and the tracks and roads are carpeted with red – and our own property boasts from every viewpoint centuries-old specimens of our own Christmas trees so that, truly, “every prospect pleases”.

    But, this year, that pleasure is tempered by the unwelcome realisation that “myrtle rust” might mean the demise of this spectacular witness to the Christmas spirit.  Like kauri die-back, this uninvited visitor from overseas threatens the survival of one of our most iconic species.

    Unlike the PSA outbreak that shook the foundation of our kiwi fruit industry, the incursion of myrtle rust does not seem to be attributable directly to human failings.  But all of these threats to our environment arise directly or indirectly from human intervention – and we are not just talking of plants and trees at risk, but of many of our birds and marine species as well; that should surely induce some serious consideration as to what aspects of human activity should be modified if we are to avoid irreversible damage to our natural environment.

    The first lesson we should learn is that it is the human need to move ourselves and our goods from one part of the globe to another that creates the risk.  We would probably not have to put up with myrtle rust or kauri die-back if the scourge had not been spread by humans.  This realisation should immediately impose an obligation to take more care than we currently do to avoid such blights.  At the very least, we are entitled to expect that our public services are adequately funded to provide the required protection.

    Saving money on biosecurity is surely a false economy and a short-sighted dereliction of duty.  As always, prevention is better and easier than cure, and our new government should immediately take the opportunity to make good the deficiencies in this respect of its predecessor.

    But there is a wider message as well.  It may not be possible to identify in every case precisely how and why diseases like myrtle rust, kauri die-back and PSA reached our shores, but we can be sure that these calamities occurred because human (usually economic) needs were thought to take priority over the survival of our environment and the species with which we share it.

    Our mindset has, in other words, been for far too long that “turning a buck” is the most important goal and will justify taking whatever risk is involved.   In this Christmas season, and while the pohutukawas still bloom, we have the chance to re-order our priorities.  What will it avail us to have more money in our pockets if the price we pay is that we live in an impoverished environment?

    We should all stop to think.  The fate of other species should not be relegated to the bottom of our priority list but should always be at the top of our minds.  The survival of our environment – its diversity, its integrity and inter-dependence, and, yes, its beauty – should not automatically take second place to the constant priority given to a single bottom line.

    Bryan Gould

    16 December 2017

     

     

     

    In 1962, a Rhodes Scholarship took me to Oxford University – and I didn’t get round to coming back home for another 32 years.  Those 32 years in England have of course left their marks, one of which is my abiding expectation that Christmas means cold temperatures and warm fires.  After being home again now for 23 years, I confess that I still can’t quite get used to Christmas on the beach.

    Perhaps it is the prospect of the cold and dreary months of January and February that makes the lights and music and good cheer of a northern winter Christmas so welcome and memorable.  The Christmas festivities play an important role in lifting the spirits when that is most needed.

    Barbecues and picnics in the sunshine, enjoyable as they are, don’t have quite the same buzz.  But there is one aspect of a New Zealand Christmas that never fails to please me – especially in the wonderful Bay of Plenty where I grew up.  I am always delighted to see the riot of colour when the pohutukawas blossom as Christmas approaches.  As we walk along our beach, the great trees that cling to and support the cliff faces are ablaze, and the tracks and roads are carpeted with red – and our own property boasts from every viewpoint centuries-old specimens of our own Christmas trees so that, truly, “every prospect pleases”.

    But, this year, that pleasure is tempered by the unwelcome realisation that “myrtle rust” might mean the demise of this spectacular witness to the Christmas spirit.  Like kauri die-back, this uninvited visitor from overseas threatens the survival of one of our most iconic species.

    Unlike the PSA outbreak that shook the foundation of our kiwi fruit industry, the incursion of myrtle rust does not seem to be attributable directly to human failings.  But all of these threats to our environment arise directly or indirectly from human intervention – and we are not just talking of plants and trees at risk, but of many of our birds and marine species as well; that should surely induce some serious consideration as to what aspects of human activity should be modified if we are to avoid irreversible damage to our natural environment.

    The first lesson we should learn is that it is the human need to move ourselves and our goods from one part of the globe to another that creates the risk.  We would probably not have to put up with myrtle rust or kauri die-back if the scourge had not been spread by humans.  This realisation should immediately impose an obligation to take more care than we currently do to avoid such blights.  At the very least, we are entitled to expect that our public services are adequately funded to provide the required protection.

    Saving money on biosecurity is surely a false economy and a short-sighted dereliction of duty.  As always, prevention is better and easier than cure, and our new government should immediately take the opportunity to make good the deficiencies in this respect of its predecessor.

    But there is a wider message as well.  It may not be possible to identify in every case precisely how and why diseases like myrtle rust, kauri die-back and PSA reached our shores, but we can be sure that these calamities occurred because human (usually economic) needs were thought to take priority over the survival of our environment and the species with which we share it.

    Our mindset has, in other words, been for far too long that “turning a buck” is the most important goal and will justify taking whatever risk is involved.   In this Christmas season, and while the pohutukawas still bloom, we have the chance to re-order our priorities.  What will it avail us to have more money in our pockets if the price we pay is that we live in an impoverished environment?

    We should all stop to think.  The fate of other species should not be relegated to the bottom of our prioprity list but should always be at the top of our minds.  The survival of our environment – its diversity, its integrity and inter-dependence, and, yes, its beauty – should not automatically take second place to the constant priority given to a single bottom line.

    Bryan Gould

    16 December 2017

     

     

     

    In 1962, a Rhodes Scholarship took me to Oxford University – and I didn’t get round to coming back home for another 32 years.  Those 32 years in England have of course left their marks, one of which is my abiding expectation that Christmas means cold temperatures and warm fires.  After being home again now for 23 years, I confess that I still can’t quite get used to Christmas on the beach.

    Perhaps it is the prospect of the cold and dreary months of January and February that makes the lights and music and good cheer of a northern winter Christmas so welcome and memorable.  The Christmas festivities play an important role in lifting the spirits when that is most needed.

    Barbecues and picnics in the sunshine, enjoyable as they are, don’t have quite the same buzz.  But there is one aspect of a New Zealand Christmas that never fails to please me – especially in the wonderful Bay of Plenty where I grew up.  I am always delighted to see the riot of colour when the pohutukawas blossom as Christmas approaches.  As we walk along our beach, the great trees that cling to and support the cliff faces are ablaze, and the tracks and roads are carpeted with red – and our own property boasts from every viewpoint centuries-old specimens of our own Christmas trees so that, truly, “every prospect pleases”.

    But, this year, that pleasure is tempered by the unwelcome realisation that “myrtle rust” might mean the demise of this spectacular witness to the Christmas spirit.  Like kauri die-back, this uninvited visitor from overseas threatens the survival of one of our most iconic species.

    Unlike the PSA outbreak that shook the foundation of our kiwi fruit industry, the incursion of myrtle rust does not seem to be attributable directly to human failings.  But all of these threats to our environment arise directly or indirectly from human intervention – and we are not just talking of plants and trees at risk, but of many of our birds and marine species as well; that should surely induce some serious consideration as to what aspects of human activity should be modified if we are to avoid irreversible damage to our natural environment.

    The first lesson we should learn is that it is the human need to move ourselves and our goods from one part of the globe to another that creates the risk.  We would probably not have to put up with myrtle rust or kauri die-back if the scourge had not been spread by humans.  This realisation should immediately impose an obligation to take more care than we currently do to avoid such blights.  At the very least, we are entitled to expect that our public services are adequately funded to provide the required protection.

    Saving money on biosecurity is surely a false economy and a short-sighted dereliction of duty.  As always, prevention is better and easier than cure, and our new government should immediately take the opportunity to make good the deficiencies in this respect of its predecessor.

    But there is a wider message as well.  It may not be possible to identify in every case precisely how and why diseases like myrtle rust, kauri die-back and PSA reached our shores, but we can be sure that these calamities occurred because human (usually economic) needs were thought to take priority over the survival of our environment and the species with which we share it.

    Our mindset has, in other words, been for far too long that “turning a buck” is the most important goal and will justify taking whatever risk is involved.   In this Christmas season, and while the pohutukawas still bloom, we have the chance to re-order our priorities.  What will it avail us to have more money in our pockets if the price we pay is that we live in an impoverished environment?

    We should all stop to think.  The fate of other species should not be relegated to the bottom of our priority list but should always be at the top of our minds.  The survival of our environment – its diversity, its integrity and inter-dependence, and, yes, its beauty – should not automatically take second place to the constant priority given to a single bottom line.

    Bryan Gould

    16 December 2017

     

     

     

     

  • Mike Hosking’s Special Pleading

    Mike Hosking’s musings on current affairs usually follow a fairly predictable course.  But his piece in Wednesday’s Herald on the new government’s attempts to help those in need – the children living in poverty, pensioners struggling to stay warm in winter – took a rather different tack.

    He seemed to concede that the attempts were worthwhile, and might even work up to a point.  His case against them was that they were poorly directed and not adequately focused – the spending was, he said, “too loose”.   The help would go, he objected, to everyone and not just to the needy.

    He had earlier in the same piece drawn our attention to the fact that the help was being funded with the money saved from the tax cuts “we didn’t get” – spending and no tax cuts was, he said, typical of centre-left governments whereas centre-right governments offered tax cuts as a reward for national economic success.  There could be little doubt as to which of these options he favoured, though he didn’t quite get round to conceding that the majority of voters had rejected the prospect of tax cuts in favour of greater spending on better health services and education and on the alleviation of poverty.

    Now, Mike Hosking is, as the blurb that precedes his article in the Herald reminds us, one of our most successful broadcasters – and one of the most ubiquitous as well.  He must be presumed at least to know what he is talking about and to have thought through the opinions he offers us. So, when he tells us that directing help to those in need will be ineffective because it is “too loose” and poorly directed, and implies that tax cuts would have been preferable, we should sit up and take notice.

    But, hang on a minute.  Isn’t there a pretty obvious flaw in his reasoning?   If a government finds that it has a bit of money to spare, what is more likely to achieve the outcomes preferred by the voters – tax cuts, or spending to boost the incomes of poor families and to improve the level of critical services?

    The answer is surely a no-brainer.  There is nothing less well directed than an across-the-board tax cut and, if the criterion that matters is that the help must be properly focussed, the last thing you would offer is a tax cut which would fail that test at the first hurdle.  Offering a tax cut across the board will be so poorly directed that it will guarantee that a disproportionate share of the benefit goes to the better-off, and that the poor, typically enough, have to make do with the leavings.

    Those who gain the most from tax cuts are those who pay, usually by virtue of their large incomes and wealth, the most tax.  To use the available money in this way is to ensure that the benefits do not go primarily to those in need but to the well-off – and, in terms of what would most benefit the economy, it is obvious that money in the pockets of the poor will get spent and will boost economic activity, whereas tax cuts for the rich will just end up  enlarging their wealth and the income they can make from it and will do little to stimulate the economy.

    Mike Hosking purports to be making a value-free critique of the new government’s commendable efforts to help those in need.  But if we accept his argument that a clear focus and direction should be the cardinal feature of such attempts, then the last policy we should consider is an across-the-board tax cut.

    We are forced to the conclusion that Mike Hosking’s conclusion is not the product of careful and value-free reasoning but is rather the confused  product of a lazy manifestation of, at best, gut feelings (aka political prejudices).  We are entitled to expect better from “one of our most successful broadcasters” – and certainly from one who would no doubt benefit particularly from the tax cuts he advocates.

    Bryan Gould

    14 December 2017

  • Fairy Stories Are Not the True Explanation

    Shane Jones’ plan to help unemployed youngsters, particularly Maori youth in Northland, to join the workforce has received a mixed response.  Everyone agrees that something needs to be done to help NEETs (young people Not in Employment, Education or Training – there are so many of them that they now have their own acronym) but the proposal has predictably brought forth the usual stories about young people being workshy, drug dependent or ill-prepared to do a day’s work.

    The story usually follows a familiar course.  An employer is found who is prepared to say that he has jobs available but has been unable to find anyone to take them up.  The story is then repeated, with no doubt a gratifyingly substantial dollop of publicity for the originator, by high-paid broadcasters, comfortably ensconced in a television or radio studio – who, true to form, enjoy using phrases such as “let’s get them out of bed” – and is then peddled by politicians who will seize any chance to argue that youth unemployment is not their fault or responsibility.

    On this latter point, let us be in no doubt.  John Maynard Keynes established more than 80 years ago that unemployment is not the fault of the unemployed (through, for example, demanding too much by way of wages) but is brought about by failures of policy.  It is the responsibility of policymakers, he said, to run the economy so that there is sufficient demand for labour; without sufficient demand (something over which the unemployed have no control) they will remain jobless, no matter how keen they are to work.

    Little attempt is made to check whether the employers telling the story are offering a genuine job, properly valued, paid and permanent, or whether the attitude is instead that a NEET should be grateful for whatever is offered and that young people’s labour is just another commodity, to be picked up at knock-down rates, and dispensed with as soon as possible.

    All too often, one fears, the attitude is that the offer of a job should be viewed as an act of charity or generosity, rather than an economic transaction agreed between equals, with a commitment on both sides to fair value.  There is no recognition that for most young people a job is the basis on which, potentially, they can begin life as a full member of society, earn a living, pay their way, strengthen their sense of self-worth, and plan a future.  It is not just a further opportunity for society to drive home to them how little they are worth, a hoop through which they have to jump so as to land at the bottom of the pile.

    The repetition of such stories reveals more about those telling them than about those who are their subjects.  The stories are usually told with the most relish and gusto by those in secure and well-paid and reasonably interesting jobs, and by people whose good fortune means that they don’t have the least idea about the lives of those they presume to denigrate.

    The purpose of such stories is usually to allow the tellers to wash their hands of the issue of youth unemployment, and to comfort themselves and excuse their lack of concern, by telling each other that the victims have no one to blame but themselves.  All too often, as well, there seems to be a political motive – to establish, against all the evidence, that the market economy serves everyone’s interests and that it applies a moral judgment so that it will reward those who deserve it and that only the ne’er-do-wells will fail to prosper.

    In any event, the popularity and frequency of such stories is further and depressing evidence of how divided and fractured we have become as a society.   Those who are concerned about our future, and especially the future of those who seem to struggle from the outset, would do well to subject such convenient explanations of their struggles to careful scrutiny.  To blame the strugglers themselves for their difficulties is quite literally to add insult to injury. We can do without such self-serving nonsense.

    We will all benefit from living in a healthier and better integrated society oif we take the trouble to understand how the pressure points arise.

    Bryan Gould

    6 December 2017

     

     

     

     

     

     

  • Dealing with Housing Demand and Bank Lending

    Any relaxation of the Reserve Bank’s restrictions on bank lending for house purchase will be welcome to those who would then need a smaller deposit than is currently required by the Reserve Bank’s loan-to-value ratios.

    But how many will pause to reflect that this good news for today’s purchasers may simply mean that the problems that have afflicted our housing market could – if unrestrained – become even more entrenched for the future?   And will our policy-makers learn from the evident success of loan-to-value ratios in restraining the relentless inflation in house prices?

    It is widely accepted that New Zealand’s housing situation, and the policies applied to deal with it, are a total mess.  The confusion arises partly because we are faced with two problems – problems that are linked in some respects but are actually two quite different phenomena.

    The first is the problem of homelessness, and the second is the problem of unaffordability.  The first problem is the easier to explain and redress; it arises by virtue of a simple failure to build enough houses, but is exacerbated by the incessant rise in house prices and, as a consequence, in rents.

    The new government is gearing up, quite rightly, to deal with the long-term failure to build new houses; they recognise that the missing houses will not be provided by private property developers (whose interests lie at the higher end of the market where big profits are to be made), and that the houses will be built only if the government steps in.

    The constraints the government faces in taking this on do not arise because they don’t have the money – Michael Joseph Savage showed in the 1930s that a determined government can always find or create the money to build new assets – but because there could be shortages of the necessary materials and skilled labour.

    A solution to this problem will require government and private industry to work together on an agreed industrial strategy.  There can be little doubt that building the required houses, at an affordable price, would be a major step towards resolving the homelessness crisis.

    But, even if more houses are built, what further action is required, particularly in respect of the other issue – that of unaffordability?  Homelessness arises not just because there is a shortage of houses, but because rents have risen so sharply.  It is often the rise in rents that has left young families homeless.

    It is at this point that the homelessness and affordability crises coincide.  Rents have risen because speculators have been able to borrow from the banks almost without limit in order to buy up houses (often sold at knock-down prices as a consequence of mortgagee sales) and they have then raised rents on those houses so as to make a fat return on their investment.

    The Reserve Bank’s loan-to-value ratios, by making it harder for speculators to borrow, have played a valuable part in restraining this unwelcome development.  Interestingly, the new government has made a similar analysis of the problem, as shown by its prohibition of foreigners buying existing houses.

    The effect of this prohibition is to remove an important element of extra demand from the housing market – it has, in other words, exactly the same effect as the Reserve Bank’s restrictions on borrowing.  Both the government and the Reserve Bank, in other words, have at last recognised that the problem with our housing situation is not just one of inadequate supply but also one of excessive demand, caused as much by excessive bank lending as by the introduction of additional money from overseas.

    When speculators take advantage of the banks’ willingness to go on lending to them, and bring this excessive demand to the housing market, their aim is always the same – to create, and derive untaxed capital gains from, an asset inflation whose effect is to make housing impossibly expensive for our young families.  This self-serving pursuit of profit by the banks and speculators (whether from home or overseas) should no longer be allowed to distort our housing market, to the great disadvantage of Kiwis seeking a home of their own. At least the government and the Reserve Bank are agreed on what the problem is and what needs to be done.

    Bryan Gould

    1 December 2017

     

     

     

     

     

     

  • Recession? Surely Not!

    I confess I did a double-take when I saw the headline “Recession Likely Under Ardern” this week.   I wondered what new development or brilliant piece of analysis could have led to such a rush to judgment.

    All became clear, however, when I looked further.  The piece that was headlined in this way was written, it seems, by one Jared Dillian – described as a “US-based Lehman Brothers trader” – and, since it was the collapse of Lehman Brothers that triggered the Global Financial Crisis, one must accept that Mr Dillian might know a bit about what causes recessions.

    Furthermore, the piece was published on the Forbes Magazine website; Forbes magazine, of course, is the house journal of the richest people in the world and famous for ranking them in terms of who is the richest, so one can expect that their readership might be easily disconcerted by any thought that a new government might prove to be somewhat interventionist.

    My initial reaction was one of amusement at the transparency of the motivations of those involved in concocting such a piece, but my amusement quickly turned to exasperation.  A further perusal of the article revealed that it was based on literally nothing of substance.  The best Mr Dillian could come up with was that a government that sought to make it more difficult for foreigners to buy existing housing and that limited the numbers entering the country would be seen as putting up the shutters – and that could then have a depressing effect on economic activity.

    An obvious rejoinder is that our new government is grappling with a deep-seated problem inherited from its predecessor – and that problem is one of a raging asset inflation that has made decent housing both unavailable and unaffordable for many of our young families.  The limits placed on foreign purchasers are merely a sensible attempt to damp down the demand that is fuelling an unstable asset inflation, the dangers of which and the risks to economic stability they pose should surely be apparent to Mr Dillian, given his experience with Lehman Brothers.

    Interestingly, while Mr Dillian professed to see the threat of recession implicit in the new government’s policy stance, other commentators hostile to a left-of-centre government are quick to point up what they see as the supposedly inflationary consequences of measures like raising the minimum wage and more spending on health and education.  The two sets of right-wing commentators might have more credibility if they could only get their acts together – they can’t have it both ways.

    I then further noted that the Forbes magazine piece had been seized on by the National Party and given wide circulation in social media – and all this before the new government has had time to draw breath.  Then the penny dropped (don’t ask me whether that is likely to be recessionary or inflationary!)

    It struck me that the episode tells us something important about the neo-liberal hegemony which has dominated politics and economics in the west for the past decade or two.  The favourite tactic of those who would defend the inevitable tendency of “free-market” policies to concentrate wealth in just a few hands is to warn that any attempt to frustrate those market forces will threaten the prosperity and living standards of ordinary people.

    So, a huge effort is made to deter any such attempt and that means that we are constantly assured that a government that tries to intervene to produce fairer and better outcomes will inevitably produce adverse outcomes.  That effort is not limited by national boundaries – the attempt to stop government from intervening in the operations of the “free market” is made these days on a global scale.

    To be successful, any such attempt to persuade people of the unlikely proposition that governments that try to produce fairer outcomes are the problem rather than the solution must be coordinated – and the only way of doing that on the required scale is to engage the support of international media.

    The essence of the attempt is not to win the argument – hence the lack of any substance in Mr Dillian’s piece – but to dominate the headlines.  A headline that links “recession’ and “Ardern”, even if there is nothing to support it, is a victory of a sort because it confirms in the public mind that there is always something risky about electing a left-of-centre government.

    The Forbes magazine article was not in other words really aimed at a New Zealand readership, although that did not stop New Zealand politicians and their supporters from trying to take some advantage from it.  It was aimed instead at an international readership, and was intended to offset the news that a left-of-centre government had taken office in New Zealand.

    In the absence of any facts or persuasive argument to support it, the Dillian hatchet job is best seen as just another manifestation of the constant campaign to discredit anything at all that might encourage voters to use their power to say to the fat cats, in whatever country, “enough is enough!”

    Bryan Gould

    23 November 2017