• The Politics of Opposition

    For most of the time I was a British MP, my party was out of government – these were the Thatcher years, when it was hard for anyone else to get a look-in. As a front-bencher and shadow minister, I became familiar with the strategies required in a parliamentary democracy of being in opposition to a well-supported government.

    My colleagues and I settled quickly into the daily pattern of probing the day’s political developments for opportunities to embarrass the government, or at the very least to put it on the back foot. This meant a constant – and virtually daily – series of press conferences and media releases designed to keep the pressure on, with the twin objective of showing the government in a bad light and demonstrating that the opposition were on the ball and had policies that were superior to those of the government.

    The media rapidly came to expect and rely on this daily diet of political guerrilla warfare, and commentators sympathetic to our cause did their best to amplify and flesh out the points we tried to make; sometimes, our friends in the media did the job for us, by launching their own hit and run attacks on the government.

    But, after a while, we began to realise that were were getting nowhere with such tactics – and that the public seemed quickly to grow tired of our predictably critical responses to anything proposed by the government.

    The voters were inclined to let our efforts pass them by, dismissing them as just par for the course – “well, they would say that, wouldn’t they?” seemed to be the common response to our attacks. The harder we tried to land a blow on the government, the more they seemed to say that it was just more of the same.

    The bad news for today’s Opposition in New Zealand is that they seem to have reached a rather similar stalemate. Voters have become familiar with what they now see as the inevitable and expected riposte from an opposition spokesperson to any news item about a new government initiative.

    Even in instances where the government has proposed to remedy a long-standing default or deficiency, or to do something that is clearly long overdue in the general interest, an opposition spokesperson will pop up to say that it is “too little” or “too late” or “will cost too much” or “we would have done it better”.

    The lesson for politicians in opposition is that they must not be seen to be opposing just for the sake of it. They can all too easily be seen as bad-mouthing an idea or proposal, not because of its merits or otherwise but because of where it has come from.

    The lesson I and my colleagues learnt in Britain was that responding to the government in a more thoughtful and less partisan way was more likely to commend itself to the public – building the opposition’s image as responsible politicians and having the added advantage that, when effective critical points did need to be made, they were given more credence than they would have had if they were seen as just another stock standard and automatic response from an opposition determined to oppose, come what may.

    This conclusion may be a hard one to accept for Simon Bridges and his team, focused as they are on trying to get maximum exposure for a leader and a front-bench that has yet to make its number with the New Zealand public.

    But, it is in everyone’s interest that our parliamentary democracy, with all of its many strengths and virtues, should not be demeaned by a constant exhibition of the downsides of party politics at its worst. We all have an interest in good government – and that can sometimes mean that politicians should forbear from playing the party game if they – and we – can see that the government of the day is making a creditable effort to grapple with a long-standing problem or an important issue.

    Giving credit where it is due can be the best policy. Sometimes, less is more, and that is as true of opposition as it is of other good things.

    Bryan Gould
    9 September 2019

  • Where Money Comes From

    Most people would say, no doubt, that they have a pretty good idea of what money is. They live with the reality of money every day. It is what is needed to buy the necessities of life and to maintain a decent standard of living.

    You get money, they would say, by earning wages or selling something or getting a return on an investment or borrowing. There is no mystery about money; it just is – a constant part of the environment, like land or air or water.

    But they don’t usually stop to ask where money comes from or who decides how much money there should be in circulation or what society as a whole should do with it. Most would say, if pressed for an answer to those questions, that the government has a role of some sort – but that would only be part of the answer.

    The truth is a little more complicated, and surprising. The government does not make the decisions that matter on money. The institutions that have the biggest say on money matters are the banks.

    It is the commercial banks the are responsible for creating virtually all the money in circulation in our economy. And the amazing aspect of this is that they create the money literally out of nothing.

    They create money when they lend to their customers, usually on mortgage. What they lend is not actual money; it is merely a book entry by which they credit your account by the amount of the mortgage. They then charge you interest on the loan they have created.

    All very interesting, you might say, but does it matter? Well, yes.

    It matters because the amount of money in circulation has a big impact on our economy. For example, if too much money is created, we are likely to see a rise in inflation. And yet decisions on these issues are being taken in the commercial interests of privately owned banks, not in the public interest – and, in our case, the billions of profit made by those banks are then shipped back across the Tasman to their Australian owners and lost to New Zealand.

    The only intervention made in the public interest is by the Reserve Bank which attempts, with only limited success, to influence the amount of new money created by controlling its price through setting interest rates. They calculate that if borrowing is made more expensive, people will be less wiling to take out loans.

    But there is a further problem about the money created by the banks. Created and lent as it largely is on mortgage, it flows almost entirely into the housing market and thereby pushes up the price of housing – and it leaves a large proportion of the population in debt. At the same time, it fails to reach the places in the economy where it is most needed – to fund productive investment in the skills, technology, infrastructure and capacity essential to a modern economy.

    There is an increasing realisation that this is no way to build a strong economy. I have the honour to be the patron of a campaigning organisation called Positive Money, which is part of a worldwide network of bodies dedicated to reforming our monetary systems.

    Later this week, on Thursday, Positive Money will present a petition bearing over 5000 signatures to parliament. It calls on the Finance and Expenditure Select Committee to conduct an inquiry into our present monetary policy arrangements, and recommends that the Reserve Bank should have the sole right to issue money, so that the current system is replaced with something that serves our interests better.

    It is surely time that our politicians recognised their responsibilities and took back from the commercial banks the monopoly power they currently enjoy to create virtually all of our money. We might then get some much-needed investment in the things that really matter

    Bryan Gould
    4 September 2019

  • More Courage Needed

    Most economists agree that a currently slowing economy could do with some stimulus – and they would also agree that there is no shortage of infrastructure projects which could be brought to productive fruition with help from that stimulus.

    In view of the current practice of sub-contracting economic policy decisions to the Reserve Bank, many would no doubt see the Governor as the person best able to step on the accelerator; but Adrian Orr – having dropped interest rates to near zero – would almost certainly respond by saying that he has already deployed virtually all the weapons in his armoury.

    He might also say that we task governments and finance ministers with managing the economy, and that it is their responsibility to step up to the plate – and on that point, he is surely right. His responsibilities are met, under current arrangements, when he sets the Official Cash Rate; it is then up to Grant Robertson to decide what to do with the monetary situation thereby created.

    The first and most obvious avenue that opens up, with the cost of borrowing at such a low level, is a review of the government’s self-denying ordinance on increasing its borrowing. It makes no sense for the government to be reluctant to borrow, when it can do so at virtually no cost, and could thereby provide a shot in the arm for a slowing economy – as well as proceeding with economically beneficial infrastructure projects.

    Sadly, Labour governments have often been unwilling to borrow when it would make sense to do so, for fear of being accused of profligacy, but this is to allow their opponents to set the agenda. The Governor’s whole point in bringing interest rates down, after all, is to encourage business to borrow and, by investing, thereby to stimulate production, employment and spending throughout the economy – so why shouldn’t the government do what it is clearly hoped others will do?

    Only those who are ideologically opposed to the government taking a role in the economy could object. Why is borrowing by business to be encouraged as being good for the economy, whereas borrowing by government must be avoided?

    We can go further. The case for the central bank making interest-free credit available for the purpose of publicly funding essential investment has often been recognised at other times and in other places as sensible and beneficial – and, in current circumstances, with interest charges virtually non-existent, it is surely a no-brainer.

    It is hard to see what objection could be made. We are after all perfectly relaxed when the Reserve Bank presides over a monetary system in which the commercial banks are allowed to create almost all of our money out of thin air. We applauded the world’s monetary authorities when they practised “quantitative easing” – creating new money to strengthen the banks’ balance sheets following the Global Financial Crisis.

    The central truth about money – that we create it and that it is our servant, not our master – is well encapsulated in the famous statement by John Maynard Keynes that “whilst there may be intrinsic reasons for the scarcity of land, there are no intrinsic reasons for the scarcity of capital.”

    What Keynes is saying here is that we – that is, as a country or as a society – can do whatever we have the physical capacity to do and need not be inhibited by a lack of money because, if we are short of the money we need, we can create it – that a shortage of money is, for a sovereign country, never a reason for not doing something.

    Many other countries around the world have followed this insight – not least, today, Japan and China – but, at various other times, countries like the pre-war United States re-arming under Franklin Roosevelt, and depression-ridden New Zealand under Michael Joseph Savage, when we built thousands of state houses and brought the Great Depression to an end in the 1930s.

    When state-controlled Chinese interests buy up New Zealand enterprises, like Westland Milk Products, they pay for them using credit supplied to them cost-free by the Chinese central bank. We are too foolish and timid to use the same technique in order to protect our essential interests from foreign takeover – or just to get our economy moving again.

    Bryan Gould
    11 August 2019

     

     

     

  • What’s the Point of a Climate Change Emergency Declaration?

    Only those who close their eyes and minds to the evidence can still be in any doubt that we are facing a climate change crisis. The evidence is conclusive that the world is not only getting inexorably hotter, but also that the rising temperatures are creating a number of other adverse consequences.

    The natural balancing factors that keep our global climate in a stable state – especially the polar ice caps – are being lost and the result is increasing climatic instability – rising sea levels, coastal erosion, flooding, slips, severe storms – all of which threaten our existing living standards and, in the long run, the very survival of our life on earth. We are getting perilously close to the point of no return, a tipping point, from which there will be no recovery.

    Little wonder, then, that governments everywhere – both central and local – are increasingly being challenged to recognise and respond to the danger by declaring a climate change emergency in their areas of responsibility – and that is nowhere more true than here in the Bay of Plenty.

    Growing numbers of government entities – worldwide – have taken this step. But those who have done so or proposed doing so have been greeted with a chorus of disapproval from both cynics and sceptics.

    Some of the disapproving voices have been raised by those who profess to regard climate change as a “con”, though quite who would have an interest in – let alone the capability to foist upon us – such a worldwide body of misinformation is not clear.

    The more usual objection, however, comes not from sceptics but from cynics. What is the point, they ask, of something that is so clearly just “gesture politics”, a prime example of “virtue signalling”, and that in itself does nothing to address the problem, assuming it is real?

    That question deserves a considered answer. First, let us immediately concede that the declaration of a climate change emergency produces no automatic and positive outcomes. It produces no new resources or solutions and provides no new powers. Such a declaration has no legal or statutory force – in that sense, it changes nothing.

    But in other senses it is a significant step forward. It is, first, a formal and public recognition by those in authority that the issue is real and that the threat will only become more serious if it is not addressed.

    And, it signals a determination to take whatever action is necessary to avert the threatened damage to our planet and our way of life. That signal serves as a constant reminder to themselves of their commitment to act – but is also a message to those they serve, alerting them to the certain need for measures that may be unwelcome.

    Even then, however, a declaration of climate change emergency will mean nothing if it is not the prelude to practical consequences.

    It should, at the very least, put in place a climate change lens for public authorities through which all issues of public policy can be assessed. It should require the preparation of a detailed climate change agenda and action plan which can be rigorously implemented and adhered to.

    It should mean a list of tests and questions to which every element of policy and action – even those with apparently no impact on climate change – should be subjected. A declaration should, in other words, lead to real, hard-edged and committed steps to putting climate change at the forefront of policy-making; there is, after all, if the declaration is to have its full force and effect, no issue more important than the survival of our species and of our planet.

    There is also a role here, not just for government agencies, but for ordinary citizens. We must be ready to hold our elected representatives to account for the promises they make to us – through the declaration – to the effect that they have our interests at heart and are ready to do what it takes to protect us.

    And we should be prepared to show some understanding of the harsh reality – that the actions foreshadowed by the declaration may at times be inconvenient and costly. We are all in this together. It is a battle we must all fight.

    Bryan Gould
    7 August 2019

  • Democracy and Self-respect

    Democracy is important in many senses. It is first and foremost a form of government – famously described as, “government of the people, by the people and for the people”.

    It is then a process, which enables us to choose our government; that process, of elections and political parties, is often confused with democracy itself, but elections are merely the mechanism by which we deliver the form of government.

    Importantly, democracy also allows us to choose our leaders. Government and leaders are, for this purpose, two quite different concepts.  A government makes the laws and implements the policies by which we organise and govern ourselves.

    Our leaders, though, are those who represent us, who embody the values we hold and who bring them to life in both the national and international context.

    Democracy, in other words, allows us not only to elect those who govern us but also to choose those who represent and lead us. The former choice is very much a political one; the latter much more a personal choice – and we accordingly tend to choose those whom we like, with whom we identify and whose values we share.

    It is this aspect of democracy that is often overlooked, yet that provides us with one of its most valuable benefits. Observers from outside the country will be able to identify the true spirit and temperament of a democratic country by examining the personality of its leader or leaders.

    And for us at home, democracy produces leaders with whom we are happy and whom we trust. The choice we make tells us something about ourselves, and is therefore in some senses an exercise in self-respect. The more we respect ourselves, the greater the care we will take to elect leaders who represent us and who, in embodying our values, seem to deserve our respect.

    The personal qualities of our recent leaders in New Zealand tend to bear out this analysis. Whether it be the charm, warmth and bonhomie of a John Key or the compassion, concern for others and inclusiveness of a Jacinda Ardern, it can be argued that we have chosen leaders whose qualities not only resonate with us, but which are applauded by our friends overseas.

    There can be little doubt that Jacinda Ardern’s profile has greatly benefited New Zealand’s international standing. When our sportspeople perform well at international competitions – World Cups and the like – the good impression created by our prowess on the sports field reinforces the impression given of our national characteristics by those whom we elect to represent us in international forums.

    We can afford to feel proud of our leaders on the basis that they provide an accurate reflection of the qualities we value in ourselves. Democracy allows us both to demonstrate our own self-respect and the qualities on which that self-respect is based.

    We are not of course alone in choosing leaders who demonstrate qualities of which we can be proud. But our example does make it all the more puzzling that some of our friends overseas do not take the same opportunity.

    How can it be, we might ask, that the Americans can use their votes quite deliberately to choose a leader who, in the eyes of the world, does not deserve respect. Whatever other qualities he might have, Donald Trump’s lack of a moral compass – his tendency to lie, bluster and misrepresent, his readiness to divide the country by targeting particular groups as un-American, his treatment of women as playthings, his lack of respect for democracy and the rule of law – bespeaks an absence of, or at least peculiar definition of, self-respect on his part and, as a consequence, on the part of the American people as well.

    It is hard to believe that the Americans are willing to have their national identity established worldwide in terms of these qualities.

    Until they re-discover their sense of self-respect, the Americans will forfeit one of the most valuable aspects of democracy – the ability to demonstrate to the rest of the world the value they place on themselves. Given that we are not about to lend them Jacinda, we must hope that they can discover by themselves how to restore the foundations of what “made America great” in the first place.

    Bryan Gould
    22 July 2019