• The Battle for National’s leadership

    Changing the leader can be one of the most difficult things a political party can do in a democracy, as the National party is perhaps about to find out.

    The process they may be about to embark upon could well be fraught with difficulties; it seems unlikely that they will find it as straightforward as Labour did last year.

    To be fair, the luck very much ran Labour’s way last year.  An accommodating, not to say selfless, leader in Andrew Little, reached his own conclusion that it was time to go.  The Labour party had already identified, in Jacinda Ardern, a deputy leader who could succeed to the leadership with a minimum of angst.  As it turned out, she was able to resolve one of the most difficult potential conflicts faced by political parties – how to choose a leader who will command the support and loyalty of party activists  as “one of us”, while at the same time appealing to the wider electorate.  All too often, a potential leader will commend himself or herself to the party faithful but will be a complete turn-off for the non-political public.

    It was Labour’s good fortune that their leader-in –waiting was not only the obvious and widely supported candidate from within the party, but that she immediately proved her vote-winning credentials.

    National, on the other hand, has a more difficult row to hoe.  Bill English is a widely respected leader, still enjoying support from his party and under no immediate pressure to go.  While National has a deputy leader, there is no widely accepted successor, as we are about to find out.  And because that is so, the field is open to other challengers, though each will have counts against him or her.  None has quite the same freshness and novelty value that Jacinda Ardern enjoyed when she first emerged into the limelight.

    National’s contenders will, in other words, bring a certain amount of baggage with them into a leadership contest.  And, in an open democracy such as ours, any question marks from their past will be remembered and refreshed in the public memory.  Whether it be a disastrous television interview or pulling a fast one as a Minister, the contenders will have to disabuse boththe public and their party’s supporters of those unfortunate memories.  Sadly for them, the likely candidates all seem to be handicapped by past indiscretions or failures – they will have to hope that their supporters are a forgiving lot.

    In modern politics, it will almost certainly be the case that a good deal of what is known as “qualitative polling” will be carried out, to find out just how the contenders are seen by the public, when asked their opinions in what are known as “focus groups”.  I remember that when I ran the 1987 election campaign in the UK for the British Labour Party we did this kind of polling, about policies as well as personalities.  It came as quite a shock to us to discover that one of our leading spokespeople was a complete “no-no” for the public.

    And, for the purposes of a poll among party members, and even more among MPs, a demonstrated capacity to alienate undecided voters on the part of a candidate will ring the deal knell for that candidate’s hopes.  Responding to a television interviewer rudely and aggresssively may appeal to the party, as supposedly demonstrating leadership qualities, but it will be seen as off-putting by the non-committed.  As the contenders line up, they will be hoping that memories are not too long and that they can start with a clean slate.

    There is one further hurdle for them to surmount.  The shoe is now well and truly on the other foot.  Labour had to endure years of John Key’s unusual ability to appeal to the voters.  Now, National have the extra burden of choosing someone who can contest toe-to-toe with Jacinda Ardern.  And the contest is not just about policies, important though they are – it is about the whole package, principle, personality, the lot.

    Being as objective as I can, I cannot, when I survey the field of National hopefuls, see anyone who fills the bill from among the supposed frontrunners.   Trying someone who is completely untried on the other hand, is a huge risk, but it may be one that National feels compelled to take.  Favourites are usually favourites for a reason – but in this race, the favourites seem to have used the inside running to disqualify themselves.

    Bryan Gould

    30 January 2017



  • We Didn’t Do Badly in 2017

    The New Year should be, and no doubt was again this year, an opportunity to celebrate as we look forward, but we also have cause for congratulation as we review the year just ended.  2017 has left us in good shape, and having successfully surmounted one of the great challenges of a democratic society – a general election.

    Not everyone will applaud the outcome of that election, but it is worth reminding ourselves that it was conducted peacefully and in orderly fashion, that there were no allegations of corruption, that there was a substantial turnout, and that we were able to effect a transfer of government from one group of parties to another without violence or threats.

    These are all the hallmarks of a mature and well-functioning democracy. The list of significant pluses can be lengthened.  Our new Prime Minister is a woman – our second elected woman Prime Minister – no glass ceiling here!  And, with her relative youth, she has taken her place in a new generation of younger leaders worldwide.

    Nor should we under-estimate the civic discipline required to remove a well-established government from office and to replace it peaceably with another.  This is a trick that many other countries have found it difficult to pull, but we managed it without any great dissension.

    We managed it, despite an electoral system that made a “hung” parliament virtually inevitable (in itself no bad thing and producing a more representative parliament).  The negotiations needed to form a government were conducted with good faith and decorum and (by international standards), in remarkably quick time.

    Whatever view we take of these matters, we should acknowledge that a change of government is healthy for our democracy.  A government that has been in power for nearly a decade and that has won three elections in a row inevitably becomes accustomed to manipulating the levers of power.  A certain arrogance creeps in, an assumption that government by that party is the norm, and that only exceptional circumstances will disturb the status quo.

    It is, in other words, good for the country that there should be a recognition that democracy always implies the possibility that power will change hands – and the big gain from that change is that a fresh approach may produce new solutions to old problems and identify new problems we didn’t even know we had.

    But the cause for self-congratulation can really be made when we compare our experience with what has happened elsewhere, and particularly in that self-appointed exemplar of how democracy should work – the United States.

    They, too, have recently had a change of government – they have a new President and a new Republican majority in Congress.  The process by which that change was effected, however, was far from straightforward, with threats, charges and counter-charges made during the campaign from all quarters – and the outcome was one that prompted marches and demonstrations by those who were appalled at what the democratic process had produced.

    The “glass ceiling” was well and truly in operation, so that one of the candidates seems to have suffered some loss of support on account of her gender – and the electorate revealed itself to be deeply divided as to the merits or otherwise of the new administration’s proposals as to racial and religious discrimination, and the priority to be given to the interests of the “haves” and the willingness to inflict further pain on the “have-nots”.

    And that is to say nothing of the growing evidence, now impossible to ignore, that the successful candidate is totally unfitted, in terms of both personal and professional qualities, to undertake his onerous new responsibilities.  That realisation is not matched, however, by any will to remedy the situation – the Republican congressional majority prefers to maintain its own ascendancy, even if it means taking major risks with the country’s future.

    Our 2017 exercise in democracy looks, by contrast, to have been pretty successful.  We have no reason to question our processes or to doubt the democratic commitment and good faith of the government we have elected.  The coming year is one we can welcome, secure in the knowledge that our new government, like its predecessor, will have to satisfy the voters – in a properly functioning democracy – that it merits their support.

    Bryan Gould

    31 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