• How to Make the Regional Development Fund An Even Better Idea

    Our new government will have surprised some people with its confident start, and not least with one of its better ideas – the establishment of a Regional Development Fund.  We now know enough about this proposal to recognise just how valuable it will be, not just to the regions but to the whole country.

    That it will deliver a boost to those parts of the country whose economy has been languishing cannot be doubted.  The focus on communications and transport alone, with the special emphasis on rail, will help to bring far-flung areas of the country back into the mainstream, able to share better in the prosperity to which we have all contributed.  And better rail communications will not only keep trucks off our roads but will benefit enterprises such as the Port of Tauranga.

    But it is not just economic activity and output that will benefit.  It will be local employment as well – and more jobs will provide a shot in the arm to retailing, construction, new investment – a veritable virtuous circle.

    And even beyond those considerations will be the benefits to the environment that are clearly being targeted.  Tree-planting on a large scale will boost forestry but will also help us to meet our greenhouse gas target.  The shift in transport policy away from building more roads in favour of updating our rail network will do likewise, as well as reducing the road toll and opening up new development.

    The one fly in the ointment, perhaps – especially for those conditioned by years of being told that cutting government spending is the top priority – is the cost of these measures.  Funding all these initiatives from one dedicated new fund is a good idea, but the money for the fund still has to come from somewhere, doesn’t it?

    Even though it may be clear that the rewards and returns from making this kind of investment in our regions would satisfy even the hardest-headed private investor, the question as to where the money to be invested comes from in the first place will still be asked.

    Well, not necessarily.  You may be surprised to hear that the one thing that governments are never short of is money.  How do we know that?  Because governments all around the world have been creating large quantities of new money for the past ten years or more.  They haven’t called it “creating new money” but have preferred to call it something like “quantitative easing”, but creating new money is what it is.

    When governments have created new money over recent years, however, their aim was usually the limited one of providing money to the commercial banks so that, after the Global Financial Crisis, they could re-build their balance sheets.  But new money created by governments does not have to go on such limited purposes – indeed, creating it to invest in the productive economy so as to produce an immediate return to the country as a whole makes a good deal more sense than just helping out the banks.

    And experience in earlier times and in other countries, has shown just that.  Many countries have in the past created new money to fund increases in output – whether it was Japan re-building its industry after its defeat in the Second World War (and they are doing so again today) or President Roosevelt building American industrial capacity in preparation for that same conflict.  What those countries both realised was that the need and the capacity to increase output both existed, and that it was ridiculous that such an effort should be frustrated for the lack of money, when the government could create all the money that was needed.

    Our own history offers us one of the most important instances of this being done.  In the 1930s, in the middle of the Great Depression, the great Michael Joseph Savage authorised the creation of new money so that thousands of new state houses could be built, thereby providing jobs for the unemployed and homes for the homeless and – incidentally – an income-producing asset for the government.

    As the economist Ann Pettifor (who recently visited New Zealand) remarked, “We can afford what we can do” – in other words, the real constraint is not the lack of money but a lack of productive capacity, and  that constraint, for those who believe in a market economy, is easily overcome.  If the money is there, the capacity will come.  Money is merely a facilitator or enabler and it makes no sense for a government that is ready to create new money for other purposes to decline to do so for productive purposes, if the need is there and the capacity can be built.

    The great economist, John Maynard Keynes was very clear.  Given that the banks create new money every day of the week for their own profit-making purposes, why shouldn’t governments do likewise for the purpose of investing in our productive capacity?  Creating money by the government cannot be inflationary, said Keynes, if it is matched by increased output – and isn’t increasing output exactly what the Fund is designed to do and will achieve?  Why shouldn’t the government use all of its powers to support such a worthwhile goal?

    Bryan Gould

    25 February 2018

     

     

  • Welcome Back Super Rugby

    The beginning of a new Super rugby season will be welcomed by most, but not by everyone.  For those not sold on rugby, it can mean long hours on winter evenings, consigned to watching something, in the flesh or on the screen, that may be virtually unintelligible to them.  And, while the summer sun still shines, it will have to compete with the Winter Olympics and the Blackcaps series versus England for the attention of sports fans.

    But those of us who follow and enjoy our national game will have real cause to celebrate.  Six Nations rugby (give or take the odd England defeat at Murrayfield)and Northern Hemisphere club competitions are all very well, but if you want to see the world’s best rugby, displayed week after week, there is no substitute for what Super rugby has to offer.

    The most intense competition and the highest level of skills are to be found in Super rugby, and in domestic derbies in particular.  The Australians and South Africans, Argentines and Japanese, have their part to play of course, albeit with fewer teams this year, but the record shows that they usually contribute no more than supporting roles.

    For the true rugby aficionado, it is not just the outcome of the competition itself that matters.  Yes, of course, we want our teams to win, both each match and the championship as a whole.  But there is much else to look out for, other than the team results, much of it concerning the performances and fortunes of individual players.

    Will, for example, experienced players who have been absent through injury or for other reasons – Brodie Retallick or Ben Smith or Jordie Barrett – come back as though they have never been away?  Will the emerging stars of last season – Rieko Ioane or Ngani Laumape, or Richie Mo’unga or Asafo Aumua – come back to a new season with all guns blazing again?

    And what new names will emerge – to spark our interest and raise our hopes?  And how will we make good the loss of Lima Sapoaga or James Lowe?  Will Damian MacKenzie make the transition apparently required of him, not only by the Chiefs but by the All Blacks as well?

    Will our established world-class stars – Beaudie Barrett or Sam Whitelock or Sam Cane or Aaron Smith –  effortlessly recapture their high standards?  Will Julian Savea force his way back into the All Blacks or Patrick Tuipulotu cement his place in the squad?  Will Jerome Kaino re-establish his claim to the Number 6 jersey?  Will Augustine Pulu or Brad Weber take up where Tawera Kerr-Barlow left off?  And what will all of this mean for the All Black selectors and their continued quest to fashion a team that will win the World Cup next year, to say nothing of beating England at Twickenham later this year?

    And we should not overlook the Championship itself.  Like many fans, no doubt, I have loyalties to more than one contender and more than one coach.  I will be content if the prize goes to any one of the New Zealand teams, even, praise be, the Blues under Tana Umaga.

    And a question for each of us to answer.  Do we realise how privileged we are to see by far the best team game in the world played by the world’s top players in our own back yard?  What better sporting spectacle can there be than a thrilling contest of skill and spirit and courage, individual brilliance and instinctive teamwork, fought out by players so well-known to us that they are almost friends or family members?

    Rugby is, after all, our national game.  It has that status not just because we happen – men and women, boys and girls – to play it better than anyone else or because it is followed with passion by thousands of Kiwis.  Rugby has, for good or ill – and any objective assessment would strike the balance on the positive side – been a major influence in shaping our national identity.  It has brought our founding races together and it continues to provide a small nation with international standing and a powerful reason for national pride and confidence.

    Welcome back, Super rugby!

    Bryan Gould

    24 February 2018

     

  • Abuse Can Happen Close to Home

    “Abuse” is a word that these days appears, sadly, all too frequently in the headlines.  It is, however, a word that covers a multitude of sins – the phenomenon it describes takes many different forms and arises in many different contexts.

     

    On one day, it will refer to instances such as the shocking treatment inflicted on no fewer than thirteen children who were found, ill and under-nourished and  shackled to beds in their parents’ home in the United States.  No one reading an account of the discovery of these children in these shocking circumstances would fail to recognise it as an archetypal example of abuse.

     

    On a succession of other days, “abuse” will refer to complaints made by brave women – usually actresses or models – about the treatment they were accorded by Harvey Weinstein and by other prominent men, usually in the entertainment industry, who demanded sexual favours in return for promoting their careers.  This scandal has engulfed a growing number of men and has destroyed a number of careers and reputations – though Donald Trump seems somehow to have avoided a similar fate as the penalty for his own admitted (and proudly proclaimed) offences.

     

    On yet other occasions, a different – and perhaps even more worrying – manifestation of abuse will hit the headlines.  An unfortunate baby or toddler will be found to have suffered fatal injuries at the hands of an adult carer, or a terrified woman will suffer physical violence at the hands of a bullying partner.

     

    Even these instances do not exhaust the catalogue of the forms that abuse can take.  Destructive criticisms levelled on account of the race, religion, gender, sexual preference, or physical or mental capacity of the victim is a form of abuse that can be so damaging both to individual victims and to large groups of our fellow citizens as to be treated as criminal offences – though, again, Donald Trump seems to enjoy some kind of imagined Presidential immunity.

     

    This recital of the forms of abuse with which we are familiar takes no account of yet other forms which attract less attention, not because they occur less frequently but because they are less easily recognised.  But the law is catching up with real life; the  law that outlaws physical or sexual violence has recently been extended to cover a further form of abuse that can occur in the domestic context.

     

    That form of abuse is described in the legislation as “psychological abuse”, but it is usually described in the expert literature as “coercive control”, a term that better captures the essence of what is peculiarly destructive behaviour arising in the context of a family relationship.

     

    The victims of “coercive control” are usually women (though they can be men) or children, living with a domineering adult (either male or female) , and finding that their ability to operate as independent human beings has been gradually eroded by the emotional, psychological and even financial pressure placed upon them by their abuser.  That pressure is usually designed to undermine their self-confidence, to isolate them by weakening their networks of social support, and to make them more and more dependent on the abuser.

     

    The problem in identifying psychological abuse is that “it leaves no bruises”.  It is usually not apparent to observers from outside the family because the abuser will be expert at concealing what is really happening, present an image of domestic harmony and play the role of devoted family member.

     

    These evidential issues mean that the courts have found it difficult to handle cases of alleged psychological abuse.  The danger then is that the abuser gets away with it, and may even be presented with further opportunities to control (or abuse) the victim.  A partner or child who alleges such abuse can often be directed to undergo counselling or some other form of mediation, which can then mean that the abuser has a further chance during the course of such conversations to exercise the control and domination that are the essence of “coercive control”.

     

    We should not, in other words, always look for bruises.  Abuse, in its many forms, can destroy lives without leaving an imprint, except on the happiness and ability to function of the victim.  We are fortunate to live in a society that at least makes the effort to protect its members from abuse that can be so destructive, even if less obvious, but more should be done.

     

    Bryan Gould

    21 January 2018

     

     

  • Is There No Limit to Trump’s Awfulness?

    Is there no limit to the awfulness of Donald Trump?  It is hard now to imagine that there is anything further he could do or say that would truly shock us, in the sense of taking us by surprise.  He seems surely to have exhausted his repertoire of shortcomings, his playlist of buffoonery, narcissism, and readiness to offend his fellow citizens.

    Whether it be his all-too-evident racism, his propensity to demean and bad-mouth those whom he does not understand or who are outside his usual social circle, his disregard for the truth, his truly monumental ignorance about what his job entails, his readiness to defy the normal conventions concerning nepotism, the continuing priority he continues to give to the promotion of his own business interests, the threat he poses to a free press, his recklessness in foreign affairs, his boasting about the nuclear weaponry at his disposal – to say nothing of the manifest failings in his personal life – he has surely done everything possible to convince us of his uniqueness.  He is, of all those who have held the office of President, unique in his embodiment of a complete lack of personal or professional fitness for the role.

    The debate about what has caused his shortcomings is largely beside the point.  It may be that he is mentally ill, suffering from an inherited personality defect or from the onset of dementia.  It may be that his defiance of the normal standards of decency is the product of his upbringing as the son of a wealthy and domineering father or of the limitations of a billionaire’s lifestyle.  It may be that he is simply what we see – an embryonic fascist, a self-absorbed bully and narcissist, persuaded of his own “genius”, and harbouring a range of really unpleasant views about race, women and the plight of those in society who need help.

    But whatever the explanation, we are lumbered with him.  The only question now is what can be done about that.  Sadly, the only people with the power to take action show no sign of willingness to do so.

    The Republican majority in Congress could impeach him – a number of grounds offer themselves and the Mueller inquiry into Russian involvement in Trump’s election might add to that number – or  simply remove him on account of his inability to fulfil the role.  But the Republicans are in hock to billionaire donors who are the ones who really pull the strings.

    The one ground for optimism is that Trump has already delivered to those billionaires the benefit they were willing to pay for – massive tax cuts for the wealthy, achieved at the cost of cutting the help and health care available to the poor and sick.

    It may be that, with the tax cuts in their pockets, those wealthy Republican donors will see Trump as disposable, and will therefore drop their threat to Republican Congressmen of reduced funding if they don’t support Trump.

    There is one further possibility which I hope is not too fanciful.  Trump himself may decide to review the question of whether the game is worth the candle.  By all accounts, he is not enjoying the role and gets away from the White House whenever he can.

    It may be starting to dawn on him that being President may deliver the fame and recognition he craves, but that the spotlight on him also means that his every misstep and failing is magnified.  There is no escape for him – the longer he stays in the White House, the more certain it is that his public image and reputation will be trashed; his plight is rather like that of an actor in a leading role who, having forgotten his lines, is nevertheless compelled to make his entrance on the stage.

    He may now realise that he is destined to go down in history as a disaster, as the worst ever President, as an embarrassment to his country and to America’s allies.  Why, he might ask himself, prolong the agony?  Why run the risk of being impeached, or removed for incompetence, or (if the polls are accurate) being voted out of office?  Why not choose the moment, and the pretext, for stepping down?  We can but hope.

    Bryan Gould

    13 January 2018

     

  • 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