Yet another poll about asset sales

3 News have released another poll on the issue of asset sales. Their poll of 1000 people showed 62% disagreed with the Government selling off our assets, and 35% agreed.

This is off the back of a Te Karere poll of 1000 Maori voters showing 88% disapproval for the Government’s plans.

However, while these are recent polls, it’s not a new sentiment. Massey University did a poll last year that had 75.9% of responders disapproving of asset sales (it has to be noted they used a very different methodology though).

It’s going to be interesting to see how the Government reacts to such a consistent negative sentiment to one of it’s flagship policies, and then how the public reacts to that.

One thing is certain – the people of New Zealand do not want National and the Maori Party selling off their assets.

The ethics of foreign labour

Those who follow tech blogs will no doubt be aware of the continued scrutiny of Chinese company Foxconn. They are a giant manufacturing firm who famously make products for many American firms, notably Apple’s iPhones and iPads. In 2010 their poor working conditions lead to a string of at least 14 suicides among their work force.

To this day, the working practices in factories owned by companies like Foxconn are coming under increasing scruitiny.

Here in New Zealand, one of the key criticisms of Labour’s signing of a free-trade deal with China was to do with their record on human and worker’s rights. In left circles, it’s still a big issue.

It will probably come as a surprise to some, but New Zealand exports of fish to the US are now under threat because of on-going allegations of poor working conditions (described as slavery conditions) on ships operating in New Zealand waters.

There has been a Ministerial inquiry into this issue going on since August last year. It doesn’t seem to have made any progress. I’m sure Labour’s Darian Fenton will continue to champion the cause.

It is a timely reminder that we need to make sure our own house is in order before we criticise others.

Is the High Court ruling on the Crafar Farms just what we need?

Bernard Hickey has written an excellent opinion piece on interest.co.nz – everyone should read it. His basic premise is that as a country we borrow too much foreign money, and then sell off our assets when we can no longer afford to do so any more.

For decades we have spent more than we earned as a nation and funded the difference by borrowing foreign money through our banks, or directly in the form of companies borrowing offshore or the government borrowing from foreign funds and banks. If we couldn’t borrow the money, we would sell assets, be it companies, land or state assets.

We’ve been kidding ourselves for decades that, like the L’Oreal ad, we were worth it. We have run chronically high current account deficits for most of the last 30 years. We believed, and have been encouraged by our leaders, bankers, and asset buyers, that New Zealand could afford it and we deserved it.

But in our bones we knew we couldn’t, and it’s great to see Justice Miller at the High Court now tell us in this decision it has to stop, even if the government can’t or won’t do it. His ruling that any foreign buyer has to prove a bigger benefit to the nation than a local buyer sets a very high threshold.

It effectively says that any buyer has to invest an awful lot more, create a lot more jobs and pledge to reinvest dividends here, otherwise there is an inevitable drain on the nation.

I highly recommend you read the full article.

The Crafar farms situation

I’ve so far managed to avoid posting about the Crafar farms buy-out. It’s a messy situation for sure. I’m still trying to string my thoughts on it together, but a few things stand out.

  • The Chinese firm that has bought the farms, Oravida NZ, donated $55,000 to the National Party.
  • David Farrar has fudged the numbers to make it look like Labour sold lots of productive land, and the poor innocent National Party have done no such thing. It’s a very liberal use of statistics, and I’ll be going into it further.
  • We need to strike a balance between overseas investment, which we need given our feeble domestic capital market, and the ability to keep strategic assets in New Zealand hands. Then of course you would have to build a case for dairy farms being a strategic asset.
  • As far as I can tell, the calls of xenophobia on the issue (“the opposition is only because they’re Chinese”) are non-existent. As we’ve seen in recent years, there is a strong opposition to the sale of New Zealand assets to international buyers, regardless of their nationality (remember the objections to the Canadian Pension scheme buying Auckland Airport?)

There are rumours floating around there have been all sorts of dodgy deals going on. I guess we’ll soon find out what’s been happening…

Farrar’s non-solution to a non-problem

David Farrar has written a blog post for Stuff suggesting that we should have a term limit (three terms / nine years specifically) for list MPs…

This would mean that you could only spend say three terms or nine years maximum in Parliament as a list MP.This would reduce the power of political parties to keep putting back into Parliament someone who is not wanted by their electorate.

The thing is, this isn’t really a big issue.

The only Labour MP who has entered a 4th term as a list MP is Moana Mackey. And given her 1st term was only partial, entering Parliament in 2003 following the resignation of Graham Kelly – I’m sure the rules would be designed to only count complete terms.

The Green’s longest serving MP, Metiria Turei is entering her 4th full term – so presumably would be dumped under David Farrar’s rule. I’m not sure this situation is what he was really thinking of.

National has also has one “offender” – long serving cabinet minister David Carter is now in his 5th term as a list MP. He did try for the nomination in Selwyn in 2008, but internal party machinations forced him to pull out.

So it looks like David Carter is the only person that David Farrar is really opposed to (unless he wants to see the Green’s co-leader dumped, which isn’t implausable). The thing is, very few list MPs last more than three terms – and given we’re now in the 6th MMP parliament, I do think we have enough history to judge this.

Farrar does also touch on the topic of long standing electorate MPs…

You could argue why not have term limits for both electorate and list MPs. I happen to think there is some merit in that. But the argument is that electorate MPs are directly elected by the people, and can be directly sacked by the people. List MPs are indirectly elected, and hence term limits are more appropriate.

There are a number of MPs on both sides of the house who have held their seats for decades, and this is hardly a new problem. David makes a good point though, the electorates could dump their MPs if they wanted to. Labour’s longest continuous serving electorate MP, Ross Robertson, elected to not stand for the list.

That said, not only can electorates dump their MPs, but parties can too, by electing not to re-select long standing electorate members (of course though, then you get into the quagmire of the electorate selection rules the various parties use…)

At the end of the day though, what we really need is a politically aware voting base – who have a good idea of who they are voting for. The media have a very important job to play in this. While I don’t always agree with the Trans Tasman’s MP rankings (2011 Rollcall) – I think it plays an important part in our democracy. More of this please!

Speech from the Throne

Part one and part two are available on In The House. If you want to see the rest of the pomp and ceremony, then they are here on In the House.

I’m really looking forward to hearing Key and Shearer’s responses, and will post them later in the day.

I have to say though, the speech itself was rather disappointing. Key didn’t make the mistake of getting the G-G to say ‘turbocharged’ (when will the economy be turbocharged, by the way Mr Key?), but he also didn’t put any vision into it.

It basically read like he’d copy and pasted the different coalition agreements into a speech.

What is the Government’s vision for New Zealand? What will the legacy of the 50th Parliament be?

What’s behind the Austerity Consensus? New Polling Suggests Income Inequality.

A guest post by Hayden Munro.

One of the most frustrating things for Progressives about the world-wide policy response to the Great Financial Crisis and the Long Slump that we are still in, has been the incredible amnesia with which most policy makers have responded to the crisis. For Progressives, the Great Financial Crisis is nothing new, it’s a crisis brought on by dangerous under-regulation of the financial industry, which created a financial meltdown, a liquidity trap and depressed aggregate demand. In other words, it’s a repeat of the 1929 crash that caused the Great Depression.

This is the central theme of some must read works like “This Time it’s Different” and pretty much Paul Krugman’s entire output since 2008. To progressives, the answer should be simple, the financial crisis has damaged the engine of growth that should be powering our economy, and Government has a role to play in lifting growth and stabilising the economy, putting people back to work and restoring the financial security of the middle class that has been so damaged by years of trickle down economics and the financial crash that followed.

This was the immediate read on the crisis and the thinking that underlay the early response to it, moves such as the bank bailouts in the US, the nationalising of banks in the UK, and the general rounds of economic stimulus all over the world. Since early 2009 however, Progressives have watched as policy makers, having successfully stabilised the financial sector, promptly abandoned any moves aimed at restoring pre-crash levels of growth, instead favouring harsh austerity measures aimed at cutting the deficits run up in the lead up to the crisis, and by the emergency response itself. For Progressives, it boggles the mind at a time when flagging growth is so obviously the most important challenge facing our economies, all of the attention has been on “the debt problem” rather than the “growth problem”

This is evident in the New Zealand context as well: think about Bill English and his zealot like commitment to a “zero budget” when New Zealand actually has very low public debt by global standards, yet worryingly low growth.

Joe Biden”s former chief economic advisor Jared Bernstein sums up the progressive astonishment well here:

Over the last decade, too many households, governments, firms, and banks borrowed recklessly, nudged by financial “innovations,” negligent underwriting, and pure disregard for their ability to meet the liabilities they were taking on. Then, in September 2008, the system snapped. One particularly over-leveraged investment bank, Lehman Brothers, went bankrupt, and the global debt bubble popped. Millions of people lost, and continue to lose, their homes. Unemployment is rampant, and just under half of the unemployed have been jobless for more than half a year. The debt burdens of sovereign nations, Greece in particular, pose existential threats.

And yet policy-makers seem frozen in place, unwilling to take the necessary actions for one basic reason: doing so would mean deficit spending. Indeed, those at the helm in the advanced economies seem intent on shifting into reverse, pursuing austerity measures that, like medieval bleeding, only make the patient sicker. We recently inflicted more wounds on our already injured economy by arguing about whether or not to default on our own sovereign debt. This frustrating and destructive debate would have been a pitiful sideshow had it occurred during a period of full employment. For it to happen in the midst of the worst jobs crisis in decades amounts to malpractice by the policy-makers involved.

UK Labour Leader Ed Miliband is one of the few progressive politicians making this case explicitly. In his 2011 Conference Speech Miliband told voters…

I have a fundamental disagreement with the Government.

They believe Britain can address our problems of debt without addressing our problems of growth.

They are wrong.

Think of how you pay off the credit card bill.

You need to make savings in the household budget.

But if you lose your job and the money stops coming in, you can’t pay off the bill.

People in Britain are losing their jobs.

They aren’t spending.

Government is cutting back.

And the recovery has stalled.

Of course, the world economy is suffering.

But our Government is making it worse.

The argument by people like Bernstein and Miliband is simple: countries like New Zealand, America and the UK have a growth crisis, not a debt crisis, and by focusing exclusively on debt, we are missing the point and prolonging the recession. So this leads us the question: Why? What is causing our policy makers to ignore our growth problems in favour of a laser like focus on deficits? Some new polling and research into how policy makers decide their priorities provides some hints, and for those of us who want to see economic growth atop the political agenda, it’s worrying news.

According to some much publicised research by Martin Gilens, a political scientist at Princeton University, there might be a surprising factor at work here: Income Inequality. More specifically, the way that vast differences in wealth lead to vast and worrying differences in political power. The Washington Post’s Ezra Klein explains:

Gilens has been collecting the results of nearly 2,000 survey questions reaching back to the 1980s, looking for evidence that when opinions change, so too does policy. And he found it—but only for the rich. “Most policy changes with majority support didn’t become law,” Hacker and Pierson write. The exception was “when they were supported by those at the top. When the opinions of the poor diverged from those of the well-off, the opinions of the poor ceased to have any apparent influence: If 90 percent of poor Americans supported a policy change, it was no more likely to happen than if 10 percent did. By contrast, when more of the well-off supported a change, it was substantially more likely to happen.

What Gillens’ research shows us is that, especially in America, widening income inequality has led to massively increased political power for the most well off. And this has meant that those in the top 10% and especially those in the top 1% have a vastly out-sized say in the policy making process, not only dictating what policy answers become law, but also what “questions” policy makers focus on.

Doesn’t this sound a lot like the problem we are trying to understand? To the vast majority of people, especially the middle class who are suffering in the current recession, economic growth seems to be the major problem. Yet our policy makers are focused on something else? So can we find evidence that this is actually what’s going on, and that divergent opinions on the nature of the challenges our policy makers should be addressing might be driving this disconnect?

Over to Fivethirtyeight.com which tells us that a recent sudy:

Authored by the political scientists Benjamin Page, Fay Lomax Cook, and Rachel Moskowitz and recently released by the Russell Sage Foundation, found that the politics of the very wealthy are strikingly different (from other incomes groups).

Their study, which was part of a larger project called the Study of Economically Successful Americans and the Common Good, involved something unusual: a random sample of the rich. In particular, they interviewed 104 wealthy individuals in the Chicago area between February and June 2011.The sampling frame, constructed from various sources, was essentially the top 1 percent in terms of wealth (not income, as in the Gallup analysis).The response rate among the wealthy individuals they contacted was 37 percent, which may seem low on its face but is quite respectable by contemporary standards. The median wealth of this group was $7.5 million. (Of course, the broader project is surveying wealthy people nationwide, not only in Chicago.)

So this study lets us compare opinions on economic policy issues between the top 1 percent of income earners, and the rest of the population? The findings are exactly that Gilen’s research suggested we would find: a real and substantive disagreement over which policy questions our politicians should be focused on, with the views of the top 1% matching the actions of policy makers:

The 1 percent cares more about deficits than the economy. When asked to name the most important problem facing the country, 32 percent of respondents said the deficit and 11 percent said the economy. By contrast, in an April 2011 CBS News/New York Times poll, 49 percent of Americans said the economy or jobs and only 5 percent said the deficit.”

This polling suggests that the bewildering focus on debt issues at the expense of growth, at a time when economic growth has never been a bigger issue, is more than just a mistake. It is symptomatic of wider power imbalances in our economy, and further proof that massive income inequality is a threat not only to economic stability, but to the fairness and responsiveness of our democracy.

Why this research is so interesting is that it illustrates in a really important way the extent to which our current economic problems are connected to, and caused by, deeper political problems. The sort of trickle down economic policies that the Right told us would lead to greater prosperity, led not only to massive income inequality, they deeply unbalanced the power structure of our politics. By giving more and more wealth and political power to the wealthy, they created a political system that was increasingly tailored to meet the demands of the well-off. And that meant more  more tax cuts for the rich, more financial deregulation. And then when these same policies drove our economy off a cliff, it was the well-off who got to dictate how we responded. And their answer has been uniformally to move away from the policies that history tells us actually solve financial crisis and their ensuring recessions.

So what’s the lesson here? It’s that a progressive response to the financial crisis must be one that not only gets the economy moving again, but one that rebalances the power structure of our politics. We need a politics that puts more power in the hands of the middle class, and that means more wealth in their hands. This adds a new dimension to debates like the need for more progressive taxation and things like a financial transaction tax. It’s why Labour’s proposal for a tax on capital gains is so important, because it will rebalance not only our economy, but our politics. Such moves, which would shift wealth back to the middle classes, and lessen the shocking levels of income inequality in countries like America and New Zealand, would go a long way to solving the political problems that underlie our economic woes.

In my next post: A look at other forces driving the austerity consensus, and an in depth look at how it’s holding back the global economy.

One teacher’s response to NACT’s Charter Schools

A guest post by N0rdy.

The concept of charter schools is completely irrelevant to the NZ education context.

A couple of years ago I visited schools in the UK to investigate innovative practice in teaching and learning. I visited independent (what they call ‘public’ schools), state and academy schools (these are the equivalent of the charter schools in the US, controversially brought in by the Blair Government and about to be extended by the Tories.)

The two academy schools which I visited in highly underprivileged areas were extraordinary. They had inspirational leaders, who had developed school-based curriculum programmes which were relevant to the students in their schools. The focus was on students developing their learning capacity rather than content. Much of the learning was cross-curricular and self-directed. The students were highly engaged in their learning.  A range of clever interventions were used to keep students on track with their learning. This included heavy involvement of parents in their kids’ learning. Restorative practices were being successfully utilised in place of heavy-handed discipline.

How had this been possible? The UK state school system is highly centralised (and the US system is even worse). There are several layers of national and regional education bureaucracy which control school budgets, appointments and resources. The curriculum they implement is highly prescriptive, emphasising the specific content and skills which have to be covered at each level in each school. By allowing communities to run their schools for themselves, charter/academy schools bypass the education authorities and develop their own curriculum and approaches. But, how will Charter Schools function in New Zealand? Through Lange’s ‘Tomorrow’s Schools’ Reforms, we had our education revolution in the late 1980s. The Department of Education was abolished, and the regional education boards scrapped. Boards of Trustees have their own charters by which they govern the schools their kids attend, they employ staff, set budgets and make all the key decisions about the school. Additionally, during the term of the Clark Government, a new curriculum was developed which gave schools incredible autonomy to develop learning programmes which meet their needs of the students. It is the envy of the world.

In short, we already have a highly autonomous school system. (This is why teachers have been so opposed to the National [Party] Standards which force teachers to move away from student-centred and interdisciplinary approaches enabled by the curriculum to focus solely on the teacher instruction on reading and writing.)

Banks, Key and Parata are twenty years late on this one. We have problems in New Zealand schools, but a lack of independence from centralised control is not one of them.  They have shown that in education they have no ideas of their own by importing a solution to a problem in the UK and the USA which doesn’t exist here.