Tagged: economic growth

Brownlee’s latest emission

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This blog is intended to be read whilst listening to the below song.  The above picture made sense in my head, if nowhere else.

Generally speaking, I think it’s a pretty good idea to internalise externalities, by taxing activities and products that impose a social or environmental cost on the rest of the world, and subsidising those that deliver a social or environmental benefit.  So I support petrol taxes, mostly as a way to off-set the environmental damages of burning oil (particularly if the tax income is used for that purpose), and as a way of bringing the price of petrol as close as possible to the real cost (personal, social, environmental; past, present, future).  This will hopefully reduce the use of petrol, as people who have to pay for the full consequences of their transport choices will be more likely to use public transport, cycle, carpool, etc.

So the latest petrol tax increase may have some accidental environmental benefits.  Emphasis on ‘accidental’, because Gerry Brownlee doesn’t mention it in his announcement.   He openly admits what Julie Anne Genter from the Greens exposed last month; that this tax rise is primarily about covering the $1.7 billion short-fall for the so-called “Roads of National Significance” plan.  This is why the Greens oppose this tax increase; it’s not about reducing petrol use, but encouraging petrol use by sinking $14 billion dollars into un-needed, uneconomical highways.

Brownlee probably knows better than to spin this as an environmental measure, because it would illustrate a stark double standard: it would be the opposite of their stance towards business and agriculture.  For these other major polluters (and National’s main backers), they’ve shown compassion in these tough economic times, and given them longer before they have to start paying for the social and environmental costs of their emissions.  The taxpayer can pick up the tab for a bit longer.

There’s another double-standard whereby this government, who “want to cut taxes, not raise taxes” according to the John Key quote in the above Home Brew song, are relatively trigger-happy when it comes to increasing GST and other sales taxes.  Some of these do off-set (or over-compensate for) external costs of harmful substances.  But if they’re just income-gathering measures like in this case, it’s worrying that they’d rather earn income this way than by putting income tax back up, or by introducing capital gains or financial transactions taxes.  Sales taxes tend to be regressive; disproportionately hitting the poor, while the latter are progressive; disproportionately hitting those with disproportionately high incomes and wealth.

IrishBill at The Standard points out another double standard, particularly pertinent to Brownlee; they’re happy to levy the ordinary motorist to pay for their idiotic motorway plans, but they’re not willing to implement a temporary, progressive levy for the Christchurch rebuild (because of the fragile economic climate, of course… not because of their priorities, choices and philosophies).

Actually, all of these double standards reveal a lot about the political philosophy underlying this government… Ordinary people are able to tighten their belts, while the rich need financial assistance.  We all have to make sacrifices, apparently, but on a religious level, these are sacrifices to the gods of the neo-liberal market capitalism, and on a material level, they’re sacrifices to the rich.  “Socialism for the rich, capitalism for the poor” indeed.

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The ideology of middle class struggle

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I thought this Sunday Star-Times article was quite interesting.

Three economists (from Infometrics, the NZ Institute of Economic Research and the University of Auckland) all agree that although the middle classes in the United States have been hit hard since the global financial crisis, it’s not accurate to say that the same is true here.

Despite the myth of the “middle class squeeze” and politicians’ attempts to appeal to the embattled middle classes, in New Zealand it’s the poor who have been hit hardest by the recession (and by government responses to it).  The middle classes, on the other hand, have “never had it so good”.  While the economists disagree about whether the rich are doing better or worse, all agree about “the growing level of inequality in New Zealand – it’s this chasm between our poorest and richest that’s probably the real issue“.

The article also provides eight stories from middle-class people about how they’ve been coping financially in recent years.  Karol at The Standard points out that this undercuts the above points somewhat, because they don’t give any stories of the people actually struggling.  Also, the stories are foreshadowed by this rather peculiar statement:

“Of course, this is about statistics – the average. This isn’t you, living from pay cheque to pay cheque, scraping together the school donation, the football subs, the car repayment, the Sky bill, the rent for the bach this Christmas.”

This might be an odd expression of post-modern skepticism about attempts at pure objectivity, and/or it might be ordinary garden-variety dumb reporting. It seems to be saying: never mind the facts, we know that you’re struggling, and an evocative description of your hypothetical woes can substitute for an argument. But maybe they just meant that you may be struggling even though on average the middle class aren’t.

Some of the stories do represent these exceptions… Those who have lost or quit jobs in manufacturing and the public service, or lost houses in the earthquakes, have indeed found things getting tougher, as you might expect.  However, they’re all pretty philosophical about it, and even their complaints are about first-world, nice-side-of-the-tracks problems:

“An expensive holiday is shelved and Mr Barton is holding onto his ageing television and car.”

“We were lucky to have steak at all. Sky was going to get the chuck. Any slight luxuries were gone.”

“they hid their financial struggles from their son and refused to withdraw him from private school”

So what’s behind the myth of the “middle class squeeze”?  Is it just lazy importing of American complaints, or is there more to it than that?

I think the best way to understand it is to see it as an ideology, in a critical or Marxist sense: it’s a worldview that functions to justify and support the present economic system and current unequal power distributions.

People from all levels almost always feel like they’re struggling to make ends meet, because their expectations rise with their incomes (usually staying just ahead).  That’s how market capitalism works; dissatisfaction and desire is what keeps the wheels turning.  If people were content with what they have, capitalism wouldn’t work, or at least not the way we know it (maybe it could work in a nicer, more sustainable way).

This malaise is always there; we’re born into it, and too often we let ourselves remain in it.  And I guess when we’re constantly hearing about tough financial times and how our class is supposedly suffering, it’s more socially acceptable for middle class people to express it openly.

The ‘Returning Kiwi’, Emily Swan, gives voice to this plight:

Does Swan appreciate that with that income and a house, many Kiwis would see her as well-off?

“Yes! The average household income is what, $30,000? Crazy. But then a lot of people are sending their kids to school without breakfast. We are grateful for what we’ve got.”

And yet . . . “I look at my age and think, I’m nearly 40 and I’m still living from pay-cheque to pay-cheque. What do I pass on to the next generation? Will I ever pay my mortgage off? I do feel like I’ve f—ed up somewhere along the way.

If she’s “f—ed up somewhere”, it’s not in not having enough money; she and her partner earn $130,000 between them, but people earning twice as much probably feel the same way (and some people earning half as much have learned not to feel that way).

Perhaps situations like this can serve as a reminder not only that perceptions don’t also match reality, but also of just how mouldable our perceptions, desires and expectations are.  Hopefully we can learn to mould them ourselves to what we think they should be, rather than letting them be moulded by advertising, conformity and the pressures of a consumer capitalist society.

Well, from the information WE’RE seeing…

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Have you noticed that every time someone confronts National with a statistic showing that things aren’t going well (it’s happening increasingly often), they have the same cryptic response?  They feign disbelief, and reveal that according to “The figures I’ve seen,” or “the numbers [Key] had seen,” or “The advice his government had received,” or “some of the other indicators,” exactly the opposite is true!

Whatever this alternative information source is, it has such a powerful effect on the government that they were “very surprised” that unemployment rose again last month.  According to the information available to the rest of us, of course, this is no surprise – it’s been rising all year.  But apparently when you have “the information WE’RE seeing”, the job market is “jumpy” or “bouncy” or “grumpy” or some other anthropomorphic euphemism to render statistics, truth and accountability completely meaningless.

So, I’m really curious to know: What is this mysterious “information WE’RE seeing” that the government are getting their ideas from?

Is it this?
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Or this?

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Or this?
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Or these – National Party Pills?

Or this?
BullShit

Let them eat liver, or: It’s the inequality, stupid, or: A short note on poverty not existing

When I wrote my last blog on child poverty, I was planning to follow it up with a critique of ousted ACT leader Rodney Hide’s Herald column where he made the bold claim that there is no child poverty in New Zealand.

I was going to make all sorts of jolly yet incisive points about how I’m actually quite fond of Rodney (something I can’t say about more recent ACT leaders), but that he’s revealed an embarrassingly out-of-touch and simplistic understanding of poverty as a mere lack of money (“All kids are poor. Children typically don’t own much beyond a few toys”, “Poverty can’t be the cause … Liver … costs 70c a serve”).

I was going to point out that not everyone has grown up in the Protestant-work-ethic-Northern-European-stockpiling-rationalising-individualising tradition that he and I have, but that the economic system that’s been imposed here is set up to favour people with these values and shaft everyone (and everything) else.

I was even going to say that, despite all that, I’m considering trying out his suggestion of boiling up bones and getting a stew going for my lunches.  Anyway, I didn’t get around to writing this blog, and now Hide’s “let them eat liver” column is old news.

Still, I think it’s worthwhile to address the most important point – the idea that poverty in New Zealand is ‘only’ ‘relative’ poverty and therefore isn’t ‘real’ poverty.  Hide points to one common measure of poverty: living on less than 60% of the median wage.  In Hide’s mind, all child poverty statistics can be summarily ignored, because this measure doesn’t measure what (supposedly) really matters: how much money the country has overall.

I suppose this poo-pooing of statistics is what enables Hide to state with a straight face that it’s the welfare state’s fault that kids go hungry, despite the fact that the child poverty figures began to skyrocket precisely when his friend Roger Douglas began to roll back the welfare state in the 1980s.

But this idea isn’t just touted by extremists living in a libertarian fantasy world; deputy prime minister Bill English used this very notion as an excuse to dismiss the Child Poverty Expert Advisory Group’s recommendation to set child poverty reduction targets, claiming that “such a relative poverty measure made no sense as it did not show how rich or poor people were in absolute terms”.

But hold on a second.  Even if we go along with Hide and English and ignore the Advisory Group’s other poverty measures such as material deprivation or access to GDP growth, there’s something pretty fishy about such an easy dismissal of relative poverty, a.k.a. inequality.

This ignores a whole host of research showing that ‘relative’ inequality absolutely does matter.  The book The Spirit Level compiles some of this research to show that unequal societies with high ‘relative poverty’ like New Zealand have significantly worse statistics for life expectancy, literacy and numeracy, infant mortality, homicide, imprisonment, teenage births, obesity, mental illness and social mobility than more equal societies – across the whole society, not just for the ‘relatively’ poor.  Even though inequality or relative poverty is relative, it causes real, solid, objective, material, absolute damage.

The truth is that we’re relational beings, so it shouldn’t be surprising that how we’re doing relative to each other affects us – but neo-liberals indoctrinated into the “no such thing as society” philosophy seem to forget this.

Hide and English assume that what really matters is the ‘absolute’ matter of how much money people have.  But since when was money ‘absolute’?  Money only has meaning insofar as we give it meaning to represent the value of goods and services, and to say that this person can access this much goods and services, while that person can only access that much.  In other words, it’s only meaningful as a relative measure; relative to real stuff and real power in the real world, and relative to how much stuff and power others have.

So, when Rodney Hide licks his lips about a “windfall that doubled all incomes” but “wouldn’t budge the child “poverty” figure”, that’s exactly the point.  Doubling all incomes wouldn’t change what those incomes are relative to; it wouldn’t create any more resources.  Inflation would soon ensure that each dollar was only worth half as much, so nothing would have changed at all.  Poverty and affluence would be exactly the same as before.

Of course, if this ‘windfall’ was localised in New Zealand, it would give us relatively more access to resources than other countries; and that’s what National mouthpiece David Farrar, who endorsed Hide’s column, says we should be aiming for: “In these times of huge global economic uncertainty, the focus needs to be on economic growth, not [equality, which Farrar conflates with] increasing tax and welfare.”

But The Spirit Level shows that internal economic equality is far more important than economic growth for improving conditions in developed societies.  Perhaps it’s because we care more about how we’re doing relative to people around us than about being even more relatively rich on a global scale than we already are.

So the fatal flaw of this spurious neo-liberal argument is that it absolutises the relative; money, while relativising the absolute; inequality.

Bill English and his government are repeating this error with devastating consequences by calling the real suffering of real children ‘merely relative’ while treating economic growth as the absolute to which all else must be sacrificed (and it isn’t even working).