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.
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.
(This is part two of a two-part series on the current “welfare reform” policy – part one is here)
I have a friend who says that Paula Bennett‘s welfare policy is fine, and it’s not beneficiary-bashing, because if you (only) look at the individual policies, they’re not really as bad as they first appear; some of them are quite reasonable and even potentially helpful.
I think this is quite generous. There may be things that can be done on an individual level to help beneficiaries and reduce their reliance on welfare, but these aren’t constructive or intelligent measures; I take issue with how hypocritical, worryingly controlling, contrived and just plain stupid they are, the effects on children in poverty, and the fact that overall they add up to welfare cuts.
But these specific policy effects are only part of the picture of welfare reform. We need to look at the entirety of what is being communicated if we want to understand “welfare reform” and its relationship to the phenomenon of “benny-bashing”.
The essential message of “welfare reform” is: The problem is with beneficiaries themselves. If someone can’t get a job it’s because they don’t have the right skills or attributes, not because there aren’t enough jobs to go around; if they’re not in paid work on top of raising a family and running a home, they’re leeching off the system, not making a choice mothers with partners are allowed to make; and if they don’t want to do a certain job it’s because they don’t have the right attitude, not because that job is dehumanising or abusive.
Of course, this message is a lot more subtle than the populist sentiments simmering just beneath the surface of the rich, the working poor and anyone who hasn’t had to rely on welfare themselves. Rather than saying beneficiaries are lazy, incompetent, drug-addicted, child-abusive, over-breeding criminals who think the government owes them a living, Bennett talks of an “investment approach” to welfare and unveils special new rules for beneficiaries only, to make sure they’re not taking drugs, opting out of optional early childhood education, having any more children, or refusing any job offer whatsoever.
It is indeed true that the actual policies are slightly gentler than the shriekings of talkback radio and internet comments. But the policy announcements still have the effect of dog-whistling support for these populist sentiments. In fact, she’ll often back down from earlier extreme statements; a shrewd strategy that allows her to satisfy our benny-bashing instincts, but then also satisfy our more reasonable natures that the policy isn’t going to be quite so harsh as it seemed.
So it’s clever politics, in that it allows National to affirm its identity as smart and careful with money, and tough but fair when it comes to the dole-bludging strawmen who are the main target of New Zealand’s two minutes’ hate.
Either way, it’s still repeating the essential message that it’s the beneficiaries who have the problem. But this is simply insufficient to explain why four years ago unemployment was the lowest in decades, and now it’s rapidly approaching 80s and 90s highs.
Sociologist C. Wright Mills used high unemployment rates as an example of something that cannot be properly understood or solved on a purely individual level; instead a “sociological imagination” is needed to connect personal problems with public issues.
The most obvious “public issue” at play here is the global financial crisis and recession. Our worst periods of unemployment since at least the 80s have all followed periods of negative economic growth; compare this with this.
Paula Bennett actually admitted in April that there simply aren’t enough jobs in the current economic climate. Bill English certainly knows this, and is trying to get us back to economic growth by following the dubious neo-liberal formula.
Of course, this will only be a temporary solution until the next recession brings another wave of unemployment. A more long-term solution would be to address the economic system itself; to change the way the economy operates so that it doesn’t rely on periodic bouts of recession and unemployment. As Mills put it; “In so far as an economy is so arranged that slumps occur, the problem of unemployment becomes incapable of personal solution.”
Unfortunately, this government is not about to challenge the basic shape of the capitalist system, or even its recent neo-liberal form. In fact, the current National party are the ideological progeny of the neo-liberals who argued in the 80s and 90s that unemployment is good, because it keeps wages low, which is great for business. They might not make such bold statements nowadays, but they still believe that an underpaid and desperate workforce is what we need to bring about the utopia of economic growth.
To really solve unemployment would require the government to re-think their entire philosophy that says that unbridled capitalism is our lord and saviour – not the cause of problems like unemployment.
So they do what dominant groups have done throughout history when they don’t want to address societal issues in a way that might challenge their way of running things… They scapegoat marginal individuals for the problems of the whole society, and consolidate power by uniting the majority against these scapegoats; in this case beneficiaries.
It makes perfect sense why they’d do this; it’s the best way for National to gain politically out of the situation, even if nobody else does. But with rising unemployment, record inequality and obscene child poverty, blaming and punishing the victims is not the kind of welfare “reform” we need right now.
(This is part one of a two-part series on the current “welfare reform” policy; part two is here)
Although Paula Bennett won’t bother measuring child poverty, she’s measured how much her welfare “reforms” are going to save: $1.6 billion. Contrary to Bill English’s assurances, this is the expected follow-up to an obscure and expensive statistic about the “lifetime cost” of beneficiaries, whatever that means ($78 billion, if you’re interested – and only 5% of that is for unemployment beneficiaries, but that distinction will be obscured by the new categories).
Saving money on welfare would be great if it meant people were rising above the social safety net rather than having it pulled out from under them. If the economy was working and everyone was holding down good jobs, we could save on welfare, like we did four years ago when unemployment was at its lowest in decades.
But we can’t fix the economy by cutting welfare – that’s confusing cause and effect. When unemployment is high and getting higher, inequality is at record highs and we have 270,000 children living in poverty, mostly from beneficiary families, we’re going to have to spend more on the safety net if we want to be humane, not less.
Current government policy basically amounts to: lots of people relying on welfare –> push more people off welfare into paid work –> make a crowded job market even more crowded –> lots of people relying on welfare. This vicious circle does nothing to acknowledge that there are problems with the economy and the workforce as well as problems with beneficiaries – and it certainly does nothing to fix these wider issues. Pleading with employers to hire boot camp graduates, and keeping the minimum wage low based on a discredited neo-liberal premise, is not a sufficient job-creation strategy; and sacrificing to the gods of neo-liberal capitalism until economic growth comes back is not working so far.
So I find it rather disturbing that Bennett is boasting about cutting welfare as if that’s the answer to poverty and unemployment.
Of course, welfare reform isn’t all about saving money – $1.6 billion isn’t that much to a government who spent the same amount bailing out South Canterbury Finance, and some of the changes will cost more than they save.
But this does confirm that what we’re basically talking about with “welfare reform” is welfare cuts. The fact that Bennett can portray welfare cuts at this time as a good thing is a symptom of the deep-set benny-bashing sentiments of the general population – which I’ll discuss in my next blog, on the basic message of “welfare reform”.