28 February 2012

Our bank - Our money

Bernard Hickey’s heretical call for the Reserve Bank to ‘print money’ (NZ Herald, Feb 26) doesn’t go far enough. Yes, the Reserve Bank should create credit (the vast majority of our money supply is electronic) to fill the gap between incomes and prices, and to build and repair vital infrastructure – not just in a crisis, but as a sovereign duty, permanently.

New Zealand, although rich in resources, has a growing underclass and a widening gap between rich and poor. This lack of equality comes with huge costs in health, crime, and the sheer waste of human potential, a burden that we all bear. We will never return to any kind of general prosperity until this is addressed.

Further, the income gap will continue to widen as long as current economic orthodoxy reigns supreme. Speculators will get richer, huge corporations will gobble up small and medium businesses, and publicly owned assets will fall into private hands. Third World diseases and social problems will be commonplace. It is happening already.

‘Inflation’ is a bogey-man sent to frighten us if we dare to suggest creating our own money supply. The fact is, we have had inflation on a rampant scale ever since neo-liberal policies were forcibly adopted in the 1980s. What you could purchase for $50 in 1965 will cost you over $800 today – cost inflation created by banks out of thin air.

The low inflation percentages bandied about today are carefully selected ‘baskets’ that exclude items that are the target of speculators (e.g. housing during the bubble) and include imported goods that flood the country on the ‘free market’ ride. We have inflation right now – just ask anyone with children to feed how much food has gone up in the last two years.

‘Eroding savings’ is another bug-bear that doesn’t stand the light of day. Money was created to exchange, not save. Saved money is not working for anyone except speculators and banks. Money should be creating assets, purchasing goods and services, feeding families. People who want to hoard their money should pay for someone to look after it.

A vital element of creating our own money supply, rather than borrowing from overseas, is that the Reserve Bank can lend to the government interest-free. Thus, when a loan is paid down, the money is removed from the system – deflation. Meanwhile the money used to build assets and repair infrastructure also creates more jobs, putting money into more hands, which goes to local businesses, who pay wages and replenish stock. Suppliers are paid, producers are paid, and everyone pays a bit of tax. It’s a win-win, and what is not paid is interest to overseas fat-cats.

It’s our bank, and it should create our money supply. It's a no-brainer, really

Hickey and the Big Kahuna

Bernard Hickey should get together with Gareth Morgan; one has the daring, heretical call for the Reserve Bank to ‘print money’ (NZ Herald Feb 26) and the other maintains, shockingly, that we should all be paid a basic income.

And why not? There is no doubt that people on the lowest incomes are struggling to make ends meet. Overcrowding, Third World diseases, crime, domestic violence – all of these are symptoms of deepening poverty. They are exacerbated by the media: seeing what you don’t have and some else does only makes your situation seem worse. Publishing the Rich List rubs salt in the wounds of poverty.

Gareth Morgan recognises that not only would families benefit from a universal basic income, but their local business communities would too. And the envy of the ‘haves’ that the ‘have-nots’ are getting a handout would disappear, because everyone will get it.

But how to pay for it? Enter the heretical Mr Hickey. He has called for the publicly owned Reserve Bank to do the job it once did and ought to do now: create the money New Zealand needs to function, without resorting to borrowing from overseas banks at interest.

This is where the plan must depart from orthodox economics: no interest should be charged on this created credit being lent to the government. In this way, while enabling all New Zealanders to live in prosperity and dignity, and collecting the resulting taxes as money changes hands and strengthens communities, an eye could be kept on inflation as loans are paid down.

Democrats for social credit call for an independent Monetary Authority to manage this exchange, and keep control of the money supply, increasing or decreasing it as needed. It is generally accepted that such responsibility is too dangerous to leave in the hands of politicians.

So, Mr. Morgan, may I introduce Mr. Hickey? I think you have a lot to discuss.

11 July 2011

The year in review

One of the most important issues for New Zealand this year has been alcohol reform. It is very much an economic issue, as well as a social one. There is no question that alcohol costs this country a shocking amount in poor health outcomes, domestic and public disturbances, road accidents and deaths. The loss of productivity, that magic bullet that economists and politicians are continually banging on about, ought to make the issue of alcohol reform an urgent one for the Government.

However, alcohol makes some people a lot of money. Alcohol manufacturers and distributors are big corporate entities, as are the supermarket chains whose profits rely on alcohol sales. In a Bill hundreds of pages long these groups are uncurbed, and some are actually exempted from any regulations stated in the Bill. With huge public demand for effective alcohol reform (9000+ submissions), the Government has found itself between an economic rock and a socially demanding hard place, and has put off considering the toothless Bill. Perhaps the hope is that public demand will have waned after the election, with all the excesses of the Rugby World Cup behind us. Let us hope otherwise.

We have encountered a number of other issues through this year: local government changes, student loans, supporting children and changes to the tax system. Most of these Bills or papers attempted to save the Government money by squeezing individuals and small businesses, either through cutting costs or reorganising processes. The Budget proved more of the same.

Income sharing, a laudable attempt to recognise the vital unpaid work caring for children that so many women do, failed to gain traction partly due to the already huge and unnecessarily complex tax system we are burdened with. The discussion document Making Tax Easier was entirely about IT, and nothing to do with the iniquities and loopholes that allow money marketeers to escape basic taxes like GST, which the poorest families cannot. For me, making tax easier would be to abolish GST in favour of a very small financial transactions tax (FTT) implemented on withdrawal so that speculators could not avoid it. Now, that's a broad-based tax.

Most recently there has been some mainstream media discussion about gender pay equity, a welcome change. Thanks to the foot-in-mouth outpourings of Alasdair Thompson, facts all too familiar to women in the paid workforce are being aired in public. Our public service makes a poor showing, and the challenge is to keep the issue to the fore now that Mr. Thompson is no longer a useful target.

A potential economic threat to all aspects of our society is the Trans Pacific Partnership Agreement. This and similar trade agreements have been found to include clauses that privilege multinational corporations and reduce the democratic sovereignty of signatory nations. We are likely to lose Pharmac to the giant drug companies, and even alcohol reform will be hampered by trade agreements. The tobacco lawsuit against the Australian Government is a timely warning that the corpocracy that Professor Doug Sellman warns about is upon us.

Meanwhile, the casino of stock markets and currency traders continues unabated, with the NZ dollar one of the most volatile and profitable currencies going. Orthodox economics dictates that while stock values are rising and bank profits in the black, the economy is all right. Blinkered National Party thinking that places faith in ‘market forces’, and chooses to ignore the dangerous, widening gap between rich and poor, will be the driver of another worse downturn, one we can’t blame on earthquakes in Christchurch.

06 July 2011

Death by A Thousand Cuts

However you look at it, the damage to Christchurch is a tragic disaster that will continue to affect all of us for a long time and in many ways. Inevitably, economics raises its ugly head - the cost of rebuilding, the slowing of the economy due to so many businesses unable to trade, and the ways we are all going to have to pay.

Before the latest big quake hit, the Prime Minister had raised the issue of asset sales. Now, asset sales are one avenue the Government will consider to pay for rebuilding Christchurch, along with raising the earthquake levy and trimming social programmes such as Working for Families. Rejected was the suggestion that last year's tax cuts should be reversed, cuts that put the most money into the pockets of those on higher incomes, including our Prime Minister. This move, it was claimed, would tend to 'slow the economy'.

Many of us recall with dismay the asset sales of the previous century, an orgy of fire sales that gutted our railroad system, turned our publicly owned postal and telephone service into a lolly scramble monopoly for the benefit of wealthy overseas shareholders, and threw a spanner of confusion into our once reliable and cost-effective electricity supply for almost a decade. The earlier attempt to privatise ACC attracted both an insurance company feeding frenzy and a public outcry that the Government of the day could not ignore. NCWNZ policy is clear - members have many times rejected private or commercial ownership of our essential services, assets and resources. DSC policy is even clearer: public ownership right on up to the money supply.

No doubt the current Government intends make smaller moves towards flogging off our assets, to give us all time to get used to increasing economic colonisation. We hear grim warnings of Government debt, and happy references to ‘Mum and Dad' investors owning shares, but the truths are these:

· 'Publicly owned assets' means we the people already own them, and shouldn't need to buy shares.

· People with spare money to invest are dwindling in number anyway.

· Selling even part of an income-earning utility company mean less income for the Government.

· Government debt may be slightly reduced by selling assets, but private and corporate debt, already unsustainably high, will increase.

· Wherever the debt lies, we all pay for it through the prices of goods and services, which keep going up.

· Those few who have invested will soon be pressured to sell out to large overseas corporations, for lack of local buyers (think Crayfer Farms).

· Before long, all assets, resources and essential services will be foreign owned, and corporate colonisation will be complete. We will be tenants in our own country.

Meanwhile, the paring of early childhood funding, the squeezing of solo parents and beneficiaries and the demonising of the baby boomers to save on future super payments may impact severely on the general public, and yet not claw in nearly enough to rebuild Christchurch. Which begs the question: won’t squeezing the living standards of middle and lower income households also ‘slow the economy’?

Money was invented to facilitate trade. Anything that needs doing for the public good, where there are people and materials sufficient for the work, should not be held back for lack of money. If we can find the physical resources and manpower needed to rebuild Christchurch and care for its people, money should be available to make it happen.

As yet, the Reserve Bank of New Zealand is still in public hands. As it shored up the commercial banks during the 2008 credit crunch, the RBNZ has the capability to issue credit lines and even debt-free funding for the emergency in Christchurch. In fact, the RBNZ creates and issues money already, in the form of notes and coins. An electronic version of this money creation could be issued, not to on-sell to commercial banks, but to the Treasury in aid of Christchurch.

This sort of cash injection has a number of beneficial effects.

· There is no increase in debt levels.

· Jobs will be created and more people employed.

· More employment will have better health outcomes for families.

· The Government will take more in revenue, and pay less in welfare costs.

· More spending power will benefit small and medium businesses, which in turn will employ more staff.

It is a shame that the tragedy of Christchurch, instead of inspiring visionary leadership and creative solutions, is being used as an excuse to levy more tax, bring in draconian austerity measures and sell off our lucrative utility businesses to multinational corporations.

Put us out of our misery, please. Instead of a thousand cuts to our body corporate, so that as a nation we slowly bleed to death, why not just sell Christchurch wholesale, and cut out our heart?

10 July 2009

It's not too late for monetary reform

"What I want to know is: why do we keep borrowing from overseas-owned commercial banks at interest (for which we have to borrow more to pay) when we can legally create our own money supply, at nil interest, through the Reserve Bank of New Zealand? All it would take is a directive from the Minister of Finance, and we could create enough funds to do anything in this country that we want. Public assets could be paid for only once. Commercial banks could access credit at cost only, to on-lend to businesses. Health and education could be fully funded, and goodbye to surgery waiting lists and the student loan debt mountain. What are we waiting for, Armageddon?"

This has appeared on the opinion page of Stuff, as a comment on the self- and bank-serving opinion piece by Tony Alexander, chief honcho at the BNZ, who is quite comfortable with a 10% annual increase in consumer debt. Well of course he is - his bank and it's buddies make more money that way. Never mind the increasing poverty, the near fatal damage to the productive sector and the real economy, and the ongoing poisoning of Mother Earth. The banks won't stop milking us until we are dead and can't pay anymore. Then what will they do for slaves?

08 July 2009

Vote Yes for a law that works

If it is wrong to hit an adult, how can it possibly be right to hit a child?

Is it okay for your boss to slap you if you are late for work? Would you remember new skills better if you were smacked every time you had to learn something? Or each time you made a mistake?

Children are entitled to the same protection from assault in law as adults. The police have the same discretion toward inconsequential assault between adults as they do towards parents, who are not criminalised for a simple smack on the bum.

Even so, good parenting should not include smacking. 'No smacking' does not mean 'no discipline'. There are plenty of ways to correct, protect and teach a child without using violence. Smacking is a dead giveaway for parental frustration, anger, fear or a lack of parenting skills.

Maybe you were smacked and think you came out okay, but lots of people don't. They pass on their anger, poor communication and lack of control to the next generation. Smacking teaches children that big people can hit little people and get away with it.

It's time to stop smacking. Vote YES to the referendum question.

19 May 2009

Resource Management is out of our hands

The Resource Management Amendment Bill will dangerously reduce public participation.

In the name of cost−cutting and time−saving, the Government is willing to reduce our democratic rights and sell our precious and dwindling resources cheap to the highest bidder. The Bill makes it more expensive and allows less time for individuals and community groups to object to resource consent applications. Objections are dismissed as ‘vexatious and frivolous’ − without defining the terms, who they apply to or who makes those crucial decisions.

The Bill’s stated intention is to ‘simplify and streamline’ the process for resource consents. What this really means is that applicants may get a refund on their application fee if a local authority doesn’t push the consent through quickly enough. Applicants may even bypass local authorities and go straight to the Environment Court, which intends to charge a fee for any submissions. Too bad for cash−strapped groups or individuals who have genuine objections. Too bad for people who don’t live in towns where the Environment Court sits − they will have the added cost of travel.

And how about the Bill’s intention to prohibit local authorities from protecting trees? At a time when rising carbon emissions and climate change call for the planting of more trees, and certainly for saving and protecting our mature trees in urban areas, this is a backward step. To enhance the profits of a few developers, this Government is willing to denude our cities and towns of the few items of beauty which also act as carbon sinks.

Climate change, water pollution, air pollution, increasing traffic congestion − for these issues and more, resource applications should be more difficult and expensive to obtain, not cheaper and faster. There is well documented evidence of environmental damage caused by roads, buildings and intensive land uses, all presumably built with resource consents.

The drive for unchecked growth has an adverse effect on the standard of living of many in society, to the enrichment of a few. Reducing the public’s opportunity and ability to appeal against applications that are detrimental to local communities, society and the planet host, is a grave mistake that our grandchildren will fail to understand.

This amendment bill represents an opportunity lost. It is a fundamental re-weighting of the underlying philosophy, purpose and principles of the RMA, to privilege business and financial interests over public concerns, for short−term gain.

A foundering financial system should be re−examined itself, not made the excuse for further depleting our resources, despoiling our land and abrogating our democratic rights.