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?