Xenophobia is ugly and embarrassing

The concern over home ownership in New Zealand is valid, especially since statistics indicate that home ownership in New Zealand has fallen below 50% – the lowest since records began. House prices are simply too high and the necessary wages to finance a mortgage too low. Something has failed.

However, instead of turning to our failed tax and monetary system and looking for disincentives to land speculation, we resort to blaming foreigners. At which point accusations of xenophobia come into play.

I refer to this piece by Duncan Garner: LOOK AT THIS! THIS IS WHY HOME OWNERSHIP IS LOW

Garner claims that:

12% of all homes in Auckland are being bought by people living overseas

This is misleading. It does not necessarily mean that homes are being bought up by ‘foreigners’. How much of the 12% are NZ citizens living abroad? Without defining ‘peple living overseas’ its difficult to attribute the 12% simply to foreigners. Additionally, it means that around 88% of homes are owned by New Zealanders. Thats a significant majority.

Garner goes on to insist that:

we desperately need decent and reliable statistics to show just how many houses in NZ are sold to overseas speculators.

Again, ‘overseas’ is not indicative of ‘foreigner’. The conflation astounds me.

Agreed, speculation is undesirable and particularly harmful in widening economic inequality. However, speculation should be the target, not ‘foreigners’. Even if the 12 % of homes owned by people living overseas are owned by foreign speculators, it does not mean domestic speculators have an insignificant effect on housing prices. We need statistics on speculators in the market, irrespective of their nationality.

Jamie Whyte criticises Labour’s economic policy as failing to discourage ‘rentseeking’ (speculation) and ‘crony capitalism’. The argument in short: if a government causes losses to accrue to the wealthy, it has to compensate for those losses with taxpayer money. Labour are not alone here. National also have the system set up so that tax revenue is redistributed upwards just using different kinds of subsidies.

Of note, Labour (and the Greens) advocate for a capital gains tax (CGT), yet appear to wilfully ignore that this device was in place in other countries and did not prevent the GFC in 2008 that was largely the result of a property boom.  To extend on Whyte’s point – taxing capital gains creates obligations between the government and the parties subject to that particular tax – in order to ensure gains aren’t moved offshore or that investors don’t stop investing here, those subject to the particular tax will need incentives, usually in monetary or ‘regulatory’ forms.

My point is that if any political party is serious about tackling speculative behaviours that affect housing affordability then land value tax (as a single not an additional tax) must at least be up for consideration. We need innovative solutions. David Cunliffe (Labour Party) stipulated that in his economic upgrade speech yet offers only a CGT.

But moving on, Garner’s boldest claim is to:

ban foreigners from buying old stock, build new houses if you want to invest here – that’s what happens in Australia. It’s time to stop the madness

Garner’s effectively suggests that we signal to foreigners that we in New Zealand don’t think they should buy homes where we want to live, they should instead build homes where we don’t want to live.

All those accusations of Māori separatism, come home to roost in the suburbs of the middle class.

A further problem is that xenophobic policy is dangerous for diplomacy. New Zealand has adopted declarations that create obligations to avoid discrimination and to uphold human rights. These declarations may only amount to soft law (not legally binding), but our actions do indicate our commitment to shared principles across the globe. They speak to our moral character. Xenophobic policies damage our international character.

There are strong arguments [from cosmopolitanists] for principles of distributive justice to apply at a global level. In context of this post, if we consider how we did not create the land, our claims on {absolute) ownership are questionable. Arguably, our only legitimate entitlement to it, is to share in its wealth. It might follow then, that those not born in NZ or who don’t fit the legal requirements for the arbitrary notion of ‘citizenship’ should still have every right to purchase land in New Zealand. Afterall, our birth place is contingent.

In my view, any governance model, must ensure that the communities affected by land ownership are properly compensated for that resource being taken out of the commons.

I  appreciate that some Māori might be uncomfortable with supporting policies that give foreigners access to land, particularly, if there are no safeguards around land that might be in dispute or customary land. Disputed and or customary land is a different case, they are about just possessory claims and ought to be dealt with separately from the general residential housing market.

Garner concludes that banning foreigners from buying homes in New Zealand is:

…not racist. It’s common sense. Let’s put New Zealanders at the front of the queue and help them, before it’s all too late.

If we want to make it easier for New Zealanders to buy homes in the areas they want to live, then tax the land and untax productive incomes.  The mere suggestion of banning foreigners is both ugly and embarrassing,  does not resolve the pricing issue and is most certainly not common sense.

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#Herecomesthesun: The Greens Solar Home project

Firstly, there is some magic in using a Beatles song as a hashtag to promote your policy on solar energy. On one hand, it will resonate with the diehard Green voter given that its a criticism of corporate life. On the other hand, one can’t help but smile when listening along given its folky beat. And its The Beatles, well, more correctly George Harrison. Maybe its just me, I don’t know. But I think that its use is some political psychology gold.

Secondly, the Greens Solar Home project is the kind of radical policy that the Greens need to reinvigorate their voting constituency. Its a bold move amid their neolibral-lite policies, to encourage consumers to ‘take the power back’. Another pun from a band also likely to resonate with the diehard Green voter and anti-state renegades. But pertinent since it implies that the consumer has the power both in terms of their energy source (no more bills to Mr Deep-pockets) and their choice on how best to manage their energy needs (self-determination).

BUT there is a ‘but’ when considering the specifics of this policy and I’m hoping my critique doesn’t minimise the clout of the overall message.

The thing about political parties is that they seem to abhor revision. In the face of criticism, parties often dig in their heels – even if that means advocating bad policy. I hope the Greens can internalise the feedback from Green voters and even non-Green voters and use it to show that they are open to revision where necessary, which is in itself conducive to participatory democracy, and in line with the underlying message of solar project – self-determination.

For ease of reference the Greens policy document can be located here.

In it you will see, that the Greens offer low interest loans to homeowners to install solar panels. The repayments are made through the homeowners council rates. That is, the loan is to be repaid at $900 per year on top of their rates. The interest on the loans is said to be about 4.1% p.a, although this interest figure is subject to change.

The Greens envision a savings of $100 per year for homeowners. Given interest must also be paid on that loan per year, its unclear if the Greens will require the interest on top of the $900 repayment, in which case, the savings figure of $100 is false. Or if the interest is included in the $900 per year, which means the term of the loan is longer.

Some argue that at least the repayments aren’t going to a foreign-owned company. But the loans are made through a foreign bank and provided to the consumer via the government. So in effect, the repayments go to the worst of them all. The Bankers.

What about the effect on homeowners? Its true that some homeowners will benefit from solar power, particularly those who live in the homes they own. Depending on social preferences, house prices may rise if solar is viewed as an improvement to the property. Which is fine for those who tenant their won properties.

What about the renters? landlords may decide to install solar to improve the value of their properties. The effect, is likely to see the rent increase for two reasons: the market rate for solar homes will increase if there is demand for solar powered homes, and the landlord will need to repay the loan for the installation of the solar panels. So for low income renters, this may be a negative, since renting can already place a large burden on those individuals or families. If landlords are prevented from passing on the costs of the loan to install solar, then fewer rental properties will have solar, which affects a large proportion of the lower socio-economic demographic who are the people who need access to soalr the most. Also, it diminishes the purpose of the Greens policy.

Also, the idea that excess power generated could provide a return to the homeowner is a bit disingenuous. If the uptake is significant then power prices will fall. This means that the price at which you can sell your excess power is probably negligible. In addition, the Greens NZ Power policy, intends to drive down the price of power!

This article by  George Monbiot  (h/t to @gtiso) suggests that solar panel installation ‘is the ideal modern status symbol, which signifies both wealth and moral superiority’ [in the middle class], ‘even if it’s perfectly useless’. The suggestion is that the policy either intentionally or inadvertently operates as a wealth transfer to the middle class. Similar could be said of the Greens policy.

What about disposal? It was pointed out that solar panels are difficult to dispose of because they contain toxic materials. Solar panels are estimated to have a life span of about 25 years. The policy is unclear on how the Greens intend to dispose of the panels at the end of their life spans. If they will create landfills in NZ, then there are additional costs involved in setting up a land fill for this purpose, not to mention issues with dumping toxic materials into NZ soils. The alternative is to export the waste material and have some other community deal with the effects of solar panel pollution. Admittedly, I’m not very clued up on how to dispose of toxic materials or the extent of the toxicity in solar panels, so this worry of mine could be completely unfounded.

So I have outlined my gripes, so let me just reiterate that I wholeheartedly support initiatives to address climate change and moves towards decentralisation and clean energy. So  one way I see for improving the policy is implementing the combination of LVT and UBI (see my post on the benefits of UBI here).

LVT as mentioned multiple times in previous posts, brings land (broadly defined to include all natural phenomena not produced through human exertion) into common ownership – distinct from collective or private ownership. The economic rent collected is pooled and can be redistributed via a UBI. Income taxes are abolished (or significantly reduced during the transition) giving workers and non-workers (due to UBI) the ability to invest in their choice of clean energy (if that’s what they desire).  It might even be that communities decide to reduce the UBI for each person and use the remaining amount to invest in infrastructure and clean energy. Who knows. But that is self-determination. It extends this policy and makes it fair for all.

Reviving Georgism: George was a root hacker not a branch wriggler

Universal Basic Income vs Minimum/Living Wage

Bryce Edwards compiled a round-up of the inequality debates regarding NZ’s 2014 Election. I suppose, whether the motivation to focus on inequality is well-intentioned or a vote grabbing exercise is yet to be determined.

My issue with the inequality debate is that it is most often framed in terms of whether we should (a) increase the minimum wage, (b) legislate for a living wage, or (c) target assistance through wages subsidies like Working for Families. Not really root hacking stuff.

The presumption from those advocating increasing the minimum wage or having a living wage is that it will improve outcomes for the working poor.

Minimum or Living wage (MLW)[1] proponents also tend to argue that it is unfair that government subsidises businesses through the various welfare packages made available to low-income earners absolving businesses of the responsibility to pay fair wages to its workers.

In fact, I have made this argument myself and while I have revised my views on MLW strategies, I do think it has some merit. But whether MLW strategies address the issue of economic inequality is a different story.  In my view, part of the remedy to overcoming economic inequality is to implement a Universal Basic Income (UBI).[2]

I have posted this particular piece in my Reviving Georgism series because like many Georgists,[3] I think UBI and Land Value Tax (or land rent, land fees etc) are complementary policies for tackling inequality.

I do not necessarily oppose a MLW, in fact, a living wage is precisely what I advocate. I’m just not convinced that state regulating private enterprise to pay a particular minimum amount will necessarily have the effects intended. I think that UBI is a better goal because it benefits all society, not just one group, i.e. low skilled, low-income ‘workers’.

I also think we overlook that a MLW is a legal privilege that favours business and is therefore out of step with the objectives of the Unions and campaigns who typically lobby for MLW. I set out my argument below.

MLW as legal privilege

A MLW is a legal privilege weighted in favour of business because it removes the negotiating power of the worker to obtain a higher wage. It does this by legally entitling businesses to pay workers less (the minimum) than they might otherwise be willing to pay. Moreover, businesses are likely to choose to pay the legal minimum required simply because the law says they can.

Robert J Murphy adds another dimension where he argues that:

“Raising the minimum wage might represent a drastic harm to the most vulnerable and desperate workers…What could happen is that the higher wage would attract new workers into the labor pool, allowing firms to become pickier and, thus, to overlook the least-productive workers, who would remain unemployed or lose their jobs to more-highly-skilled workers”

I agree that MLW increases could represent a harm to low-income earners and I think that Murphy’s point reinforces my argument about privileging business. Additionally, MLW strategies might attract those who are unemployed but looking for work, to take on low skilled jobs in the interim, thereby potentially increasing unemployment for low skilled workers – an unintended consequence.

I’m not ignoring the fact that in non-minimum wage societies businesses can (and do) exploit workers.  My criticism is not that MLW strategies are inherently bad for all workers, indeed they probably do have some positive short-term effects for some but as Fred Foldvary points out [Henry] George would argue that minimum wage simply treats the effects [of poverty] not the symptoms, and that it distracts and appeases to avoid confronting the remedy.

Wages increase when rent decreases

George argues that ‘the line of rent is the necessary measure of the line of wages’.[4] He thinks that under free conditions, no-one would work for someone else if they could make the same amount working for themselves.[5] He argues its only when land is monopolised that individuals are forced to compete for work.[6]

George’s theory argues that wages are determined by what is left after rent is taken out.[7] Rent being that which is paid for using land.[8] He further argues that:[9]

“No matter how much they might actually produce, they receive only what they could get on land available without rent—on the least productive land in use. Landowners take everything else. Hence, no matter how much productive power increases, neither wages nor interest can rise if the increase in rent keeps pace with it”

He also proposes that:[10]

“Where land is subject to ownership and rent arises, wages will be fixed by what labor could secure from the highest natural opportunities open to it without paying rent (i.e., the margin of production). Where all natural opportunities are monopolized, wages may be forced by competition among laborers to the minimum at which they will consent to reproduce. Clearly, the margin cannot fall below the point of survival”

At first glance, this quote seems to support having a MLW, but in context George would say MLW is not conducive to solving inequality – it simply ‘appeases’ the workers to avoid dealing with the free lunch income enjoyed by land owners at the expense of workers who are forced to compete for a minimum wage. Noting, a minimum wage could never be lower than the margin or landowners would risk an uprising that could threaten their privilege. So even without a MLW setting, landowners will always have a minimum at which they can charge rent, and businesses would have a minimum at which workers would consent to work or they risk workplace strikes.

On this basis, I think a MLW plays right into the hands of the landowners and businesses to the detriment of the most vulnerable members of our society because it provides a sense of certainty around rents i.e. a MLW provides a legally specified minimum wage that must be paid to workers (by businesses)  on which land owners can base their rents.

Importantly, as Nate Blair points out minimum wages in the long-run can only shift economic rent to different locations or decrease aggregate wages. And while a minimum wage can benefit labour in the short-run, including labourers who also happen to be landlords,  the long term impact on real wages is negligible.

Arguably, UBI is no different than MLW because it too provides everyone with a specified minimum amount of income. However, this is why I think in order for UBI to be effective it must be accompanied by a LVT and because it focuses on long term outcomes.

Another benefit of UBI is that it provides a mechanism for recognising and rewarding our currently economically invisible members i.e. those who carry out valuable but unpaid work such as stay at home parents, or volunteers.

The UBI and LVT combination also provides a foundation for setting up a participatory democracy framework which would enable individuals to voluntarily take part in public decision-making forums (e.g. multi-body sortition etc) without the stress of having no income. But that is a discussion for another post.

To conclude, if the politicians aren’t going to address the root of inequality by looking at tax evolution and a UBI, then we deserve an answer as to why. This is what I believe we ought to challenge our politicians on this year to determine if their policies are simply vote grabbing or genuine. How we decide the amount, or the age, or the frequency at which individuals receive a UBI (or the rate or measure for determining LVT) is beyond the scope of this particular post but I think what we should be focusing on (as the title of this post suggests), is hacking at the roots instead of simply wriggling the branches of the failed system we have inherited.

UPDATE:

Its been brought to my attention that I have probably been a bit presumptuous in assuming that readers would take into account the current wage subsidies and welfare packages already available in NZ.

Its important because this is the context within which I base my argument. Here are a few sites to help get your head around NZ minimum wage and the government transfers available:

In NZ there are two predominant broad views about how to improve poverty. The first broadly subscribes to the Scandinavian model – progressive taxation and increasing the top marginal rate to increase revenue to provide free core public services. Critics of the welfare system and of those advocating for a Scandinavian model in NZ argue that welfare creates dependency and this dependency causes the poverty and wage gaps we see in our country.  The critics are the second group who typically subscribe to the neoliberal model – lower taxes, privatisation, user pays services, the free market. Scandinavian model advocates usually argue that if the wealthy paid more taxes on their productive incomes that we could afford to provide core public services to those most in need.

There is a strong tension between these two groups. As a relatively recent subscriber to Georgism, I think that both models are flawed because unlike Georgism, they ignore the role that speculative behaviour plays in creating inequalities.

In this post, I tried to clarify that I didn’t think a MLW was inherently bad, just that UBI with LVT was better overall.

The reason most often cited for pursuing a MW is ‘fair pay for a fair days work’ and I agree with the sentiment. However, I don’t think ‘fair pay’ and ‘minimum wage’ are the same, but this is how MW proponents often frame their arguments.

In fact, MW’s often aren’t ‘fair’ for the work carried out. If they were then government transfers i.e wage subsidies wouldn’t be necessary. No matter how little a worker is paid by their employer, the wage subsidies supplement those incomes enough so that supplemented income makes working more attractive than just receiving jobseeker support (a welfare payment).

So if we had no MW (in NZ), and some workers were to receive less from an employer than they might currently get those low-income earners would have their incomes supplemented by wage subsidies.

Additionally, no business could pay below the maximum someone could get on welfare because most workers would choose not to work for less than what they could get for not working. This would apply in any country who has a welfare system. In effect, even if there was no legally specified MW there is actually already a minimum in place i.e. more than a worker could receive as their maximum on welfare. Admittedly, in NZ this rate would probably change depending on the region a person lives, because the accommodation supplement is location based.

Aside from the arguments set out in this post, MW also has the effect of forcing workers to compete for jobs, which gives business the upper hand to choose the person willing to accept the least amount in wages i.e. the minimum legal amount.

I reiterate, I don’t disagree that MW’s can have short term benefits. However, I think that focusing on MLW prolongs getting to the real remedy because it appeases workers, which means the more vulnerable members of our society – those who are unable to work for whatever reason, only receive welfare payments, which are necessarily less than those who earn any productive wage with additional government transfers (wage subsidies). A UBI and LVT combo would iron out this inequality and ensure even those who were unable to work had access to a living wage, not a bare minimum.


[1] For ease of reference, I use MLW to include those who advocate:

  1. a minimum wage; and or
  2. increasing the minimum wage; and or
  3. a living wage.

[2] Others refer to this is Guaranteed Minimum Income or Guaranteed Basic Income.

[3] I have resolved to use the term ‘Georgism’ (as the title of each post suggests) to reinvigorate interest in Henry George’s economic theory. However, in doing so I think I may have inadvertently neglected the preferences of some who prefer ‘Geoism’ and others who reject describing themselves under an ‘-ism’, such as Martin Adam’s who writes at Land, A Humaniteer Project. Adam’s proposes that while Henry George’s economic theory is traditionally understood as Georgism, a more accurate term is ‘Geoism’ because it ‘contains the prefix Geo, from the Greek word γαια, meaning ground or earth’ and because George’s philosophy advocates the sharing of nature. Please note that I use the term ‘Georgism’ broadly to include any persons who share in advocating the fundamentals of George’s economic theory.

[4] Henry George and B. Drake (ed.) Progress and Poverty (2006, Robert Schalkenbach Foundation, New York) available online: http://www.henrygeorge.org/pdfs/PandP_Drake.pdf  at 117.

[5] Ibid at 116.

[6] Ibid.

[7] Ibid at 93.

[8] Ibid at 89.

[9] Ibid at 93.

[10] Ibid at 116.

Credit for the title of this post belongs to Adam John Monroe

Thanks to all those in the LVT Facebook group that helped me get my head around this and directed me to relevant chapters!

National signs NZ up to Ethiopia land grab

A media release from the National Party states that NZ have signed a Food Security Cooperation Arrangement with the Ethiopian government.

Foreign Minister Murray McCully states that NZ’s involvement is:

…to assist in the development of commercial scale agriculture in Ethiopia, and build food security partnerships in the region.

Indicatively, the food security arrangement is less about feeding one of the poorest countries in the world, and more about commercial agri-business gaining access to millions of hectares of land in Ethiopia.

Fred Pearce explains in his book The Landgrabbers that:

The [Ethiopian] governments five year plan promises to lease 3 million hectares for large scale mechanized agriculture by 2015, much of it in the rebellious tribal border lands of Gambella (chapter 1, p.12)

Pearce also points out, the development of commercial-scale agriculture has devastating effects on those regions where the land is most sought by commercial interests. In order to get land ready for commercial agriculture, the government collects the dispersed local inhabitants (predominantly tribal groups) into state-designated villages while foreigners get exclusive use rights of their land, forests, fields and hunting grounds through arrangements like the Food Security and Cooperation Arrangement.

The effect on the inhabitants, the ecosystems, the wildlife and biodiversity in general is disastrous. In addition to being forced from their lands and into a lifestyle they are not accustomed to, they have their livelihoods snatched from them as their fields and forests are cleared, waterways diverted and lands enclosed.

Many end up working on the farms for low pay because they are now required to pay rent in the village they did not freely choose to live in to a landlord who took what had been freely available to them. Moreover, because they work on the commercial farms, they are unable to tend to their own food crops which makes food security even more difficult than their previous subsistence living.

The governments and commercial enterprises that participate in these land grabs often proclaim their businesses will lead to prosperity and jobs for locals. This is rarely the case. In Ethiopia, the companies bring in foreign nationals and the highland Ethiopians to do the technical work, while limiting the local lowland Ethiopians  opportunities  to unskilled  very low paid work. Despite that its the lowland Ethiopians whose land is most often subject to these land grabs.

To make matters worse these companies export most the food grown on these commercial farms. The locals lose their own ability to feed themselves through loss of land and an inability to buy expensive imported food, so that commercial agri-business can use their lands to feed foreigners for profit.

McCully’s media release highlights the commercial advantages for NZ in signing the agreement, pointing to Ethiopia’s proximity to key markets in the Gulf, but it is vague on the issue of food security.

Food security is defined by the WHO ‘as existing when all people at all times have access to sufficient, safe, nutritious food to maintain a healthy and active life.’ However, given the signals in the media release focusing on commercial scale agriculture I am doubtful that the arrangement concerns food security for the most vulnerable Ethiopians.

The National governments acceptance and support of commercial agri-busness in Africa is evidence that the colonial past lingers on.

This is exploitative, destructive, neo-colonialism. We should be ashamed that our Government would make us complicit in a practice that intentionally destroys the lives of already marginalised people for profit.

Reviving Georgism: How the Greens could improve their taxation policy

Previously, I wrote that I would vote according tax reform policy because I consider tax reform as fundamental in resolving economic equality in NZ and abroad. It’s also no secret that my voting preferences are best understood in a left-wing framework, but this does not presuppose I would vote for a NZ Left party if their tax policy had worse outcomes.  Anyhow, I was reading the Greens taxation policy and decided this was a good time to write the third installment of Reviving Georgism and discuss how the Greens could improve their taxation policy to address the unrelenting economic inequality smothering NZ.

(Obviously, I am critiquing from a non-economist perspective but in light of Henry George’s economic theory)

Summary of Greens Taxation policy

The Greens state that they envision a tax system that ‘supports communities and the environment, encouraging sustainable behaviour while providing sufficient revenue for the effective operation of Government’.

They insist that a tax system should be broad based to avoid excessive reliance on personal and business income taxes, and that the tax base should include: Personal & Business Income Taxes, Consumption & Expenditure Taxes, Targeted Environmental Taxes, and Taxes that acknowledge the value of common property (Resource Rents).

The Greens also advocate Ecological Taxes (ET), a Capital Gains Tax (CGT), and a Christchurch Earthquake Levy (CEL) as part of their policy proposal. In addition, they recommend setting up an ecological tax commission, increasing the top marginal personal income tax rate, altering the progressive tax scale, and introducing a universal tax free threshold for the first $10,000 of income.

The Greens support exempting the family home from CGT, restricting foreign purchases of local assets, and treating investment income equally for tax purposes.

This taxation policy is intended to ‘shift taxes off work and enterprise, and onto waste, pollution and scarce resources’. The Greens insist under their taxation policy ‘clean business pays less and everyone pays less income tax’.

Note, I will not be discussing The Greens monetary policy included in the taxation scheme, in this post, except to point out that if productive income tax is abolished, individuals would receive their full wage and this is likely to be spent back into the economy, increasing the money supply in circulation without having to artificially create more money or print more money.

Why tax at all?

Most of us probably agree that under current economic conditions we need to fund public services for the most vulnerable members in our communities and for other community needs. And generally, tax is considered acceptable for this purpose. The question for now then is not whether we should tax, but rather what should we tax.

Of course, hard leaning right libertarians will probably dispute the use of taxation altogether, but for the purposes of this post, I will not explore that particular argument.

As pointed out in my previous posts on Reviving Georgism here and here, I explain how Henry George proposed targeting what we take not what we make and he saw this is as fundamental to eradicating poverty and instrumental in advancing progress.  I think that the Greens vision could be highly compatible with Georgism if more radical changes were made to their taxation policy  and if they simplified rather than complicated the tax system because their vision is not too dissimilar from George.

Analysing the Greens under a Georgist lens

Currently, the Greens taxation policy is not the fairest way to draw revenue for public services because it places a large tax burden on the productive earnings of individuals and businesses and burdens them with further costs attributable to an array of other taxes (existing and new).  But it does at least feature land and resource rents, which are not only relevant to Georgism but probably the most important component of an efficient and effective tax system.

I find the Greens phrase  ‘funding the effective operation of Government’ problematic, because it’s so general in nature it ignores that the tax system must be simple or efficient if we want effective government. As pointed out in the Taxing Question of Land ‘complex tax systems allow for avoidance, evasion and expensive administration costs to both the public and private purse’. So it is really a matter of fiscal responsibility to implement a simple tax system. The Greens seem to presume that the introduction of CGT counters the avoidance issues, but they ignore the cost it takes to administer further taxes and to enforce payment, and the fact that individuals and businesses may still be able to hide that revenue in offshore tax havens.   Unfortunately, the Greens policy does not simplify the monstrosity of a tax system we currently endure, it introduces a raft of new taxes without abolishing any existing taxes, and effectively feeds the monster.

The Greens also insist that a broad base tax system is necessary to reduce the burden on income earners, but seem to equate ‘broad base’ with many taxes. Broad base just means not restricting to narrow sources, and as the Land Value Tax Campaign argue land itself is the broadest base of all from which to draw public revenue since it’s the hub of basically all economic activity. The Greens seem to overlook the practical role of land and natural resources in this sense.

The Greens insist that their taxation policy lowers income taxes but it doesn’t. It raises the top PAYE rate to 39% for those that earn over $80,001.00. The Greens retain a tax-free threshold which is intended to offset the land and resource rents that form part of their ecological taxes. In addition, there is no reward for clean business, there is simply an exemption from paying the maximum rate.

In order to understand the alleged benefits of the Greens income taxation, I carried out a comparison between the current PAYE scheme and the Greens PAYE scheme. The table below shows the current thresholds and tax rates against the Greens taxation proposals. It also provides two examples illustrating that the Greens are wrong to say that ‘everyone pays less income tax’.

Current PAYE 
Tax rate
 
Greens PAYE
Tax rate
Up to 14,000
14,001 to 48000
48,001 to 70,000
70,001+
10.5%
17.5%
30%
33%
Up to 10,000
10,001 to 42,500
42,501 to 80,000
80,001+
0%
19%
33%
39%
(Note: all comparisons exclude all other levy's/taxes)
Example A: XX earns $90,000 per annum
AA under PAYE
$90,000
AA under Greens PAYE
$90,000
$14,000  - 10.5%
$34,000  - 17.5%
$22,000  - 30%
$20,000  - 33%
$1,470
$5,950
$6,600
$6,600
$10,000  - 0%
$32,500  - 19%
$37,500  - 33%
$10,000  - 39%
0
$6,175
$12,375
$3,900
TOTAL
$20,620
TOTAL
$22,450

Example A shows that someone who earns $90,000 p.a pays an extra $1,380 p.a under the Greens taxation scheme.

Example B: XY earns $48,000 per annum
XY under PAYE
$48,000
XY under Greens PAYE
$48,000
$14,000 - 10.5%
$34,000 - 17.5%
$1,470
$5,950
$10,000  - 0%
$32,500  - 19%
$5,500   - 33%
$0
$6175
$1,815
TOTAL
$7,420
TOTAL
$7,990

Example B shows that someone who earns $48,000 p.a pays an extra $570 p.a under the Greens taxation scheme.

So despite the Greens universal subsidy for the first $10,000 earned, no real benefit accrues to the income earner. The use of progressive taxation nullifies the intended effect of a tax-free threshold. It’s probably why Labour dropped it and why National have argued against it.

LVT avoids issues inherent in progressive taxation

Supporters for progressive taxation schemes typically argue that the most well off members in society should pay more than the least well off members. I agree to an extent, except I don’t think ‘well-off’ should have any bearing on actual income earned – such income goes to the income earner in exchange for their labour. I’d argue that well-off is those with the privilege of holding land, that is, those whose increases in wealth occur through the State sanctioned legal privilege of land holding (*NB, I do understand that there are persons who are asset rich and cash poor which needs special attention when implementing a tax reform such as LVT).

Other issues that concern me with progressive taxation are:

  1. self-employed earners may opt to work for cash jobs to avoid paying the higher tax rate, thereby reducing the amount of revenue collected for public services/effective operation of Government
  2. it could discourage individuals and businesses from acting charitably because of the increase in tax from their productive earnings, thereby reducing the funds that might otherwise be invested or directed toward charitable causes
  3. by having the income tax rate so high and introduction of resource taxes on top along with a raft of other taxes without removing any pre-existing taxes, may in fact drive down wages or employers may choose to employ fewer people to maximize their profits

Avoiding xenophobia allegations

I do worry about the restrictions on asset purchases targeted at foreign purchasers. Restricting foreign purchases of local assets suggests xenophobic attitudes, whether intended or not. However, if land rents are implemented, there is no need for the restrictions because the landowner becomes liable to pay the land tax. The rents accumulated are then redistributed back to the community whose efforts created the unimproved value of the land. This unimproved value is also why I think the Greens are wrong to exclude the family home as a source of tax revenue. Homeowners can simply hold their properties without making any improvements yet the land value increases through the efforts of others but the benefit of that unearned increment goes straight to the land title holder.

Greens compatibility with Georgism

In reference to my earlier posts on Georgism, I do think The Greens are right to argue that ‘work and enterprise should be encouraged and speculative investment in non-productive assets discouraged’, and I also agree that ‘the taxation burden should be reallocated away from income and towards resource use, waste, and pollution’, which is why I think the Greens policies could be highly compatible with Georgist economic theory.

If the Greens explored the fundamentals of Georgism, I think they could create a sound tax system that fits their vision while simultaneously addressing the economic inequality smothering NZ.

I think the best way to improve the outcomes of our most disadvantaged members is by abolishing income tax altogether.  This does not mean abandoning social security. The LVT is an effective precursor to introducing a UBI, and subsequently the dismantling of an overreaching State by reducing the need for many of the services the State provides. It is simple and  efficient.

In my opinion, The Greens are in a favourable position. Without the support of the Greens, Labour probably wont be able to govern. This means that instead of the Greens having to resort to incrementalism (after all, Labour have that covered) they can use their influence as part of a coalition to push more radical policy that is less State centred while trying fresh ideas to revitalise the Left and broaden their appeal across the political spectrum.

In summary, The Greens could improve their taxation policy by abolishing taxes on productive earnings and focusing on taxing land and resources. This would simplify the tax system, work toward reducing the size of government and act as a precursor to implementing a UBI.

 

FYI – Over the next week or so, I will be updating my blogshelf to include a page designated to Land Value Taxation. Please email me: ellipsister.blog@gmail.com  if you have a blog or website and want to make sure I include it! Thanks. 

Defending the Left-Right dichotomy

Following Pablo’s piece on Kiwipolitico, where he ascertains that ‘the Left is well and truly dead in NZ’, I noticed that there was relatively little commentary, well, aside from Whaleoil.

(A silent acknowledgment of a shared sentiment, perhaps?)

I don’t actually think the Left is dead, rather I think it’s dormant, largely due to what Pablo identifies below:

Many of the Left political elite prefer to maintain their positions in the status quo rather than heed the demands of their grassroots to push for fundamental change. Their concerns are about the distribution of power and resources–their own and that of the organizations they front–within the system as given, not about changing the system.

Many argue that the Left-Right dichotomy (LRD) is increasingly unhelpful and results in meaningless political generalisations. Others insist that the traditional LRD has changed (I’ve written a little on this see: Politics as a broader spectrum than Left vs Right, note that some of my views may have changed or slightly altered).

Bryce Edwards wrote about The Changing Nature of Ideological Conflict in NZ Electoral Politics in 2009. He suggested that many other dimensions are at play that can conflate and/or confuse where parties sit on a political spectrum. For instance, Liberalism is often conflated with the Left and Conservatism with the Right, yet we can all probably think of examples where this simply isn’t true.

In my experience, the generally accepted convention is that Left is symbolic of a Socialist economic vision (noting that there are variations within that Socialist worldview) and that Right is symbolic of a Capitalist economic vision (again noting that there are variations within that Capitalist world view). Given the wide scope necessary for discussing political spectrum’s and the various dimensions at play in full, this post is limited to discussing the LRD with regard to the conventions set out above. I am not presuming to be an authority on the issue and I acknowledge the risk of confirmation bias by limiting the discussion in this way.

Unsurprisingly then, I largely disagree that the LRD is either unhelpful or meaningless. Why?

Firstly, many of those who say the LRD is meaningless, still refer to it when discussing their own political views or the views of others. Arguably because its helpful for (1) differentiating their views from others, especially if one wants to create distance from a view they strongly oppose and (2) for building a rapport with like-minded individuals or groups. It is at least a helpful and meaningful as a reference point.

(On a side note, I notice that it is mainly those who have identified as Left who tend to disapprove of the LRD)

Secondly, it tells us something about the parties, that is whether they broadly subscribe to a Socialist or Capitalist worldview. Its helpful because as noted above, it gives us a reference point that we can assess or analyse the parties against and it highlights if the respective parties policies are consistent with the visions they proclaim.

However, I do think that the sentiment of meaninglessness has some teeth, that is, when a party claims to have a specific alignment (i.e. they usually indicate if they are Left or Right) but their policies are inconsistent with that alignment. This can make the LRD appear meaningless, but in my view, it only makes what the party says meaningless. It does not impinge on the LRD itself. Moreover, it legitimates the use of the LRD as a measure of credibility or honesty.

Lastly, the LRD is helpful for retaining a space for socialism to further evolve.

Morgan Godfery, blogger at Maui Street, tweeted:

which he later qualified as being the ‘the modern left’.

I can see the attraction in wanting to expand the definition of the Left to include those with socially democratic values albeit with capitalist inclinations. As a Socialist in a Capitalist society its difficult to reconcile ones practical life with ones ideological views. What I worry about is developing a concept of the Left that is so incoherent that it becomes both meaningless and unhelpful. I consider that including Capitalism within a Left framework is to concede to Capitalism. That is, we reinforce the  position that NZ Labour party have perpetuated since 1984 – that Socialism is an untenable vision.

Socialism is not the shit stain that Capitalists (irrespective of whether they call themselves Left or Right) proclaim and as such I think the LRD should be preserved because the ‘Left’ space gives Socialists a reference point (at least) that is unimpeded by an ideology with which it is inconsistent to further develop. Additionally, by allowing Socialism to evolve unimpeded, this may help to overcome the pejorative way in which a large proportion of the public view Socialism and the Left. So to this end, I defend the LRD, especially so in the current political economy.

Reviving Georgism: What is Land Value Tax

Firstly, I recommend watching either or both of the following clips before or after reading through this post (whichever you prefer):

There are some much longer documentaries on this topic, but the above two give a basic rundown and hopefully get you curious!

Land Value Tax (LVT) is a tax (or levy) on the unimproved value of land. LVT aims to reduce the value of land to make housing affordable by discouraging land speculation (unproductive behaviour) and to encourage entrepreneurship in business through abolishing taxes on productive behaviour. LVT is not intended as an additional tax, rather as a replacement of all other taxes.

Some prefer to call LVT a groundrent and not a tax because it reflects the rent paid for the use of property rights in land which is distinguishable from the ownership-use rights in buildings and other capital improvements.

[Note: I will discuss how LVT could be implemented in a later post and will address the differing views on what to call the LVT, as I’ve noticed some friendly contention among Georgists on terminology]

Henry George recognised that land obtains it value through its location and  demand. He noted that a vacant lot can increase in value without the landowner having made any improvements. He called the increase in the unimproved land value ‘unearned income’ (i.e. there is no cost in producing land because land is itself not produced by labour – although as pointed out in The New Statesman recently, some landowners have in fact produced land, e.g. the Palm Jumeirah).

Similarly, Professor Michael Hudson writes that:

Classical economists developed the labour theory of value to isolate economic rent, which they defined as the excess of market price and income over the socially necessary cost of production (value ultimately reducible to the cost of labour). A free market was one free of such “unearned” income – a market in which prices reflected actual necessary costs of production or, in the case of public services and basic infrastructure, would be subsidized in order to make economies more competitive. Most reformers accordingly urged – and expected – land, monopolies and banking privileges to be nationalized, or at least to have their free-lunch income taxed away.

[emphasis added]

George argued that unearned income from land should be taxed because:

If land were taxed more heavily, the quantity available would not decline, as with other goods; nor would demand decline because of land’s productive uses. By taxing the whole of the value of unimproved land, the government would drive the price of land to zero 

[emphasis added]

So why drive the price of land to zero?

In a nutshell: there is no cost in producing land since (predominantly) no-one produced or created it. Land is a natural resource (like air, water etc) that we rely on for survival. However, because our current system does not take into account the community efforts that give land its value, it is treated as a commodity allowing land speculators, homeowners and those employed in the FIRE (Finance, Insurance and Real Estate) sector to profit from the efforts of others simply by holding and selling land and obtaining the ‘free lunch’ or unearned income.

Reducing the land value to zero would mean that future homeowners would only need to borrow money for the improved value of the land and not the unimproved value and could mean that some future homeowners would not have to borrow at all from a lending institution, thereby making home buying much more affordable.  It also encourages those sitting on vacant lots (i.e. land speculators and property developers) to develop the site or sell it to someone who will develop it (i.e. putting it to productive use), because the land owner would still be required to pay the LVT whether or not any improvements were made. This would also address concerns about foreign ownership of land in NZ, because foreign owners would also be required to pay  LVT.

LVT is preferable to productive income taxes, because there is a fixed amount of land, so any rent could easily be collected. This means we could simplify the tax system and address avoidance issues, as people cannot shift land offshore to a tax haven. In addition, it means that workers and businesses can retain their full productive earnings thereby encouraging productivity (entrepreneurship, research and development etc) which will improve economic outcomes and assist in bringing about equality.

Matt Nolan (TVHE and Infometrics) states that:

If you tax land, the price of land will fall, but the amount of land being used will not change.  In contrast, a tax on labour income will lead to some people working less, and a tax on capital will lead to lower levels of investment in New Zealand.  This attribute of a land tax means that it is more “efficient” than other taxes, implying that for any given amount of revenue the government wants to raise this tax will do it for a lower cost to the rest of us.

Nolan also notes that while the introduction of a land tax would have ‘adverse implications for those who own a significant amount of land or those who own land but have a variable income year to year, that changes in wealth as a result of the imposition of a land tax will only happen once, so it would be possible for the government to compensate the immediate losers of the changes through lump-sum payments if it deems the adjustment to the new tax unfair’.

The fairness argument is a significant component of Georgism and its unsurprising that land owners including Mum and Dad homeowners and the FIRE sector resist the introduction or dismiss the idea of a LVT system given the intent to reduce land values. But Georgists and many other renowned economists argue that LVT is fair and in fact is the fairest tax system because it penalises unproductive behaviour rather than productive behaviour. The Land Value Taxation Campaign set the fairness argument out as follows:

Land (unlike goods and services) has no cost of production. If an ample supply of land of equal desirability were available everywhere, there would be nothing to pay for its use. In reality land acquires a scarcity value owing to the competing needs of the community for living, working and leisure space. Thus land value owes nothing to individual effort and everything to the community at large. It belongs justly and uniquely to the community. Conversely, the reward for individual effort can belong only to the one who earns it, to spend, save or give away as he or she may see fit.

Because of differences in positional advantages, fertility or natural resources, some locations are more desirable than others. Demand for access to these features gives land its rental value. Land Value Taxation, being assessed on these values, is fair in its incidence.

Georgism is not immune from criticism, but  Nate Blair argues that:

The problem with Georgism is not the idea, which is basically flawless.  The problem with this idea is that it seems both radical and inherently moderate to anyone understanding it.  The revolutionary aspect of Georgism threatens the predators of caricature “capitalism” and angers the conservatives. The justice and honesty threatens communist revolutionaries and angers armchair progressives, who are fine with paying a bit more but not with giving up their privilege.

[emphasis added]

My current view (which may change as I come to understand Georgism and LVT a bit more) is that LVT as a single tax is insufficient for capturing other forms of unearned income, and given George was writing in a time when technology and global networks were not nearly as sophisticated as they are today, perhaps he may have considered a tax system that captured all unearned income. However, some Georgist’s suggest that LVT would capture most unearned income, since it derives from land holding in some way.

In concluding, it is important to note that LVT is not an end in itself but it is the most equitable way for bringing about progress and eliminating economic inequality. And who knows what will follow, but in my view we should at least be trying to set the right foundations.

 

Reviving Georgism: Introduction

HGeorge

“This association of poverty with progress is the great enigma of our times…so long as all the increased wealth which modern progress brings goes to build up great fortunes, to increase luxury and make sharper the contrast between the House of Have and the House of Want, progress is not real and cannot be permanent” – Henry George

Henry George is most well known for his ‘single tax on land’ proposal, or what is most commonly referred to as Land Value Tax or LVT (although, he was not the first to popularise this idea). George’s theory is summed up on Econ Lib as follows:

Most taxes, noted George, stifle productive behaviour. A tax on income reduces people’s incentive to earn income; a tax on wheat would reduce wheat production, and so on. But a tax on the unimproved value of land is different. The value of land comes from two components, its natural value and the value that is created by improving it (by building on it, for example). The value of a vacant lot in its natural state comes not from any sacrifice or opportunity cost borne by the owners of the land, but rather from demand for a fixed amount of land. Therefore, argued George, because the value of the unimproved land is unearned, neither the land’s value nor a tax on the land’s value can affect productive behaviour. If land were taxed more heavily, the quantity available would not decline, as with other goods; nor would demand decline because of land’s productive uses. By taxing the whole of the value of unimproved land, the government would drive the price of land to zero.

I have briefly alluded to LVT before here and here .

A social advantage of the LVT is that it obtains support from across the political and economic spectrum, that is, its not strictly left, right or centre. For example, David Farrar (right wing blogger/National Member) recently commented that he supports a land tax and Stuart Nash (left wing blogger/Labour Member) did the same earlier this year on the Daily Blog .

My understanding so far is that George wanted to bring an end to privilege. He thought that the dependency relationship between land owner and non-landowner enabled the conditions for poverty to flourish and he considered that a land value tax to replace income taxes would reduce the resultant economic inequality by placing the tax burden on the unproductive gains of the land owner rather than the productive gains of the worker.

This presumably has the effect of encouraging the least well off members of society to obtain their full wage, thereby incentivising productivity and reducing the incentive of land owners to hold vacant land which drives up property prices.

As a non-economist, there are definitions I am still trying to get my head around, so any economists reading this feel free to correct any errors in the comments below. I’m still reading ‘Progress and Poverty’ (among multiple other texts) and I’ve decided that I will address Georgism in a series of posts over the next few months, with the holiday season nearing, I may be somewhat distracted. I will try to write according to the titles listed below and I will update with hyperlinks as I post:

  1. What is land tax
  2. Who does land tax apply to
  3. Why we should favour land tax
  4. How will land tax reduce economic inequality
  5. How we can implement land tax fairly in Aotearoa New Zealand

NZ’s attachment to the State

I have written, rewritten, changed the angle on this post multiple times over the past week and have just today reduced this particular post from the 4,200-word monster it was to something more digestible.

Recent political events indicate how attached to the apparatus of State we are here in NZ. When I began writing this blog just over a year ago, many people accused me of being a ‘statist’. They were right. I genuinely believed that we required the State to regulate both the economy and our social systems because I considered the only alternative was a corporate/multinational controlled society. My initial concerns derived from my strong opposition to neoliberalism (NL) and my limited understanding of how economies work.[1]

I imagine that the ingrained fear of the ‘free market’ is responsible for the general attachment to the State. The fear is probably well founded, given the concept of the free market we have differs significantly from the free market advocated by classical liberalism (CL). Under NL, the ruling elite have an advantage over the masses because they control the policy making of the State (I explain one angle of this later in this post). NL diverges from CL at this point, because the free market was supposed to be free from State intervention. As Michael Hudson points out, ‘Today’s neo-liberals say a free market is free for predators. It’s free for monopolists, free for land speculators, free for bankers to extract as much income from wages and industry as possible’.[2] I’m not here defending CL, merely pointing out that the NL conception has created this State attachment, that perhaps a free market under CL conditions wouldn’t have. Noam Chomsky argues that Adam Smith advocated [free] markets only on the grounds that under perfect liberty [free markets] would lead to perfect equality’.[3] But my concern is that a great disservice has been done to the concept of the ‘market’ itself, as if markets are inherently evil and designed to privilege the few.

The dominant theory is that the State is necessary for regulating the market to ensure that the least advantaged members of our society are not made worse off by the privileged few under the NL framework. Parties on the Left most often espouse this view, but it sits awkwardly with the Labour Party given that they implemented this system during the Fourth Labour Government. Additionally, as highlighted by Giovanni Tiso in his latest post, The leader vanishes, the Labour Party still considers that [Labour] ‘took difficult and long overdue decisions necessary for the modernisation of the New Zealand Economy’.[4] Clearly, an endorsement of the neoliberal project, yet in his bid for leadership, David Cunliffe asserts that he will increase taxes for the rich, and even touted the ‘socialist’ card.[5] So I am somewhat confused as to Labour’s true position.

As I mentioned above, I believed that we needed the welfare state[6] to overcome the existing structural inequalities in NZ. However, exposure to further information highlighted the flaws of the welfare state, specifically, that if the State are the arbiter of human rights and freedoms, then we are vulnerable to the same authoritarianism that we are currently experiencing under this National led government.

Sebastian AB writes on C4SS blog that what the state is capable of giving, it is also capable of taking away – by force.[7] The GCSB Act is the most current or at least, the most publicly discussed example of the seizure of human rights and freedoms (i.e. privacy) from individuals.

In my view, NZ’s political framework appears to be an amalgamation of the welfare state (WS) and NL. and the tension between these two ideologies has (arguably) created the worst possible outcomes for everyone. NL underpins all the policy decisions made in NZ, and policies targeted at improving outcomes for individuals and families (welfarism) are developed and implemented within this framework. Despite any perceived improvements under Labour or National, the changes have had no substantive impact on social or economic equality.

I was disturbed about the aggressive pronouncement (by Cunliffe, but also advocated by other left wing parties) of increasing income taxes for the rich, because it reaffirmed that our left is devoid of new ideas and are rehashing stale policies from the state socialist handbook.

Labour, Greens and Mana (LGM) argue that increasing taxes on high-income earners means that such earners will contribute their fair share to society. I appreciate and endorse the sentiment – we don’t want to leave our least advantaged members struggling to survive.

But what are the consequences of increasing income taxes for high-earners?

Those who pay proportionately more in taxes receive benefits from the State in the form of policy privileging their interests, otherwise the government risk being ousted by those with the most capital. The effect is the same as crony capitalism. This interventionism causes the deprivation that LGM insists their policies protect against.

Taxation is a huge reason that income inequality exists, and income tax is actually a relatively modern concept. Some critics even question the constitutional legality of taxing personal income, given its denouncement in the Magna Carta.[8]

In NZ, we use a progressive taxation scheme, i.e. a tax system that takes a larger percentage from high-income earners than it does from low-income earners.[9] LGM simply want to increase the percentage further for higher income earners, and some parties have even called for reducing the percentage to low income earners.

Problem – when those who earn high incomes become subject to a heavier tax burden, they seek increases in their net income to counter the loss through taxation. The obvious result is that low income earners lose out so that businesses can retain those high earners – these are typically academically qualified professionals who have the ability to negotiate their wages in their favour. This creates job losses/reductions in the lower echelons of business. When jobs become scarce in the lower echelons of the business, the workers compete for the available jobs and workers tend to accept less than the true value of their labour. In addition, they are often forced into beneficiary queues, state housing, state education and state healthcare systems and must conform to the criteria of those State schemes to even receive or become entitled to assistance thereby limiting their individual autonomy. Moreover, low income earners become the subjects of government data collection, further infringing their rights to privacy.

We will continue to play cat and mouse with income taxes as the rich are pitted against the poor. History tells us who wins. Our taxes effectively pay the ruling elite to tell us what we can and cannot do.  In fact, this is neoliberalism 101. The statocracy have convinced us that without the State, the market will plunge us into the deepest pits of inequality we have ever known.

As a nation, we have been indoctrinated to view State intervention as an indicator of a compassionate government, resulting in an unhealthy attachment to the State apparatus through propaganda used to obtain support to implement unpopular policy – usually policy that intends to limit human rights and freedoms for the economic advantages of the ruling elite.

I consider myself left because I still believe that socialism is preferable to capitalism, because in my view, profit over people is never justifiable and hierarchies are inextricably linked to capitalism where bosses control and exploit rather than emancipate workers. But I am not a socialist who thinks the State can resolve structural inequalities and is necessary towards that end. I can appreciate the pragmatic arguments for the State, but I doubt that we would be thrust into an Arab Spring like revolution in rejecting the State in an attempt to minimise its control over our lives.


[1] I admit that I am still a novice when it comes to economics and do not even pretend to hold any kind of expertise on the topic.

[3] Noam Chomsky on Libertarian Socialism via YouTube http://www.youtube.com/watch?v=yxbeyn2xMQE at (1:07)

[4] Giovanni Tiso, “The leader vanishes” on Bat Bean Beam available online at: http://bat-bean-beam.blogspot.co.nz/2013/08/the-leader-vanishes.html

[5] See Colin Espiners article David Cunliffe is Labours top dog available online at: http://www.stuff.co.nz/national/blogs/bull-dust/9092256/David-Cunliffe-is-Labours-top-dog

[6] “A welfare state is a concept of government in which the state plays a key role in the protection and promotion of the economic and social well-being of its citizens. It is based on the principles of equality of opportunity, equitable distribution of wealth, and public responsibility for those unable to avail themselves of the minimal provisions for a good life… The welfare state is funded through redistributionist taxation and is often referred to as a type of “mixed economy”. Such taxation usually includes a larger income tax for people with higher incomes, called a progressive tax. This helps to reduce the income gap between the rich and poor” Wikipedia available online at: http://en.wikipedia.org/wiki/Welfare_state

[7] Sebastian AB on C4SS “Taking power with or without Chris Hedges” available online at: http://c4ss.org/content/20440

[8] H/t Mark Hubbard’s blog (dedicated to tax issues) Life behind the Iron Drape available online at: http://lifebehindtheirondrape.blogspot.co.nz/  see also Ian Wisharts Income Tax: 1297 law holds key to challenge in Investigate (June 2000) available online at: http://www.investigatemagazine.com/june00tax.htm

[9] Progressive Tax, Investopedia available online at:

http://www.investopedia.com/terms/p/progressivetax.asp

Are we apathists?

Plato proposed that ‘the price of apathy towards public affairs is to be ruled by evil men’.[1] Put in the context of today at a time when global dissent is growing, we here in New Zealand sit apathetically on the periphery of this global movement lending truth to what Plato proposed. But why is that? Why do we accept that because our government is perceivably less authoritarian than other governments that we can sit idly by while they usurp our civil liberties and democratic rights? I do accept that authoritarianism permeates our political structures and that its not attributable to a particular side of the political spectrum; however, since the election of the National led government we have seen some clear trampling of rights and severe abuses of process. This post discusses why (in my opinion) we are a nation of apathists who criticise those who actively oppose the destruction of our rights.

In understanding the source of our apathy, we must understand from where it derives. We need to acknowledge that what we have is a two party state. National or Labour are at the forefront of any legislation implemented via our parliamentary processes. Note that Labour have an equally terrible history of overriding our civil liberties and democratic rights, most notably for me, the Foreshore and Seabed legislation passed under Helen Clark that actively denied Maori the right to be heard with regard to claims on the Foreshore and Seabed.[2]

But despite the fact that Labour have a poor record, National in particular appear to have no proclivity for the rights of individuals. It considers itself above the law and invincible. It has passed and intends to pass multiple pieces of legislation that limit our rights as individuals and within our communities.[3]

We receive our daily dose of the extremism of the Left in the myths perpetuated by right wing media streams whether that be in mainstream media or the blogs. We are told that the Left want to take your taxpaying money and give it to the lazy, bludging, griever, minority imbeciles (welfare state). We are told that the Left want the government in, on and under your bed (statist). We are told that the Left despise prosperity (communism) and lack the necessary skills to create a prosperous economy (anti-neoliberals/anti-freemarket). And most people believe it. Because most people are too busy trying to survive in their current economic situations to take the time to learn, think and critically evaluate that rhetoric.

The other myth perpetuated is that our government is far less authoritarian than other regimes and the crony policies it implements are for the growth of our economy. For the record, exponential economies are not sustainable; the myth that economic growth is the only means for prosperity is false. Exponential economic growth will destroy prosperity and humanity in the process.

When the public are saturated with the fear of a collapsing economy, they rely on their government to remedy the issue. Depending on the narrative, people consent to handing over their rights to the government. This is where we are. We are so afraid that we are going to wake up with empty bank accounts through no fault of our own, that we allow the government to implement whatever laws they deem necessary to avoid this happening. In fact, it is precisely such laws that will create these situations that we fear. Economies don’t collapse because of small businesses and hardworking individuals. Nor do they collapse because of the poor and unemployed being a supposed burden on the government books. Economies collapse because banks and multinationals call in their debts when the market becomes unstable. Moreover, the banks and multinationals create unstable markets so that they can call in their debts in order to increase their profits. This is what has often been referred to as the freemarket. The system of private lending that allows individuals to create wealth. Its bogus. But nonetheless, our government supports this supposedly freemarket that is in fact engineered to benefit the banks and while its possible that some individuals will benefit from this structure, many others will indubitably suffer. This supposed freemarket works best when smaller governments that have been forced to rely on borrowing to fund state infrastructure become so indebted to these banks that they have no choice but to comply or face the wrath of the quite visible hand of the IMF. The IMF impose strict conditions on lending and force compliance with those conditions through authoritarian governance – forced legislation to the benefit of the banks and multinational companies. South Korea is a prime example, such that the IMF claimed they were helping the nation out of insolvency. Instead, they vindictively devalued the currency and bankrupted major economic players in the Korean economy opening the market up to foreign economic domination. In my view, this is the likely plan for NZ. There can be no other reason for signing up to the TPPA and for selling legislation to multinationals that limits the rights of the people in Aotearoa New Zealand.

Sergei Karaganov writes on Aljazeera that:

“Western capitalism’s model of a society based on near-universal affluence and liberal democracy looks increasingly ineffective compared to the competition. Authoritarian countries’ middle classes may push their leaders towards greater democracy, as in Russia, but Western democracies will also likely become more authoritarian”

In my view, the New Zealand government are preparing us for this shift. In fact, I would go as far as saying that we are already part of that current. As Roger Douglas once pointed out, if we create a crisis and act swiftly so that people do not have a chance to think then we can move closer to implementing this freemarket. The National led government have passed many laws under urgency and this is a hallmark of Douglas’s literature. In addition, the government have used the perceived success of authoritarian China as a means to impose these standards in NZ with this narrative further reinforced by the US creating a moral panic that the Chinese will inflict authoritarian structures on the vulnerable nations in the South Pacific so we must act authoritatively to counter that influence. Both narratives support the implementation of authoritarian forms of governance.

So are we apathists? Hell, yes. While we have a small activist contingent, who remain committed and informed on matters of public affairs, the wider public tend to think that they are powerless and they disengage. Is feeling powerless the same as apathy? No. Irrespective of whether or not we think our voices will be heard or listened to, sitting by idly waiting for change or accepting defeat only feeds authoritarianism. I am guilty of being a slacktivist. I sit at my computer and purge criticism at the government and a few people will read what I have to say, but this is not the same as walking side by side with those who physically enter public spaces to voice their dissent. It doesn’t matter if you voted for National or a National led government, or if you fall within the other half of the population that voted against a National led government. If you disagree with the undemocratic actions of this government, the only way to make that clear and to co-opt change is a public show of solidarity.

We currently have an example of solidarity in Turkey. The elected government secured over 50% of the vote. Similar to here in NZ. Yet the people have said no to authoritarianism and in a show of solidarity have taken to the streets, despite the brutal backlash from the government and the dictatorial speeches of Tayyip Erdogan to quell the dissent. We are unlikely to experience the same violence in NZ because the government knows NZ will not accept blatant state aggression against the people.

But its time we start seriously considering who the extremists are: those actively opposing and publicly condemning the usurping of our rights or the government and their cronies who have taken active steps to abuse our parliamentary processes to deprive us of our rights and civil liberties?


[1] I am unable to find the original source of the quote, so I cannot guarantee that it is stated verbatim nor that it has not been misattributed. Nonetheless, it is still aptly fitting for this particular post.

[2] Note, it doesn’t matter if you think Maori have an actual claim on the Foreshore and Seabed, what matters is that there is a process that allowed the claim to be assessed and Labour removed the ability for Maori to go through the process. Its similar to the Health and Disability Amendment that has removed a process for parents as carers of adult disabled children are denied a process of judicial review of this particular amendment, despite the express discrimination inherent in the amendment.