Human Rights

Death Duties

I was reading Martyn Bradbury’s post Generation X have been betrayed by neoliberalism and baby boomers.

I agree with many of the points he makes including some of the points made in the article he cites, insofar as economic inequality is a massive issue.

But I do not agree that we can attribute the cause of economic inequality to a birth cohort. The focus on generation ignores or at least treats as ancillary, an obvious cause, namely, speculation or rentseeking. It is not the fact of being born between 1946 and 1964 that destroyed free education, a robust welfare system and affordable housing in NZ. It is the speculative rentseeking behaviour of those – many born within that particular cohort, some before and some after – who were already privileged enough to participate in the speculative markets that created widespread economic inequality and preserved it through the 1980-1990 economic reforms through to today.

But I want to focus on the last statement Bradbury makes at the end of his post:

“A progressive Government coming into challenge this intergenerational theft should first consider reapplying death duties to redistribute all that boomer good luck to other generations”

The argument it stems from is more or less this: Baby Boomer’s (BB) were born into and lived through a unique economic boom that created many opportunities such as affordable housing (really it was cheap land), a robust welfare system and free education. This implies that during and as a result of the economic boom, BB’s were the recipients of the benefits that flowed from those opportunities without the struggle of repaying student loan debt and being priced out of the housing market unlike the generations following the BB’s. Therefore, BB’s should compensate future generations for the loss of opportunities by paying a tax on their death.

I understand why people romanticise about taxing the BB’s on their death (as morose as it is), because when faced with communities living in poverty, there is a whole generation to blame because we are told that BB’s had everything sweet.  In doing so, we neglect the highly unjust tax and monetary system.

Often missing from the debate also is that death duties will likely incentivise the wealthy BB’s (those these arguments usually target) to shift the funds of their estate to offshore tax havens.

So, in my view, changing the tax system to capture unearned income (during the lifetime of the individual) and targeting speculative behaviour is better than waiting for people to die.

An objection also worth noting (although highly unlikely and very slippery slope) is that wealthy BB’s may become targets of vigilante groups in extremely tough economic times, on the perception that they are worth more to society dead than alive [I don’t seriously think this is an issue, but its not an impossibility either].

The idea of death duties, in my opinion, is flawed for three key reasons (although this isn’t an exhaustive list).

Firstly, it is inefficient to (re)introduce another tax into an already complex tax machine.

Secondly, there is a simpler, more efficient and effective tax that could deal with speculative behaviour/rentseeking – land value tax (LVT).

Thirdly, death duties are hardly hallmarks of a progressive government, unless what we view as progressive is retro politics. Death duties were introduced in the 19th Century in NZ and by the mid-1950’s were (mostly) abandoned [see Michael Littlewood’s History of Death Duties and Gift Duty in NZ].

On the first point, I consider death duties inefficient for many reasons, including  that it is difficult to determine (even approximate) how much revenue will be raised in any given year and so that makes planning/budgeting on how to redistribute those funds uncertain. Also, no-one mentions how these funds might be redistributed back to society e.g. citizens dividend? or just paid into the states general fund? There is also the issue that the argument for death tax is intended to assist future generations, yet these are usually the direct beneficiaries of inheritance, so the tax takes from those generations. Although the suggestion is, it is fairer because it redistributes back to all. However, by putting back into the general fund, means that living BB’s still benefit from the deaths of their birth cohort, while the direct recipients have their inheritance taxed.

The uncertainty of fund levels also impacts on administrative costs such as staffing, office space, office equipment – noting that some of the revenue collected would be redistributed back into administrative costs, reducing the pool of funds available for social redistribution.  And the tax itself adds to the growing number of taxes (increasing bureaucracy) the government expects individuals to pay thereby increasing the reach of the state from the life of the individual into their death.

On the second point, the level of tax paid by the community is already excessive. Most people agree we need to reduce the tax burden not amplify it. The focus should not be on how many other taxes we can use to collect the revenue necessary to provide public services. I maintain my position that LVT and abolishing or significantly reducing all other productive taxes appears to be the fairest and most efficient way to deliver public services, alleviate poverty, disincentivise speculative behaviour and incentivise innovation and entrepreneurship.

So discussions on economic inequality ought to focus on how we can collect revenue efficiently and effectively while reducing the tax burden. Without reiterating previous posts, I have written on LVT  here and here and you can also view the LVT page of resources by clicking on the tab at the top of this page.

[Note: There are many Georgists/LVT proponents who do support inheritance taxes, so this post isn’t intended as a reflection of the broad church of Georgism/Geoism]

The third point is that NZ has had death duties in the past and they were abandoned. Calling a government progressive for reintroducing them is like saying a Beatles Tribute band is progressive. Death duties are retro politics. Admittedly, the same claim might be levied against LVT; however, LVT has not existed as a single tax and is currently being researched around the globe as economists and political and non-political groups look for ways to tame the speculative beast and ensure prosperity for all.

I’ll also point out, that some BB’s actually saved their earned income to pass on to their children. They may have struggled through their life for this specific purpose. Are their earnings something that we can justifiably tax? I’m not convinced it is at all.

I absolutely agree that we need to deal with economic inequality – and fast.  I also support the idea of redistribution, provided it is done in a manner that minimises hierarchy rather than reinforces it.  But if we unpack the phrase ‘death duties’ we see that it grants the state a ‘right’ to collect revenue from individuals on their death, since  individuals (would) have a correlative duty to pay the state on their death. Death duties are effectively a death tax, and taxes are collected through enforcement measures exercised through state hierarchy. So, death taxes reinforce state hierarchy through a perverse strategy for managing economic inequality by ‘waiting for people to die’ so that the state can ‘benefit from their death’.

I suspect many readers will disagree with me about death duties; however, my question is what does it say about humanity if there is not even freedom from the reach of the state in death?

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Harawira declares his totalitarian darkside

MP Hone Harawira,  Mana Party NZ

Appalled. That is how I feel about Hone Harawira’s latest outburst.  Endorsing the public murders of legally abiding citizens is a grotesque proclamation to make.

Harawira made the statement during a Public Meeting in Waitakere (West Auckland) regarding  legal highs and the recently enacted Psychoactive Substances Act 2013 (PSA).

Section 3 of the PSA provides that the purpose of the act is to:

regulate the availability of psychoactive substances in New Zealand to protect the health of, and minimise harm to, individuals who use psychoactive substances.

The Act banned certain synthetic drugs and requires all synthetic drugs to undergo scientific testing and to obtain approval for sale from the Director General of Health (s1o) who receives advice from an expert advisory committee (s11). The list of banned or controlled drugs are found in Schedules 1-3 of the Misuse of Drugs Act 1975.

Understandably, tensions were high (no pun intended) as families present had experienced the destruction caused by many of the synthetic products.

Simon Collins from the NZ Herald reports:

Mana MP Hone Harawira…said drug retailers should be killed.

“If there is one law I could pass, it would be line up the guys who are making the most money out of this legal drug stuff, put them on TV and then publicly execute them, and then introduce a law to say the next bastard that does it is going to get the same treatment,” he said.

I am prepared to accept that Harawira was probably just speaking hyperbolically  to the mood of the crowd but as an experienced MP, I would have expected Harawira to make a more considered statement.

Instead, he confirms for critics of the Mana Party’s state socialist ideology, that he backs the totalitarian excesses of the communist military dictatorships that ‘Movements of the People’ typically despise.

Declaring approval for public executions of people acting within the bounds of the law and alluding to introduce a law to legalise executing people acting legally, Harawira has dug a ditch that will be almost impossible to dig his way out of.

I am by no means defending the legal high industry. I happen to agree that synthetic drugs are more harmful than the naturally occurring product they are trying to replicate. However, Harawira’s words are unforgivable and are a tremendous insult to the many freedom seeking socialists that support his movement.

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.

Performance funding is a terrible and harmful idea

Source: Chicane Southland Times

Source: Chicane Southland Times

I’ve preached in many a post that central planning is basically the devils work. I stand by that. Where power can be concentrated, it will be. This isn’t limited to economic issues either – it traverses the entire ‘state sector’.

Minister Hekia Parata’s announcement that she is looking to fund schools according to the progress their pupils make, reinforces my contempt for central planning. Should this proposal come to fruition, it will be extremely harmful for children.

Parata was critical about ‘schools in deprived neighbourhoods’ being paid more, ‘as a blunt instrument’ and admitted that ‘some gentrified areas, especially in Auckland, could lose hundreds of thousands of dollars, while others would gain similar amounts’

This suggests that Parata would cut funding to schools in lower socio-economic zones based on the arbitrary device her government uses to measure the performance of pupils. The zone is important here too – it restricts pupils from attending better funded schools outside their zoned neighbourhood.

Parata’s idea places the funding burden on pupils. In effect, their schools would lose funding if they [the pupils] didn’t perform well in their tests, exams, assessments etc. Reiterating, their performance is subject to a highly contentious arbitrary measure.  This is a perverse policy and is prima facie inconsistent with the Convention on the Rights of the Child (the Convention).[1]

For the purpose of the Convention, child is defined as including generally every human being below the age of eighteen years. So, the Convention applies to almost all pupils who would be affected by Parata’s proposal.[2]

Art 28 of the Convention provides that States must recognise that all children have a right to education with a view to achieving this right progressively and on the basis of equal opportunity. Additionally, Art 2 (2) provides that children should be free from all forms of discrimination.

As Chris Hipkins (Labour Party) states:

a child’s achievement depended on a wide range of factors including whether they were living in a cold, damp house and whether their parents were educated and had time to spend with them

Hipkins barely even touches on the multitude of factors that affect a child’s performance at school, yet we can already deduce that some children, particularly those already at a disadvantage, would suffer greatly under a performance-funding model because the States commitment to provide equal opportunity in education perishes and children could become subjects of discrimination based on their socio-economic backgrounds.

Parata appears to acknowledge that this proposal is discriminatory when she implies that schools in deprived neighbourhoods could potentially lose hundreds of thousands in funding based the progress of their pupils. She also appears to ignore that the increased pressures placed on lower socio-economic families exacerbates the poor performance of those pupils.

Many have criticised the National Party’s implementation of the arbitrary National Standards measures and the shifting in funding from public schools to charter schools[3] and now criticise the proposed potential of the state to transfer school funding from lower scoio-economic areas upwards.

But the standard response is simply to replace one form of centralised power with another, by voting for the other side. This doesn’t fix the problem. It just shifts who holds that centralised power. Concentration of power is susceptible to the same abuses irrespective of who is exercising it.

If we want to avoid policies that are discriminatory and removes equal opportunity, particularly for children, then we need to reject the path that leads to the concentration of power – the centralised state. Because as mentioned at the start of this post, those with the ability to attain power can and (as we have observed) do assert it contrary to popular will. Reiterating here that this is not a feature unique to the National Party – its the flaw in our supposedly ‘representative democracy’.

The usual argument against decentralisation is that without central government, private corporate tyrannies will rule. I think this is misguided. Decentralised public entities could exist to guide and support public institutions because removing central government involves removing the privileges central government grant in favour of big business.

I don’t presume that we could just do away with the central government today and have a perfectly formed, and functioning decentralised community tomorrow, but prioritising it as a goal means we can start planning and implementing the infrastructure that would support decentralisation and in effect the proper measures to deal with social an economic inequality.

If we want quality education for our children, then we need to eliminate central government control of it.

[1] NZ ratified the Convention on the Rights of the Child in 1993  subject to specific reservations.

[2] Noting, some students in their final year of secondary school are 19 years old.

[3] I have defended charter schools (to an extent) in previous posts on the basis that they are decentralised educational institutions that have the potential to provide education according to the needs of the pupils who attend and in conjunction with the families and local community (e.g. Te Kura Hourua O Whangarei Terenga Paroa). I’m not convinced that charter schools are necessarily ‘for profit’ entities.

Musings on the Taxpayers Union

When the Taxpayers Union (TU) first formed, I did find it amusing that its typically right wing founders used a generically left wing term to name their product.

The key objective of the TU is a ‘fair and efficient tax system’. Who can argue with that? Currently our tax system is highly inefficient and hugely unfair. It taxes productive incomes earned through our efforts and rewards rent-seeking behaviour by not taxing unearned economic rent.

The question on the minds of many is whether the TU is a non-partisan group? Recent comments in the NZH by TU co-founder Jordan Williams might suggest not despite the non-partisanship noted on the TU website.

 When asked about deaf MP Mojo Mathers’ taxpayer-funded trip to be interviewed on a small provincial radio station, Williams made the following comments:

 It’s amazing that she has so little to do with her time to actually travel to a community radio that probably has as many listeners as you can count on your hand

The only silver lining is that the time spent travelling to go on the station in the middle of nowhere is less time spent dreaming up new ways to spend tax payers money

Williams’ comments leave the impression that he sees this particular instance as ‘government waste’. Either that, or his comments were purposively partisan.

Here are the issues as I see them:

  1. Are Williams comments ableist, is he suggesting that disabled MP’s ‘dream up new ways to spend tax payers money’ on wasteful expeditions that reach only a ‘handful’ of people; or
  2. Is Williams commenting on Mathers position as a Green MP – noting the Greens are largely attacked by ‘right wing partisans’ for overtaxing and overspending.

On point 1, if Williams sees taxpayer funding for disability as ‘wasteful government spending’ then he is hardly promoting a ‘fair’ tax system. Fairness is not simply about who is taxed but also about how any revenue collected is then redistributed back to society.

On point 2, if Williams was making partisan comments, then he has spoken out of step with the TU, since the TU acknowledges that:

Individual members have their own political involvements, but as an organisation the Taxpayers’ Union will be vigorously independent in promoting the interests of New Zealand taxpayer.

What about the NZH for even raising this as news?

As @lmfbs points out its unclear whether the TU approached NZH with this story or vice versa. How does it change the story? Arguably, it changes the context and the motivation behind the reported comments.

Additionally, while the NZH story indicates the author was seeking the view of the TU on whether Mathers trip was value for taxpayer money, its unclear if they interviewed Williams in his personal capacity or as a member of the TU. Yes, they refer to Williams as a Director, but was that on the assumption he was speaking in his capacity as a TU member or in his personal capacity?

For many, the answer probably doesn’t matter, because as @ColeyTangerina points out:

There is a genuine disdain for the TU because of those involved in founding it and their very public political partisanship. The sentiment conjured up by Williams’ comments,  irrespective of whether or not they were misreported, adds weight to the scepticism about the the true nature of the TU. However, as a critic of the NZ tax system, I’m not against the establishment of the TU in principle,  I’m just not convinced it won’t devlove into some partisan right wing think tank. Although, others probably think it already is.

Like the TU, I do think that central government exerts too much control over society, and in my view many functions such as education and health could be dealt with at the local level. Obviously, these are topics for future posts, but I think its worth thinking about how we reduce the size and power of central government without destroying vital public services. Local governance creates local opportunities and allows communities to participate in the issues that affect them.

Taxes captured through a central body reinforce a centralised state and therefore central state planning. The TU appear to promote reducing the size of government, providing tax cuts for business and opposing progressive taxation, but at this stage it offers no innovative alternatives. Perhaps, it just means another tax movement needs to be established to challenge these orthodox approaches to economics and taxation.

This talk about incest

Although the focus of Jamie Whyte’s comments about incest rapidly degenerated to his apparent advocacy for incestuous relationships and the open mocking of the very small minority of people who choose to enter incestuous relationships, the argument he was making was largely missed, that is,  whether the State should intervene in sexual or marital relationships between two consenting adults.

On The Ruminator website, Tim Batt asks a very provocative question, obviously to see how deep Whyte’s convictions are on freedom & liberty:

But what about incest – should the state intervene if adult siblings want to marry each other?

“Well personally, I don’t think they [the State] should. However, it’s a matter of almost no significance because it just doesn’t happen.”

Whyte then defended his comments in the NZH stating:

“I don’t think the state should intervene in consensual adult sex or marriage, but there are two very important elements here – consensual and adult”.

“I wonder who does believe the state should intervene in consensual adult acts?”

He said he was “very opposed” to incest.

“I find it very distasteful I don’t know why anybody would do it but it’s a question of principle about whether or not people ought to interfere with actions that do no harm to third parties just because they personally wouldn’t do it.”

The NZH have amended the previous article reporting that Whyte says:

“I regret the comments, mainly because I feel I let the party down,” he said.

Lets not beat around the bush, incest is morally repugnant to the vast majority of people. But do not forget that for many socially conservative types, homosexuality is also morally repugnant. Why do people feel justified in defending and actively seeking equality for consensual sexual and marital relationships between two consenting adults of the same-sex, but publicly ridicule a consensual adult relationship between two persons of the same biological family? I agree with Whyte, just because it’s not something we’d personally do, it doesn’t give us a right to ridicule those who do choose those relationships. Heterosexuals who support equality in LGBT relationships and who actively oppose bigoted statements against such relationships, should look at the arguments they use to justify one and vilify the other. I think the response has been largely vile from many (on the left) that attempt to marginalise a very small group of people who choose to enter incestuous relationships.

Arguments in favour of state intervention regarding incest, almost always revolve around the risk of sexual abuse. Whyte’s view on incest does not prevent criminal charges arising from sexual abuse. Where there is a lack of consent and/or where one (or both parties) are not ‘adults’, this abuse is already captured under the Crimes Act 1961. Many seem to conflate issues of rape, sexual assault and pedophilia with incest. It’s true that in many of those cases that incest occurs, but incest is not the violent act, it is the nature of the relationship between the two people. Moreover, he wasn’t even suggesting it become policy, he seemed to me to be addressing the principle behind why it ought not be illegal, rather than taking direct action to legalise it.

Whyte simply answered a question that to be fair, has not (as far as I know) been put to any other politician. In my opinion, he answered the question rationally, the way you’d probably expect from a Philosophy Professor.  However, rather than analysing the argument, it was a quick lurch into cousin f*king memes and conflating other sexual crimes with incest.

As a left identifying voter I hate that I feel compelled to defend Whyte’s comments.

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.

Pōwhiri and gender essentialism

Following an Editorial piece in the NZH on 8 January 2014, there is currently a debate (in NZ) regarding whether Māori women should be able to whaikōrero (make a formal speech) at pōwhiri (welcome ceremony) which requires that they sit on the paepae (orators bench).

The discourse is seemingly lead mostly by males – both white and Māori (Update: I am now starting to see voices from across the spectrum, and no I haven’t been reading the NZH comments section).

I was going to publish last night, but decided I should make sure I am certain of my views, since 1) they are probably very controversial and 2)I have been grappling with this issue since it was discussed in one of my Jurisprudence classes at University a couple of years ago (raised by Māori Law Lecturer Valmaine Toki). I decided to publish because I believe that as a Māori woman, I am not alone in my views, so I make no apology for disagreeing with the narrative largely lead by Māori men.

Graham Cameron writes a beautiful piece on the story of the pōwhiri and introduces his views therein.  I say its beautiful because he tells the story of pōwhiri so eloquently. And I agree that pōwhiri is not intended to dominate women. But my contention is that it is not sufficient to accuse critics of cultural imperialism while ignoring the views of Māori women who may in fact want to whaikōrero at pōwhiri.

I was introduced to the concepts of ‘gender essentialism’ and ’benevolent sexism’ by a Pākehā woman yesterday. And I agree with her that these concepts are prevalent at pōwhiri  and that they are discriminatory irrespective of custom. Additionally, these concepts are not unique to Pākehā culture.

Cameron’s piece alludes to the idea that because these tikanga customs and practices are culturally essentialist, gender essentialism is justified on these grounds.

How about that – a man justifying what is and isn’t important to the experience of Māori women at pōwhiri, you know, because culture dictates it.

Cultural essentialism does not justify gender essentialism. The mere fact I am a woman and must be protected (benevolent sexism anyone?) so I can have babies is no justification for depriving me the opportunity to whaikōrero at pōwhiri. I acknowledge that this is a really uncharitable interpretation of Cameron’s post, but as a Māori woman, this is how it reads to me.

A great proportion of this debate also centres around how karanga and whaikōrero are equally important aspects of the pōwhiri. And this is true, but it doesnt detract from the fact that they might not be equally important to the Māori women who actually want to participate in the whaikōrero.

Do I think that Māori should change this practice because the Speaker of the House says so? Absolutely not. Do I think Māori should have the discussion within their respective whānau, hapū, and iwi, allowing Māori women to express their own preferences and making consensus based decisions? Absolutely.

As Māori we are consistently talking about the fluidity of our tikanga, yet when a male privilege is challenged – cultural imperialism!

Admittedly, I am not as familiar with feminist theories and the various nuances as others are and I do feel like I might be less protective of this particular cultural aspect than others because I was raised in a predominantly urban environment with limited exposure to my Māori heritage.

But I will not sit idly back and let this discussion be derailed by the Speaker of the House and the dominant culture or by Māori men justifying gender essentialism based on a context that no longer afflicts our interactions with each other. Tikanga is fluid. It can adapt. But its up to Māori to decide if they will adapt.

(Note: this post was originally much larger, but I decided to reduce it so the basic message isn’t lost in a typhoon of academic speak)

Are white voices amplified and privileged over indigenous voices?

Native Affairs screened a story last night on Tim Morrison who spent the past 18 months defending a manslaughter charge for a crime he didn’t commit.

As usual, Twitter was an abundant hive of activity and commentary. But one particular comment stood out to me,  the commenter stated she did not ‘trust white indigenous rights activists’ because ‘in a culture of white hegemony, white voices are amplified and privileged over indigenous’.

While the first comment seemed to be more personal in nature, I think in a different (but related) context the second point is extremely important.

In my view, white voices that advocate for Maori or advance Maori issues are often subordinate to our dominant Maori activist voices. Moreover, most white indigenous activists in NZ will defer to our Maori voices for commentary on indigenous issues and our better journalists will request comments or interview Maori voices known to be respected in Maori communities.  So in this respect, I think Maori are very skilled at having their voices heard and advancing indigenous issues in NZ. I’m more concerned about gathering the support necessary to implement change and this is why I consider white indigenous activists as vital for building grassroots relationships. Since Maori are a minority, we need to build support networks and the first step is in embracing those who support our cause.

I think we should be careful about distinguishing between people who advance issues as allies of indigenous voices and those who advance them as a means of thwarting the decolonisation process.

I do agree that in a colonised country white voices are amplified to the detriment of indigenous voices but more so in the context of white voices serving as an impediment to neutralising the privilege of being white in NZ, or alternatively stated, as a means of maintaining that white privilege.

In Open Letter to the Pocahotties: Annotated Version, the author makes some very good points on how when referring to ‘white’, ‘racism’ and ‘privilege’, the usual response is defensive and those who refuse to acknowledge their white privilege often cite their own historical misgivings as justifications for their racist actions.

I also found an excellent article on the top 10 list of how not to respond to indigenous experiences of racism. The author here highlights many of the common responses to charges of racism and briefly explains the problems with such responses. For instance, many argue that some racism is worse than other racism. In the NZ context Maori are often belittled because Australian Aboriginals have a much worse experience of racism than Maori. The article highlights that racism is deplorable no matter how you frame it.

Another relevant point is that some people use ignorance as a shield because their reality differs from the reality or experience of an indigenous person; they often claim that the indigenous persons experience is just wrong because it doesn’t match their reality.

A common reason (noted in the article) that I hear in NZ is that while we were racist in the past we are not now. Notwithstanding the statistics, the cases that evidence institutional racism, and the everyday responses from supposedly non-racist white NZer’s that perpetuate the egregious racial stereotypes.

In summary, my view is that white indigenous activists in NZ are usually respectful and aware of their privilege and will often defer to Maori voices for commentary on Maori issues. However, many white NZer’s are still tied into their privilege and do not understand that they have it or that their privilege perpetuates racism in NZ. I believe that we need white indigenous activists to help show those who enjoy white privilege that there is no shame in acknowledging and understanding that privilege and the inherent racism and surrendering it once its understood. Such persons need to understand that the shame is in trying to justify it.