Tag Archives: economy

Neoliberalism explained

With the recent release of the OECD report into inequality, My Thinks thought it imperative we delve further into this and get some clarification on neoliberal economics. Emeritus Professor Archibald Ineruditus, head of the Ayn Rand College at the University of George W Bush in Texas, has studied classic neoliberalism since it’s inception following a meeting between William Randolph Hurst and Satan, the Prince of Darkness, at the birth of Rupert Murdoch in the 1930s. Professor Ineruditus joined our interviewer by internet phone from his palatial home in the leafy suburbs of Austin.

My Thinks: Thanks for joining us professor.

Professor: My pleasure.

My Thinks: Let’s get straight into it. Do you feel, in the wake of the release of the OECD report into inequality, that classic neoliberalism is on the way out?

Professor: Great first question Mr Thinks. Like all neoliberal theorists, I’m actually going to answer a different question by saying the weather in Austin is fine, thanks for asking.

My Thinks: If I could ask you again, do you think that neoliberalism has had its day and western democracies are going to start bringing in other, more egalitarian forms of economic management.

Professor: Oh no. We have to remember that all western governments, be they Republican or Democrat, Tory or Labour, or whatever you have in New Zealand, are all totally funded by monies obtained from very rich people. Normal people and poor people don’t have the kind of money they can splash about on paying for political party membership. It’s a well-known fact.

My Thinks: You’ve been studying classic neoliberalism for years now. What would you say is its strongest feature?

Professor: Well… over my many years of study I would say definitely the strongest point of neoliberalism is its comprehensiveness. Everybody benefits. From those running the multinationals right through to the people who own the multinationals.

My Thinks: Is there anyone who doesn’t benefit.

Professor: Because of the trickle down effect, everybody benefits. The extra growth created from those higher income earners reinvesting their tax cuts into housing and their superannuation funds or other tax-free investment opportunities really does mean that the whole economy does really, really well.

My Thinks: How?

Professor: It’s hard to quantify in terms of actual money, but certainly there is a vibe that trickles down. I’ve been many, many poor people standing outside in the rain looking with excitement at my house and where I live (Thanks to the many grants I get from various think-tanks and business lobby groups I have certainly benefited from the trickle down effect in a monetary way). Anyway, when this vibe is pretty all-encompassing.

My Thinks: If you were to sum up neoliberalism as a list of key elements, what would they be?

Professor: Oh, excellent. You read the list of questions I emailed. The first tenant of neoliberalism is user-pays. All government services are user pays for every single citizen. If you use it, you pay. The only legitimate exception to this would be those people who are able to structure their finances in such a way as to appear poor despite owning several million dollars worth of stuff.

My Thinks: What else?

Professor: Just quickly. Small hands-off government. If we have too much red-tape and bureaucracy that will stifle growth. Private business will be given absolute freedom to develop and run themselves as they see fit. Public services, such as health, education and social services, will be micro-managed with the paper fist of bureaucracy. If we paid tax, that would be our tax dollars being wasted.

My Thinks: So trickle down, user pays and small government. Is there anything else that you would say defines neoliberalism.

Professor: Yes. It’s important to ignore any scientific or empirical evidence that proves your entire life’s work is a complete joke. If I was to accept any research into, say, the economic impacts of climate change or inequality, then I would have to reject all the hard work I have done for my wealthy benefactors since the 1980s. I would be utterly discredited and I would probably have to sell all my Harley Davidsons.

My Thinks: Really?

Professor: Yes. I own a fleet of Harley Davidsons. That’s why neoliberalism is so important to the economy, growth and the future of the world.

My Thinks: So you absolutely reject the OECD’s findings that inequality is actually hurting growth in economies who’ve adopted neoliberalism.

Professor: Totally. Anyway, everybody knows the OECD is full of hippies and anything they say is a joke.

My Thinks: Except when you’re using data that supports your theories?

Professor: Exactly.

My Thinks: Once again, thanks for speaking with us this morning professor.

Professor: Thank you Mr Thinks.

 

 

 

 

We are a Community

Following the recent death of Margaret Thatcher there were many mentions of her famous quote: “there is no such thing as society.”

This is a telling comment from the Toriest of Tory politicians. Translation: all for one and each man for himself!

This has got me thinking – are we a group of 4 million individuals or are a society?

Having recently moved from Auckland to the South Canterbury hamlet of Geraldine, there is certainly a far greater sense of community in this small town. There’s lots of waving to neighbours, bumping into people in the supermarket, and so on. I certainly feel like I belong, more so than I ever did in Auckland, and I lived there for 15 years.

The school I now work at is very small, very rural and has a fantastic community surrounding it. The parents’ association is incredibly active, raising enough money to hire an extra teacher – that’s right – extra teacher. No cake stalls for a few rugby jumpers. I get a whole other colleague from their hard work.

With our neoliberal default to individual freedoms and responsibilities over the last thirty years, we have worked so hard on promoting this ideal of ME. The ME is so important. It’s all about ME. ME. ME.

But what about them?

Thatcher, Douglas, Regan et. al. have given us this cult of the self where we are so focussed on our own needs that I believe this sense of community, this sense of togetherness that is embedded in the culture of my new school is so sorely absent from our lives. We are so busy working hard to serve the needs of our families that we barely have time to worry about the people down the road, let alone that family in Northland who’ve lost a child to rheumatic fever – a disease that can damage the valves in the heart. It’s a disease that belongs in the third world.

What can we do?

We are at a point in time in our country where we can go one of two ways. We can either head down the road we’ve been heading down for the last thirty years. The road that gave us back rheumatic fever. The road that sees several families sharing cold and wet South Auckland houses because they can’t afford the rents being charged, yet they still have to live in the city because that’s where the work is. The road where teachers are demonised for speaking out against national standards and secret privatised schools paid for by taxpayers money because, in our professional opinions, we believe it will make things much worse for our most vulnerable. A country where children, through no fault of their own, turn up to school each day (EACH DAY!) with no food, yet our political masters decide to blame the parents for not managing their money and buying smokes and booze.

Or we can take the other road.

The road where we have to make some hard decisions that are in the best interests of most New Zealanders – not just some.

Schools could be the heart of the solution.

What if schools were a hub – a hub for the whole community. A place where people could gather at the start of the day and talk to each other. A place where the Aunties get together and feed the kids in the morning and at lunch so at least they have two solid meals a day. Schools could offer counselling or health and dental services. We could be teaching literacy and numeracy for adults who’ve moved to the country with very little English language. We could offer sporting or arts classes as part of a comprehensive after school care programme that allows parents to work longer hours.

There is so much we could do. There are so many people out there in our community who could contribute to this. It would be very positive, especially for all those kids who are living below the poverty line that the National Party are so quick to deny or reject because accepting it would be the first step on the path to fixing that and that’s not what they want to do. Not really.

Why?

Because it would mean higher taxes.

This sort of community care, the sense of society, the idea that we are all in this together costs a shit-load of money.

And we know what our National leaders think about money. I will take it from you if you are poor, but if you take it from me, you thieving little monkey, there will be hell to pay!

A massive social reform like this, centred on our schools and focused on improving health, education and socio-economic outcomes for all New Zealand kids would cost billions.

I think the thing we forget too often (and by we I mean our policy makers) is that if a person is educated, healthy and sees a future for themselves then they are far more likely to contribute positively to society.

Why don’t we put our fences at the top of the cliff rather than having ambulances (and prisons) at the bottom?

Mr B

Chicken Little and the End of the World as We Know It

The story of Chicken Little and Henny Penny was floating around when I was a child. Briefly, this is the story of a small chicken who, when hit on the head with an acorn, believes the sky is falling and the world is going to end. Chicken Little flaps around the countryside issuing warnings to all her friends – Henny Penny, Drakey Lakey, Goosey Lucy, etc – about the world ending. Her friends believe her word. After all, there is nobody to doubt her.

The story ends with Foxy Loxy telling all the animals they can come and stay at his place because it’s underground and will be safe from any falling sky. Once everyone is inside, the fox eats them. To death.

This week there was a small acorn of power regulation that fell out of the sky on the heads of the neoliberal establishment.

They are now running around like crazed chickens spouting all manner of warnings about communism, North Korea, Muldoon (who was a Nat!!), and Albanian power policies.

It really is a sight to behold. The acorn has well and truly hit, my friends! It turns out the sky is indeed falling, and the world is coming to an end.

But not for me. And people like me. Workers, families, people who don’t have three homes and several cars – one for each of the kids and one SUV to head out to the bach at Whangamata on the weekends.

I welcome lower power prices. I also welcome lower house prices. Go on, get in there Labour and Greens. Don’t just tinker at the edges either. Roll your sleeves up and get stuck in.

It is very rare for the market to provide for the likes of us. Ordinary people with ordinary lives. But then again, none of us are chairing the board of a power company and earning over $1 million.

No our world isn’t coming to an end. It is just beginning.

And about bloody time.

 

2009

Hello and welcome…

It would be remiss of me not to do what everyone else in the world is doing over the course of this week so here goes…

A lot of people must be looking back at 2009 and thinking, like I am, where the hell did that go. This year seems to have flown by much quicker than usual. Or is it the fact that I’m getting old? Does time pass quicker the older you get? If I think back to my childhood the years seemed to go on forever, weeks and months melding into each other like one long hot summer. Anyway, that’s enough of the Stand by Me crap. On with what I was going to say.

It’s good to see that the capitalists of this world still think the sun shines out of their arses despite the complete and abject failure of their way of doing things.

Oooo, ooo, Mr. Obama… Mr. Obama… I’ve got a good idea!! Me, me! Look I know that in the last couple of years that things haven’t been going quite right. In fact, technically speaking, when you crunch the numbers, they’ve been going quite wrong by quite a lot – mainly because I’ve been trying to make ridiculous amounts of money by effectively gambling on things I didn’t really understand but pretended I did.. Anyway, what I’m trying to say is that if you give me MORE money, and when I say give I mean lend, if you lend me more money I can do some more guessing and gambling and I can make it all better. And once it’s all better, then I can pay you back. Good ay?

6 months later….

Oh, yeah, hi Mr. Obama… look I know that we made some number of billions profit this year despite having to ask you for some readies to tide us over but we really can’t afford to pay you back just yet. But I am good for it, I really am. It’s just that we need that money to do a bit more guessing and gambling. See, we’ve made $60 billion in the last six months, but if you let us keep going with the loan, if we can keep doing what we are doing – and remember we are the experts in the field, we know what we are doing – if we can keep going then that $60 billion could turn into $63 billion or maybe even $65 billion. That would be like an extra $5 billion that you didn’t have before man. Where did it come from? Well… um… I don’t really know. I just checked the balance at the end of the day and it had gone up a bit. No, it’s not like actual money you can hold in your hand, like a $2 note or anything. No no, this is an on-line bank balance. Well, yes, I suppose it could go back down just like it’s been going up, but I doubt that very much. After all, we play the markets like this all the time so we have experience and know how that allow us to be extremely confident in ourselves and what we are doing. No, I don’t have any qualifications other than a diploma I got from a technical college in Halifax. No, that diploma isn’t in finance – it’s in something called book labelling… it’s like book-keeping but instead of accounting for the ebb and flow of cash through the books, I’m am qualified for making sure all the books are correctly named. How did I get into the finance industry? I knew a guy in college who told me I was quite good on computers and adding up and he suggested I become a day trader. The rest is history.

Of course, that’s not to say that ALL of those people still involved in the financial institution that nearly bought the world to its knees (but thanks to some quick cash from those people who actually pay taxes, they can continue on their merry way) have no idea what they are doing. Indeed, I’m sure that most people who take huge daily risks with money that doesn’t belong to them in situations they can barely understand, know completely what they are doing.

I am being incredibly sarcastic here. I doubt whether anyone on Wall Street really fully understands anything about the institution they’ve created. All they really care about is making money – and lots of it. And before you go all funny and start suggesting I’m a communist, or, God forbid, ‘against us’, think of it this way… where does the money come from? If I’ve clicked my mouse to complete a trade, then later that day I sell making money, the only thing changing is a number on a computer screen. Where is the cold, hard cash – the tangible thing that I can hold in my hand that shows I’ve actually done something useful.

If I go out to a market and buy a carrot for 9 cents and later that day sell it for 10 cents, I’ve made a penny. I also have a 10 cent piece in my hand that I can show people and say – look at me, I’m worth 10 cents. Yesterday I was worth only 9.

The thing that really sticks in my mind from this year is the amount of profit these US companies made in the months following their bailout by Obama. For example, AIG made $1.82 billion in the second quarter of 09. This after getting nearly $200 billion in loans. I suppose, technically speaking, these loans have to be paid back by AIG, but all they’re doing is shuffling things around and selling them off to do this. They’re not really changing the root cause of all the financial market malarkey that has occurred in the last couple of years (oh, and in the late 90s, and in the late 80s, and in the 1970s, and so on and so on and so on).

People are driven by wanting to make as much money as they possibly can with little regard to whose money it is that’s actually helping them do this. When human nature is involved, you can’t have a totally unregulated situation in the marketplace, no matter how many times they tell you to let the market provide. Look what it provided last year (oh, and in the late 90s, and in the late 80s, and in the 1970s, and so on and so on and so on) – complete meltdown because those in charge of the money-go-round all got off at the same time. Dicks.

Oh well… I’m sure they’ll do better next time (I’m picking it to be around 2018).

Happy new year!!

Boon x

The Dirty Poor and Their Evil Ways

This week the government – led by the benevolent National Party of New Zealand and their little shoulder parrot the ACT Party – sponsored the delivery of a report on how the country can bridge the ever-increasing wage/salary gap with Australia.

Having read the above you must be thinking, “How very benevolent indeed. Imagine thinking of the worker in this scenario.”

The point I have to make at this juncture is – Bollocks.

To understand by point let us why the report exists in the first place… About a year ago in little old New Zealand there was an election. This election was won by the National Party after they created coalition agreements with ACT and the Maori Party. Traditionally National are a right / centre right party – this means they are like the Republicans in the US – except for the extreme nonsensical gibberish about Money, Jesus and 9/11.

In terms of coalition partners, ACT are slightly more right of National and therefore obvious drinking partners. ACT stands for the Association of Consumers and Taxpayers. Ironically enough, the leaders of this party probably don’t pay any tax thanks to creative accounting. I’m not implying they are breaking the law, I’m implying that they are creative with their accounting. Things like trust funds for family homes, cars and putting things in the wife’s name. This creativity means a reduction in taxation imposed upon them by the Inland Revenue people. As part of their coalition deal with National, ACT demanded a review of things led by Dr. Don Brash, a former head of the National Party himself and a notable proponent of the low tax, low spend government that ACT so lovingly puts forward.

New Zealand has had a long history of low productivity compared to Australia. Over the years our wage gap has remained for years and this sees many New Zealanders eyeing up the sandy Ozzy shores to make a new live. And being just 3 hours away on the plane it’s very easy to return to see the family now and again. In recent years escaping the financial talons of a student loan has also been a great motivator.

Having done some backgrounding of the issue we can now move on to Dr. Brash’s report recommendations. If you can remember back to the 80s when hair was big and shoulder pads even bigger, many policies adopted by governments around the world were very much focused on cutting government spending in a variety of ways including rationalisation of health, education and welfare spending, selling off of state assets to the private sector and lowering personal income tax while lifting the level of consumption tax. Dr. Brash’s report brings us back to those heady days. He called for, among other things, cuts in government spending, cuts in income tax, lifting consumption tax, selling of assets, and cuts to the minimum wage – the argument being that the private sector is able to offer far more efficiencies to the taxpayer than the government-run organisations, and over time these changes will increase productivity and close the wage gap between New Zealand and Australia.

Again, I make my point – Bollocks.

I’m not an economist or a statistician. I don’t pretend to know everything there is to know about GDP or tax law. I am not a world leader in the sale of assets. I am, however, a wage/salary earner. If you want to increase my productivity, if you want to make me more efficient than I have ever been, then you reward me for my efforts. This seems, on the face of it, a very, very, extremely, very simple solution.

The minimum hourly wage in Australia is $A14.31 ($NZ18.32), whereas here in New Zealand it is a mere $12.50 – and Brash says this should be cut. I must be an idiot because I would have thought that if you cut the minimum wage and I can earn 50% more for doing the same job in Australia, then I’m going to move there… aren’t I???

Cutting health and education spending is not going to work either. Having a sicker, stupider workforce is unlikely to lift production or wages. I admit that this is flippancy at its extreme, but there is some foundation there. Brash and his report buddies are asking for more private sector involvement in the provisioning of health and education. The idea is that competition will cut government spending levels. This is good I suppose… but the private sector is not the great liberator of spending Brash thinks it is, and they don’t always run things better than the government. Just look at the state of ridiculousness at the end of last year where companies like AIG, Lehmann Bros and so on couldn’t do their jobs properly because they didn’t know how the system they operated in worked.

Who’s to say the same collapse wouldn’t happen if the education or health system were privatised? Once you get money involved in things then maximising profit and returning dividends to shareholders becomes the motivation, not delivering a public service and ultimately those services, and the consumers of those services, suffer.

Brash and his rich little cronies should get their wallets out of their arses and try and live on $12.5o an hour with 6 kids to feed. He never will though and therefore he will never really understand what it’s like in the real world. It’s all numbers to them. Numbers can be made smaller. Unfortunately, and this is the case for all economic arguments, people aren’t numbers.

So again I say: Bollocks. You can’t build a bridge between two things if you begin by cutting away at the coastline on one side.

Brash, you’re a dick, and you always will be (this is slightly inflammatory so I must qualify the word ‘dick’ by adding the word ‘alleged’ to it. So, Brash you are an alleged dick, you nerd).

Until next time. Word.

Boon x