Time for fundamental change

In a piece with headline Price of progress hurts Kiwis Fairfax media notes…

The rampant cost of living means two-income families are increasingly worse off than single-income families were a generation ago – and it is threatening to put them under.

While median incomes and the number of women in the workforce has risen substantially, the money that families are putting into servicing the long-term commitments of a standard middle class lifestyle – comprehensive health insurance, a house in the right suburb and investment in education – has soared.  http://www.stuff.co.nz/business/money/7200255/Price-of-progress-hurts-Kiwis

Being old enough to remember that far back they are dead right, but to call it progress?

This is not the result of progress this is obvious consequences of thirty years of decline.  The consequences of Roger Douglas’s failed reforms are now at the point where the decline becomes terminal.  The sale of our energy companies and the Crafar farms are the signs of terminal decline as is the widespread increase in poverty – we are selling the last of the family silver to eat and we are chopping up the furniture to burn to keep warm.  Meanwhile we live in the most well endowed country on the planet on a per capita basis.  Given that one has to ask why we are in such a state.  Are we lazy? I would suggest not.

We are suffering this fate for no other reason than that we have had archly stupid, short sighted and unmoral leadership across both business and politics since Roger unleashed the dark side of private enterprise upon the functions of the State.  We have since then had leaders of both business and politics acting in disregard for the law and with impunity as the norm.  Worst of all we have an economic ideology dominating our society that is destroying us.

It is time for a change at the most profound level.  We need to take back control of our society and our economy, but most of all we need to take back control of our supposedly democratically elected leadership. 

Is Labour up to it?

More on Muldoon

It is my understanding that it was a deliberate strategy.   Muldoon came from hard times, he understood scarcity.  Muldoon also had a strong social conscience, he was obsessed by full employment.  When the financial crisis of the early eighties arrived he set up the PEP work program which again while it had its flaws it did wonders ( I ran a large one as a part of some other things I was doing) - these schemes got ruined by the unions in the end - but for a while it soaked up unemployment and crime disappeared in our area as everyone turned up for work- not always the most meaningful work - but it occupied people when times were tough.

The real fallout from Muldoon is the opening he gave Roger Douglas to destroy so much that was good about out public service and our society.  Again there was no doubt that much needed reformed about the public service but  Roger didn't reform he destroyed.  Muldoon saw the need for social justice Roger just saw that as economic inefficiency.  Our society since Roger destroyed the old moral order has since resulted in one after another of our leading economic institutions acting in ways that were nothing short of blatantly dishonest.

It is to the point where now we trust none of them.  That is why all the "capital markets"want to buy public infrastructures, they are guaranteed secure returns on assets that can't evaporate.  There is nothing else that can be trusted, the share-market is just an unregulated casino, the property market has flared and died,  investment banking has tanked taking $Billions with it.  Entrepreneurship has been severely eroded by the blatant untrustworthiness of the instruments of the marketplace. Those within society who have less power and advantage see their institutions acting with impunity and with a complete lack of morality and think well why should I be any better.

But I digress, the main intent of my commentary on Muldoon was the need for a strategic plan and for leadership from those who we elect to represent us.  For the past three decades we have been coasting pretty much on what was done in those days while our leadership has succumbed to pettiness and dog-whistling.  Nothing much has been built in Auckland in the way of major infrastructure that wasn't started by the old Ministry of Works Town Planning group.  Even Transmission Gully was drawn up in the 1980's.  The point I was making was that we haven't had a leader (for all his warts) since Muldoon.

Governments have a key role as strategic planners, markets can't plan. While much negative stuff is said about China the reality is that China has a plan that is working and we don't.  John Key's three big ideas so far are to build $50 Million of cycle trails to nowhere, the rugby world cup and asset sales.  This is the agenda of someone with no idea and not the vaguest concept of a plan - other than to sell everything.

When Muldoon was in power China was in the throes of the cultural revolution.  Then we used to look at China with disdain or at least mild bemusement.  Thirty years later China is on the way to owning us as we are in the process of becoming serfs in our own country with John enthusiastically selling us into serfdom.

Meanwhile we live in the most well endowed country on the globe in terms of natural capital per capita, much of that we don't value, lots we don't care about and the rest we don't use very efficiently.  People who don't value and care for their resource base, or who don't understand its true value, are on on the pathway to extinction.  The Maori experience is a classic example of that circumstance.  When the European arrived they saw a vast unexploited resource while the Maori were living at the upper limit of what their technologies allowed.  Quite a number of early Maori were rapid adopters of European Technology but many just used it to settle old scores and sold their assets to acquire guns to deal to old adversaries.  Infighting takes much less vision and leadership than adapting.   They to also had the problem of their leaders taking the guns and blankets and leaving the broader populace to their fate just when times were changing.  We are at a similar epochal horizon and we are stuck with leaders with no vision and no courage.

Even with their rapid adoption of the new way of doing things the Maori didn't adapt fast enough and they were divided while confronted with a common threat. They didn't see what was coming until it had arrived and was overwhelming.  They were confronted with a new moral and philosophical order they did not understand.  We are at a similar point in our history.  We are confronted by the challenges of demographics, energy scarcity, global power shifts and the radical changes that advances in computing are presently and increasingly will unleash upon society and the economy.  Much of what we do now we will not be doing in twenty years time or even ten.

Last week I finished uploading my entire CD collection, today I put them into a large trunk to put under the house.  I will never need to play them again.  It is unlikely that I will ever buy another one, it is far easier to do it on iTunes.  That is a metaphor for what is ahead of - as both threat and opportunity.  It didn't seem so long ago that CD's were a wonder that would be with us for a very long time, and now they are very nearly unnecessary.

In ten years time what will our universities look like, in twenty our hospitals.  One good academic can already teach to millions.  Surgery will be performed by robotics, diagnosis will take place on a microchip.  These technologies are here already but they aren't yet ubiquitous, they very soon will be.  manufacturing wil rapidly change as well.  The logic of vast industrial enterprise and of equally vast cities is likely to be turned on its head.

Meanwhile we have vast billions of people wanting to live the way we do but we do not live on a planet that will allow that. We have a labour force of billions just when it suddenly seems that they may be unnecessary.  How will that pan out?

Last time something like this happened, old Mother England put them all on ships and unleashed their labour surplus on an unsuspecting primitive world.

We the descendants of those who were unleashed have arrived at the end of that epoch and we have no leaders and we have no plan.

Roger’s legacy – the fallacy of economic efficiencies under a neoliberal regime

In the 1980’s Roger Douglas in his foolish belief in the righteousness and efficiency of the market place laid waste to the public service.  He sold of all sorts of public assets and functions of the State often at fire sale prices and sometimes with the most dubious of procedural integrity.  What he also sold was the power for government to act as agent for the nation.  

In the good (relatively!) old days before Roger a Minister got things done by  allocating a budget and directing the relevant Head of Department or Ministry to get on with the job.  Now this wasn’t perfect but that is a foible of democracy.  Roger didn’t change the quality of the governance he only changed the manner in which they can take action.  Unfortunately for the worse.

Much of the advice Roger listened to came from lawyers and accountants and partners in the big consultancies.  These people are not known for their altruism.  What these people want is more business for themselves.  They of course told Roger that they could do it better than some boring old public servant on a tenth of a consultants pay.  Roger being a dogmatist and not a thinker took to this as THE ANSWER.  So we got a country run by economists and bankers and accountants and lawyers in place of public servants.  Now if you want to get an accountant or a lawyer to do your bidding you have to write laws and regulations and pay big bills.  You can no longer just get on the phone and give orders to your lowly paid and subservient bureaucrat.

So Parliament started writing laws to get done what once was done with a few phone calls and the honest hard work of a dedicated public service (not always but mostly) with the results being obvious in the graph below.

This figure illustrates the growth in Volume of legislation (Acts and Amending Acts) on the NZ Statute Book by year of enactment from p23 Improving Public Access to Legislation PriceWaterhouseCooper for the Parliamentary Counsel Office 1999

And so everything became expensive and complicated and hard to do.

As the graph shows law making went exponential with Roger’s reforms.  Where before the reforms parliament was busy if it passed 15 new pieces of legislation a year quite quickly it was passing 150.

And while parliament was busy passing all this legislation it stopped doing anything else.  It lost any vestige of strategic view it had and instead become bogged down in a vast complexity of select committees and parliamentary debates.

The accountants and lawyers and consultants loved it.  Every new law bought more work for these parasitic elements of the economy.  And so we became a country bogged down in a vast complexity of vested interests playing with legislation.

But for all of this legislation and for all of the expensive minds working in the system we now get less done than we ever did before the reforms and nothing got cheaper or more efficient.

Even dear old Bill English lamented recently that the non-productive part of the private sector share of the economy (lawyers, accountants, bankers and consultants) was growing far faster than any other sector of the economy.

This legislative binge has also bred a whole new public service that is about writing and interpreting rules and managing information rather than doing anything useful.

In hindsight Rob Muldoon might not have been so bad.  At least he got things done.  But more about that in another post.