The 5 percent of Americans with the highest incomes now account for 37 percent of all consumer purchases, according to the latest research from Moody’s Analytics. That should come as no surprise. Our society has become more and more unequal.
When so much income goes to the top, the middle class doesn’t have enough purchasing power to keep the economy going without sinking ever more deeply into debt — which, as we’ve seen, ends badly.
The real reason for America’s Great Regression was political. As income and wealth became more concentrated in fewer hands, American politics reverted to what Marriner S. Eccles, a former chairman of the Federal Reserve, described in the 1920s, when people “with great economic power had an undue influence in making the rules of the economic game.” With hefty campaign contributions and platoons of lobbyists and public relations spinners, America’s executive class has gained lower tax rates while resisting reforms that would spread the gains from growth.
Yet the rich are now being bitten by their own success. Those at the top would be better off with a smaller share of a rapidly growing economy than a large share of one that’s almost dead in the water. – Robert Reich, New York Times, 3 September 2011
“Neoliberalism as never been, and is not, a coherent set of economic principles, the presence or absence of which in any given policy prescription determines the strength or weakness of its ideological credentials. Indeed, neoliberalism, far from being some sort of neo-classical economic crusade, is what it has always been: the fearsomely coherent political project of global capitalism’s ruling elites.
Its anti-state/free market propaganda notwithstanding, neoliberalism’s purpose has always been to use the coercive power of the state to thwart and/or reverse any and all attempts to empower the many at the expense of the few.
As Professor David Harvey notes in his A Brief History of Neoliberalism:
“Redistributive effects and increasing social inequality have in fact been such a persistent feature of neoliberalisation as to be regarded as structural to the whole project. Gérard Duménil and Dominique Lévy, after careful reconstruction of the data, have concluded that neoliberalisation was from the very beginning a project to achieve the restoration of class power”.” – Chris Trotter, Bowalley Road, 30 May 2015
“…the share of population living in poverty is at a very high level. The latest data shows almost 15 percent of the American population of 46.7 million people living in poverty, and those numbers are even higher, if you concentrate on certain groups, particularly minority, single parents, especially female-headed families, and it is heavier for young people and those with disability.
So, with such large share of the population living below the poverty line, this has important macroeconomic issues, let alone the concern that is of a more political nature, which we will not address. But if we look at the macroeconomic impact, not only does poverty create significant social strains, it also eats into labor force participation, and undermines the ability to invest in education, to invest in health, to invest in training, and by holding back economic and social mobility it creates not only a poverty impact on this generation, but it certainly can make it more sustainable inter-generationally.” – Christine Lagarde, Managing Director, IMF, 22 June 2016
In America, the full impact of a neo-liberal agenda hit Kansas so harshly that comedian/commentator, Seth Meyer, was unflinching with his scathing, mocking, satire at the travesty that had resulted;
After his election in 2010, Republican Kansas state governor, Sam Brownback, made massive cuts personal and business income taxes on the neo-liberal premise that low (and in some cases, nil) taxes would result in massive job-creation and increased economic activity by local businesses.
Kansas also completely erased the income tax bills for the owners of certain “small” businesses, totaling 330,000 by this year and including a host of subsidiaries of Wichita-based Koch Industries. The Koch-funded organization Americans for Prosperity helped Brownback push the bill and has remained a staunch defender of the changes.
The result was utterly predictable;
The predicted job growth from business expansions hasn’t happened, leaving the state persistently short of money. Since November, tax collections have fallen about $81 million, or 1.9 percent below the current forecast’s predictions.
Last month, Brownback ordered $17 million in immediate reductions to universities and earlier this month delayed $93 million in contributions to pensions for school teachers and community college employees. The state has also siphoned off more than $750 million from highway projects to other parts of the budget over the past two years.
School teachers, college employees, the State University, schools, poverty-programmes, medicare, and other services all faced budgetary cuts.
The business website, Bloomberg, was less than impressed;
Kansas has lagged Nebraska in job creation since 2011, and the gap has widened since late 2014. Instead of adding the 25,000 jobs a year that Brownback promised, Kansas actually lost 5,400 jobs over the 12 months ending in February.
The author, Justin Fox, made the eye-brow-raising under-statement of the year by declaring;
This doesn’t look great for Kansas.
There’s an age-old saying for such under-statements. Click here.
Little wonder that Fox headed his article; “Kansas Tried Tax Cuts. Its Neighbor Didn’t. Guess Which Worked“.
The owners/editor of Bloomberg appeared to ‘freak out’ at the prospect of publishing a story so utterly revealing of such an epic fail of neo-liberal dogma. The editor/owner posted at the bottom of Fox’s article;
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Of course not. That might be embarrassing. Having to admit to the Masses that one of neo-liberalism’s main tenets is actually bullshit, is not a good look.
Even Governor Brownback’s fellow Republicans were panicking, as they faced re-election this month, and the wrath of voters;
Now many of the same Republicans who helped pass Brownback’s plan are in open revolt, refusing to help the governor cut spending so he can avoid rolling back any of his signature tax measures.
“Let him own it,” Republican Rep. Mark Hutton said. “It’s his policy that put us there.”
“We’re growing weary,” said Senate President Susan Wagle, a conservative Republican from Wichita. While GOP legislators still support low income taxes, “we’d prefer to see some real solutions coming from the governor’s office,” she said.
In an example of how Republican’s take personal responsibility, Governor Brownback told journalists who was to blame for his “real live experiment“;
“You’ve got some global issues that are going on that we have absolutely no control over.”
That’s how you take Personal Responsibility: blame others.
As Kansas is slowly bankrupted, Trump appears not to have learned from Brownback’s economic ineptness, saying;
“Under my plan, I’ll be reducing taxes tremendously, from 35 percent to 15 percent for companies, small and big businesses. That’s going to be a job creator like we haven’t seen since Ronald Reagan. It’s going to be a beautiful thing to watch. Companies will come. They will build. They will expand. New companies will start. And I look very, very much forward to doing it.” – Donald Trump
Trump’s plan to cut taxes mirrors the Republican “experiment” in Kansas. It simply remains unclear why Trump believes the results will be any different.
Meanwhile, here in New Zealand, the re-distribution of wealth up-ward, through successive tax-cuts for the richest, echoed that taking place thousands of kilometres away in a central US state.
In 2009 and 2010, National cut taxes and increased gst. (There have been seven tax cuts since 1986.) This shifted wealth up-ward to higher-income earners.
As government revenue fell, budget cuts to spending on services followed;
Even as recent tax cuts resulted in wealth re-distributed upward; wage growth remaining low or stagnant; and social services reduced – New Zealanders are still not facing the dire economic and social hardship faced by our American cousins.
In September 2011, forward-thinking American economist Robert Reich explained how a worsening economic crisis in the US was affecting the middle classes;
Some say the regressive lurch occurred because Americans lost confidence in government. But this argument has cause and effect backward. The tax revolts that thundered across America starting in the late 1970s were not so much ideological revolts against government — Americans still wanted all the government services they had before, and then some — as against paying more taxes on incomes that had stagnated. Inevitably, government services deteriorated and government deficits exploded, confirming the public’s growing cynicism about government’s doing anything right.
Some say we couldn’t have reversed the consequences of globalization and technological change. Yet the experiences of other nations, like Germany, suggest otherwise. Germany has grown faster than the United States for the last 15 years, and the gains have been more widely spread. While Americans’ average hourly pay has risen only 6 percent since 1985, adjusted for inflation, German workers’ pay has risen almost 30 percent. At the same time, the top 1 percent of German households now take home about 11 percent of all income — about the same as in 1970. And although in the last months Germany has been hit by the debt crisis of its neighbors, its unemployment is still below where it was when the financial crisis started in 2007.
How has Germany done it? Mainly by focusing like a laser on education (German math scores continue to extend their lead over American), and by maintaining strong labor unions.
THE real reason for America’s Great Regression was political. As income and wealth became more concentrated in fewer hands, American politics reverted to what Marriner S. Eccles, a former chairman of the Federal Reserve, described in the 1920s, when people “with great economic power had an undue influence in making the rules of the economic game.” With hefty campaign contributions and platoons of lobbyists and public relations spinners, America’s executive class has gained lower tax rates while resisting reforms that would spread the gains from growth.
Yet the rich are now being bitten by their own success. Those at the top would be better off with a smaller share of a rapidly growing economy than a large share of one that’s almost dead in the water.
The economy cannot possibly get out of its current doldrums without a strategy to revive the purchasing power of America’s vast middle class. The spending of the richest 5 percent alone will not lead to a virtuous cycle of more jobs and higher living standards. Nor can we rely on exports to fill the gap. It is impossible for every large economy, including the United States, to become a net exporter.
Reviving the middle class requires that we reverse the nation’s decades-long trend toward widening inequality. This is possible notwithstanding the political power of the executive class. So many people are now being hit by job losses, sagging incomes and declining home values that Americans could be mobilized.
And mobilised they have been.
Whatever one thinks of Republican presidential candidate, Donald Trump, he has tapped into the psyche of the disaffected; the disenchanted; and the dispossessed. And they are legion in number.
According to US Census Bureau, there are some 43.1 million Americans currently living in poverty – 13.5%. (The Bureau states that poverty has fallen by 3.5 million people since 2014.)
The lives of ordinary Americans is now stressed and wretched, as Australia’s ABC journalist, Elle Hardy recently reported;
When fun-loving 34-year-old George Tabor died suddenly in the town of Tifton in America’s Deep South, his family was bereft.
It confirmed again that the American Dream is a vision that’s moved beyond the reach of millions of its citizens.
George’s family struggled with the immense grief of his loss, but they were also plunged into a financial crisis, not knowing how they could fund his funeral or medical bills.
“The very first day, as we were dealing with the fact that he’s gone, the first thing that was in my mind was that all these bills were about to fall on us,” his older sister Doris Stafford, 36, said.
George and his sisters all worked. Their mother had worked her whole life too. Yet, as workers on minimum pay rates, just coping with weekly needs is an endless treadmill.George Tabor was in goodhealthbefore he suddenly fell ill.(Supplied: Doris Stafford)
Having savings to buffer sudden emergencies, or even a plan for a more secure future, is a story from Fantasyland for this family, and for up to nearly 70 per cent of Americans, according to a recent survey.
In this election year, as the anger of the marginalised and threatened has taken centre stage, it’s rocked the established verities of American political culture.
The IMF warned in June of social strains if the US fails to address soaring rates of poverty, in this richest of First World economies.
On the ground, it’s the immediate daily strains that occupy people’s minds.
George’s sister Sherry Smith, 31, began receiving George’s medical bills at the apartment they’d shared. Meanwhile, Doris was working out how to come up with $US5,100 ($6,610) for his funeral.
For workers earning about $US290 ($375) a week, the challenge is astronomical.
Robert Reich’s simple infograph (below) demonstrates convincingly that pay rose with productivity until the late ’70s /early ’80s. At that point in our global history, Thatcherism and Reaganism impacted on their respective nations, the UK and USA.
New Zealand followed half a decade later. We now face our own social fall-out from the introduction of neo-liberalism; high-unemployment; under-employment; unaffordable housing; low wages; student debt; growing child poverty; and a widening wealth/income gap;
In its latest survey of household wealth, Statistics New Zealand found the country’s richest individuals – those in the top 10 percent – held 60 percent of all wealth by the end of July 2015. Between 2003 and 2010, those individuals had held 55 percent.
It is little wonder that with increasing globalisation, corporations have shifted jobs to developing nations where wages are low and working conditions next-to-nil.
Western workers have lost out to their counterparts in China, India, Pakistan, Vietnam, etc.
That has meant vast swathes of US industries closing down until major cities such as Detroit – once a major economic powerhouse for the nation – went bankrupt in 2013. Millions of workers have lost their jobs or have taken lower-paid employment.
The story of George and his family continues;
If there was any mercy in George’s death, it was that when it came, it was immediate. But in the weeks leading to it, there was much that was preventable.
When a persistent cough started nagging, he put it down to smoking. When the hacking began, a doctor’s charges and medicine costs were off-putting.
Finally, coughing and unable to breathe, he asked friends to take him to hospital. Some laughed it off as another prank.
“We didn’t find out he was sick until he’d been in hospital for three days,” Doris says. “We found out on Facebook.”
George had pneumonia. As he lay in a coma, the family assumed he was insured through his job and contacted his employer. Low-wage workers rely on employer-provided health care, or they go without.
“Applebee’s said he wasn’t eligible for insurance until next January, even though he’d been working there a year and a half,” Sherry said.
Frequent visits from the hospital’s “financial people” compounded their stress.
The family believe that if George had medical insurance, the hospital would have let him stay. Tests revealed he had an abnormal swelling in a heart blood vessel. Corrective surgery was scheduled for November 1, but the hospital sent him home.
“He was sent home with no medication,” Sherry says. “He couldn’t walk, his feet were still swollen. He tried to stand and he fell over.”
Private health insurance costs thousands of dollars a year in the US. Even the much-vaunted Obamacare seems to miss its targets.
“At first I thought Obamacare would be a good idea,” Doris says. “When they told me the price, $57 a week — it was $57 I didn’t have in the first place.”
The family has always voted Democrat. But this time it’s different. With worries about jobs, and living in quiet despair, the Republican candidate is winning her over.
George Tabor’s family was not alone. There were millions of George Tabor Families throughout the United States. And they were no longer listening to the political establishment.
In a moment of prescience, Billionaire investor Warren Buffett warned;
Americans are rapidly losing faith in the ability of Congress to deal with our country’s fiscal problems. Only action that is immediate, real and very substantial will prevent that doubt from morphing into hopelessness. That feeling can create its own reality.
Buffett wrote his words in August, 2011.
Since the late 1970s, both Republican and Democrat parties have failed to address the growing threat to Middle Class stability, and to Working Class aspirations in the US. Both parties had deserted their constituents, leaving people stressed, desperate, and fearful.
The forces of globalisation/neo-liberalism/free market has robbed millions of American families of what they considered their birthright – a high standard of living unparalleled in the world, and opportunities for their children.
There was a vacuum left by the political establishment, and Donald Trump shrewdly colonised that space. Trump had created the new “reality” that Buffett warned us about.
The feeling of desperation and alienation from both Working and Middle classes is now so palpable that mainstream media are finally coming to terms with that disaffection and understand what constituted the almost-irresistable force that propelled an ego-driven, political novice to the White House.
Despite Trump being a seriously flawed, undisciplined individual who has alienated large numbers of American voters; women, blacks, Hispanics, LGBT, disabled – I think we all underestimated the anger of the Masses that Trump was feeding off.
I glimpsed a miniscule fraction of that anger last week when I watched ‘Sixty Minutes‘. A journalist was talking to five disaffected blue-collar workers in Ohio.
These were supposedly Democrat-voting, Union-loyal, workers.
But at least three openly declared their intention to vote for Trump (story starts at 25:12);
It was at that point that I finally understood what inexorable force was propelling a bloated billionaire to the most powerful position on this planet.
As former Republican Party operative, Mike Lofgren, wrote in September 2011;
It should have been evident to clear-eyed observers that the Republican Party is becoming less and less like a traditional political party in a representative democracy and becoming more like an apocalyptic cult, or one of the intensely ideological authoritarian parties of 20th century Europe. This trend has several implications, none of them pleasant.
What do the Democrats offer these people? Essentially nothing. Democratic Leadership Council-style “centrist” Democrats were among the biggest promoters of disastrous trade deals in the 1990s that outsourced jobs abroad: NAFTA, World Trade Organization, permanent most-favored-nation status for China. At the same time, the identity politics/lifestyle wing of the Democratic Party was seen as a too illegal immigrant-friendly by downscaled and outsourced whites.
While Democrats temporized, or even dismissed the fears of the white working class as racist or nativist, Republicans went to work.
Lofgren‘s entire piece is worthwhile reading.
So the ground was fertile for someone who would supposedly articulate the feelings of betrayal and loss for millions of disaffected, confused, resentful Americans.
People are pissed off, and they ain’t going to take it any more. They are fighting back. Like their British counter-parts during the “Bexit/EU” referendum, a considerable segment of American voters lashed out at “The Establishment”. It’s as if millions of Americans suddenly woke up, realising the supreme power of their vote.
The system could take away their jobs; their standard of living; their aspirations – but their right to vote was cast in granite-stone. Like their right to “bear arms” and casually shoot each other at whim, it was guaranteed by their Constitution.
Early last century, when Russians lashed out at the autocratic Establishment of the Russian royal family, they installed a far-left regime, the Bolsheviks.
But Americans don’t do left-wing revolutions.
When Americans revolt en-masse, they lurch to the Right.
In this case, a dangerously nationalistic, reactionary Right that is closer to the French National Front than the US Republican Party. (Though many would assert that the only real difference between the French National Front and the US Republican Party is that the latter is willing to tolerate immigrants for cheap, exploitable labour.)
Those who voted for Trump have done so for a myriad of reasons, many of which are fluid and inter-changeable. They see Trump as someone outside the political Establishment; someone who will be their champion.
But Donald Trump will not be that champion. Demogogues with simplistic answers to complex problems rarely are. History is replete with demagogues who have exploited peoples’ legitimate discontent to gain power and subsequently wreaked havoc.
If Americans think they have just elected the solution to their problems, they are sadly mistaken.
Their problems have only just begun.
Meanwhile, from a global perspective, the Left is confronted with a serious crisis of confidence: when Working Class people turn to jingoistic demagoguery for solutions, why is our message not getting through?
Perhaps that is the real crisis confronting us.
New York Times: The Limping Middle Class
International Monetary Fund (IMF): Transcript of a Press Conference on the Conclusion of the 2016 Article IV Consultation Mission with the United States
Youtube: Kansas Tax Cuts – A Closer Look
Motherjones: Trickle-Down Economics Has Ruined the Kansas Economy
The New Yorker: Covert Operations
NZ Kindergartens Inc: Funding cuts take effect
Fairfax media: Police shut 30 stations in effort to combat budget cuts
NZ Family Violence Clearinghouse: Lead up to Budget 2016 – Govt announces funding cuts, increases and reprioritising
Radio NZ: Unemployment rises, wage growth subdued
US Census Bureau: Income, Poverty, and Health Insurance Coverage – 2015
Radio NZ: 10% richest Kiwis own 60% of NZ’s wealth
The New York Times: Stop Coddling the Super-Rich – Warren Buffett
Prime TV: Sixty Minutes
Bowalley Road: Raising Nixon’s Ghost
Bowalley Road: The Better Angel: Why Birgitte Nyborg Beats Donald Trump
Gordon Campbell: on the US election home stretch
Kiwipolitico: Social origins of the Politically Absurd
No Right Turn: This is not what democracy looks like
Public Address: The Long, Strange Trip
The Daily Blog: LaQuisha St Redfern vs Donald Trump
The Daily Blog: American Demockery
The Standard: Trump final campaign ad
The Standard: Donald Trump is good
The Wireless: Uncovering the art of an ugly election
Previous related blogposts
This blogpost was first published on The Daily Blog on 10 November 2016.
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On Radio NZ’s Morning Report, on 5 September, NZ First leader Winston Peters, told Guyon Espiner that his party would be a force for major economic change. NZ First, he insisted, would spell an end to neo-liberalism;
“It’s no use having what we’ve had, perhaps you can call it tweedledum and tweedledummer, who have persisted with the neo-liberal experiment. Who have gone along with allowing the foreign banks to dominate New Zealand market for example. Allowed the overseas ownership of our share martket which went from 19% when this experiment started to beyond 70% now.
New Zealand First is not going to swap one side for the other side because they think it’s their turn so that they can carry on the same economic direction they’re going.
You’ve got a group on the Right, with a whole lot of cling-ons. You’ve got an unholy wedding or pre-nuptials on the Left, and we don’t want to be part of either of those things. We’re out for economic change and we intend to be successful.
We believe, if we’ve succeeded in getting our message away then economic and social direction change is a certainty.
And we’re not going to go around starting negotiating pre-election, with parties who have proven since the last 32 years, one started this economic disaster and the other one has continued it.”
Peters’ repudiation of the neo-liberal economic model had been made two months earlier on TVNZ’s Q+A, when he told Corin Dann;
Corin Dann: Do you think globalisation has failed?
Winston Peters: Of course it has. Because, see, it’s not so much about free trade, so to speak; it should be about fair trade, and there’s a world of difference.
Corin Dann: What is the alternative to globalisation if you believe that it’s failed? Is it a return to protectionism, nationalism?
Winston Peters: No, no, it’s not. It’s being like Norway; it’s being like Switzerland; it’s being like Taiwan. It’s being as smart about protecting the interests of the economy you’re trying to build rather than just going along with being told internationally what you must accept. There’s a world of difference, and right around the Western world, there is a coming now rejection of the neoliberal experiment after 30, 35 years. It is under serious challenge now.
Corin Dann: Mr Peters, globalisation has lifted millions and millions of people out of poverty. It’s brought New Zealand great diversity; it’s brought us all of the mod cons that we take for granted – our phones – everything like that. Hasn’t globalisation been great?
Winston Peters: You’re just confusing sound trade arrangements with globalisation. Globalisation in the UK consequence meant they were being told, out of the European Commission – unelected, in the UK Parliament – they were being told how their laws would be. 55% of the laws in the UK were being dominated out of Brussels. Now, no self-respecting country’s going to take that.
Peters’ comments roundly rejected globalisation, free trade, neo-liberalism. He inferred protectionism when he told Dann, “It’s being as smart about protecting the interests of the economy you’re trying to build rather than just going along with being told internationally what you must accept“.
However, in a speech made in 1997, when Peters was Treasurer in the National-NZ First Coalition Government, he told the NBR Deloitte Touche Tohmatsu Government to Business Forum that he would be pursuing conservative fiscal management; supporting an “open, internationally competitive economy”; lower taxes; and a de-regulated market.
Peter’s speech is in the form of a hard-copy in this blogger’s possession. It is headed “Office of the Deputy Prime Minister & Treasurer” and is dated 11 February 1997. It was embargoed till 8.35am for that day, when Peters made his speech at Wellington’s up-market Park Royal Hotel.
Peters began by saying that there were “four core economic principles at the heart of the government’s strategy;
- “sound, stable government
- ensuring an economic climate conducive to sustainable development and growth, more employment opportunities, high quality education and social services, a strong commitment to low inflation, prudent and conservative fiscal management and over time, lower taxes and reduced public debt
- an open, internationally competitive economy, a strong export sector, and policies to stimulate private sector and individual performance
- planning for the country’s future, emphasising intergenerational fairness and increasing the nation’s saving”
Later in the speech, Peters reiterated the Coalition’s fiscal policy;
“That is why we are committed to low inflation, prudent and conservative fiscal management, lowering taxes and reducing public debt.”
Peters made clear that those were the core principles of the National-NZ First Coalition. They also happen to be core ideological tenets of neo-liberal doctrine.
Peters’ “core principles” are mirrored by the so-called “NZ Initiative” (formerly the Business Roundtable), a right-wing, neo-liberal think-tank;
We [NZ Initiative] are committed to developing policies that work for all New Zealanders, and we believe that promoting such policies will benefit all of our members as a matter of fact. But we are certainly an Initiative that usually prefers Adam Smith’s invisible hand to government’s visible fist.
Most of all, though, we believe that our goals and values are similar – if not identical – to what most New Zealanders want to see achieved:
- A good education system.
- Affordable housing.
- An open economy.
- A free and democratic society.
- The protection of our natural resources and heritage.
- Sound public finances.
- A stable currency.
The NZ Initiative/Business Roundtable also promotes lower taxes; a competitive, open economy; and prudent and conservative fiscal management – in short all the core principles expressed by Peters in February 1997.
In case his audience did not understand Peters’ commitment to “an open, internationally competitive economy” he repeated himself again, in his speech;
“The key to maintaining an open internationally competitive economy will be:
stable macroeconomic policies;
de-regulated, competitive and open market;
quality public services provided as efficiently as possible;
and the lowest possible taxes”
He went on;
“Another reform… removing restrictions on air services to and from New Zealand is important for reducing barriers to trade and tourism. To this end, the government remains committed to reciprocal liberalisation where possible…
To make the most of the opportunities a global economy provides…”
Not content to cement in an adherence to a neo-liberal agenda, Peters then attacked the social welfare system in this country – another prime target of the New Right;
“What distinguishes this government is the prominence given to the value of self-reliance… moving people away from State dependence to independence.”
Bear in mind that Peters was giving his speech only six years after Ruth Richardson’s notorious “Mother of All Budgets” in 1991. By the time Peters addressed the Government to Business Forum in 1997, 19% of households were already living below the poverty line and unemployment was at 6.8%. By June the following year it had ballooned to 7.9%.
Peters’ response was to attack and demean the welfare system that kept many of these people alive as the scourge of neo-liberalism ravaged the country.
Peters’ speech continued, parroting many of neo-liberal cliches that we are now so familiar with;
“We want to create an environment which encourages New Zealanders to move away from welfare dependency to employment. And for those who still need welfare support, we want a move away from a welfare mentality to a positive attitude and greater acceptance of social obligations.
It is also about people taking greater responsibility for their futures rather than simply relying on the state.”
Peters was promoting the Cult of Individualism and cutting back state support – another basic tenet of neo-liberalism.
Next, he took a swipe at families and their “reliance” on welfare;
“A prime area needing attention is the family… this government will create an environment which instils greater levels of parental responsibility.
Our destiny is ultimately in the hands of individual New Zealanders. Breaking the cycle of dependency means taking primary responsibility for our own welfare and the welfare of our families.
This government expects each and every New Zealander to… live up to their responsibilities…”
This speech and it’s conservative message sounds ominously as if the ACT Party might have given it;
“To alleviate poverty, reduce dependency and shift able-bodied people from welfare to work.”
“To put personal responsibility, self-reliance and work above welfare dependency.”
“Welfare must not put children at risk by undermining the two-parent family.”
“True compassion demands welfare that provides a hand up to work, independence and a better future.”
In a later speech by Peters, on 28 February 1997, to the American Chamber of Commerce in Auckland, Peters reiterated his commitment to a free market regime;
“…Maintaining an open, internationally competitive economy, supporting a strong export sector, particularly by managing cost structures downwards and continuing deregulation and policies to stimulate private sector and individual performance.
The government’s approach to fiscal management is orthodox and consistent…
Maintaining an open and competitive enterprise economy is essential because an open and competitive economy drives New Zealand firms to lift their game, and provide a more profitable investment base for our savings.
Let me be clear, this government is not opposed to foreign investment. When it is in the national interest we welcome all investment that boosts employment, productivity and growth.”
Peters was reassuring his capitalist audience; this man was not for ‘turning’.
There is little clear evidence that Peters is hostile to neo-liberalism, whether of the brutal Ruthenasia variety or the more insidious neo-liberalism-with-a-relaxed-face.
Instead, the evidence from his 1997 speeches is there for all to see. Peters may profess to have distanced himself from the neo-liberal experiment, but his own words betray him.
There is not one monolithic conservative/centre-right party in New Zealand, but two, distinct parties on the conservative spectrum. Just as Australia has the Liberal Party and it’s own rural-based National Party, we have National and NZ First. Like left-wing voters who have a choice between Labour or the Green Party, conservative voters in this country have a choice between National and NZ First.
As long as everyone is crystal-clear on this; NZ First’s leader remains committed to neo-liberalism.
The following are scanned images of Winston Peters’ 1997 speech to the Government to Business Forum;
The following are scanned images of Winston Peters speech, on 28 February 1997, to the American Chamber of Commerce in Auckland;
All media enquiries can be made to the author at email@example.com.
NZ Initiative: About Us
NZ Initiative: The Case for Lower Taxes
Business Roundtable (NZ Initiative): Submission to the Finance and Expenditure Committee on the 1997 Budget Policy Statement (March 1997)
Te Ara Encyclopedia: Mother of All Budgets
Ministry of Social Development: Assessing The Progress On Poverty Reduction
Statistics NZ: When times are tough, wage growth slows
ACT Party: Welfare and The Family
The Standard: Can We Trust Winston Peters?
Previous related blogposts
This blogpost was first published on The Daily Blog on 7 September 2016.
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Wellington, NZ, 22 May – Speaking to a fully packed downtown conference centre in Wellington, on a cold, gloomy rainy afternoon, Labour-leader, Andrew Little launched into a fiery attack on the current National Government focusing on it’s inarguably lack-lustre track record for the past eight years.
With a heavy media presence, Rimutaka MP, and Labour spokesperson for Education, Chris Hipkins, was tasked with making the introduction;
“Certainly there is a mood for change around the country now and that mood for change is increasing. But the question that everybody has been asking us, is is Labour ready? And that’s a fair question to ask.”
“They say that being the leader of the Opposition is the toughest job in politics. Well I can tell to tell you that Andrew has taken to that tough job in politics like a duck to water.”
“In all of that time that he has been doing that job, and all the hours he has put in, he has never forgotten why is there; for people. And that is why the Labour Party is here.”
The short introduction over, the audience of committed Labour members clapped enthusiastically as Little mounted the podium;
To say that Little had plenty of material to work with would be an understatement as the growing crisis for both affordable housing; skyrocketing rentals; and shortage of state houses have been well publicised in the media and by bloggers.
From just one day in Wellington’s Dominion Post Monday 23 May edition;
Jane Bowron’s piece especially – Marae shows up Government with haere mai to homeless – is a must-read, head-on assault on the warped ‘values’ which currently afflict our government and some peoples’ thinking. Yet, the Dominion Post is hardly known as a bastion for marxist agitation.
Little wasted no time as he launched into a recitation of National’s failures after eight years in government;
“It’s becoming harder for many people to get ahead. Harder to find a good job or get a pay rise. Harder to find a home, put some savings aside, or get the health care you need. Parents are paying more for their childrens’ education, but our schools aren’t performing as well.
Look at the headlines from the last couple of weeks: Children sleeping in cars or forced to lives in houses that make them sick; plummeting home ownership; rising unemployment, [and] stalled wages for many people.
And while the few at the very top got to enjoy special rules that meant they didn’t have to pay their fair share – everyone else is paying the cost.
We’ve seen increases in unemployment. There are now 144,000 people out of work in New Zealand, 40,000 more than when National took office.”
Little is correct on those stats. According to the convenient graphs and data from US website, Trading Economics, the increase in unemployment in New Zealand has remained stubbornly high;
Little explained that the unemployment problem was worse than just sheer numbers;
“And it’s not just that more people are out of work – it’s that many more are out of work for longer. Under this government the number of people unemployed for more than a year has tripled – up over 11,000 since they took office.
The situation is especially tough for our young people. Under this government the number of young people who aren’t in work, education or training has risen by more than 26,000.
The truth is those are the young people this government has given up on – the ones they label as ‘pretty damn hopeless’.”
Little pointed out the numbers who had not gotten any wage increase in the last year, and more importantly that workers were missing out on the benefits of economic growth;
For those in work, getting a pay rise has become harder. 43% of New Zealanders saw no increase in their incomes at all in the last 12 months.
Under the last Labour government, the share of economic growth going to wage and salary earners was over 50%.
Today, it’s 37%.
The slice of the economy going to workers has fallen each year under National.
This year, that lost income works out to be fifty bucks a week for the average family.
His comments will most likely resonate with those workers who feel they are working harder and longer hours – and yet do not seem to be progressing. The back-stories of mega-rich tax-evaders hoarding their wealth in tax havens will fuel feelings of resentment by those who work and pay their taxes so we can have roads, hospitals, schools, etc;
Little then hit the big story of the last few weeks – growing homelessness in New Zealand. Coupled with a fall in home ownership rates since 1991 (from 74% in 1991 to 64% in 2015), and we get a clear picture how “free” market economics has impacted on our society.
National’s response was to deny that a problem existed in New Zealand at all. According to Social Housing Minister Paula Bennett;
Andrew Little’s response was less dismissive of the challenges facing 21st century New Zealand families;
“When kids are sleeping in cars. That’s a crisis.
When families are crowded into garages. That’s a crisis.
When an entire generation is locked out of ever owning their own home, that is a crisis.”
He firmly sheeted home blame for our current predicament, in no uncertain terms;
“Instead of owning up to that and fixing it, the government is siding with property speculators and land bankers, while everyone else misses out.
Every initiative our bumbling housing minister Nick Smith has tried on housing has failed. Rather than go after the causes of the problems, he’s flailed around with gimmicks.
Remember special housing areas? Fewer than 1000 homes actually built.
Remember his gimmick from the last Budget? Releasing crown land? It turned out to include substations, cemeteries and even the back yard of Government House.
While the government’s been tinkering, the problem’s gotten so much worse.
In March, the average house price in Auckland rose by over $2,200 a day.”
For maximum effect, Little repeated that startling factoid to the audience and media;
“Let me say that figure again. Over twenty two hundred dollars a day.”
On Radio NZ’s political panel on Monday, 23 May, former Labour Party President, Mike Williams complimented Andrew Little’s speech, referring to it as “dangerous”;
“Middle New Zealand is concerned about health, education, housing, and the economy. And I think, as far as John Key is concerned, this is the most dangerous speech a Labour leader has given since Helen Clark resigned.”
Williams also made an interesting observation regarding how Middle New Zealand felt about their rising house values;
“I think there’s a bit of schizophrenia going on in Middle New Zealand which is showing up in the UMR numbers. If you own a house you are feeling pretty good because the value of your asset has been going through the roof. However, if you’ve got kids, you’re worried about their schooling; you’re worried about will they get a house; and you’re worried about will they get a job that pays enough to pay for a house. So I think, that, yes, home-owning New Zealanders [are] feeling ok, but parents are not.”
Little then addressed the growing under-funding of public healthcare;
According to Infometrics, we’ve had $1.7 billion dollars cut in real terms from our health budget over 6 years.
That’s meant that 160,000 people in the last 5 years have been unable to get the appointment they need with a specialist.”
Which seems to be a replay of National’s cuts to the Health budget in the late 1990s;
In response, Little promised;
“Under Labour, Kiwis will know that if they get sick, the public healthcare system will be there for them. That’s why we are committed to meeting the cost pressures that are depriving people of the care they need…
…Budgets are about priorities, and under Labour, health will be a priority again. We shouldn’t be spending money on $3 billion of unaffordable tax cuts when we could be fixing our health system instead.”
Which, if the previous Clark-led Labour government’s actions are anything to go by, can be counted as a solid committment;
Little was also scathing at National’s taxpayer subsidies being thrown at Charter Schools;
“At the same time as National has poured millions of dollars of taxpayers’ money into privately run charter schools, our public education system is struggling.
In the last year alone, National has cut funding for pupils by $150 each.
And so schools load more costs on to parents in order to fill the gaps.
Ask any parent and they’ll tell you the cost of uniforms, class activities, camps and of course ‘voluntary donations’ just keep on rising.”
For all of National’s much-vaunted “reforms” in our education system, the results are less than impressive. Little rattled off a list of stats that should raise concern with all New Zealanders;
But here’s the thing: while costs are rising, standards are falling.
In 2006, we were ranked 5th in the world for reading.
Now we’re 13th.
We were 7th in science.
And in maths? We’ve fallen from 11th to 23rd.
So much for National Standards. And so much for the neo-liberal ideology that has not only not delivered on promises of excellence in our education system – but has seemingly damaged it. Our fall in international rankings are stark evidence that National’s policies in education have failed spectacularly.
Little then offered what can only be described as Labour’s manifesto for the 2017 General Election;
- We’ll crack down on the offshore speculators who are driving up house prices and locking families out of the market.
- Labour will launch a mass home building programme to deliver new, affordable homes in Auckland and around the country.
- That’s why we are committed to three years’ free post-school education so that Kiwis can train and retrain across their working lives, without having to take on huge debt. That’s how we support our people and its how we tackle the challenge of the future of work.
- We’ll introduce a dole for apprenticeships scheme to give young people the opportunity to get into paid work.
- We’ll raise the number of hours people can work without having their benefit cut.
- We will feed hungry kids in schools…
In six, short, sentences, Andrew Little has put the boot into neo-liberal so-called “reforms”. If elected, and if Labour does not water-down it’s promises, we will be witnessing the dismantling of thirtythree years of the neo-liberal paradigm in New Zealand.
No wonder right-wing commentator, Matthew Hooton, seemed perturbed by Little’s speech during his regular ‘slot’ on Radio NZ’s Nine to Noon programme on 23 May.
Perhaps the most revolutionary aspect to Little’s promises is that of “three years’ free post-school education“. This is, in effect, partially undoing user-pays in our tertiary institutions.
But the most clever aspect to Little’s speech is that it is “talking” to two different parts of New Zealand.
His reference to “that lost income works out to be fifty bucks a week for the average family” is a direct pitch to Middle New Zealand that feels it is not progressing whilst the mega-rich rort the tax system.
But his reference to abandoning part of user-pays in tertiary education is directed at the Left who are demanding that the Labour Party make a public commitment to renouncing it’s Rogernomics past.
The trick for Labour’s hierarchy and strategists is to achieve both – appealing to Middle New Zealand and the Left – but without spooking the former, or further alienating the latter.
In effect, Labour has taken a firm step-to-the-left – and the public have not noticed.
Mike Williams was right: this was a “dangerous” speech from Andrew Little.
And a damned clever one.
Full text of Andrew Little’s speech here.
Trading economics: New Zealand Unemployed Persons
Radio NZ: No housing crisis in NZ – Paula Bennett
Scoop media: Andrew Little: Pre-Budget Speech 2016
Pundit: Have We a Housing Policy?
Kiwipolitico: Not Quite But Getting There
No Right Turn: National should give us our $13,000 back
The Standard: Little’s $50 a week message getting through
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This blogpost was first published on The Daily Blog on 25 May 2016.
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