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The alternative forms of economic society require "cooperation" through an all-powerful coercive government (the Hobbesian solution), or the "war of all against all" which is the logical outcome of general non-cooperation (the "Prisoners Dilemma"). It is now coming to be understood that homo sapiens is a cooperative species, so the problem only arises when we create ideologies that appear to tell us we are wrong to equate the interests of other with our own interest and institutions that reward the non-cooperative "cheats". Trust is undermined most when we are told that we cannot be trusted. A particularly important area in which cooperation is required relates to our willingness to pay taxes. A society which encourages, even glorifies, tax avoidance is a society that is telling its members that the clever thing to do is to cheat on the moral rules that oblige us all to pay our due shares of the taxes that are required to support the public goods that are the sine qua non of a civilised society. Today, the established big business interest is particularly lax at paying its taxes, and particularly prominent in demanding lower taxes. |
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Abstract: |
Although New Zealand's backroom negotiators appear to be less interested in negotiating exclusion clauses than are negotiators from most other countries, the Treaty of Waitangi is being cited as a basis for protecting certain Maori interests. It is my argument that the "settler" population were also party to the Treaty of Waitangi, and should also be covered for exemption purposes with respect to the MAI negotiations. Following a modern interpretation which downplays the role of the British sovereign, I feel that all immigrants and descendants of immigrants who regard New Zealand as "Home" (rather than as an economic playing field) should be regarded as signatories to the Treaty of Waitangi. Positive discrimination should favour them as well as Maori. On the other hand, I can see no reason why transnational business interests resident in New Zealand should have an advantage over identical non-resident interests. In that regard, I support the goals of the Multilateral Agreement on Investment. |
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Abstract: |
While the concept of carrying capacity is a useful one, it is important to take both a marginalist view which suggests that additional persons will consume less than the current average amount of resources, and a dynamic view of changing average resource usage over time. The key concept is that of "lightness of tread", and, thanks to changing values brought about in part by rising populations, in some circumstances a higher population will tread more lightly on the earth than will a lower population. Certainly, many of the worst environmental abuses took place in the past, when populations were smaller. The particular value shifts that lead to less weight of human tread result both from the increased value of land, the scarce factor of production, and from a shift away from the work ethic. People who work less intensively tend to tread more lightly on the earth, because much of the pressure on the planet arises from our habits of work, such as commuting, and congregating in the bigger least sustainable cities. |
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Abstract: |
The key liberal principal is that of socialised self interest, meaning that markets only work to the advantage of all when participants in the economy take actions which they believe will yield the best outcomes for all, and which are most effective when others take the same view of self-interest. Examples of such actions are voting, and refraining from drink-driving. Advocates of competitiveness tend to use a form of blackmail in their arguments, by asserting that strongly negative outcomes will occur to any nation that fails to follow their particular prescriptions for competitiveness. This particular tactic presents grossly exaggerated doom-laden scenarios as the consequences of lost competitiveness. The net effect of such policies is that, all nations, as nations, lose, while particular interests within each nation turn out to be the winners. Global capital for example, profits from globally low tax rates that arise when each nation cuts tax rates in the name of its nation's competitiveness. |
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Abstract: |
The main cause of the growth of the American market has been falling interest rates, and fear of another crash is likely to lock America and many other countries into low interest rates for many years. This benign low interest scenario also fits in with the long wave scenario developed by Soviet Economist Kondratieff in 1927-28. If capital continues to flow back from SE Asia to America, and is reinforced by capital flight from Latin America, Eastern Europe and Japan, then a repeat of the 1929 scenario becomes probable. But it is more likely that current sharemarket wobbles will ease off as American money flows back to SE Asia. |
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Abstract: |
In a democracy, the relationship is one of circular flow, from the sovereign people as citizen-principals, through the apparatus of government, as agents, to the people again as subjects. In a dictatorship, the circular flow of power is replaced by a linear flow, from autocratic sovereign to subjects. The same diagrams can be used as a means of revealing deviations from the theoretically correct forms. They can be applied to any particular society to test whether that society conforms more closely to the democratic or to the autocratic form. There is some uncertainty about the policy direction of the New Zealand government in 1998-99, under Jenny Shipley. However, our political system now operates as a well-constituted democracy, thanks to proportional representation. New Zealand has rediscovered its principals. Mrs Shipley, as an agent rather than a principal, will have to orient her government's policies towards a significant constituency of public opinion. If she doesn't, then she cannot survive as Prime Minister. |
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Abstract: |
International capital flows - meaning all flows of capital that regard the world economy as a single 'playing field' - can be creative or parasitic, depending on whether they create new streams of income, or whether they do little more than divert income streams to those with market power. "Invisibles" payments are simply the income streams that result from foreign capital movements. By funding our invisibles through additional capital flows instead of through an excess of exports over imports, we simply add to our deficit on invisibles, by around $500 million per annum. New Zealand has had similar balance of payments problems in the past; most dramatically in the 1880s. One of the most perceptive observers then was the MP for Parnell, Frederick Joseph Moss. His analysis and advice could be usefully followed today. |
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Abstract: |
The principalagent framework is central to the "rational choice" school of political economy, and is applied in particular to political rather than economic "actors". While, in general, the "ruler" or chief executive is regarded as the principal - eg the President in the USA - it is also axiomatic that Parliament is the principal in Westminstertype systems, with the Prime Minister and Cabinet being agents of Parliament. The strengths of the framework are that (i) it acknowledges both economic and political failure as intractable issues of public policy, (ii) it acknowledges that power is very much a part of economics as well as of politics, and (iii) it provides a way of both discerning the prevailing power relationships and analysing the political failures which prevent power relationships from being what they ought to be in a democracy. People become true citizens of their nation when they crack the principalagency problem of political economy; when the people as nominal principals become the real principals. When that happens, the revolution which started in France in 1789 will have been completed. For New Zealand, MMP was a vital step in the creation of a representative Parliament which acts as principal over the Cabinet as its agent, thereby making possible a reversal of the previous relationship in which the Ministry exerted power over Parliament. |
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Since 1984, and in particular since 1991, there has been a marked contrast in the inflation experiences of beneficiaries (and low income workers) compared to high income workers. Statistics New Zealand have developed a Superannuitants Price Index (SPI), with subdivisions for homeowners and for renters. The SPI for renters serves as a good base for a Basic Price Index (BPI). To create a simple BPI, I have adjusted the SPI for renters by taking out private transport, air travel, tobacco and alcohol. Through the 1990s, beneficiary households have faced significantly higher inflation than have households on average incomes. Beneficiaries and most low income workers have suffered from both absolute and relative losses of income. Thanks to their gross inefficiency, the reforms have caused a domestic cost inflation that has severely damaged the life opportunities of many New Zealanders. |
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Abstract: |
The post Employment Contracts Act working class - the constituency of the new Centre - is driven by economic insecurity. They are attracted to populist leaders and are looking for scapegoats. Beneficiaries are set up to play that scapegoat role. The new working class are seduced by concepts such as workfare and targeting, and they resist tax increases. Some parts of New Zealand First's programme - eg the Code of Social Responsibility - are tailormade for Shipley. She may crowd out some of the territory of the Alliance as well as that of NZ First. Not only do I expect to see her oversee the dismantling of many of the Health structures that she helped to set up, but she may well come out against a blank cheque commitment to multinational investment. I expect the 1999 election to be a contest between two headstrong women, one leading a united National Party; the other leading a Rainbow Coalition of Labour (the new New Right), the Alliance, the Greens and a Maori coalition. The neoliberalism of the old New Right will not feature as an election issue in 1999. Rather, the contest will be between the political groupings who literally fought each other in 1981; pluralism versus 'Jenny's mob' of mainly white 'Heartland' New Zealanders. |
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Abstract: |
Rising interest rates have a strong proinflation effect. Profits are an important element of cost in any capitalist economy, and the size of that cost is determined by the prevailing rate of interest. Companies' share prices fall if they cannot pay dividends that keep up with rising interest rates. Because our "antiinflation policy" is actually causing inflation, the pressure remains for the policy to be persevered with. The policy creates the conditions which give rise to the policy. A global escalation in interest rates that would follow from other countries copying our technique of treating inflation would cause a worldwide increase in unemployment, a massively increased misallocation of resources, and a global increase in inflation. |
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© 1997 Keith Rankin