Sunday, June 22, 2014

Why and how the Labour Party needs to change

It's time New Zealand's left wing took a very long hard look at itself.

Right now the Labour Party's vote is arguably around 30%. Under Helen Clark, back in 2005 it was 41%. The Green's share of the vote is around 10%. In 2005 it was 5.3%. So while the Labour Green vote is 40% all that has been happening has been the Greens have been eating Labour's lunch on the left and scaring off middle New Zealand who might vote Labour by looming as a powerful coalition partner for anyone who votes Labour. The net result is that the Greens are killing the prospects for the left for the foreseeable future.

Labour is slowly sliding into obsolescence, and why? Because it has forgotten who it is. 

The problem has been far too many bourgeois liberals in the Labour Party. Bourgeois liberals are those who earn their living from law, or policy analysis, or working in Government who align themselves with the left because big government makes them better off. They love issues that make them seem a bit defiantly radical, a bit like Professor Verkhovensky and Madame Stavrogina in Dostoyevski's The Devils. Radical enough to wear long scarves to film festival shows, and make slightly outrageous political propositions in tutorials but not so outrageous as to actually put their car parks in jeopardy.

These people infest the Labour Party with their ill-conceived and often completely naive notions for reform in industries they know nothing about, while steadfastly resisting any change whatsoever in industries like education or health which they may know something about. As such the New Zealand electorate only vote Labour if there is a lot of money about and they want the Government to do more. This happened in 1984 as the sharemarket ballooned prior to the 1987 crash, and again in 1999 as we clambered out of recession on the back of rising dairy and oil prices.

Because the problem with the Labour Party is that it has forgotten it was born from a depression and the need for jobs. While the bourgeoisie have wrung their handsies about environmental and social issues what has been forgotten is simple, basic economic issues like unemployment, jobs and New Zealand's economic and industrial development. 

New Zealand's Net International Investment Position ( all it owns, less all it owes) is in the same territory as the PIGS (Portugal, Ireland, Greece, Spain). It's bad. Really bad. There are, however, three differences between New Zealand and the Pigs which help. First, we aren't stuck with someone else's exchange rate (like the Euro nations). Second, our overseas debt is private debt not public debt. It is households who owe a fortune to foreign banks not the Government (partly through the magic of privatisation). Finally, and this is a real biggie, we have been exporting our surplus unemployed to the Australian mines, keeping unemployment down to 6% for adults and about double that (as usual) for youth.

Unfortunately all this good news is covering up a very big dirty secret which the OECD has pointed out recently. New Zealand has the second highest property prices in the OECD after Greece. But the average is strongly affected by our largest city, Auckland, which is home to a third of the population. While the Auckland property prices have been growing at over 10% per annum (most recently 13%) generating inflation and a not insubstantial slice of GDP (through financial services  i.e. mortgages) the simple fact is that the baby boom generation is in the final approach for retirement. Within ten years boomer families will realise that their living costs in Auckland (in particular) are escalating dangerously, their pensions are not sufficient and they are sitting on $1m properties. If they sell those properties and move down the road they can probably put half a million in the bank and their very long retirements will be most comfy indeed. Problem is who will buy them?

The next generation is not only relatively poorer, it is also considerably smaller. So Government will have a choice. Either increase immigration (again) or watch Auckland's property market slide. Immigration will generate resentment (which is gathering already), a price collapse could have a serious and lasting economic impact.

So New Zealand's fundamental problem is that a crisis is coming. It just hasn't got here yet.

While the National Party has shown some indication that it can see the problem the Labour Party doesn't seem to have anyone with the nous to recognise the problem let alone start to deal with it. This is a huge pity because the National Party's solutions are not going to go easily on Labour's traditional constituents.

Part of the problem is the Auckland mayor who is threatening to impoverish ratepayers to build a rail link around the central business district. This rail link will mostly service the well-to-do and their student children but even then relatively small numbers of them. If Auckland is lucky it will double the rail share from 1.3% of trips to 2.6% of trips. But because the mayor has also decided that the long term rates plan the city decided on is politically impossible his only solution is to cut other services in order to build the rail tunnel. 

Unfortunately bourgeois liberals have been convinced that rail is more sustainable than cars and lacking any mathematical ability have adopted the kind of Animal Farm mentality about the project swallowing the Mayors belief that a rail project which will cost half the book value of all the local roads in Auckland will solve the city's congestion problems. Sadly to these liberals what is important is not that this is physically impossible but that it is an important gesture. Rail means being a "proper city" for those in the leafy inner suburbs and tweaks the noses of all those dirty plebs who will still have to drive in from the outskirts.

The second part of this story is that Auckland's impoverished South (home to many poor white, Maori, polynesian and other immigrants) is the youngest, fastest growing population in the country. There is already higher than average unemployment in this part of the city and the rapid evolution of technology suggests this is only going to get worse. So far the bourgeois liberals have merely used these people's plight as a demonstration of the heartless thuggery of the National Party but have offered absolutely no workeable solutions to avoid a potential social disaster within twenty years.

What is actually needed is some strong leadership by the Labour Party not only in Auckland but nationally.

In Auckland the Party needs to look at its constituents needs in reality rather than in theory. The rail loop is not what they need. What they need is better support for safe walking and cycling (especially at night) through better street layouts and lighting. Better access to valid licences. Better libraries that kids can do homework in, better homework facilities for non-academic studies in schools, and better sports and cultural facilities. While the rich of Auckland may resent their rates being spent on the poor it will mean that in twenty years time they don't have to worry about a generation of unemployed thugs fighting it out Los Angeles style with guns from the internet.

The Labour Party also needs to work nationally.

First it needs an education policy which sets out a strong reform agenda. The fundamental problem with New Zealand's education system is that while it works fine for the best and brightest it fails to provide our average and ordinary people with the skills they need to find employment and live their lives. It treats the trades as failure, rather than success. We have far too many Universities and far too few technical institutes. It does not provide basic skills in financial literacy or the ability to get to work. It is all about teaching, and not about adding value to others lives.

To get an education reform agenda agreed with the teachers unions would be a huge coup for Labour and will certainly work better than the reforms National will inflict on the sector if Labour cannot offer a better alternative.

Next the Labour Party needs to start making friends with New Zealand businesses. It needs to look at ways to integrate labour protections, labour flexibility (yes businesses do need flexibility), and work-force planning. New Zealand cannot succeed unless New Zealand business succeeds and Labour has to not only accept that but embrace it. 

Finally Labour needs a policy for local government that actually works. The Resource Management Act has been an abject failure and National will probably replace it or heavily amend it. But it has failed because local government is simply not able to make it work. Local government is in dire need of reform, not only for business but for households as well, It needs more resources, less red tape and incentives to assist employment.

In the end the Labour Party is about employment. It isn't the gay rights party or the environmental protection party it is about the thousands of New Zealanders on the average wage or business drawing who struggle in a way that their parents did not. When Labour can stand up and say, truthfully, that it has done its best to achieve full employment and improve New Zealanders incomes then it will achieve the electoral approbation it deserves.

But not before.

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Wednesday, June 4, 2014

Reviving Observations

Its been a long time since my last post and the question has become whether to abandon observations altogether or not. I've decided not. I've decided to start posting again about issues connected with the media, politics, society and economics in New Zealand. As always the views expressed are purely my own.

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