Sunday, September 21, 2014

2014 - Why the left lost, and what they should do

The results of election 2014 should be taken as an object lesson by both the left wing parties and the media. As I guessed the left were punished for both “dirty politics” and targeting the Prime Minister via the GCSB. These are not necessarily unimportant issues but they were not election winners. But let’s back up a bit and take a look at a successful Labour campaign so we can ‘play spot the difference’.


Helen Clark swept to power in 2000 having guided Labour back from the near terminal collapse after the Party split into left and right wings following its crushing defeat in 1990. Let’s look at what she did.
First she stared down challenges for the leadership. No Party can win playing musical leaders, as Australian Labor Party leader Kevin Rudd most clearly demonstrated when he toppled Julia Gillard in the lead up to the 2013 election where Labor was thrashed. Political infighting destroys any confidence in a party’s ability to govern.
Second Clark assembled a credible shadow cabinet, especially a credible finance spokesperson. Michael Cullen was essential for Clark just as Douglas had been to Lange and Birch was to Bolger. Her shadow cabinet was a tight five of experienced, and one has to say, very intelligent individuals who all gave the Party credibility in their respective portfolios.
Third Clark was patient. The result in 1996 was very very close, but rather than claim an unworkable victory she gave away the Speaker and prepared for victory next time.
But most important of all was Labour’s underlying philosophy. It campaigned that it was a party for employment. Cullen spent years talking to business leaders finding out what they wanted and building rapport. By the time 2000 rolled around he had a huge backing from business leaders who had actually met him and been impressed with his practicality and stability. In other words not so many people in business were scared what would happen if Labour won.
Then National did two stupid things. In a spiteful and pointless gesture Jenny Shipley toppled Jim Bolger and Bill Birch said he was retiring. Second Maurice Williamson aired “Better Transport Better Roads” a plan to corporatise road ownership out of district council hands which the privitisation battered electorate saw as a stepping stone to privitisation. And that was it. The Government of the day looked ugly and out of touch  Labour looked capable and a better alternative. Result: a convincing victory that sent National into the political wilderness Labour has been exploring lately.
So that is the recipe. Labour has done it before so (theoretically) it can do it again. But the real question is, in practice, can it?


Now let’s have a look at election 2014. First there is no getting around the fact that the leadership coup by David Cunliffe cost the Labour party four seats.  The disingenuous praise by the election winner, John Key, for his opponent should raise alarm bells with the Party. But should Cunliffe go? Probably not. Another round of leadership cannibalism will only make things worse, and in fact Cunliffe did make a reasonable fist of fronting the Party in the television cage fights with an almost over-relaxed John Key. In my view Cunliffe needed this excruciating boot up the arse in order to make him a better leader. Only when his bullshit optimism was finally called by the electorate did he drop the unctious righteousness which completely failed to connect with male voters in particular. Standing practically naked in the bright lights of defeat hopefully he has learned the crucial lesson he needed to learn – it is not about the leader.

Oct 28 Postscript. I am no fan of Cunliffe, as are a good many of the Labour caucus but sadly it seems the ego grudge-match is back and the Party is having a new round of leadership maulings. If Grant Robertson thinks he is any improvement over Cunliffe his head is wedged so far up his own arse he can't see daylight. He has no charisma. In fact none of the potential labour leaders have any charisma. But at least Cunliffe has had exposure. What the party desperately needs is continuity. It took Clark three successive losses before she was ready to step into the Prime Minister's role. If Labour had switched leaders after each loss she never would have got there.

For that was the fundamental flaw in the left’s strategy – if it can be called that. The strategy went like this. Pile up a whole bunch of shit on the head of the other leader (John Key) and then call upon the electorate to “Vote Positive”. The mistake Cunliffe made was his own arrogance. The assumption that the leader matters. It doesn’t. We don’t have a president, we have an elected cabinet running the country. It is the team that matters and Cunliffe didn’t have one. David Parker is no match for Bill English. Phil Twyford is no match for Steven Joyce. And both had profiles lower than earthworms.
Plus the other problem is shit sticks. In theory Labour had nothing to do with Nicky Hager’s book, “Dirty Politics” and nothing to do with Dotcom’s “Moment of Truth”, but by talking about both it got dragged into the shit-storm and was tainted in the process. By default it let the news agenda be set by these events because it didn’t have anything else to contribute. It didn’t have events and challenges of its own and just rode along on the coat-tails of the muck-rakers. If that was deliberate (Wellington is a small town and people talk) it was a very dumb strategy. If it wasn’t it was incompetent campaigning. By contrast in his heyday Winston Peters has raked his own muck on governments and he has been very accurate and clever with the way he’s dispensed it too. People respect Winston for holding the government of the day to account by himself. Simply saying “Yeah, when I’m Prime Minister I will call for inquiry” is weak from every angle.
The internet may excite some people but for most it isn’t important. Most people don’t care about political shenagins. The only people who do are the media.
There is no question that in an election marked by the failure of egotists (Cunliffe, Dotcom) to realise it was not about them, the media has acted like another bunch of egotists. Nobody much out there cares about Cameron Slater and Nicky Hager. They are only important if you are a gallery journalist. The huge distraction of “Dirty Politics” etc was only because political journalists are even more out of touch with ordinary New Zealanders than politicians are. They have no point of contact and the result is distorted editorial decision-making. My contention is that this isn’t just a problem with political journalism, but a problem with all journalism, but I’ll leave that debate for another day.


For the real problem with the election was the left didn’t have a strategy. It had a circus and the electorate punished them for it. Kim Dotcom should now realise that his egotistical bid to carry his fight against John Key to the political realm has been a disaster. It has probably cost the Mana Party its seats. But that was a sideshow to the event that was conspicuous by its complete absence.
There was no question that Labour had no chance of governing alone. It needed the Greens and it needed New Zealand First. Everyone knew this. So where was the announcement of the Policy Accord between the three which detailed the areas where the three parties agreed on a single coherent policy? Where was the alternative government in waiting? Right, there wasn’t one. All the three parties had was a promise to reflect the policy concerns of their own base. That’s not coherent. It’s certainly not a potential government. It was a potential nightmare. That isn’t a “positive” vote.


Now let’s have a quick peak over the fence at National. National has factions in it, to be sure, but they unite for the purposes of winning elections. They are coherent. They look in charge.
They are also very cheeky. They are poaching Labour policy and territory forcing themselves into the centre and Labour to the extremes. National’s catchphrase “Working for New Zealand” could have been the Labour catchphrase.  That’s the cunning way National is dominating the centre of politics and that is where elections are won because right in the middle of the electorate are people who aren’t in any base and will vote Labour or National. It is they who decide elections.
Because the fundamental problem for any political party is that it’s base is usually a liability when it comes to extending its appeal. The way the National Party hung the Conservatives out to dry was very smart. While it may have cost them Napier (where Sensible Sentencing Trust’s Garth McVicar split the blue vote letting Labour steal it) it signaled to the centre that National was not interested in lurching right. If it had done that, things may have gone very differently on polling day.
The problem with Labour’s base is it’s unbelievable hatred for National and John Key in particular. The idea that the son of a poor single mother could work himself up to become a significant fund manager at Merrill Lynch and then come back and lead the National Party seems to assault something deep in the psyche of Labour’s supporters. Perhaps it is the sell-out to the unprincipled world of mammon, or perhaps it is that Key is a direct assault on the ego protection that a person’s poverty is not due to their own lack of work ethic and determination but because “the system” sucks. Labour’s base is all about changing the system to suit those who aren’t winning in it. Unfortunately for those in the Centre that looks a bit like the losers voting themselves a win rather than doing the work. It was what the Austrian economist Joseph Shrumpeter thought would ultimately destroy the socialist governments of Europe. It was also the what led the British to vote for Thatcher.
By contrast Bill English has been saying some quite extraordinary things about deprivation lately. As a professional policy researcher I had realised that one of the main challenges facing New Zealand was the growing gap between rich and poor potential. Automation could eat up many jobs that the poor have traditionally relied on. The danger was the creation of large ghettos (especially in South Auckland) which essentially poison the rest of the country. To my surprise when I started exploring what could be done about this English was already there. The Nats have recognised that benefit dependence is a long-run cost and that if that long-run cost can be obviated by up-front investment the whole country wins. For a Party that has traditionally associated with beneficiary bashing this is an extraordinary bit of enlightened self interest. But it’s also invading Labour space and taking aim at the Labour base.


So what can Labour do?
First it needs to recognise that the problem isn’t a leadership one, it’s a team one. The team is weak and needs work. A Cunliffe – Norman team could work but it would mean a completely new way of working for the Labour and Green Parties.
Second the Labour Party needs do what National is doing and extend its reach beyond its base and woo business.
Third the Labour Party needs a far more coherent common policy platform with its potential allies which it can present to the electorate. It was the Greens that cost Helen Clark her fourth term in 2008. If the Labour-Green alliance isn’t coherent and credible Labour’s vote will remain weak. For this to work Russell Norman’s efforts to mainstream the Greens have to continue.
Finally Labour needs to recognise that if it keeps doing the same thing with the same people, the same way its going to get the same result. New people, new ideas, new approaches are needed. Dyed in the wool Labour Party supporters will have to get over their post 1990 suspicion of a more rightist stance and recognise that if Labour is about work it needs to work with job creators. That means recognising the difference between the financial pirates who infiltrated the party in 1984 and employers who bring and keep sustainable work in this country. It means unions helping business, and business helping skilled employees. If Labour can develop a profile which reflects its commitment to employment then it has a reasonable crack at winning.
Eventually, as John Key and Bill English have both said, the electorate will get sick of them. But without the Labour Party offering a credible alternative Labour will not necessarily benefit. If they don’t get their acts together National will sleep-walk into fourth and even fifth terms without interruption.

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Wednesday, September 10, 2014

Decision 14 = public policy as bomb disposal

This year's New Zealand election has been rather like watching an earthmoving crew working on an unexploded bomb site. For a while there was a bit of a punch up over in the corner over Nicky Hager's "Dirty Politics", about who would drive the bulldozer that was a complete distraction to the issues New Zealanders really wanted to talk about, namely: the economy; the distribution of wealth; our prospects as a country and the priorities for the future. Finally we seem to be actually discussing what we should have been talking about from the beginning.

So why is New Zealand an unexploded bomb?

Reason one: Third most over-valued property prices in the the world.

New Zealand property is, as everyone knows, wildly over-valued. Property is propped up by foreign investors, Auckland City Council's metropolitan urban limit ( see Grimes) and the destruction of available land in Christchurch. The problem is people (particularly Aucklanders) are addicted to high property prices and 10% per annum increases. If the music stops there won't be enough chairs to go around and many property owners will end up with negative equity. There is a risk of capital flight and massive deflation.

Reason two: Our Net International Investment Position is terrible

While Treasury worries about the state of Government debt the NIIP is an indicator of all the debts and assets of all New Zealanders. Government debt is relatively modest but private debt is astronomical. New Zealand is up there with Ireland, Spain and Greece. Singapore owns more of the world than the world owns of it. We are the reverse. The only reason our unemployment has stuck at 6% has been Australia's mining industry. But as that slows people are returning home and there isn't much for them. There just isn't much to come and go on. We are reaching the end of our credit rope.

Reason three: Shallow industrial base

You don't have to look at New Zealand's export statistics for very long to see that aside from Fonterra we don't have any other major vertically integrated corporations. The next biggest is Air New Zealand, but while this re-nationalised airline is in far better shape than Qantas, it is still operating in a difficult and political environment. The rest of New Zealand's firms are tiny, very diverse, and have very little in common with one-another. Diversity is not a bad thing, but small size is not so good. It means our firms are shallow. They don't have the same resilience and sticking power as larger firms. Corporations are important because they are the repositories of applied intellectual property. Only corporate intellectual property delivers wealth. New Zealand has loads of tiny smart new firms. What it needs is more bigger firms that stay in this country and don't follow in the footsteps of Glaxo to other corporate locales.

Reason four: Ill-educated underclasses

Let's be straight about this. There is poverty in New Zealand. Being poor, is not necessarily a bad thing if there is a legitimate way out. Many successful people are motivated by poor childhood's and do very well for themselves as a result. Our Prime Minister is a good example.
But I'm talking about cyclical poverty where generations never escape, where education becomes irrelevant rather than a means of escape and crime becomes the first best option. This is happening in New Zealand and it costs us in two ways. First there is the opportunity cost. People who could contribute who never get the chance are a cost. Then there are the actual costs: benefits; health problems; mental problems; crime and the costs of crime and mental health impacts on others. This is a dead-weight cost to the rest of the community, as more and more jobs become automated, turned over to robots or machines, the scope for these people to find meaningful work (paid or otherwise) is diminishing.
To be blunt I blame middle class teachers for this problem. Their outlook on education is essentially a supplier-oriented one. They want to teach a certain thing and organise education to facilitate that. What they want to teach is essentially what they were good at, in their own education. Adding value to the lives of students, which they may have nothing in common with, simply doesn't feature unless it fits into their own middle class value systems. The result is far too many Universities teaching courses with no value for employers and too few technical institutes teaching low cost practical vocationally useful courses. We do need a shake up of education but politically I don't think Labour dares disturb its base and National will only antagonise it.

Put it together and shake it up

Put all this together and you don't get a pretty picture. You have a nation which is a perfect example of the "Tragedy of the Commons" ( where everybody in pursuing their private interest ends up compromising the collective interest). A large part of the problem is that public discourse is dominated by petty politics rather than serious issues. We are, in effect, distracting ourselves towards collapse.

What don't we need as a result of this election?

1) Policies that rip demand out of the property market suddenly. A sudden collapse in demand could easily lead the way to a total meltdown which will lead to serious amounts of negative equity in highly geared Auckland households. If the property market collapses lending will collapse and with it investment. The dollar too would plummet increasing fuel prices and the cost of living for everyone. While we certainly have a property bubble the last thing we need is for someone to pop it. We need it to be squeezed down over time, ideally by increasing supply so that prices stabilise so incomes can catch up.

2) Borrowing or taxing for things that don't make a return. We do not need to take money out of productive purposes to invest in things which aren't. Politically motivated investment is always dangerous. Politicians who want to build monuments to themselves should be shamed and exposed for what they are. Investing in things people won't use or don't want just because it fits some kind of ideological mantra is not something we can afford. This applies equally to the Nats, the Labour Party and the Greens. The prudent course is if in doubt that you can't create more value than people can for themelves don't take the money from he people.

3) Ego driven politics. There are always seriously inflated egos in politics but now we have from left to right (based on their historical actions of putting themselves before the rest of their own party): Kim Dotcom; Hone Harawira; David Cunliffe; Winston Peters and Judith Collins. It's not pretty. People who relish the opportunity to hold sway. People who love power for its own sake and will do anything to get it. We don't need that shit. We need a political process that can make predictably sensible decisions in a calm and rational manner. When you are on an unexploded bomb site, you don't want a lot of shouting. Instability and grandstanding will only make any crisis worse. The last thing we need is the horror confronting the United States in these midterm elections.

4) Partisanship. To be honest I don't see much difference between Labour and National.  Some will howl that the nats are dirty tories but frankly Labour has skeletons too, they simply haven't come out yet. I have supported both Labour and National and I have hated both at various times. I have no time for partisans, because I don't think any side is automatically right. I have no time for extremists either because they simply don't believe in democracy, and my steadfast belief is that ultimately there is wisdom in the average of all views.

To be honest I am not relishing this election. I am very frightened of a circus attempting to manage this country through delicate and difficult times. The left shows a terrifying lack of policy experience with many policies apparently developed without any reference to anyone other than their own base. The right, while a much tighter and more disciplined organisation, has shown an unnerving tendency to ignore popular concerns and plough ahead with policies they have not explained convincingly and which basic humility should have given them considerable pause about executing.

I just hope nobody cuts the wrong wires. 

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