I had the pleasure of interviewing a prospective intern here, aged 18. She’s very smart and business-like, and when you are 18, you do have ideals. You see the world and the bad shape it’s in. And you think: something can be done.
   Every generation, I think, sees this, and after a while society or the sheer lack of change drives some to despair. Go back to, say, my father’s generation. He went through WWII as a kid and saw how the postwar institutions tried to create a more peaceful world. Things like the Universal Declaration of Human Rights attempted to say to the world: there are minimum standards. Slavery is bad. The idea of one group over another, limiting their free will, leads to ruin or bloodshed.
   But go back through history and it seems to be human nature. Slavery has often accompanied economic success: slavery in pre-Civil War US, guest-worker programmes in certain Middle Eastern nations, and even in occidental nations today, (illegal or legal) immigrants who have fewer rights than full citizens doing the tough work. Globalization has narrowed the distance at which certain corporations or individuals can have control over another group of people who may work for less than a dollar a day.
   This upsets us because we pride ourselves on being civilized and because we know that no one should be without dignity. What this reminds us of is the fact that we are closer to the Darwinian ape than to anything civilized, as we struggle to narrow the gap between rich and poor on our planet. We have enough food and certainly enough weapons to blow ourselves up many times over, yet we can’t feed nations. For all the coolness of causes such as ending poverty or hunger, where are we?
   I imagine that as people hit middle age, these questions flash across their minds as the planet looks remarkably similar to the one a generation ago, albeit with higher water levels, warmer temperatures, more motorists and SUVs.
   So what is the solution? There are good blogs out there with very wise ideas—many are linked at the right of this page in my blog roll—but I know it is dangerous to throw the baby out with the bathwater. Yet the establishment is often clueless, particularly political establishments that seem to have shorter collective memories than even the population.
   Labour in New Zealand moans about the high Kiwi dollar when it has done little to encourage business or exports; instead, our companies are being acquired left, right and centre or are forced to outsource to Asian countries. That is a digression, but it highlights that the weak dollar that we had in 2000 (versus the US, the Kiwi was at $0·40) and the strong dollar we have now (which looked perilously close to $0·80 in July) can be linked to a lack of direction and economic inaction. This is just seven years, yet the government has forgotten what conditions we had a short time ago. (The Opposition still seems equally clueless, because this is a heck of a big target that Clark and Cullen have painted on themselves—perhaps John Key needs glasses, or does his ignorance suggest something more sinister?)
   What we do know is that the technocratic way of managing our planet has not really worked. The growth of globalization and the creation of nations of underclasses to be exploited can’t really meet a healthy end. Idealists may point to the potential of equalizing incomes as outsourcing continues, which is not totally incorrect. I, too, believe in healthy and ethical trade as a means of addressing some of these concerns: as Simon Anholt wrote in Brand New Justice, it is possible to give second- and third-world nations branding techniques to help their products be marketed in first-world nations, the price premium going back to boost local economies and communities.
   Simon’s is not a technocratic solution; it is not the sort of thing that Robert McNamara or the Whiz Kids might have come up with for President Kennedy. Yet we keep listening to the technocracy when I am not terribly convinced that it has had the answers. The US, for instance, has the most unequal distribution of income among richer nations, yet its political–economic model is followed. Can any New Zealander who can think back to the pre-Rogernomics, pre-Ruthanasia days honestly say that society appears more stable, or that we have proportionally fewer murders? We have grown an underclass.
   I was just chatting to someone at Clemenger BBDO who had been to Spain. She reports that while Valencia shopping isn’t what it should be, Spain is a lovely place. Many of us can remember post-Franco Spain being a pretty run-down sort of place, even if Franco himself had attempted to modernize the nation during his time in power. But His Majesty King Juan Carlos I and his governments have turned the nation around, brought it into the EU as a successful economy—without following too many of the monetarist theories that have been oh-so trendy since the 1980s here. I remember how Spain overtook the UK as a car producer many years ago—as a child, that prospect would have been unthinkable.
   Spain was in bad shape after Franco and even the centrist government could not do much to deal with the oil shocks. When Felipe Gonzalez’s government took over in 1982, inflation was running at 16 per cent. It closed the big, unprofitable SOEs. It introduced energy policies that were more efficient. It did encourage private capital investment. But by the early 1990s, unemployment reached a horrendous 23 per cent, but by all accounts, as measured by the globalists, Spain is now in good shape.
   Look more closely, however, and Spain has done a lot to bolster the middle class, not just the wealthy. It abandoned low-cost manufacture as its claim to fame in Europe; today, Spanish brands are often trendier than those from the more brand-developed economies. Spain went to more skilled enterprises, its standard of living and cost of living—taxation was needed to finance many of its programmes—both steadily rising over the decades.
   When I think about it, the most stable, growing economies these days are not the ones that go for the flash—the ones that create millionaires and billionaires at the expense of others. The enduring ones have bolstered their middle classes, allowing many to share in the nations’ growing wealth. And domestically, I don’t think I have seen that for a while: certainly not the last National Government, which followed the technocrat’s playbook, and Labour, with its good intentions in 1999, has not narrowed the rich–poor gap. The middle class is disappearing because it is no longer the politicians’ focus: there are better photo ops alongside celebrities and the wealthy in an age of party-marketing. As with Wall Street, celebrity CEOs get more headlines than the ones who have continued to steer an organization quietly into its fifth decade of growth.
   Even our own Department of Labour paints this grim note:

From 1986 to 1991, work-poor households grew from 13% to 20%. Yet when the economy and job growth picked up in the early 1990s, the proportion of these households declined only a fraction, to 19.4% in 1996.

as does the Department of Statistics:

the bottom half of all households had considerably less of the disposable income in 1996 than 14 years before (31.1% as compared with 27.8%). Conversely, the top 10% of households saw their share of the disposable income rise from about a fifth to over a quarter.

   What politicians need to decide is whether there is a long-term vision for our planet. If we can get our own doorstep right, then maybe we can begin to influence the rest of the world.
   I am not sure if our present government knows if we are to be an exporter or a net importer. If we were to be exporters, then the favourable economic climate in 2000 should have been maintained, and growth in intellectual capital-intensive industries encouraged (which was the National Government’s plan in 1999). Yet there has been every sign since the Labour Party’s election that that was not desired as imports have been encouraged more and the currency strengthening in accordance. In 2000, an exporter could have made NZ$2·50 for every US$1 earned. Now, that same exporter would make just over NZ$1·25 on the same sale. That company is less able to put its profits to benefit its workers—assuming it hasn’t got rid of all of them because of our draconian employment laws. I think it is pretty clear based on this simple analysis by a layman—I would never proclaim myself an economist—where this government’s priorities lie when it comes to exports.
   Instinctively, I am sure its tax take has lessened in real terms from our businesses, despite a rise in the rate soon after its election in 1999, with less going back into our institutions. I have not checked but with so much foreign ownership of our enterprises and profits flowing to, say, Australia (Griffin’s) or Eire (the New Zealand Listener), should I need to? Perhaps someone better versed in this can do the sums and inform me.
   I believe in strong businesses. I also believe in those businesses acting ethically and putting something back into their communities. I welcome the good parts of globalization: the connecting with people halfway around the world, learning their specialities and collaborating with them. If we are to take one more step, let us ensure it is not one that seeks to create yet another divide between the haves and have-nots. Posted by Jack Yan, 07:03  permalink

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