Two things stood out for me about the National Party conference, both on the Friday – John Key once again saying his Labour opponents were driven by the “politics of envy”, and Peter Goodfellow telling delegates National had more money for this campaign than ever before. Envy is one of the seven deadly sins. So is greed.
Key’s meme follows Farrar, Slater, Herald editorialists and political commentator John Armstrong. Paradoxically it reflects a vulnerability, evidenced by National’s surfeit of money. That’s why they want to change the subject from money to morality.
There are two issues worth examining about too much money in politics and the economy. First, while there is no shortage of money in the economy, there is some evidence that “long periods of unequal incomes spur borrowing from the rich, increasing the risk of major economic crises”. Those with more money than they need look for even higher rates of return, so push those with just enough to borrow more, and the result is bubble-and-crash. In “Leveraging Inequality”, IMF economists Kumhof and Ranciere compare the 1930 depressions and the 2008 recession:
When—as appears to have happened in the long run-up to both crises—the rich lend a large part of their added income to the poor and middle class, and when income inequality grows for several decades, debt-to-income ratios increase sufficiently to raise the risk of a major crisis.
The second is that the pernicious influence of money in politics is growing across the democracies. We are increasingly seeing government of the rich, by the rich, for the rich. It’s as though those with much more than they need have decided that the way to hang on to what they have is to take over government for themselves.
It is no accident that as right-wing parties have come into government they have moved swiftly to change the law on political donations. One of the first things on Steven Harper’s Conservative government agenda in Canada was to move to change the law to remove their public subsidy on election expenses. The first thing the Tea-party Republican-controlled House of Representatives did after the 2010 election was to repeal the law to provide public funding for elections.
Rick Perry is the latest Republican candidate into the crowded field. Money will be no obstacle for him according to the New York Times. There are no restrictions on campaign contributions in Texas. Too much money in American politics – $3billion in donations in 2000 to $5billion in 2008 – and its pernicious influence on economic decision-making has led Howard Schulz, the chairman and chief executive of Starbucks to propose a campaign to boycott all political donations. It’s a desperate move but symptomatic of the beginnings of a shift away from excess.
Asset sales policy is a critical area where money does matter and Labour and National have very different approaches. I have no doubt that part of the reason why National’s coffers are bulging is because of their policy to sell publicly-owned assets, and will do another post or two on the connections between political donations and asset sales. Those with more than they need are greedy for more – investments with a secure cash-flow such as utilities are perfect in times like these. Forget the convenient cover of the mums and dads; they’ll never see a penny. Wanting to keep assets in public ownership for the benefit of all is absolutely not about envy.
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