Written By: - Date published: 8:38 am, July 20th, 2018 - 41 comments
Categories: business, capitalism, class war, Deep stuff, economy, Economy, employment, Free Trade, jacinda ardern, john key, Politics, quality of life, tax, Unions, wages, workers' rights - Tags: matthew hooton
Occasionally previously staunch defenders of the free market see the light and turn to the left after they realise that the power of the state is necessary to counter the evil caused by unregulated greed.
One of them is Bernard Hickey, one of the most astute local commentators on economic issues. In 2010 he wrote:
I feel like a priest who has been wrestling with his belief in god and has now decided god does not exist.
It’s time for me to recant and to say what I’ve been thinking for months: the economic god of completely free markets and capital flows is not worth believing in anymore and we must look for other things to believe in and do.
I think New Zealand needs to have a debate about capital controls, about foreign ownership of assets, about measures to control our currency and about being openly nationalistic rather than internationalistic about our economic policy.
I think the Global Financial Crisis and the preceding decade of debt-driven instability in global capital markets and trade flows have demonstrated the failure of the economic model most New Zealand policymakers have adhered to for nearly 3 decades.
I think we need to rethink the way we run monetary policy, the way we allow foreign ownership of assets, the way we encourage savings, the way our financial institutions are regulated and change the things we are aiming for.
We should debate more specific controls on who owns what assets, whether monetary policy should still use the Official Cash Rate to focus on inflation alone, and whether banks should still be free to lend however much they want to whomever they want.
Another right winger may right now be having his very own road to Damascus moment. Although judgment on this should be reserved until further information is in.
I am referring to occasional Standard reader Matthew Hooton.
His latest Herald article is headed Communism by Stealth is here, recycling John Key’s oft quoted description of the Government’s Working for Families policy.
He talks about how the Nurses wage claim was perfectly justified, which it was. He says that this may ignite wage inflation, which it might, and this would mean that Jacinda Ardern would be a one term Prime Minister, which it won’t and which she wouldn’t.
He then says this:
In fact in 2004, the left-wing critique of Working for Families was stronger than Key’s, that it would operate as a subsidy of low-paying employers.
That is, using Key’s original numbers, if there was a job to do worth $60,000 a year, an employer could hire someone with two kids, pay them just $38,000 a year, and they’d end up with almost the same pay in the hand.
Union bosses rightly feared it would be difficult to get workers with children to sign up for a pay campaign if it made little difference whether they earned $38,000 or $60,0000 a year.
Worse, if Government subsidises something, there will be more of it, in this case low-paid jobs. To an employer, Working for Families screams out: “Don’t buy more plant and machinery or invest in on-job training, just hire a few more low-skilled labour units and get the government to pick up a big hunk of the tab.”
On this point many left wingers would agree. Wages should be higher and the state should not have to subsidise wages and salaries just so that families can cope. I disagree with the language however. I have always thought of working for families as advantageous tax treatment of deserving taxpayers, not as a cost.
Hooton then seeks to divide workers between those with children and those without.
When trying to buy a house, childless people also have to compete with those with children, whose after-tax incomes have been artificially inflated by the state.
Working for Families then creates a vicious economic and political cycle. As it holds back productivity and keeps wages low, the best electoral response is to expand it further, as Ardern and Robertson did in December.
And what better way to stop nurses, teachers, doctors, and police officers from striking than to ensure the ones with children will get nothing out of doing so?
He thinks the policy causes division. Speaking as a taxpayer who has never received working for families can I express my consent and support to those with young children on modest wages receiving extra assistance.
Hooton blows it with his last paragraphs.
And don’t expect National to be able to do anything about it. With the financial status of so many working families now as locked in to welfare as any other beneficiary, abolishing Working for Families is becoming ever-more politically impossible.
It has transferred the primary economic relationship that determines family income from being that with the employer to that with the state. It is indeed communism by stealth. Clark and Cullen knew exactly what they doing when they set it up.
The policy was not a permanent power grab by the fifth Labour Government. It was an attempt to address increasing poverty caused by rampant greed and Globalisation.
But what are the solutions? What does Comrade Hooton think should happen to make sure that working families receive an adequate wage?
He is unfortunately very quiet on this. Maybe he needs to go further on his trip to Damascus before he can say what needs to be done.
Through an unfortunate juxtaposition his column had an EMA advertisement opposing the Government’s attempt to improve Union access to work sites. The evidence is undeniable, increased Union power increases wages. Clearly the EMA realises this.
I look forward to the next column from Comrade Hooton where he takes on the EMA and explains to them that the best way to avoid “Communism by Stealth” is to properly reward workers and to respect and engage with the Union movement.