Is Matthew Hooton becoming a socialist?

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:

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.

41 comments on “Is Matthew Hooton becoming a socialist?”

  1. Puckish Rogue 1

    Aren’t we all a little bit socialist 🙂

  2. R.P Mcmurphy 2

    Business in New Zealand hides behind a grandiose set of axioms that are the stuff of economic theory for giant corporations with large payrolls. Business can always afford higher wages but in new zealand where most businesses are relatively small and owner operated the payoff is psychological for the owners and not merely financial but the ruggid individyoualls love being able to enforce economic obedience and obeisance from the workers.

    • soddenleaf 2.1

      Poorly thought theories, like neolib free market ideals, support big corps, why?How have they persisted though wrong? Simple cheaper energy means growth has nothing to do with politicians or economic theories. Those who vote Tory really never had a clue, or else brought into the idea that cheaper energy meant govt needed to regulated lessand so let the market be freed up. The problem is govt keeps your competitors honest, chlorine meat, heat treated vegies, PR running to shop floor where manager get bonus for cutting wages, etc becuase some bright thing in or has convinced the board that lower quality means more sales.

      Good businesses recognize the need to keep efficiency high not just inside the business gates, when a company cheats customers, employees, the competition must meet those lower standards or goto the wall. So good boards,ceos, are out in front pushing good standards on tgeir industry. I.e not like the civil engineers who let the cctv building inspectors walk… etc.

      Efficient economy efficient govt.

  3. Pat 3

    It may not apply to Hickey whos revelation was sometime ago, but I suspect most recent ‘road to Damascus’ events are driven largely by fear….and a likely justifiable fear at that.
    Resetting wealth distribution is not so simple as higher wages for the low(er) paid as was alluded to by Mr Hickey when he mentions capital controls for it is the free movement of capital that is the very basis of the neoliberal experiment….and are enough prepared to accept the trade offs that come with that control?…especially when many have known nothing else.

    And then theres climate change.

  4. aj 4

    “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”

    And if I recall correctly WFF was put in place after a long period when the Right (and the media) were constantly drawing attention to the difficulties families were facing with living costs.

    • Pat 4.1

      WFF was largely an increased version of the Family Support paxkage introduced by the 4th Labour Gov….if I recall correctly the Australian gov introduced a much more generous version around the same time and later the Clark gov increased payments and renamed it WFF.

  5. Lucy 5

    I have always believed that WFF was a subsidy for employers that artificially depressed wages. Having said that there was a desire to ensure that lower paid workers with children were able to keep out of the poverty. The difference between the minimum wage and a family wage for a person with one child is $185 in tax credit and in work tax credit. So the difference between what the employer pays ($630) and what a statistician has calculated costs to raise a child is $185. Labour costs have been suppressed by ensuring a flow of cheap labour – with youth rates and migration (probably not as big a factor as categorized) and clamping down on the ability to organize as a collective. The cost of labour should reflect the cost to the labourer, as no firm would produce a part that cost more to make than was sold for! If we look at humans as resources, as employers tell us they do then the real cost of living is an essential part of the calculation of wages. which would logically mean that working in Auckland you would be paid more by your employer for housing component and in South Island you are paid more to compensate for oil prices.

    • Adrian Thornton 5.1

      @ Lucy +1
      I would also add that if the WFF is also a subsidy to landlords that helps artificially floats New Zealanders obscene fetish in using housing as a tradable commodity, the ‘housing market’ would collapse tomorrow without it.

    • millsy 5.2

      The same could be said about what people like to call ‘youth rates’. Bascially expecting parents to subsidise employers (the argument being that most 17 and 18 year olds live with their parents and don’t need as much money as older workers do.

  6. tc 6

    ” Is Matthew Hooton becoming a socialist? ” yeah nah just another day at the office for matty. Chuck out an old slogan that seemed to work last time dog whilsting with communism eh, must be a slow day.

    What intrigues me is how much in the DP delivery seat is the paid columnist as opposed to how much at the DP strategy table he is. Be interesting to see who sits at that table.

  7. Morrissey 7

    Hooton? That cynic above all cynics has meddled with gullible “liberals” in the past.

    https://morrisseybreen.blogspot.com/2018/01/hooton-talks-mike-williams-agrees-with.html

    And no bunch of liberal patsies is more gullible than the poor folk over at Russell Brown’s love fest. Remember the havoc Hooton stirred up when he pretended to be a Nelson Mandela fan…

    Open mike 30/12/2013

  8. patricia bremner 8

    Last time I heard Hooten on the radio with Kathryn Ryan he was hysterical at the idea of Jacinda forming a government with the Greens and NZ First. He was so petulant and cross at the idea of change he was child like.

    He was so in a screaming frenzy Kathryn told him ‘That is enough Mathew’ Mind this hostess has had the right on regularily and can harrange the left when it suits.

    So the idea that Mathew could seriously accept anything other than right wing dogma would be a complete surprise. ‘A Damascas moment? Possibly, but not too likely.

    Some of these now fringe players are finding astute journalists asking questions they can’t answer, and to get cut through they are using ‘communism’ ‘unions’ ‘payrates’ ‘Inept government’ in a muddled effort to explain what clearly hasn’t worked. ‘Poor Mathew’. He and Hosking have the same ‘flu, only Hoskings blames the Government.

    Have they seen ‘the light?’ Don’t think so. Will they change? It isn’t likely all things considered, as they think those from the left lesser beings with fewer rights.

  9. Currently reading Other People’s Money, by economist John Kay and he pretty much says all of this. That the financial institutions we have created have only served to syphon off wealth to the 1%. It seems that a lot of other people have come round to this viewpoint. Hooton knows this instinctively – and he does note ruefully the strong early criticism of Working For Families on the left.

  10. Julia Schiller 10

    Perhaps you need to look past your own cohort to find resentment toward families receiving WFF? At least you and I were comfortable enough to be able to have children in the first place. But the Millennial generation is delaying having children, maybe forever, thanks to student debt, crappy housing options, and precarious work.

    I am starting to appreciate the argument that Labour’s efforts to mitigate the evils of unregulated greed don’t equate to much more than handouts/bandaids that go straight back into the pockets of these greedy private interests. Increase the student allowance? Private landlords raise rents commensurately. Similar with the winter heating subsidy.

    In the case of power, the left should be talking about completely renationalising that industry to lower everyone’s power bill and make the switch to sustainable energy easier. There’s some communism for you, Hooton!

    • Rosemary McDonald 10.1

      “In the case of power, the left should be talking about completely renationalising that industry to lower everyone’s power bill and make the switch to sustainable energy easier.”

      Seriously scary suggestion, and it’d be wise to check the horses are well contained with their blinkers and earmuffs in place before putting it out there. 😉 😉

      This is what a true Left and progressive gummint would do if it was truly committed to positive change for the 99%…but we don’t have one of those yet. 🙁 🙁

      Maybe next time?

  11. UncookedSelachimorpha 11

    He’ll become a communist I expect. It’s exactly the same thing as socialism.

  12. Kat 12

    Long after the sun went down Hosking and Hooton sat quietly in the car, the contents of the glove box had been emptied on the floor and there was no map. Hosking looked out the window into the darkness and began to shiver, he needed some relief. Hooton spun the dial on the radio, faint voices could be heard behind the static. Then the unmistakable voice of John Campbell burst through the ether “absolutely marvelous”………. Hosking looked down at the rear left wheel, not only was it wet it was flat.

    • patricia bremner 12.1

      Wonderful visuals, Thank you Kat.

      • cleangreen 12.1.1

        Shit Kat;

        Please write a book; – as you have a way with words I’m captured again.

        I am astonished. You are gifted.

  13. SPC 13

    More likely he is setting the scene for the right to once more move on WFF when back in government.

    As last time, they would reduce the real value of WFF, and again hold down nurses wages and use the saved money to finance a reprise of the 2017 election tax cuts package – this is why the great majority of the oldies vote National (every tax cut bumps up the value of their super, which just makes it more unaffordable).

  14. SPC 14

    And as for the ridiculous argument that without WFF employers would pay workers more. Total nonsense. National held down the real value of WFF while in office and there was no surge in wages, ask nurses.

  15. The sky will fall in on our heads if we have a strong Union presence like they do in Australia where wages are significantly higher…

    Say what ????? !!

    Socialism ,…my great fanny fat aunt… and Australia has a far more ‘ Americanized’ economy than us by far.We just are not ‘ doing it right’.

    Too many who want to keep it just like it is.

    And that’s the real problem.

    • Draco T Bastard 15.1

      Too many who want to keep it just like it is.

      And that’s the real problem.

      QFT

  16. Brutus Iscariot 16

    He’s right in that WFF is an appalling mess – discriminatory against non-breeders, and abysmally inefficient. Tear up the lot and start again, perhaps by going down the route of a UBI.

    • RedLogix 16.1

      I’ve strongly argued for a UBI as a component of a rational, efficient tax reform package. The open question remains, is it sufficient by itself? The clean logical arithmetic appeals a lot, but what might be the unintended outcomes?

      It’s something we should think through.

    • phil 16.2

      Agreed, although I’d prefer the UI to be rather more than basic. Why not reorganise the economy to maximise the quality of life of the many rather than the wealth of the very few?

  17. RedLogix 17

    A thoughtful post Mickey. While I agree that empathy is not a cardinal feature of right wing politicos, it’s wrong to think they are entirely unaware of inequality as a problem.

    It’s worth reading Hooten to understand how deep and complex a problem it really is. While it’s true that the chief symptom of inequality is a lack of money, it’s not obvious that throwing money at it is the best solution.

  18. patricia bremner 18

    When did these poor wages become entrenched?? When Muldoon started his wage and price freeze.
    Then the Bill Birch contracts act allowed firms to close, change their name and offer cut rate rehiring wages. Locking union reps out and bringing in individual contracts compounded thingsThen to avoid holiday pay uniforms insurance and Kiwi saver, employers moved to contracting..
    We are more like America than Aus. Aussies still have Unions and on-site reps, they also have the “Fair work” rules and $18.98 an hour is the bare minimum.
    Workers here in NZ had no rights, but this new Government has made numerous employers pay correctly, which has given people backpay up to 13/14 thousand.
    More work place inspectors has uncovered mean and cruel practices. Aussies can’t believe the low wages some Kiwis get.
    The Australian Government pays Employers $10 000 to take on a new worker full time. So the employers are subsidised here and in Australia.
    The Neo Liberal system is like gruyere, full of holes.

    • … ‘ Aussies can’t believe the low wages some Kiwis get ‘ …

      And in an article I read many years ago about young Australian managers sent here from Australia to do their ‘apprenticeships’… one statement by one of them was :

      … ” Australian CEO’s cant believe the garbage NZ workers will put up with , – in Australia there’s just no way workers would put up with any of this shit ”…

      So they’ve known about it for several decades and taken full steps to exploit the situation for all its worth. Foreigners coming here , exploiting New Zealand workers, siphoning off huge profits and then laughing at us.

      Make you feel good ?

      But the question remains ; WHO enabled them to be able to do that ?

      I think you know and I know EXACTLY who.

      ——————————–

      New Right Fight – Who are the New Right?
      http://www.newrightfight.co.nz/pageA.html

      ——————————–

      • Graeme 18.1.1

        I went over to WA in the mid 80’s after a while on the Clyde Dam and other sites around NZ.

        I thought NZ had a strong Union culture but the Aussies had REAL UNIONS. I couldn’t believe the efficiency and reach of the Australian Unions, coverage went well above the trade level and they didn’t fuck about. Any shit and it was all on.

        • WILD KATIPO 18.1.1.1

          Good on you , Graeme.

          Been busy… just casually recapped. Was good to see .

        • Wensleydale 18.1.1.2

          Yeah, NZ unions don’t seem to have the stomach for a fight to be honest. It’s more a case of “Let’s just sit down, have a wee chat and a nice cup of tea, and see if we can’t come to an arrangement.” And while you’re sitting there enjoying your cup of Bell and plate of gingernuts, employers are knifing you in the kidneys, lying to the media and laughing all the way to the bank. The notion of ‘good faith’ seems to be a sick, sad joke much of the time.

  19. greywarshark 19

    Thanks Micky
    Interesting post. A double rainbow, how can it be? Bernard AND Matthew?
    It is a bright moment in a day to read about possible changes that might enable some good stuff to get done.
    A little songwas made to go with the double rainbow viral thing.
    Let’s celebrate, and mark this point in time.
    (https://www.youtube.com/watch?v=MX0D4oZwCsA

  20. Tricledrown 20

    Hooton is a politikle chameleon he changes his colour according to how the political winds blow.
    But underneath he is yellow notice the little twerk when he speaks.
    He’s Trumpish but with a nagging whine.
    Since he been off the waggon he has been doing a lot more slaggin.
    When the National Party is up in the poles he is fine.

  21. Pat 21

    Before unwinding WFF it may pay to develop a workable alternative …especially in light of the fact that the minimum wage is $16.50 p/h (34k pa) and the living wage is considered $20.55 (or 43k)

    https://www.workingforfamilies.govt.nz/tax-credits/payment-table.html

    • greywarshark 21.1

      People would like to see WFF dismantled. It only subsidises employers and that is wrong. It enables them to pay less than they should so that we are increasingly seeing poor working people living below the breadline.

      Abolish this practice they thunder. It is incompatible with a fair society. Yes but. First replace it with something else will you boofheads. There are real people here trying to live on relatively little, so don’t take the little away and only leave them with ‘relatively’.

      Something like this is happening already to beneficiaries who get money to boost their meagre benefit from their relatives (or friendly loan company), but then the state tries to cancel their benefit and want back all the living expenses already used for sustenance, back to some distant time when they became needy.

      Can lefties with such high principles about how things should be done actually CARE that people have sufficient remuneration from elsewhere and are paid adequately first! This BEFORE wiping WFF and insisting on tidy, appropriate business systems that bring decent standards to “”everything”” they do?! Let’s face it – a majority of businesses in NZ would have to close down in that case, at least temporarily.

      • greywarshark 21.1.1

        And further to my above comment I look further in the column and see Red Logix at 16.1 making a short but absolutely vivid true point about the need to think through changes and alternatives from a practical point of view of how it will affect the lowest paid, and structurally unemployed and partially employed.

        Also what effect it will have on the money flow so that NZ businesses can continue trading profitably and employing at decent wage levels. Wages should start cranking up every two years to keep up with low inflation, remembering that over those two years people have been paying the current prices from yesterday’s wage rates. That lag should be remembered when there is talk about wage rises being inflationary. Look elsewhere for that fuel I think.

  22. Jum 22

    Hooton a socialist? How ridiculous. He’s a weasily, snake whisperer from radio 10 years back. The only reason he ever attacks National is because they’re not the alt right/conservative right/greedy right act.

    He has clients that want to own New Zealand and New Zealand workers and he wants to help them get there.

    Handle with care; bacteria alert.

  23. georgecom 23

    WFF does have an element of subsidising low wages. However, if WFF had not existed wages would be little higher than they are today. So whilst Hooten might be correct in a sense, the real world reality is that I doubt employers would not have suddenly and magically hiked wages had WFF never come around. So maybe theoretically correct only M Hooten.

    WFF is a funny amalgam of approaches. Yes, it is a poverty reduction package that ensures families are lifted above a poverty line. It is also a form workfare, not the highly punitive form we can see the likes of Judith Collins rolling out were she in power, more an incentive for people to be “available and work ready for the labour market”. It financially drives people toward being available to the market. Another way that it subsidises employers.

    If H Hooten is indeed genuine about his comments, he will strongly advocate foe the one thing which is shown to lift wages, unionism. He will advocate for strong democratic industry unions and the policy settings which allow industry based agreements.

    Balls in his court now to back up what he says with an actual plan to lift wages.

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