Nigel Haworth – Back to the Future?

Written By: - Date published: 10:08 am, November 27th, 2023 - 22 comments
Categories: Deep stuff, labour, political parties, uncategorized - Tags:

A previous post suggested that the global situation – for example, challenges to the rules-based economic order of the postwar period, regional military clashes, the advent of a mode of buccaneering Capitalism, reminiscent of the C19, a pandemic, and climate challenges – is unstable to a degree not seen since the mid-C20. A key component of that instability is growing wealth inequality. Internationally, Social Democracy has conscientiously played the liberal democratic game, clung to a shifting “centre”, and sought, with the best of intentions, to mitigate the impact of instability and inequality.

Current mitigation approaches are at best partial and limited and at worst, ineffectual. The policy framework and associated tools required to moderate or reverse inequality are currently not deployed. Moreover, the political arguments needed to support that framework, and make it viable politically, are not widely espoused.

Ways forward have been offered, from wage-led growth to Piketty on taxation. The emergence of discussion around these issues in the deep waters of NZ Labour is promising. Piketty, of course, suggests that the achievement of a fairer alternative economic model will be hard work. Piketty’s realism highlights the difficulty in renewing a modern Keynesian Accommodation. He may be right, but we must try; the alternative is barbarism on a global scale.

Received wisdom that Labour has six years or more to sharpen its arguments and settings on inequality is lazy thinking. The three-headed hydra now in its birth throes does not exude an air of stability and jointness of purpose. It is clearly intent on support for increased inequality.

This brings me to a model with roots in 1960s Keynesian thought:

Productivity + Taxation + (Economic) Democracy = Distribution + Equity

Labour should be as focused on production as it is on distribution. Labour’s job is not simply to distribute such resources as accrue to the state; it is to promote production and trade that underpin fairer distribution, but under particular conditions. These conditions include democracy and an effective response to climate change.

Productivity is a fraught term. For workers, it often means increased work pressure for less than equivalent rewards. Readers of “Capital” will nod at this point, and they will be right. However, that broad debate about over-production and under-consumption is for another day. For now, let us conceive of changes in the labour process, in technology, in the length of the working day and elsewhere, which increase productivity and also improve dramatically worker incomes.

Those incomes generate taxation, but the key focus of taxation changes should be on the dramatic narrowing of incomes, wherein a combination of wealth and other taxes flatten inequality and support improved wages and salaries and broader social provision. Flatter wealth structures allow more widespread saving and further productive investment. A flatter wealth profile also underpins social cohesion.

Democracy, in two forms, safeguards these arrangements. The first – political democracy – is well founded in some nations, yet, even there, has been subject to erosion over the last five decades. Elsewhere, it struggles. Political democracy must be strengthened. The second is the unfulfilled promise of the liberal democratic model – industrial democracy. Political and economic democracy were once understood as the two interlocking spheres of a democratic system. Collective bargaining is a step towards industrial democracy; its practice is important, but we should consider alternatives – cooperatives and other community and workforce-owned arrangements – that work against inequality.

Distribution and equity may be left for now. What is clear is that “more of the same” does not tackle effectively the growth of inequality. “More of the same” also, through each iteration, makes the needed changes all-the-more difficult to make. NZ Labour must grasp this nettle, or court irrelevance.

Nigel Haworth

22 comments on “Nigel Haworth – Back to the Future? ”

  1. Thinker 1

    "Received wisdom that Labour has six years or more to sharpen its arguments and settings on inequality is lazy thinking. The three-headed hydra now in its birth throes does not exude an air of stability and jointness of purpose. It is clearly intent on support for increased inequality."

    Totally agree. Luxon's made a pact with the swinging voters such that each one believes he/she is going to have their lives improved by him being in power. Reminds me of the childrens' story of the six blind men and the elephant (each put their hand on a different part of the elephant and so formed an impression of something quite different to what was really there). In some ways, despite best efforts, the left couldn't possibly beat that kind of pork-barrel politicking.

    But, after today's swearing-in ceremony, things can only go downhill. For instance, I notice one of the coalition clauses is to bring the size of the public service down to 2017 levels, which sounds mild but I think it translates into something like a 25% headcount reduction. Right there, there's going to be a lot of people who must have been part of the swing to the right who are going to regret what they did.

    And, despite appearances to the contrary, this wasn't a huge swing to the right. It's only really that Labour refused to go with Winston again that a 3-way party coalition was the obvious outcome.

    I think the winner from the next 3 years will be ACT, as people become disillusioned with National and its inability to shift from being a "Boomer Party", as boomers become less in proportion to the whole package of voters. While I don't subscribe to right-wing politics, if I did I would prefer ACT as a modern-thinking party that connects with the public better than National which, to me, remains aloof and with a born-to-rule attitude that doesn't sit well with Gen X and beyond.

    What will history make of Winston's term with this coalition? He blotted his copybook with Labour and we know that Key chose not to deal with him in the past. To some extent, I have some sympathies over that because by nature his party is designed to bring whatever extreme is in governance back to a watered-down version of its intended style. Presumably, Winston will either come out of this as a competent centre-right member of any right-wing coalition, or a party to be avoided due to raining on whatever parade is passing by.

    • bwaghorn 1.1

      I notice one of the coalition clauses is to bring the size of the public service down to 2017 levels, which sounds mild but I think it translates into something like a 25% headcount reduction.

      Na they are already weaseling out of that, saying tings like having yo allow for population growth,

    • alwyn 1.2

      You say "I notice one of the coalition clauses is to bring the size of the public service down to 2017 levels"

      I suggest they you have a chat with your optometrist. It doesn't say that at all. It says only that expenditure reduction targets should be informed by the increase in back office staff since 2017. That is nothing like what you claim and certainly is nothing calling on a rollback of the Public Service to 2017 levels.

      Kindly give an accurate quote to what was said and where it says it.

      • Thinker 1.2.1

        "Policy Agenda" section, bullet point 5.

        Dont forget to take the log out of your eyes first.

        https://thespinoff.co.nz/politics/24-11-2023/the-coalition-deal-at-a-glance

        • alwyn 1.2.1.1

          You really shouldn't trust the "spinoff" to tell you what is in the agreement.

          Go to the source. This is what they agreed to after all. It says, in Fiscal Policy,

          "Deliver savings in public sector spending by reducing non-essential back office functions, with expenditure reduction targets to be set for each agency, informed by the increase in back office head count at that agency since 2017."

          That is what they agreed, and it isn't even close to what you are saying.

          https://assets.nationbuilder.com/nationalparty/pages/18466/attachments/original/1700778592/National_ACT_Agreement.pdf?1700778592

          • Thinker 1.2.1.1.1

            Deliver savings in public sector spending by reducing non-essential back office functions, with expenditure reduction targets to be set for each agency, informed by the increase in back office head count at that agency since 2017."

            and the bit you chose not to supply…

            When evaluating government expenditure, it should be assessed on the extent to which it is delivering public goods, social insurance, regulating market failure and political choice.

            I'm not going to say you're wrong. Maybe you have connections to the inner workings of NACT and know their intentions.

            But to suggest that the wording is not even close is a stretch, my friend. The Deputy Editor of Spinoff thinks it means what I also think it does and time will tell what the outcome is.

  2. Anne 2

    Back in 1972 Norman Kirk said:

    "there are four things that matter to people: they have to have somewhere to live, they have to have food to eat, they have to have clothing to wear, and they have to have something to hope for".

    And there you have it in a nutshell.

    Labour could and should return to the philosophy as expounded all those years ago by Kirk. Many thousands of young people were drawn to Labour in the early 1970s. I was one of them. So was Helen Clark. It is what the youth in particular are looking for, even if they don't know it, and they are the future of this country. Labour is the only major party equipped to deliver it.

    • Rolling-on-Gravel 2.1

      I would seriously vote Labour for the first time in my life if they actually meant that quote, Anne. And carried it out to the best of their ability.

      That would be a party I'd be excited to vote for.

      I vote Greens because they have that ethos and they also have climate consciousness. Both are important to me.

      If I had three choices instead of two, I would be a happy, happy person.

  3. Blazer 3

    'growing wealth inequality'….what a stunning revelation.

    I wonder if things ruled out by visionary leaders like a CGT or a Wealth Tax ,could help address that inequality.*sarc&*

    I guess we'll never…know.

    • Descendant Of Smith 3.1

      Even bringing back stamp duty would have helped.

      In the coalition agreement there is a clear push to allow the well-off to keep more of their assets and the state to pay for their care. Note that the asset thresholds don’t apply to under 65’s.

      Undertake a select committee inquiry into aged care provision to include supporting people with early onset conditions and what asset thresholds are appropriate in 2023/24.

      • Rolling-on-Gravel 3.1.1

        Undertake a select committee inquiry into aged care provision to include supporting people with early onset conditions and what asset thresholds are appropriate in 2023/24.

        I would support that. People need to be supported properly whatever age they are at.

        And yes, Labour needs to consider a CGT or LVT or whatever is needed to reduce inequality. I'm pretty tired of its current fearfulness when it comes to pushing for policy. And it need to give ecological consideration it comes to policy.

        All of that matters.\

        • Descendant Of Smith 3.1.1.1

          Currently early onset under 65 can go into residential care with no income or asset test. There's just a lack of specific specialist care facilities for those younger who end up in facilities designed for much older people.

          The asset thresholds post 65 are already quite generous.

          Asset test

          If you are aged 65 or older, then the total value of your assets and those of your partner should not equal more than:  

          • $256,554 if you want to include the value of your house and car in the asset assessment; or 
          • $140,495 if you do not want to include the value of your house and car in the asset test (eg, if your partner or dependent child still lives there). 

          That money will in the main be accumulating interest and will simply pass on to whoever in their wills apart from maybe some small capital purchases like a TV for their room, or some furniture, etc. Lifting it would simply increase the transfer of wealth to the next generation and shift more cost to the state earlier. It would also place further demand on the bed numbers which the sector are already struggling to meet.

          There’s a tsunami of old people with dementia coming which we are ill prepared for.

          It is possible I guess that they might be looking to asset test the under 65’s but I would not have thought so with Winston there.

          • Adrian 3.1.1.1.1

            If we try to tax estates too much the following generation may never own a house of their own.

            • Craig H 3.1.1.1.1.1

              Agree, but it shouldn't be difficult to find a threshold that makes some money without wiping out estates.

              • Descendant Of Smith

                Firstly it isn't a tax on estates. It is money that is paid to a rest home for care by the person themselves.

                Secondly any threshold is in effect a tax payer subsidy for those who have assets.

                Every dollar it is lifted is a dollar the taxpayer has to pay for a child's house once the rest home fees deplete the assets to the threshold level is what you are suggesting.

                Many well off already hide their assets in family trusts etc and now you want to give them more tax breaks. Many will also pass away before their assets reach that threshold as well.

                Life expectancy once you become state paying is down to 1.7 years. Unlike in my great grandmothers day who lived in a rest home for 12 years you only get into a resthome these days when you are quite unwell.

                Rest homes, once the domain of still relatively active elderly people, have become what one expert calls "de facto hospices", housing people with complex and serious health needs.

                And where residents once drove and needed parking spaces, "now they were arriving in ambulances".

                https://www.stuff.co.nz/national/health/108004835/median-length-of-stay-in-a-rest-home-for-someone-receiving-govt-funding-is-just-17-years

          • Visubversa 3.1.1.1.2

            $250,000 might buy the letterbox and the front steps of most Auckland houses these days

            • Descendant Of Smith 3.1.1.1.2.1

              Nonsense it is quarter of a house at average and median prices. Well above what is needed for a deposit.

              At a time when houses are worth more than ever you want the taxpayer to further subsidise the care of those who own those houses.

              Seriously.

              You want to perpetuate the increasing disparity of wealth by ensuring that those who have the assets to pay for their care don't have to so their children can get their money instead. Children who likely in their 40's and 50's and are already house owning as they will have been helped out by their parents.

              • I am pointing out that the numbers of people who will qualify for this subsidy will be much lower as a result of the unrealistic valuations threshold. It may be a quarter of a median value by your calculations, but we are not talking about a deposit here – we are talking about the full value.

                You cannot guarantee that those 40 or 50 year olds were helped by their parents. By that time, the ability to capitalise on the Child Benefit to buy a home, which assisted a lot of working class and lower middle income people into a home was long gone.

                You also saw the massive layoffs and privatisations of the late 1980's which further restricted the ability of lower paid people to get into housing, or to help family members get into housing.

                Today's older generation would have been among those paying 17 to 18% interest rates in the 1980's also.

                • Descendant Of Smith

                  I am pointing out that the numbers of people who will qualify for this subsidy will be much lower as a result of the realistic cash asset test.

                  Lifting the cash asset test will simply mean more people with assets will qualify at a time when the increase in demand is growing.

                  Your point about later generations having less home ownership means that there is also increasing demand from those that are asset poor. Why would you add more demand?

                  Surely the point of lowering taxes was the principle that where you can you should provide for yourself not that you should benefit from lower taxes and still expect the taxpayer to fund you.

                  The current limit is more than enough to cover off the elderly persons needs.

  4. Ian B 4

    Where was this voice when you were president of the NZLP? Bloody hell.

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