No future in English & Brash’s neoliberal plans

Written By: - Date published: 10:57 am, June 7th, 2011 - 14 comments
Categories: bill english, budget 2011, don brash - Tags:

In recent weeks Don Brash has been complaining in the media that the Government has no plan to deal with the number of issues our economy and our society face. Brash of course will argue that he does have the solutions. Bill English set out in the budget what he believes amounts to a plan for New Zealand over the next few years. The reality, I think, is that both have plan however there is little or no future in either plan. Neither Brash nor English have laid out a plan which deals with the present and quite near problems we will face.

There are some important differences to the Brash plan and the English plan. Brash may focus more on meaningful activity whereas the English plan adopts a more cross your fingers and hope attitude. Brash will be more extreme and ideological in his endeavors whereas English tends to be more measured and somewhat more realistic. Those issues aside, the end game for both Brash and English are generally the same. Their plans amount to less government, more free market, deregulation, and lower taxes (with a resultant a transfer of wealth upward) and promotion of the competition state. The pathway there for both may be different but the destination is proximate.

The problems with this plan can be argued on many levels and individual policy settings can be picked apart and criticized. I am going to concentrate on three broad issues which I see as failings of the Brash-English approach (from here on referred as the neo-liberal plan). The plan will be unfit to cope with the challenges we (all collectively) face but actually present some significant future risks to the relative health of society.

The first failure of the neo-liberal plan is growth and a resources constrained future. The plan demands that growth occur and a waterfall effect distributes wealth (unevenly) down the economic food chain. The rising water level raises every boat, albeit with a concentration of wealth in the upper echelons. They get wealthiest but the rest of us get something as well. Due to various resource constraints, real world forecasts for continuous economic growth are not optimistic however. The most immediate crunch may be the global supply of oil however other resource maximization and depletion sit behind. Low or nil economic growth is a challenge for all modes of growth which are growth reliant, Keynesianism approaches included. The significant weakness for the neo-liberal plan is that it relies on a sufficient magnitude of growth to fill the pockets of the wealthiest such that some falls out for the people below. If there is less wealth in circulation then the wealthy need to hang on to more of it to service their essentials of life. There is less for everybody else.

The second failure of the neo-liberal plan is economics. If neo-liberal economics was ever relevant following the global melt-down of 2008, it is not so any more. As much as it pains neo-liberals to face this reality (and they strenuously attempt to deny it), de-regulation and reliance on the proper operations of the market failed. The explanations for this have been well rehearsed by others so I will not attempt to do so yet again. A general observation will suffice. The neo-liberal policy settings facilitated the severing of ties between the enchanted world of money and the real economy. The resultant unstable edifice of credit and debt was typified by various terminology we have heard post 2008 such as ‘derivatives’, ‘fractional lending’, ‘credit swaps’, ‘securitization’, ‘financial bubbles’ and so on.

The third and last failure of the neo-liberal plan is very similar to the first, the creation of wealth, but here pertains to how that wealth is distributed through society. We already have gross distortions between the accumulation of wealth. A process which relies of trickle down as growth is stalling threatens to intensify that inequity. Not only would this be unfair and unacceptable, it could also be dangerous. Declining living standards for the many, as the few maintain or even increase their living standards, would put at risk the fabric of society unless wealth was more evenly spread around. A redistributive political economy would be required to maintain social cohesion in the face of significant challenges. The neo-liberal plan cannot deliver this as it is premised on selfish accumulation of wealth and a maxim of ‘line my pocket first’.

There are no ready-made solutions to these challenges. We do have some of the tools to find a viable future option however it is a work in progress rather than an off the shelf project. The danger, in light of a ready to go solution, is that the likes of Brash and English can continue to pretend for a little while longer that they have the plans we require. Continuing with that option will make it that much harder and more expensive to clean up the mess and then get things right.

– george.com

14 comments on “No future in English & Brash’s neoliberal plans ”

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  1. ZeeBop 1
    7 June 2011 at 1:00 pm

    Wait up but we can always sell the best cuts and milk? well the japanese thought that putting six reactors in a line up against the ocean was safe. The far right-wing is delusional thinking its in control, or has much control now the money (influence) isn’t around. Markets have a habit of taking their own indicators and the staggering naivety of English, Key, Brash, is that there is any political pay off in trying to get out in front and claim a recovery, or competent control of events. We are living through interesting times. What fools are these people who are in government.

    • Colonial Viper 1.1
      7 June 2011 at 6:25 pm

      Best cuts to the Koreans, best cheese to the Chinese

      New Zealanders can eat cat food.

  2. ropata 2
    7 June 2011 at 1:05 pm

    Are they fools or are they puppets of the IMF?
    In any case we (the electorate) are suckers.

  3. randal 3
    7 June 2011 at 2:11 pm

    neo liberals seem to have forgotten what liberalism was originally all about. now they are just grabbers. the only way they can measure themselves against others is by the quantity of their venal acquistiveness which is what theya ll ASPIRE to. I say quantity because ultimately they have no taste or class or discernment but what the market tells them. The only way they can be happy is to get a leaf blower and stick it where the sun dont shine.

    • ZeeBop 3.1
      7 June 2011 at 3:44 pm

      Cheap energy meant we all let out our belts. The less informed went on a borrowing spree,
      forgetting the old maximum never be a debtor be. The mediocre parasite class appeared that made fees off peddling yet more uninformed nonsense about free markets naturally forming without legislation, that legislation also did not produce winners (them). So cheap energy produced a group think by mediocre thinkers who forgot that diversity of thought is a societies insurance not its enemy, this is now termed as neo-liberalism and is rampant in the right-wing and parts of the left-wing who believe they must sell out to get elected.

      Its the new normal that the elites seem unable to grasp. That energy will continue to get more expensive, that any economic growth will come from saving energy, making our world more efficient, less heating costs, less commuting, local over region, regional over global, grass roots thinking, less pollution because it will cost more to clear up – prohibitively more! So because the crisis is so severe, and delayed dealing with the crisis by fiscal impudence (Bush II – if only Osama had not attacked the twin towers the market crash would have happened for the right reasons – pre-peak oil). So why the road building?

      Janet Frame suffered from ?social phobia?, she was told by an expert psychologist after
      she narrowly escaped a scheduled lobotomy that she should avoid social contact if it made her anxious. Something seemingly bleedingly obvious she was do anyway. Its pretty much the same with John Key Nasty National, they’ve scheduled an economic lobotomy for the NZ economy and all we needed was an expert to tell us that avoiding anxiety causing neo-liberalism, which we were doing already was the proper course. i.e. be happy don’t worry, your not insane, you actually are pretty smart and will go on to create exports of your books and draw tourists to come to see where you lived. Janet Frame was an export winner, and yet Key today would force her into social anxiety creating situations that would have led to her NOT becoming the export winner she was, she returned far more to the taxpayer coffers that all the welfare her and her family received. Unlike Key who can avoid most taxation quite easily.

      Key, English, Brash, the three stooges, are the veneer of desperate men trying to keep up in a sphere of public service they do not have the skill to, or any admitted desire for service, and they know it. Their prescriptions start with the shock doctrine and end with the shock doctrine. Oh, look Brash tried to trip Key up, now English hits himself, and Key falls on his face.

  4. Afewknowthetruth 4
    7 June 2011 at 5:42 pm

    Capitalism was a short term aberration in the grand scheme of things, and free market neoliberalism was an even shorter term aberration in the grand scheme of things.

    Rule 1. Without energy nothing happens.

    Rule 2. Without a stable global environment you don’t have an economy.

    Capitalsm has been squandering energy capital and degrading the environmenta for hundreds of years, and neoliberlaism put the assualt on the Earth into ‘hyper-drive’.

    Payback time is approaching very quickly.

  5. ropata 5
    7 June 2011 at 6:28 pm

    I’d love to know what role John Key plays in this book:

    Crash of the Titans: Greed, Hubris, the Fall of Merrill Lynch, and the Near-Collapse of Bank of America

    With one notable exception, the firms that make up what we know as Wall Street have always been part of an inbred, insular culture that most people only vaguely understand. The exception was Merrill Lynch, a firm that revolutionized the stock market by bringing Wall Street to Main Street, setting up offices in far-flung cities and towns long ignored by the giants of finance.

    With its “thundering herd” of financial advisers, perhaps no other business, whether in financial services or elsewhere, so epitomized the American spirit. Merrill Lynch was not only “bullish on America,” it was a big reason why so many average Americans were able to grow wealthy by investing in the stock market.

    Merrill Lynch was an icon. Its sudden decline, collapse, and sale to Bank of America was a shock. How did it happen? Why did it happen? And what does this story of greed, hubris, and incompetence tell us about the culture of Wall Street that continues to this day even though it came close to destroying the American economy? A culture in which the CEO of a firm losing $28 billion pushes hard to be paid a $25 million bonus. A culture in which two Merrill Lynch executives are guaranteed bonuses of $30 million and $40 million for four months’ work, even while the firm is struggling to reduce its losses by firing thousands of employees.

    (H/T Scoopit)

  6. tc 6
    8 June 2011 at 7:42 am

    Sideshow played the role laid out for them all……enjoy the ride you’re making a killing, never mind what happens next you’ll be sweet as.

    If you don’t look to hard or ask tough questions then it’s plausible deniability all the way home…..oink oink.

    • Georgecom 6.1
      8 June 2011 at 11:07 pm

      Thats the Enron economy. Keep talking up the share price even as everything around you starts to unravel.

  7. Craig 7
    8 June 2011 at 11:46 am

    Oh, there’s a “future”, all right. But it’s a brutal, dystopian one reminiscent of a retrofitted turbocharged Charles Dickens, with welfare provision privatised, homelessness, family disintegration, youth crime, suicide and drug abuse skyrocketing and…yep, that’s right, the United States after a decade of Bush era neoconservatism. Do we really want to emulate that deeply troubled nation, when the New Right mantras devised there have so manifestly failed?

    • Colonial Viper 7.1
      8 June 2011 at 11:25 pm

      Do we really want to emulate that deeply troubled nation, when the New Right mantras devised there have so manifestly failed?

      Yeah it’ll be like Dickens over there real soon, problem is that Oliver Twist and his mates didn’t all have semi-auto firearms.

  8. Jenny 8
    9 June 2011 at 2:02 am

    This is an intelligent and very well laid out treatise, warning us all of the pressing dangers of Climate change, resource depletion, economic collapse, and the inadequacy of market driven solutions as a solution to this impending multi-headed crisis.

    There is a growing consensus amongst the wider left of the reality of the impending combined crisis, even from those like -george.com, who is obviously close to the Labour Party.

    What is clear from this essay is that even though the Labour Party leadership aren’t mentioned, and the point is never made. The same criticisms of the Brash and English plan, (or lack of plan) to deal with the combined crisis, could just as easily apply to current Labour Party policy too. For Labour to meet the challenges of the combined crisis there will need to be some massive change of policy direction within Labour as well.

    I look forward to many more posts from -george.com to see how he further expounds his views.

    I would genuinely be interested to read his suggestions on the way forward for the Labour Party and the wider left.

    Bravo, a great post and a significant contribution to the ongoing debate, I will be disapointed if there is not more to come.

    • Georgecom 8.1
      9 June 2011 at 10:58 pm

      Jenny, I am Labour whilst Labour remains the best opportunity to repel the forces of myopia which is the Brash (especially) and English (to a lesser extent perhaps) plan. I am Labour whilst they represent the opportunity for a more positive future. That future is not Labour alone but includes the Green Party and somewhere Mana has to fit in as well. If the Maori Party wants to make a contribution, and even Winston if he makes it back, that is their prerogative however I think the door should be open for them.

      I am encouraged by signs that I am seeing (I think) within labour of a need to rethink the neo-liberal economic consensus. I’ll term this the narrative of the competition state – where a national economy is aligned with maintaining ‘market confidence’ and a ‘competitive economic advantage’ within the global economy of competition states. I have some faith that this rethink is too shortly produce some policies which mark a change in the Labour Party approach. The Clark Government made a significant effort to rebuild the public sector from years of neglect after Douglas-Richardson-and subsequent followers on. It relied on a ‘third way’ approach to do this, maintaining the economic approach of the competition state whilst fixing up some of the social fallout from that project.

      I think I know, in general terms, what a sustainable future might look like. At least I would like to think that I know. There is a wealth of literature expounding on this in far more detail than I am ever able to comprehend however what exactly the future could be is not yet clear to me anyway. I think Peter Conway, CTU economist, has summed things up as eloquently as anyone else I have seen when he stated in a CTU economic bulletin that ‘there is not yet any new ‘ism’ but we need to put forward a political economy which joins the dots between neo-liberalism, globalism, poverty and climate change (I’d add to that resource depletion/limits) and which puts people and the planet first’.

      There is no off the shelf alternative at present to the morass neo-liberal globalised capital has led us into. That alternative political economy narrative is a work in progress. But, some things I will be looking for in the near future, as the start of a progressive left consensus are agreement on a capital gains tax (or other financial speculation, in an ideal world a Tobin type tax, but probably not at this point), a roll out of more energy efficiency programmes (such as the housing insulation programme) and a commitment to cancelling some of the loss making RoNS and investing that money into public transport (the rail tunnel as the litmus test of that commitment but also including other regional PT projects). In the near term, but highly likely not this election, I am hoping to see things like a legislative commitments to promoting urban gardening (on quite a large scale), worker owned collectives, a realistic attitude to dealing with climate change (I am uncertain that a cap and trade approach is going to be successful at mitigating greenhouse gas emissions and am favouring a straight carbon tax. For one reason, it can be recycled back through the economy), a plan for a more equitable spread of wealth through society (a better, simpler WFF type scheme, even maybe a UBI) and a plan to deliver flexicurity of income – a meshing of work and income security.

      That type of future needs the Labour party on board. I am almost finished rereading a book titled “After the Wasteland” – A Democratic Economics for the year 2000″ by radical US economists Bowles, Gordon and Weisskopf. That book deals with the failures of neo-liberal global capitalism and raises several of the solutions above to effect a more negotiated and inclusive economy for the US. The book was written in 1990.