We are stuck

Written By: - Date published: 7:13 am, August 12th, 2021 - 45 comments
Categories: capitalism, Deep stuff, economy, uncategorized - Tags:

New Zealand has one of the most concentrated and oligopolistic economies in the world, and also one of the least commercially protected societies. Will we ever be able to break out of it?

If you look across our society, it is the relationships of less than 20 main companies with our government that form a dominant nexus of power. This isn’t a new observation, with Bruce Jesson commenting on it throughout the 1980s.

Check out the top 2 or at best 3 companies in all of these fields: banking, supermarkets, fishing, dairy, meat, apples pears and kiwifruit, ports and airports, building materials, water, electricity generators: many of their controlling organisations were formed by legislation and get regularly reviewed. Some have public majority ownership. Some have stronger regulation than others. Few are ever held to account. Even fewer answer squarely to their customers. Their power over us is near-total. Even North and South magazine did a recent cover feature: “The Real Reason New Zealand Is So Expensive”.

What we are feeling across all these industries is a system of interdependence between the state and corporations that is very, very hard to disentangle.

It’s part of a system of liberal trade that the United States began over 75 years ago to help integrate the world around a vision of peaceful economic cooperation, and evolved as we shifted from a British corporation dominated postcolonial economy to an over-managed one and now to a very odd hybrid.

But many of the vital international systems that used to hold this together are failing.

Nothing has underscored this breakdown in the ‘system’ more than COVID19, with nations now fighting over how to secure vaccines. New Zealand’s much-vaunted national drug buyer Pharmac has to get in the queue like everyone else: so much for monopsonistic power when it counted. We are also seeing real tensions in the production of semiconductors worldwide. United States-formed corporates like Facebook and Google are continuing to stave off multilateral regulation at all. Not even climate change can unify our world.

Small signs of multilateral hope like a global corporate tax floor remain few and far between.

There are many countries that are going through tests like ours is, but in a really small state with a really small economy in a really isolated little place with a really tiny number of people who could fix things, we’re not engaging with each other very well at all.

One result of these problems has been a surge in calls for governments across the world to introduce protectionist measures, closely manage domestic industries, and pursue new visions of autarky. But these clashes and government officials’ responses to them threaten far more than the world’s fragile international industrial and financial systems. They have led citizens to start to lose faith in the rule of law and in the intentions of longtime state allies. Worse, they have played a role in the disruption of democratic debates and norms in the United States and Europe.

It is going to take a very different set of relationships between China, the United States and Europe to unwind some of the dangers. That’s unlikely. Nor are there useful international models for us to track against.

New Zealand itself is in the worst of all worlds: neither fully privatised enough to have hefty regulators with a big sticks that take some of the impact of political reputation when things really go wrong, nor having corporates integrated enough with policy to get much public good done.

And as long as our own semi-public and semi-private corporates can keep this balance-of-no-power up, the easier it will be for their balance sheets, for their stock options and retirements, and for our collective slide into the same low-productivity economy and low ambition society that we now have. That’s the balance of power right now.

Worse, I don’t see any answers from either our major market players or from government that might build something anew.

We are stuck.

45 comments on “We are stuck ”

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  1. RedLogix 1
    12 August 2021 at 8:39 am

    This OP deserves repeated careful reading. It diagnoses NZ's geopolitical dilemma very well. We've been one of the many fortunate nations who have benefitted enormously from the global trade order of the past 70 years – yet most of us have failed to appreciate this. As a result we've been more than a little careless. As a nation we've acted like teenagers, deriding and sneering their parents, yet obliviously living under a roof provided for them and eating the food that others have worked for. Well the free ride is coming to an end, NZ now has to face a disrupted world and an uncertain future.

    Riffing on Ad's main theme, the reason why NZ is so expensive is that – regardless of what economic dogma we organise ourselves around – we're too small, vulnerable and lack the critical mass of competent people who can drive the changes necessary for NZ to obtain a future on it's own terms.

    The only alternative to 'stuck on our own', drifting toward dysfunction in the South Pacific, is to look outward to the wider world, forming fresh alliances and becoming a team player on the world stage again. The only future NZ has is part of a rules-based trade and economic bloc based around an alliance of SE Asian and Pacific nations. We need to act sincerely toward our smaller Pacific nations, offering them a partnership in the same project (they after all have the same problems we have only more acute) – and crucially work toward repairing our broken political relationship with Canberra.

    Events are moving fast in this region – and within years we're going to need some friends and colleagues to work with.

    • Ad 1.1
      12 August 2021 at 8:57 am

      Cheers Red. I know it doesn't make for cheery reading. I'll probably have to do a book on it to get it out of my hair.

      I suspect I'm also documenting that feeling of Australia accelerating up and away from New Zealand in all respects.

      • RedLogix 1.1.1
        12 August 2021 at 9:55 am

        Yup. I've found myself working in Perth longer than expected and contemplating a more permanent living arrangement. How about these house and land packages – brand new for less than the cost of renting:

        https://www.aussielivinghomes.com.au/

        https://www.aussielivinghomes.com.au/house-and-land-packages/lot-514-butterleaf-road-baldivis-9130417/

        OK so there will be some bait and switch up going on here but look at the headline price – $291k for a brand new 129m2 3 bdrm home.

      • Tiger Mountain 1.1.2
        12 August 2021 at 11:13 am

        Much of Australia is a burnt out sand pit already. The ANZAC spirit departed years ago, but the Australians still try to play their US “deputy dog” regional enforcer role.

        The ANZAC thing lives on in sport only really, at least Shane Van Gisbergen is driving so well this year in Supercars.

        • RedLogix 1.1.2.1
          12 August 2021 at 11:20 am

          Much of Australia is a burnt out sand pit already.

          Have you ever left your mother's basement? I live there and that statement is just beyond silly. We've just had the wettest winter in ages and the place is thriving.

          Although if you really want someone to blame for the appearance of modern Australia – look to the Aboriginals who started burning the place to the ground when they first arrived 50,000 years ago.

          Prior to that it was mostly covered in forest.

          • Tiger Mountain 1.1.2.1.1
            12 August 2021 at 11:27 am

            Nice. Colonisers blame the colonised.
            https://www.dpaw.wa.gov.au/management/fire/fire-and-the-environment/41-traditional-aboriginal-burning

            There are some large holdings, dry as dust with not an indigenous person around–it is called Climate Change.

            • RedLogix 1.1.2.1.1.1
              12 August 2021 at 11:35 am

              The point is that if you want a pristine forested 'eco nation' free of all human modification – then that ship sailed a very long time ago.

            • WeTheBleeple 1.1.2.1.1.2
              12 August 2021 at 1:36 pm

              There are also some (fringe?) people turning that (desertification) around. Australia is the birthplace of permaculture, and the site of the proliferation of aquaponics. Both of these are going to be hugely significant as we move forward.

          • arkie 1.1.2.1.2
            12 August 2021 at 11:32 am

            Aboriginals who started burning the place to the ground when they first arrived 50,000 years ago.

            Prior to that it was mostly covered in forest.

            Do you have evidence for this claim?

            It runs counter to the evidence and studies by experts:

            "Aboriginal use of fire had little impact on the environment and… the patterns of distribution of plants and animals which obtained 200 years ago would have been essentially the same whether or not Aborigines had previously been living here".

            A 2010 study of charcoal records from more than 220 sites in Australasia dating back 70,000 years found that the arrival of the first inhabitants about 50,000 years ago did not result in significantly greater fire activity across the continent (although this date is in question, with sources pointing to much earlier migrations). The study reported higher bushfire activity from about 70,000 to 28,000 years ago. It decreased until about 18,000 years ago, around the time of the last glacial maximum, and then increased again, a pattern consistent with shifts between warm and cool climatic conditions. This suggests that fire in Australasia predominantly reflects climate, with colder periods characterised by less and warmer intervals by more biomass burning.

            https://en.wikipedia.org/wiki/Fire-stick_farming

            • Ad 1.1.2.1.2.1
              12 August 2021 at 11:37 am

              Controversial this topic. Aboriginal forest burning and climate change:

              https://theconversation.com/how-aboriginal-burning-changed-australias-climate-4454

              … but not necessarily much impact on erosion;

              https://www.abc.net.au/news/science/2016-02-04/aboriginal-land-clearance-bush-fire-environment/7107980

              … then the back-and-forth of studies begins in earnest:

              https://www.mendeley.com/catalogue/174336ec-4920-379d-a81d-d96d0c037305/

            • RedLogix 1.1.2.1.2.2
              12 August 2021 at 11:44 am

              Prior to human starting to use fire to modify the landscape, the highly fire adapted eucaplyts were confined to a few dry areas – now they dominate pretty much everywhere and lock the landscape into routine fire events.

              Only in the wettest pockets do other species survive.

              Prior to humans arriving the landscape was forested in a diverse range of species and supported a large megafauna population. And while some of it survived human arrival for a long period – most dissappeared very promptly after humans.

              Again another science topic that can't be rationally discussed because woke ideology has to portray Aboriginal people as eco-saints beyond all scrutiny. Yes they created a stable fire modified landscape that well suited their life style – but it was very different to the one that existed prior to their arrival. About that there is no debate.

              • arkie …
                12 August 2021 at 11:48 am

                Again another science topic that can't be rationally discussed because woke ideology has to portray Aboriginal people as eco-saints beyond all scrutiny.

                WTF are you talking about?

                I asked for a link to some evidence to support your claims. As Ad has stated this is a controversial topic, and therefore when discussing it we should back up our positions with some evidence.

                • RedLogix …
                  12 August 2021 at 11:54 am

                  Nice. Colonisers blame the colonised.

                  Right there is your WTF. As for some links – Ad has done the work for me thanks.

                  • arkie …
                    12 August 2021 at 11:58 am

                    Did I say that?

                    Ad's links do not support your claims. Please do your own homework.

                    • RedLogix …
                      12 August 2021 at 12:06 pm

                      This entire derail started with an idiotic claim that "Much of Australia is a burnt out sand pit already. "

                      Not seeing you rush in to debunk that and I don't have time to play silly link games with you – I know how that game is played.

                    • arkie …
                      12 August 2021 at 12:10 pm

                      Asking for evidence of claims =/= Silly link games

                      Having a productive discussion involves being less dismissive and condescending.

      • RedLogix 1.1.3
        13 August 2021 at 6:18 am

        The YT algorithm popped this up for me tonight – the talk itself is the first 40min.

        A dense and interesting geopolitical take from a US perspective and one I think most people here would get something from – even my critics. His conclusions are gloomy with considerable justification.

        Yet on reflection he unwittingly makes the case I've been outlining here for very long time that for all of it's failings and shortcomings the mere fact of the US leading a global trade order through a 70yr period of unprecedented peace and prosperity strongly suggests that a successor- an authentic, intentional and just global order – might well transform the affairs of humanity beyond all imagining and hope.

    • roblogic 1.2
      12 August 2021 at 10:07 am

      "We" have benefited from global trade? Agreed, if "we" completely ignore one side of our divided country

      • RedLogix 1.2.1
        12 August 2021 at 11:25 am

        Yet when I point directly to evidence of how Australia is able to provide affordable housing … less than the cost of renting.

        • Simbit 1.2.1.1
          12 August 2021 at 1:22 pm

          C'mon. Most of Australia is a scorched bbq area.

          • WeTheBleeple 1.2.1.1.1
            12 August 2021 at 1:44 pm

            'Most of Australia is scorched'

            Geography plays a large a part in that, as does length of occupancy by man. Now we are recognising the foibles of anthropocentric agriculture it's time to stop finger pointing (men, period, idiot farmers).

        • roblogic 1.2.1.2
          13 August 2021 at 11:04 am

          Aussie banks have run rampant in NZ and drowned us in debt. The Oz govt and RBA are more hard headed at reining in bankers endless greed

  2. roblogic 2
    12 August 2021 at 9:46 am

    Systemic problem requires fundamental reform of our crappy rent extraction economy.

    What the West must learn from China – UnHerd

    In America, among the biggest beneficiaries of the current economic system are not entrepreneurs or innovators, but parasites who owe their wealth to rigged markets or government subsidies. But they are merely a symptom of the bigger problem: a newfound scepticism in the ability of American capitalism to deliver on its economic promise of prosperity.

    That is precisely the kind of thing that China is seeking to avoid. Stock market investors may be unhappy, but far from destroying consumer confidence, the measures now being undertaken by Beijing might have precisely the opposite effect.

    As Chinese fund manager Yuan Yuwei has argued, “housing, medical and education costs were the ‘three big mountains’ suffocating Chinese families and crowding out their consumption”. Yuan went on to describe these measures as “the most forceful reform I’ve seen over many years, and the most populist one. It benefits the masses at the cost of the richest and the elite groups.”

    Unlike America’s Federal Reserve, whose increasing tolerance and support of financial bubbles continues to engender profound systemic fragility in the American economy, Beijing is prioritising social cohesion above the narrow interests of financial rentiers.

    • RedLogix 2.1
      12 August 2021 at 10:01 am

      For real social cohesion you need the "Thoughts of Xi Jinping" app. Download it today.

      • roblogic 2.1.1
        12 August 2021 at 10:09 am

        In the absence of a Leviathan government we have seen the rise of a parasitic oligarch class.

        • Subliminal 2.1.1.1
          12 August 2021 at 7:44 pm

          You are absolutely onto it there roblogic. Some people go on a bit about productivity but how on earth are productivity gains to be made when the financial rentier parasite class are bleeding the economy dry?

          Michael Hudson is onto it when he describes financial history as a battle to keep power from being concentrated with the oligarchy. You correctly cite China as the only large nation today that has any awareness of this history. I guess it's not so surprising when you realise the age of their civilisation.

          Debt can never be allowed to stand forever since interest always accumulates at an exponential rate. How anyone can believe that the productive sector stands any chance under these conditions is the real fairy story.

          China understands that the State must be in control of all debt creation and money creation. Productivity hits a brick wall when all excess is syphoned off to interest payments. On the other hand, an economy that minimizes the money syphoned off (China) will absolutely defeat one heavily burdened with a parasitic load (the West)

          • WeTheBleeple 2.1.1.1.1
            12 August 2021 at 8:17 pm

            But, but, China!

            You nail it. We don't have to like China's leadership to understand the dilemma we've put ourselves in via allowing money to subsume politics. The western wet dream of 'financial independence' (you'll find it on a vision board near you) is exactly that of parasites where, working life is no longer required as 'your money works for you'.

            So we are indeed overburdened with 'do nothing' types. Not the unemployed, but the 'independent'.

          • roblogic 2.1.1.1.2
            13 August 2021 at 3:04 pm

            Well said Subliminal, Big fan of Michael Hudson. Of course I am not endorsing everything about the totalitarian CCP, but the West is in decline because of the egregious accumulation of wealth and power by private interests. Critics of “democracy” do have a point — it has been hacked by the oligarchy and their disinformation machinery

  3. Robert Guyton 3
    12 August 2021 at 10:35 am

    The handsome young man in the photo is an exceptionally creative thinker!

    🙂

  4. Adrian 4
    12 August 2021 at 11:03 am

    I like the “ We are not amused “ sitting in the background, but ignore him, he has no power, by the beautiful syntax he is a mere Eng. Lit student.!

  5. Tiger Mountain 5
    12 August 2021 at 11:03 am

    Well, my take is that Aotearoa NZ’s future involves it becoming an “EcoNation” and member of the non aligned movement of countries. This would include bi-lateral mutually beneficial trade and cultural agreements.
    https://en.wikipedia.org/wiki/Non-Aligned_Movement

    Leaving 5 Eyes, returning power generation and supply to full public ownership and control, rolling back all neo liberal state legislation, and penetration of public infrastructure by private capital.

    There is no mystery in all of this–the capitalist class, and international finance capital runs and exploits this post colonial country thanks to the legacy of “Roger’n’Ruth”, where 50% of the population own just 2% of the wealth.

  6. Ad 6
    12 August 2021 at 11:07 am

    Our massive reliance on low value unprocessed bulk products going to China is well summarised in Stuff today:

    https://interactives.stuff.co.nz/2021/08/trade-off-china-nz-exports/

  7. RP Mcmurphy 7
    12 August 2021 at 11:30 am

    news zealanders are acquistive and infantilised. as long as the teevee goes and they can go from A to A and back again in their flivvers burning up gas and getting off on the throb they dont really give a damn.

    • Ad 7.1
      12 August 2021 at 11:38 am

      No we protest plenty, and our political allegiances are sensitive enough to usually need marginal coalition parties to prop up governments. We are definitively not the Passionless People you describe.

  8. RP Mcmurphy 8
    12 August 2021 at 12:26 pm

    a very small segment of the population does protest but they are apparatchiks and will protest anything if it assists the revolution [sic]. going off your head at a footy game is not passion it is merely the expression of A MOB.

  9. RP Mcmurphy 9
    12 August 2021 at 12:27 pm

    BTW economic historians still consider New Zealand an area of recent settlement and as soon as the natural resources are all used up then the plug will be pulled.

    • Maurice 9.1
      12 August 2021 at 1:30 pm

      There is no plug to pull … we are presently circling the pan and the spin is becoming faster.

  10. Jackel 10
    12 August 2021 at 7:41 pm

    One or a few big companies controlling an industry is just the natural end result of having a free competitive market. So neoliberals, like the Act party etc, are really just corporate apologists.

    Having said that the Fonterra model seems to work well for a small country like New Zealand rather than having a lot of competition in an export industry.

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