Category: Economics

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Enough rope

On Mike Hosking’s Newstalk ZB show this morning, a discussion of the gender pay gap and Catherine Delahunty’s bill on the topic — and an object lesson in not believing your own hype:

Alasdair Thompson [Employers & Manufacturers’ Association CEO]: “Let me get down to tin tacks here. It is unfortunate, if you like, that men and women are different –“
Helen Kelly [Council of Trade Unions President]: [incredulous laughter]
AT: “– they are. The fact is, women have babies, they take time out of their careers to have babies. Women have — look, I don’t like saying this, this is how contentious this is, but here’s a fact of life. If you really want to keep some statistics, look at who takes the most sick leave. Why do they take the most sick leave? Women do in general. Why? Because, ah, you know, once a month they have sick problems. Not all women, but some do. They have children that they have to take time off to go home and take leave of. Therefore their productivity — not their fault, it’s … it may be because they haven’t got it sorted out with their partners, where the partners take more responsibility for what happens outside work. There are all of these issues, and none of this is covered in these statistics that this bill wants to sort out. Now, I’m sorry, I don’t like saying these things because it sounds like I’m sexist, but it’s a fact of life.”
HK: “Sure does, Alasdair, I’m glad you said them, it’s fantastic. I let you go on that one.”

(Audio)

Helen Kelly played Alasdair Thompson like a harp here. For a start, his argument is bogus — as Kelly says, the figures don’t back it up in the general case, and where they do back it up there’s a host of confounding variables. (For just one of many possible objections, since women already earn less than men for the same work, there’s an advantage at the margin where they retain the primary childcare responsibility, all else being equal. On the basis of this Thompson says they should be further penalised.)

But quite apart from the standard of the argument, Thompson ended up defending the indefensible in indefensible terms. It’s one thing to defend the indefensible in terms that seem reasonable, quite another to do so in terms that are repugnant. Rather than arguing the difference of interpretation and retaining the dignity of a Captain of Industry, a benevolent leader of men (and women) who cares about their wellbeing, he slipped into the worst sort of boss-man-splaining. This might work just fine in boardrooms where the interests of those present are aligned, but it’s not much good in the public sphere. He clearly realised this, but only once he had committed to it: his delivery was garbled and disjointed, clearly ad-hoc, and so heavily caveated that it’s hard to take any of it seriously.

But that’s what we must do. This guy is an experienced representative of New Zealand’s employers, speaking in his official capacity on a topic for which he had (or ought to have) prepared, in a mainstream media outlet. We are entitled to take him at his word, and we should thank him for telling us what he really thinks. And we should thank Helen Kelly for giving him such a plum opportunity to do so.

Update: Not one to do things by halves, Thompson has doubled — or, tripled down, with a press release arguing that women are paid less because they’re just not worth as much, and statements to the Herald blaming “socialists”, “Labour” and “unions” and claiming 90% support for his position. That number has now mysteriously vanished from the Herald’s story, and comments by readers of the National Business Review — Thompson’s natural constituency — are running 80-20 against him at the time of writing this update.

You could say he’s quadrupled down, even, since he’s now taken to twitter, responding to criticism and barbed quips with cut & pasted lines from his press release. A more epic fail is hard to envisage.

L

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Recuerdos de la Muerte (Memories of Death).

Today (March 24) is the 35th anniversary of the coup that ushered in the “dirty war” in Argentina that cost 30,000+ lives, more than 10,000 “desparecidos”  (“disappeared,” or those who were last seen in custody but whose bodies have never been discovered), with tens of thousands tortured and exiled. Never has the dark side of the Argentine psyche been on worse display than during the so-called “Proceso de Reorganisacion Nacional” (“Process of National Reorganisation”), and hopefully the bitter lessons learned will prevent a repetition of that wretched episode in Argentine history. The hard truth is that although the September 11, 1973 golpe that ousted Salvador Allende in Chile is more well-known (as was the dictator Pinochet), and the Argentine coup followed others in Uruguay (1973), Bolivia (1974), Peru (1968), Brazil (1964) and several previous ones in Argentina itself (1962, 1966, with an internal military coup in 1970), the dictatorship installed in 1976 was the most sadistic, murderous and cruel of them all. In its brutality and efficiency it was the exemplar of South American authoritarianism.

For people like me–raised in Argentina and directly exposed to the dictatorships of the 1960s and 1970s–the horrors of those days do not go away easily. For a generation of Argentines, to say nothing of their counterparts in Chile and elsewhere such as in Central America, the traumas of those years will linger forever, and it is only now, with the birth of a generation completely unaffected by the dictaduras, that the process of psychological healing can begin in earnest. While people who came of age in the 1960s and 1970s continue living, it will be impossible to erase from the collective memory the pervasive climate of fear that characterised life during those times.

The immediate result of the climate of fear was known as “atomizing infantilisation:” the body politic is forcibly stripped of its horizontal solidarity networks by the imposition of state terror, which paralyses resistance and reduces the individual social subject to the level of a child’s nightmare. Just as children fear the monsters under their beds and are powerless to stop their depredations, so too a society subjected to a systematic campaign of state terror is reduced to a sense of utter helplessness and vulnerability. After all, in the case of the dictatorships, the monsters were real and death or torture could occur at any time, for seemingly any reason. Terror appeared arbitrary but was in fact systematic, with the objective being to break the will of anyone who might oppose the dictatorial project.

The result was a condition of survivalist alienation: people just tried to go about their personal business, retreat into their immediate private lives and avoid trouble by relinquishing public commitments. The Argentines had a phrase for this: “de la casa al trabajo y del trabajo a la casa:” From the house to work and from work to home. Under such conditions there is no collective social subject. There is just submission.

It was under these conditions that the beginnings of the neoliberal macroeconomic experiments began in the Southern Cone. It was not just a matter of outlawing unions and political parties. It was about “cleaning the slate” of all those who could thwart the laboratory experiment that was the imposition of monetarist policies in South America. It was about using the climate of fear to reforge collective identities  so that the working classes would never challenge the primacy of capital again. It was about elites taking advantage of the window of opportunity provided by dictatorship to restructure the economy in a more favourable image, setting in place structural changes that would fundamentally alter class relations and the relationship of the state and society to capital in a way that the latter would always have the dominant say in social life. It was about, in the language of the time, “forcibly extirpating without anesthesia the malignancies of communism, atheism, feminism and homosexuality from the body politic” (the phrase is attributed to Argentine General Benjamin Menendez, who was one of the dictatorship’s most bloodthirsty leaders). In sum, the project was about using systematic application of state terror to sow the seeds of fear, alienation and despair in which market-driven projects could be imposed. Above that, the use of state terror was focused on social cleansing–in Chile it was about eliminating class challenges to capatilist rule. In Argentina it was about preserving an elite way of life. In either case, the dictators stopped at nothing to make their point.

These are the projects from which Roger Douglas, Richard Prebble, Ruth Richardson, John Key and the Business Roundtable take inspiration. These are the models upon which the NZ economic reforms are based. And if we think of the way in which NZ macroeconomic reform and other aspects of social policy have been “reformed,” we can see that the authoritarian example has been emulated in more than the economic realm. In other words, the NZ market “model” is a softer version of the Southern Cone dictatorial projects, absent the repression but with the same thrust.

We should also remember the climate of fear when we observe the Middle East. Populations that have been victimised, brutalised and traumatised by long-standing dictatorships are unlikely to have forgiveness and conciliation on their minds as the dictators begin to tremble. But the dictators and their allies know this, which stiffens their resolve to not suffer the retributions that they richly deserve. That does not easily make for a democratic “spring.”

All of which is to say, when it comes to contemplating the virtues of dictatorial regimes because they provide economic models or security partnerships, the answer in the first instance should be the rallying cry of the heroic Mothers of the Plaza de Mayo: “Nunca Mas!!”

NB: The title of this post comes from Argentine author Miguel Bonasso, who wrote a book by that name.

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Political rights and economic rights.

Recent discussions have reminded me of the relationship between economic and political rights, and the varying interpretations of it. For orthodox Marxists economic rights supersede political rights for two reasons: 1) without an equitable material distribution of resources political rights mean nothing; and 2) with an equitable material distribution of resources there is no need for political rights.  In this view “politics” is either a status quo instrument of domination that conforms the masses to the requirements of production in a system dominated by private interests, or is a means of revolutionary challenge to that status quo. In neither case is it an end of itself. Subsequent Leninist, Stalinist and Maoist interpretations all concur with this view.

Socialists see economic rights as taking precedence over but not superseding political rights. Here the view is that economic rights are more important than political rights but the latter are needed to ensure the just distribution of material resources in a society. Even if imposed by dictatorial fiat, the maintenance of economic rights requires popular participation in the decision-making process surrounding the collective allocation of resources. That is a matter of political rights.

Social democrats see political rights preceeding economic rights. Here the priority is on gaining political rights first in order to subsequently secure economic rights to the material benefits of production. Since they see political rights as a universal good, they recognise the rights of non-socialists in the political arena, which means operating from a position of structurally-conditioned disadvantage within capitalist societies. The emphasis thus shifts from control of production to redistrubution of surpluses (via taxation and state involvement in the social relations of production, mostly).

The Right has its own interpretations of the relationship. Libertarians place the emphasis on political rights (e.g. the right to do as they please so long as it harms no other) and, in the most extreme version, do not believe in economic “rights.”  Beyond that, the Right gets a bit fuzzy. Some free-marketeers assume the precedence of economic rights over political rights, so long as the rights conferred are market-driven in  nature (i.e., the “right” to make a buck without government interference). Other conservatives see political rights trumping economic rights (e.g. “no taxation without representation” or the right to mandate morality on a collective scale). The Right notion of economic rights differs from the Left notion, as it is not about material redistribution but about unfettered access to and freedom within an economic system controlled by private interests. Likewise, the Right view of political rights is more about freedom of choice and expression rather than about vehicles of collective redress and representation.

Showing my colours, I subscribe to the view that political rights are required for economic rights to obtain. The formation of unions, the extension of suffrage, the recognition of indigenous claims, the redress of past injustices, the acceptance of  universal “human” rights and the very ability to speak truth to power and challenge the status quo or elements of it all hinge on the prior granting of legal authority, or at least recognition, to do so. That is a political act, and legal recognition is the certification of political rights. That makes the move to secure political rights the precondition for the eventual recognition of other rights, to include those of an economic nature.

This is the hidden factor in transitions from authoritarian rule. The transition is most fundamentally marked by the extension of political rights to previously excluded groups, who in turn use the opportunity to agitate for previously unobtainable economic rights. The more the extension of political rights is achieved by force and economic rights redefined as a result, the more revolutionary the character of the regime change. The more negotiated the extension of political and economic rights, the more reformist the change will be.

This is just a broad sketch and not meant to be a definitive pronouncement. Readers are welcome to add their own intepretations as they see fit (within the bounds of civility, of course).

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Underclass Redux


Campbell Live tonight returned to McGehan Close (see the report, by Tony Field, here). This street in Mt Albert — on the boundary of Helen Clark’s and Phil Goff’s electorates — was visited by then-opposition leader John Key before Waitangi weekend 2007 for a particularly cynical stunt. This was Key’s first big symbolic play as leader of the opposition, and it was a hum-dinger. He had already singled out the residents of this street in that year’s State of the Nation address at a whitebread rugby club in faraway Christchurch, branding them archetypal members of the New Zealand ‘underclass’, and the visit saw him glad-handing and patronising a bunch of poor brown people who’d already been used as shot in the National party propaganda cannons.

The purpose of the speech, and visit, was to install one of the core planks of the National party narrative about the Clark government — that it was at best unconcerned with the plight of said underclass; and at worst, actively cultivated such a demographic, which would be permanently dependent on Labour’s welfare policies and would therefore be a permanent source of electoral support for the Labour party. (So the ‘bribing the bludgers to breed’ theme goes, rarely uttered by anyone with authority in public but a commonplace among the usual proxies; check almost any General Debate thread on Kiwiblog from around that time for instance.) This is absurd in more ways than it’s feasible to explain here, so I won’t bother. Let’s just leave it at ‘the underclass doesn’t really vote’.

Nevertheless, the visit was a roaring success. Key, bearing smiles and gifts and wearing a tiki t-shirt, charmed the residents of McGehan Close and evidently persuaded them both of his party’s goodwill toward them and of its social and economic plan to lift them from their grim circumstances. The event culminated in Key taking 12 year-old Aroha to the Waitangi Day celebrations — a move full of potent symbolism, even if it was seen to be somewhat exploitative. Drawn out over a full week of coverage (at the time a rare commodity for Key, who had replaced Don Brash as leader just before the Christmas break) this was a highly successful stunt and should have been an early warning of Key’s great talent for making cheesy set-piece events ‘work’ and feel human. The sentiment he evoked in the people of McGehan Close was certainly real.

It’s just a pity the ‘ambitious’, ‘aspirational’ policy programme Key promised them wasn’t.

Joan Nathan, Aroha’s mother, remains on the DPB (having been let go from her hastily-arranged job working for National MP Jackie Blue) and struggles more than ever to cope, now with a sixth child. Aroha, now 16, is living in the care of Child, Youth and Family, which Joan says is the best thing for her, since she is unable to provide a decent life for her daughter. Nathan and others, although they believed in and voted for Key, are now disenchanted and universally express the sentiment that the government’s policies favour the rich, not the poor, and that they haven’t been helped one iota by the change of government; in fact, things have gotten worse. Not much of this is different than it was this time last year, when the Sunday Star Times visited the Close.

So far, so obvious, you might say — and it is; indeed this sort of outcome was very widely predicted at the time. But this is important because it is as strong a counter-narrative as exists for the opposition in this election year. It reframes Key as a faker, a charlatan, an opportunist who’ll exploit whatever circumstances will advantage him, without loyalty or the willingness or ability to follow through on his word; as someone whose focus is on boardroom issues rather than on peoples’ wellbeing. Discussing and reading around the topic on twitter this evening I’ve seen considerable criticism of this Campbell Live story as a cheap human-interest stunt, as opportunistic and exploitative (or moreso) than the original event. I couldn’t agree less. It is a clear, unambiguous example of an investigative journalist simply revisiting a story where much was promised, and measuring it against what has actually happened. This is crucial to its narrative value: these events reframe Key by measuring his own defining stunt — his signature trick — against the objective reality of lived experience. Theory and rhetoric versus real people, living in the real world governed by the policy built from that theory and rhetoric. It is a reality check in its purest form.

There are disadvantages to this narrative line, also, and the virulent responses to the Campbell Live report this evening — I believe I saw presenter Rachel Smalley shudder a little whilst reading some of them out — hint at them. One is the obvious suggestion that Joan Nathan and the other residents of McGehan Close could have done better for themselves, but have chosen not to; the victim-blaming routinely visited upon the poor by the less-poor. A more serious and related line of critique is that there’s a recession on, and everyone’s hurting. Or that it’s only been three years, and change takes time.

But hang on a minute — wasn’t the point of the whole point of electing a Key-led National government to take advantage of the resulting step-change which would boost economic growth, job growth, provide better opportunities, an end to welfare dependency, safer communities and a general increase in general socio-economic mobility and wellbeing? Key made all these promises quite explicitly, not just in person to the residents of McGehan Close, but to the whole nation throughout the campaign and at almost every opportunity since. There are no jobs. There are no higher wages, and without these things you can’t exactly buy shares in SOEs. There is no greater social mobility. The ‘underclass’, as exploitatively defined by Key, still exists.

Having failed McGehan Close, John Key has failed all of us. Quite apart from the fact that we were all promised these things, or things like them, and by and large have yet to receive them, a central theme of the ‘underclass’ policy argument was that by lifting people out of poverty and bringing then into the ‘overclass’ (? — this shows just how meaningless ‘underclass’ is except as a propaganda term), the government would make society better for everyone. This is a noble goal, and one I agree with in its idealistic entirety. I think you would go a long way to find someone in a position of any political credibility who’d publicly disagree with it. The first order of business for any opposition should be to hold John Key to those promises, and demand of Key the wealthier, more mobile, and socially healthier society we were promised.

But the most vicious response will be the one which the initial stunt in 2007 was meant to evoke — the notion that the ‘underclass’ are breeding in order to get more welfare from the Labour party. The core of this line of reasoning, if I may call it that, will be attacks on Nathan herself as a mother, having had a sixth baby and having had Aroha, the subject of the initial stunt, removed from her care. The attacks will be highly personalised, racist and gendered, and they will be lashed closely to Labour party policy and doctrine. But, assuming a competent and spirited opposition, that’s ok — the National party aren’t in opposition, 18 months out from an election; they’re in government in election year. Having been elected on a moderate, sympathetic platform with strong support from women and Māori, and looking to consolidate that platform into a strong and honestly-won mandate means that the government no longer has such freedom to dog-whistle. Particularly given that an opposition counter-narrative would cast doubt on all those sympathetic characteristics, the resort to the divisive tactics of 2008, such as trying to wedge ‘hard-working kiwis’ against the ‘underclass’, and so on, would be extremely risky for the government.

In light of my last post, perhaps it is a little glib to assume a competent and spirited opposition, and in perfect truth I don’t really think Labour has this fight in them (although Grant Robertson saw the Campbell Live piece and seems to have had a similar response to mine, which is heartening). But it is an argument waiting to be had, and one which must be had sooner or later. The boundaries are drawn up; media interest is already piqued, and this is a bread-and-butter social and economic justice issue for Labour. There’s a wealth of symbolic material and slogans to employ — ‘reality check’ and ‘by failing McGehan Close Key has failed us all’ are two they can have for free, and if a Labour party can’t base a campaign around ‘underclass‘ then they’re not worthy of the name.

Time to engage.

L

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‘Efficient’ pricing and social cohesion in disaster recovery

In my view, one of the more shameful episodes in the Canterbury earthquake was the call by some for retailers to implement so-called ‘efficient’ pricing of crucial goods such as water. Among these was University of Canterbury economist Eric Crampton, whose article on the topic was even printed in the papers. Read his blog post In defense of price gouging. I often agree with Eric, but on this topic I just don’t.

I’m no big-city economist, and I seem to have misplaced the argument I wrote on the topic at the time, but essentially the problem is: if nothing is done, the resource just runs out and people who need it can’t get it. Absent some mechanism (rationing, gouging, &c) the criterion for access to the resource is speed and/or ruthlessness — the person who goes down to the supermarket & fills their ute with bottled water wins; everyone else has to rely on other means, such as asking their neighbours or others for help. I see efficient pricing as simply a means to shift the the criterion for access from ‘speed+ruthlessness’ to ‘accessible wealth+ruthlessness’. Those neither speedy nor wealthy (that is, almost everyone) will have to fall back on those same social structures of cooperation and goodwill to get their water in either case, and I don’t accept that privileging those with cash on hand is much of an improvement over privileging those who can get through the gate quickest.

However there is a non-economic factor to consider: in times of disaster, social cohesion is crucial. To large extent it operates on the notion that both the mighty and the humble are brought low; that we’re all in this together, and when the chips are down, Jack’s as good as his master. A resource allocation mechanism which punctures these illusions so as to damage social cohesion, such as by turning the poor against the rich, must deliver an enormous efficiency benefit in order to offset the harm it causes by sapping the goodwill upon which disaster recovery thrives. At a time when the foremost objective should be to promote social cohesion, ‘efficient’ pricing is an ugly imposition of individualism on the collective spirit.

Anyway, the point of this post wasn’t to relitigate that, or to criticise Eric, so much as to say that — by contrast — reports of price-gouging in post-flood Queensland have drawn a firm response from officials. Fair Trading Minister Peter Lawlor warned retailers of the possible strategic consequences of gouging:

“I think traders who attempt to profit from the misery of others during the floods should keep in mind that people have long memories. Even if there’s no official complaint, any quick returns they seek to make will be of little value to the business in the longer term.” [he said]. Mr Lawlor says if there is evidence they are breaking the law, they will be prosecuted.

More robust still was the statement from Ipswich Mayor Paul Pisasale, the same who warned looters that they would be used as flood markers if caught:

Ipswich Mayor Paul Pisasale says the city will remember businesses that try to take advantage of the disaster. “I know I’m not supposed to say [this] – but the health inspectors are on their way and the building inspectors are on their way after we finish this to see if we can help those businesses – [but] like hell,” he said.

This suggests a vigilante streak and willingness to bring the coercive force of the state to bear for social, rather than strictly regulatory reasons, and this is not usually a beneficial trait in a civic leader. However I think in cases like this there is some justification for such a stance. Pisasale’s position is a manifestation of the ‘Queensland culture’ called upon by Premier Anna Bligh in her speeches, and which may now be her political legacy. If it all came to pass, perhaps a disgruntled gouger might take legal action against Pisasale or his agencies for harrassment; but this would be an uphill battle, because Pisasale enjoys the protection of being right in the eyes of his society. After all; the only thing most Aussie battlers hate more than a government bureaucrat is a disaster profiteer. He is on firm ground as a representative of his people, because his representation rings true. His commitment is to the cohesion of his society. He is doing what crisis leaders do; efficiency be damned.

L

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The Blues go Black.

The announcement that National will undertake labour legislation reform has revealed the dark side beneath its happy face veneer. Riding high in the polls and 14 months before having to call an election, the Key-led government has dropped its populist pretense and unveiled its anti-worker credentials with the thrust of its proposed reforms. It also violates a 2008 campaign promise not to substantially revise the Employment Relations Act (ERA). In fact, the reforms are a return to the old Employment Contracts Act (ECA), one of the most draconian, overtly authoritarian pieces of labour legislation seen in the modern liberal democratic world. Rather than address all of the proposals, to include making dismissals easier, narrowing the scope of personal grievance claims and extending the 90 day probationary period to all industries, I would like to focus here on just one: the proposal that unions must secure the permission of an employer before accessing a work site. 

Due to the asymmetric power relationship between employers and workers, collective action is the best way for the latter to secure rights and protections within the productive process. Collective action requires organisation, and the ability to organise is contingent on the ability of prospective agents to access workers in an effort to persuade them to act collectively in defense of their common interests. Access does not mean compulsory membership or even recruitment success. It just means that prospective collective agents have the ability  to approach workers at their work places in an effort to organise them collectively.

Under International Labour Organisation Convention 87 on freedoms of association, such access is defined as an absolute democratic right for both workers and agents. In fact, it is a cornerstone of most democratic labour legislation that employers not have the right to interfere with the right of workers to organise, including organisation efforts by collective agents such as unions. Thus National’s proposal that unions must secure employer consent before approaching employees on a work site, and that such consent must not be withheld “unreasonably” (with the definition of reasonable left purposefully vague), is a direct violation of one of the most cherished international labour standards.

There is a historical precedent for this move, and that is where National’s real darkness shows. The 1991 ECA entered into law by the Bolger government had exactly such provisions. In 1993 the ILO upheld a complaint that the ECA violated convention 87 on rights of association as well as convention 98 on freedom to bargain collectively. The Bolger government ignored it and it was not until 1999, after the 5th Labour government came into office, that the more egregious anti-worker sections of the ECA were eliminated in the revamped ERA.

National’s black side runs even deeper. The ECA explicitly borrowed many of its provisions directly from the 1979 Chilean Plan Laboral. The Plan Laboral was the Pinochet dictatorship’s labour code, and was championed by its then Labour Minister Jose “Pepe” Pinera, the father of the current Chilean president. Under the pretense of promoting “labour market flexibilisation,” the Plan Laboral was an outright assault on the Chilean union movement, using both structural as well as politically-focused clauses to atomise the Chilean working class and forever break union influence on economic decision-making. To a large extent, and even with subsequent reforms by successive post-Pinochet democratic governments, it largely succeeded in doing so.

Pepe Pinera, somewhat unsurprisingly, was a friend of Roger Douglas and made regular Business Round Table visits to NZ in the 1980s and 1990s before his death. Ruth Richardson, the main instigator behind the ECA, was also an admirer of Pinera. These two individuals, with their direct and immediate past dictatorial connections and coalition relationship with National, are believed to be the prime movers behind this attempt to return to the ECA as the framework in which the social relations of production are determined. In other words, National is proposing changes to the labour relations system that have their origins in the Pinochet dictatorship, and which were suggested by people with direct links to that dictatorship. Beyond the violations of ILO convention 87, that alone should give reason for concern.

Hence, while some of the other proposed reforms can be the topic of honest debate keeping in mind where the balance between efficiency and fairness in production should be located, the attempt to curtail union access to workplaces is an overt assault on working class collective rights. This proposed clause is not about getting unions to ring employers up in order to make an appointment to see employees. This is about shutting them out.

It remains to be seen if this time around the CTU and other mainstream unions will offer more than token resistance to these proposals (as was the case when the 90 day probation period was introduced). It also remains to be seen if the NZ working classes will do anything other than bow meekly to the powers that be. But if ever there was a moment to rise up against the resurgent union-busting, anti-worker tide, that time has come. Remember: the reforms embodied in the ERA where at best minor adjustments meant to “humanise” the ECA. But the thrust of NZ labour law under the ERA was by no means a bold step towards worker’s control of production, and in fact retained much of the pro-business biases of its predecessor. Thus the current labour reform proposals are very much about putting the boot into the working class, and the union movement in particular.

It may take defection from mainstream, Labour-affiliated union ranks to more independent and militant unions for any effective resistance to happen, but whatever the case, if the worker’s movement stands silent on this one, then further rollbacks of worker’s rights can be expected the longer National is in power. For workers, those will be dark days indeed.

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When irony leads to hypocrisy.

The uncontrolled oil spill in the Gulf of Mexico has turned into what looks to be the US’s worst environmental disaster. 40 days into the spill the well is still spewing 19,000 barrels (79,000 gallons) of oil per day into the deep waters 50 miles off of southern Louisiana. If ever there was an environmental event that could be called “catastrophic,” this is it. Estimates are that the oil slick (which is far more extensive in the middle layers of the Gulf than at the surface) will reach the Florida panhandle within days, the western Florida coast within weeks, and if the prevalent currents take hold it, the Florida Keys, Florida Straits, Cuba and South Florida Atlantic Coast by mid July. Estimates of when the spill will be contained range from August to December. If it is the latter, the slick could well be in New England given the flow rate of the Gulf Current. If a hurricane hits (the Atlantic/Caribbean hurricane season started on June 1), then all bets are off. Whatever happens, the economic costs of the disaster are already mind-boggling and wide-spread, which at a time when the US was just starting to emerge from a deep recession is a catastrophe all of its own.

By now everyone who follows the news knows that British Petroleum is the lessee of drilling rights in that part of the Gulf and owner of the drilling platform that exploded and collapsed with the loss of 11 lives that led to the leak. BP’s inability to staunch the flow after nearly a dozen unsuccessful attempts has been matched by the the wait and see response of the US government, which initially relied on BP assurances that the leak was not as big as is now known and that a capping solution was possible within a few weeks. Now that oil has fouled the Louisiana, Mississippi and Alabama coast lines on its way to Florida, public anger against BP and the Obama has started to boil over. A few days ago the US public was treated to the spectacle of James Carville, the well-known Clinton political advisor, ranting on national television against the Obama administration for its slow response (Carville is a Louisiana native). His rant was remarkable only because he is a loyal Democrat, since a host of Tea Party spokespeople, Republican Party figures and the baying hounds at Fox News and talk back radio have all lambasted the president for his lackadaisical approach to the crisis. A recent opinion poll shows that a quarter of those polled blame BP for the accident, a quarter blame Obama, and the rest blame both.

That is pretty rich. During the W. Bush administration regulations on off-shore drilling were relaxed and wilderness areas opened to oil exploration. Common emergency cutoff safeguards were abandoned as the GOP-controlled Congress approved policies of oil industry self-regulation. Dick Cheney chaired the White House energy task force, which was staffed by oil industry heavyweights including the infamous Ken Lay of Enron fame. Their recommendations, many of which passed into law, were that “less is more is less” when it comes to oil: the less US regulation the more domestic production. The more domestic production the less dependence of foreign oil. The entire federal regulatory and oversight apparatus charged with oil industry supervision adopted this mantra, which was spearheaded by Bush appointees whose idea of environmental protection was to make industrial polluters plant trees in the neighborhoods in which they operated or designate areas under their control as wildlife refuges.

The Obama administration had nothing to do with this. Its main fault lies in that, in an effort to appear centrist and “pro-business” it has allowed BP to lead the repair operation even though BP initially lied about the extent of the leak or about the fact that there had been multiple warnings from its own engineers that the well was showing signs of blowing in the weeks before the explosion. The timing of the disaster was both unfortunate and fortuitous, as, following the “less is more is less” line of thought,  the Obama administration just approved new off-shore drilling rights off the lower US East Coast, a decision it may now have to review in view of the fact that, unlike the Gulf of Mexico coastline, the US Eastern Seaboard holds a majority of the population and important commercial and military ports as well as providing the jump-off point for Trans-Atlantic sea traffic. An uncontrolled oil spill in the Gulf of Mexico is a disaster; a similiar uncontrolled oil spill off the northern coast of Florida or the coasts of Georgia, North and South Carolina would be apocalyptic.

The situation has gotten so desperate that experts are now debating the merits of the so-called “nuclear option:” a plan to detonate a nuclear explosive 15000-18000 feet under the surface so as to melt the surrounding rock into a glass-like “plug” (the wellhead itself is just a mile (3,800 feet or 1600 meters) down). This is also called the “Russian option” because Russia has reportedly used this technique to cap runaway natural gas wells (the Russians have not said anything in public to confirm or deny these stories). Trouble is, no one knows if the nuclear option will work, or what its collateral effects will be. As one Canadian blogger reportedly wrote: “What s worse than an uncontrolled deep water oil spill? A radioactive deep water oil spill.”

So the situation is grave. But in the their effort to place the blame on Obama, the Republican Party  and its tea bagger/media loudmouth cohort have shown that they are craven hypocrites with no sense of  fair play. In their attempts to divert attention from oil industry greed and failures onto the Obama administration, they reveal themselves as complete weasels. Take, for example, Sarah Pains claim that Obama was moving slow on the crisis because he had taken money from BP. Well, the “took the money” part is true. The Obama/Biden campaign received US 70,000 dollars from BP, which also gave US$38,000 to the McCain/Palin campaign. But the oil industry as a whole gave the McCain/Palin campaign US$ 1.3 million and the Obama/Biden campaign US$900,000.  It is axiomatic in US politics that lobbying groups paper the wallets of both sides of the political spectrum, with big business and Wall Street favouring the GOP and unions, high tech and other public interest groups favouring the Democrats. Thus the claims that Obama is in BP’s pocket are refuted by a simple perusal of the public record (to be fair, Palin may not have the attention span or time to peruse the public record given that she reads “all” of the newspapers and is busy with her Fox TV Show and book tours).

Obama’s detractors are also stupid. After years of clamouring for “less government,” this motley crew of “conservative” champions of free enterprise now whine about a lack of government response to a disaster created by the very private industry that they helped free from government regulations in the first place. The Obama administration may have been slow off the mark in its response to the crisis, but that is precisely because it relied on private industry–in this case BP–to be upfront and honest about he scope of the disaster. Now that it is clear that BP was dishonest, and that this dishonesty is endemic in the oil industry when it comes to environmental safeguards, the government turns out to be the default option after all, but this time in a reactive rather than a proactive role such as what existed before Bush 43 laid waste to the federal regulations governing off-shore drilling.

Obama may rue the fact that his first two years have been consumed by problems that were not on his agenda when he came into the office. But for those salivating at the prospect of a GOP sweep in the 2010 midterm elections, the oil spill may prove to be even more problematic because no matter how they may try to spin it, it was the Republicans who set the stage for the disaster to happen. Whatever flaws his administration has, Obama gave private industry a chance to fix the problem, and it is only after BP’s repeated failures that it is now considering direct intervention in the capping efforts. So much for him being a commie, and if the Democrats have any sense of irony, then so much for a Republican landslide in November.

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They have to want it as much as you do.*

I spoke with an old Pentagon friend today (a person with whom I shared strategic planning duties in a specific area of concern, and who went on to far greater things than me), relating to him my early observations about Greece in crisis. I mentioned that the Greeks, who have a public sector that dwarfs the private sector, in which the public sector average wage is far above that of the private sector, have a huge sense of collective entitlement and natural rights. For example, university students (as public entitles) are currently demonstrating daily against proposed cuts in their free lunch and bus pass benefits, but not at the university. Instead, they disrupt downtown traffic. Tomorrow the seafarers, bus drivers and railway workers go on a 12 hour strike to protest wage freezes or labour market infringement  (the train and bus workers are public servants facing wage freezes and the seafarers are striking to protest non-EU ships being allowed berthing rights in Greek ports. Their combined walkout will paralyze the transportation network for 8 hours ). 

But media coverage of the issues is somewhat odd. Rather than look inward, the popular press is full of anti-German rants because the Germans will determine the conditions of the Greek debt bailout (which only delays the inevitable default), and the conditions imposed by the Germans (as majority holders of Greek debt) are considered to be the reasons why Greek workers will not get their entitled, perfunctory raises.  All the while  life goes on–the cafes and supermarkets are full, people crowd the trains, there are few demonstrations outside downtown. People do not appear to connect the impending default to their lifestyle.

Usually wages are tied to productivity, which means that if the public service is well paid it is also efficient (such as in Singapore). But in Greece it is not. From what I have observed and what my Greek interlocutors have told me, nothing gets done or it is waste of time to demand action. For example, on Saturday an illegal gypsy market spung up on the street outside our apartment building. It closed the street to vehicular traffic and vendors camped out on the apartment footsteps. The neighbours shut the front entrance doorway, which is usually propped open, out of fear of robbery. I asked my landlord if that was commonplace and she said that yes, although illegal the gyspy market had run for years because neighbours had zero success in complaining and bribes may have been paid for the authorities to look the other way (which indeed they did–I saw not a single cop during the entire afternoon the market was running).  In other words, Greek public service is as much a hindrance as a help to civil society, hence the proliferation of grey and black market activity. The curious thing is that this situation is tolerated by both of the dominant Greek parties, respectively left and right centre as they may be, because public sector employment and benefits is a common source of patronage and clientilism. Neither one wants to upset that apple cart (even if the latter is foreign debt-bought and effectively owned). 

Mind you, not that all Greek public services stink. When compared to the Auckland raillway system, for example, the Athenian Metro is stellar. There are few delays on the six inter city lines, complete integration with buses and suburban rail lines, and close integration with ferry and airport schedules. The only visible problem, from my non-expert viewpoint, is that there appears to be way too many people (or too little, depending on the station) doing nothing in pursuit of this goal. Then again, I tried the Henderson-Auckland (before and after Britomart) route for years, before and after it was privatised,  and the public-controlled Athens Metro system has it beat by a country mile.

Not that the Greek private sector is a beacon of innovation and entrepeneurship. To the contrary, it is mostly low skilled small holdings with no growth or technological ambition (think butchers, cosmetic vendors and locksmiths), and the political-economic elite (they are the same, crossing familial ties in many instances) in this rigid two party system have no interest in promoting the sort of capitalist ambition that would erode their joint lock on power. Cuba is similar in this regard, because in both cases oligarchic control supplants popular innovation as the motor of progress and majority consent is bought with public sector employment (not that I am drawing a direct line between the two regimes as a whole).

Which is to say, Greek economic backwardness is cultural, contrived and perpetuated by the Greek status quo. The elite see no need to change because deficit spending is a double edged sword, as many US banks found out to their dismay. Deficit-laden countries intimately locked into the European financial system such as Greece will not be allowed to collapse  becuase if they do the financial run is on given that Spain, Portugal and Ireland are all in the same predicament–too much debt, too little ability to pay within IMF/ECB guidlelines.  Hence, Greece may default, but it will not be allowed to financially collapse if for no other reasons than that the repercussions would be catastrophic on the European banking system itself.

Which is where my fomer Pentagon friend comes in. I noted to him that the problem with EU expansion is that the leading EU economies, France and Germany, viewed EU monetary expansion into Southern and Eastern Europe as a development project in which the lagging peripheral economies would be modernised by virtue of their connection with the European core (first via labour-intensive investment, then by value added industrial growth). The Euro giants emulated the US when it engaged Latin America in the 1960s and 1970s under the rubric of modernisation theory: just expose the backward masses to a little capitalist entrepenurialism and all will eventually be right.

Err…wrong.  As my friend noted, the locals have to want the change as much as we/you (external agents) do. And that is a cultural issue more than anything else. 

Developmentalist views such as that of the EU and US ignore the cultural component of investment climates. National preferences are different, cultural mores vary, and collective notions of rights and entitlements are not transferable across borders. The Germans and French may have thought that lending money to Greece to fund the Olympics would promote its modernisation, but like the Yanks in Latin America, they failed to understand that Greek culture–what it means to be Greek–supercedes any IMF/European Central Bank prescriptions. Hosting the Olympics was temporary; to be Greek is forever, and that is not reducible to a current deficit repayment schedule. To the contrary. It is reducible to notions of rights and entitlements crafted over milleniua and mytholoigised as such. That bottom line is not within an IMF  or European Central Bank purview.

Which is why my friend Ray’s point is well taken: an external actor can only help as much as the locals want to help themselves. There is no point in offering assistance and prescriptions if the locals do not see the need to change. Absent a local consensus on the need for change (which can be influenced by externally driven media manipulation but which ultimately has to resonate in the hearts  of the citiznery) better then  for external actors to cut bait than to engage in futile hope that the local conditions will change.

In fact, the opposite may be true: the less a country is propped up by external actors and the more it is forced to look inside itself for solutions, then the more it may eventually address the root causes of its backwardness, decline or stagnation (New Zealand could well be a case in point). In any event, only after internal failure is acknowledged that external assistance will make a difference in Greece or elsewhere, and that difference is not material but attitudinal.

 According to my buddy, that fact is as true for Greece as it is for Somalia, Irag and Afghanistan, and in the latter instances, the stakes are arguably much greater. I disagree with his summary assessment as it applies to Afghanistan (as I believe that there is more at stake than local self-realisation), but cannot help but recognise the truth in his words. At the end of the day in this age, no matter the degree of previous exploitation and subserviance, the root problem of backwardness lies within. Or to put it in my friend’s terms, “if the locals do not want to do it, it aint gonna happen.”

There is truth in that view and no amount of good intentioned external help will resolve the fundamental issue.

*Update: For a jaded by humorous view of Greek politics check this out.