Tag Archives: political strategy

Labour: locking in lose-lose

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David Shearer says he won’t rule out buying back shares in state-owned power companies sold by the government. He won’t rule it in, either. Why? Does he need to consult his leader?

There’s so much wrong with this that I scarcely know where to start. This buyback agenda has been set by Winston Peters; it’s now two years since the 2011 election campaign kicked off with a pledge to sell these assets, and it’s like the boffins in Labour haven’t yet had an original idea about it. The problem with old generals is supposed to be that they fight today’s war with the strategies of yesterday’s war, but this is worse — it’s fighting yesterday’s war with the strategies that lost the one before that.

But enough about my thoughts on the referendum. This time the issue is what happens after the SOEs are sold. Chris Trotter has articulated strong political arguments for nationalisation, and I think these serve to demonstrate that nationalisation is not simply untenable for a left-wing political movement.

So while I’m not persuaded the opposition should do it, there’s definitely a right and a wrong way to go about nationalisation. The core principles are similar to those in play with the initial privatisation: that we should have good information about the intentions of the main political decision-makers; and that people should not have property expropriated without due process. This need not be perfect consent — an election result delivering under 50% was sufficient to grant a mandate to privatise half the value of these assets, for example.

Market and electorate signals
Shearer’s “maybe we will, maybe we won’t” is the worst possible position. The markets into which these shares will be floated need signals so as to judge risk, and the electorate needs signals so as to judge the quality and character of the politicians they might vote for in 2014 and beyond.

A clear “we will buy them back” or “we will not buy them back” would do that; it would tell the market and the electorate what to expect and they could act accordingly. Both groups would know we were dealing with politicians of at least some sort of conviction, and more to the point, someone willing to make some big calls, to put something on the line. Today we see before us a Labour leader who has neither the conviction to know what he wants to do, nor any will to do it.

As Chris says, a stance one way or the other would provide Labour with a mandate. If Labour considers nationalisation irresponsible, then as voters we ought to know that; but it is much more crucial to justify an actual nationalisation programme. Given that the current criticism of the government is that they lack a mandate to do something they campaigned for a whole election year on doing, I struggle to see how even the most one-eyed Labour partisan could honestly justify the massive expense of buying back SOE shares unless it was clearly signalled and voted on beforehand.

This need not be unconditional. Graeme Edgeler has suggested a provisional pledge — Labour could say that if, say, two thirds of respondents in the referendum vote to not support the asset sales then an incoming Labour government would seek to nationalise them. David Shearer has many options that are better than “maybe”.

Economics of a sell-off/buyback
If Labour genuinely believes — as it has told us for two years now — that the value of these assets is greater than the cost of borrowing to buy them, it should be easy enough to show that buying them back at fair market value is worthwhile. This will likely have the effect of inflating the price, but it would at least do our international reputation comparatively little harm.

It might be reasonable for Labour to pledge to buy the shares back at cost, but only if the pledge is made credibly and early — certainly no later than the first round of sales. The pledge would be fair warning to investors: if they choose to disregard it, that’s on them.

Because it allows the markets to price in the risk of a Labour-led government coming in and making good on its promise, signalling nationalisation in this way would likely depress the initial sale value of shares. If the threat was sufficiently credible it could, in principle, depress demand for shares to the point that selling them would be uneconomical — thereby preventing the sale, or limiting it to just one or two SOEs. While this would look bad for the government there is also a downside risk that the opposition would be seen to be sabotaging the scheme — but given that Labour seems certain the scheme is unpopular, that should not concern them too much.

Because there is an ideological imperative behind the sale (that is to say, the market already knows the government has to sell in order to retain political credibility) it seems likely the shares will already yield less than what an equivalent float by a less-motivated seller might yield. There are other industry-specific factors which could also depress the price — the fact that hydro generation is not much good in the middle of a historic drought, for example. I have no knowledge of the value of the assets as they stand, but it doesn’t seem totally outrageous that it might not be all that high as it is, and a little more risk might just be enough to turn people away.

Conversely, a nationalisation conducted after the shares have been sold has the opposite effect. An ideological bulk-buyer in a fair market will bid the price up. Even worse is the middle-ground: if there exists sufficient uncertainty before the float the sale price could be depressed; followed by a Labour election win and nationalisation, causing the price to rise. The government would be selling low and buying high.

Venezuela of the South Pacific
The worst of all cases is if Labour does not provide a strong and credible signal of nationalisation ahead of the float, and then proceeds with a “surprise” nationalisation on an at-cost or dictated price — or worse yet, expropriation without compensation, as has been suggested by some of the more wild-eyed idealists. Parliament is sovereign; in principle, an incoming government could do this. But it would be a brutal assault on property rights and repugnant to a modern liberal democracy, especially one so dependent on international trade as we are. It could justifiably lead to New Zealand being treated as a pariah kleptocracy, and since the SOEs are being floated on the ASX and will likely include some institutional investors there, it could also have deep trade, diplomatic and cultural implications. I expect there is also the risk of legal challenge.

The worst aspect of holding the “maybe” position Shearer has taken is that the risk of “Venezuela of the South Pacific” scaremongering exists as long as this scenario is not clearly and credibly ruled out. I don’t seriously believe this sort of expropriation would happen under a modern Labour government, but political narratives needn’t be based on reality.

If Labour commits to nationalisation then scaremongering will commence, but at least the party will be able to control the narrative around it, and articulate arguments in principle for it, as Chris has done. If the SOEs are that popular it shouldn’t be too big a risk. If Labour rules out nationalisation then such scaremongering may still eventuate, but will be weak. If they continue to sit on the fence, they get the scaremongering, but not the opportunity to rebut it. Lose-lose.

That Labour would even consider holding the “maybe” position is astonishing, but it is New Zealand First policy after all. It reflects an awareness that New Zealand First is here to stay, will probably hold the balance of power at the 2014 election, and could make nationalisation a condition of its being part of any Labour-led coalition. The deep problem is that Labour, lacking a political agenda of its own, is letting others define it. Until the party leader is prepared to lead, Labour will keep losing.

L

Teapot Tapes poll: political moral suasion

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I recently tore into Chris Trotter’s argument that polls are deployed to promote a “spiral of silence”, to demoralise those holding non-majority views, and to deter them from political speech and action. I stand by that post, and I still don’t think the argument holds in the general case, but this morning I think we saw an example where polling data was used in just such a way.

National campaign chair Steven Joyce appeared on Morning Report defending the party’s handling of the “teapot tapes” strategy. Joyce came to his Morning Report interview armed with overnight polling data that he says shows 81% of people are sick of the coverage of the teapot tapes, only 13% think the issue is a big deal, and that some in the media ought to take a long, hard look at themselves. Russell Brown covers the topic in more detail; this post began as a comment there).

Leaving aside questions about the veracity of these figures (they could be utterly fabricated and we’d be none the wiser; Bomber reckons they’re bollocks), this actually is a case of a politician deploying polling data to send a message, not only to the media, but to the public: If you care about this you’re out of touch, disconnected, in the minority, obsessed with trivia, and you ought to be ashamed of yourselves. While I disagree with his assessment, what’s more interesting is how he framed that assessment: as a normative argument about what election campaigns ought to be about, and what “real New Zealanders” care about; echoing John Key’s “issues that really matter” rhetoric, which is precisely what all the National supporters I’m in touch with have been saying: nothing to see here, it’s a sideshow, can we get back to the substance, and all that.

Which is pretty ironic given that the Nats have done extremely well for most of the preceding five years by staying the hell away from policy arguments wherever possible. It’s a pretty remarkable position from a National party whose strategic success has been largely founded on a ruthless commitment to campaign realism, expressed by avoiding “noble” pursuits such as the robust policy focus and appearances in the hard-news media in favour of what is effective — personality and brand-focused campaigns, point-scoring, agenda domination, and routine appearances in sympathetic forums, for example. It’s even more remarkable since Joyce himself has been the architect of this strategy since the 2008 campaign.

So I am cynical about National’s sudden love for the “real issues”. They have touched on them before — the election-year launch of the privatisation policy that I wrote about in February is the best recent example — but this has hardly been their preferred route. What seems more likely is the “spiral of silence” imperative — marginalise, shame and heap scorn upon those who genuinely see a substantial public interest in the way the teapot tapes episode has played out, not out of a prurient interest in the contents of those tapes but because — as Danyl notes, it “keys into a huge range of really substantive issues: the Prime Minister’s integrity; media ethics; surveillance”. This deployment of normally-secret polling data — probably collected for this exact purpose using carefully-framed questions — seems like an attempt to bully into silence those who aren’t willing to ignore an unprecedented breakdown in the relationship between the Prime Minister and the media, and a nearly-unprecedented glimpse into the internal workings and political culture of the National party and its leader.

It has had the desired effect on other political parties — Phil Goff and Peter Dunne have sung from the same songsheet today, leaving only Winston Peters to reap the electoral harvest from these events. Given that, it is not unlikely that it would have a similar effect on voters, especially in Epsom. Of course, there may not be an electoral harvest; the polling data might be accurate and it may genuinely be perceived as a “Bowen Triangle” sideshow. I don’t think so, but then, I would say that.

Update: Since writing this, Fairfax has released a poll of their own that suggests the public are over the teapot tapes. Its numbers are considerably more ambivalent than those released by Steven Joyce, however; the strongest result was for the obviously-correct proposition that politicians should be able to discuss controversial topics privately (63%). On this basis Matthew Hooton is now praising the strategy as “genius”. It’s also important to realise that this isn’t a pure popularity contest, but a balance of complex factors — the intensity of sentiment on either side matters. As Danyl remarked in the Public Address thread, “If 4% of National supporters switch their vote over to Winston Peters on the basis of this affair, then that’s a strategic catastrophe for Joyce’s party, no matter what the other 96% do.” There’s no indication that this has happened, of course, but there’s no really definitive indication of the fallout from these events at all. The Herald on Sunday tomorrow will be fascinating.

L

Let it burn

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At the head of a large army [Po-ts’ai] was besieging Ch’ang-she, which was held by Huang-fu Sung. The garrison was very small, and a general feeling of nervousness pervaded the ranks; so Huang-fu Sung called his officers together and said: “In war, there are various indirect methods of attack, and numbers do not count for everything. Now the rebels have pitched their camp in the midst of thick grass which will easily burn when the wind blows. If we set fire to it at night, they will be thrown into panic, and we can make a sortie and attack them on all sides at once, thus emulating the achievement of T’ien Tan.” That same evening, a strong breeze sprang up; so Huang-fu Sung instructed his soldiers to bind reeds together into torches and mount guard on the city walls, after which he sent out a band of daring men, who stealthily made their way through the lines and started the fire with loud shouts and yells. Simultaneously, a glare of light shot up from the city walls, and Huang-fu Sung, sounding his drums, led a rapid charge, which threw the rebels into confusion and put them to headlong flight.
— Sun Tzu, The Art of War, XII.9(4)

I can’t agree less with Grant Robertson’s, response to David Garrett’s latest bit of madness. He says he “doesn’t want to give further oxygen” to Garrett’s “extreme and appalling” views, but that’s exactly what they need: oxygen. At present both Rodney Hide and John Key probably want to forget the fact that Garrett is the ACT party’s Law and Order spokesperson, and that consequently there are no such things as his “personal views” on these topics which are separable from those of the party — he is the ACT party’s mouthpiece on such matters, and the government’s ally. We, the people who elected him and permitted Hide to assign him that role, are entitled to take these views seriously, examine them in the context of other things he has said and done, and the opposition’s job is to prevent anyone from forgetting what this man stands for, and how far his definition of “reasonable” is from that of the wider public. From now until he’s ejected from parliament, Garrett should not be able to show his face to the public without a graphic reminder of the fact that he think homosexuality is morally equivalent to paedophilia; that he favours policy (now implemented) which means more prisoners will suffer rape as a consequence of their punishment; and that he thinks poor brown parents should be sterilised. He must be required to either defend his views robustly, or forced to issue yet another humiliating public apology; and both ACT and the government must be required to defend their association with him, or forced to dissociate, demote or publicly censure him.

The instinct for the opposition to deny a topic like this the spotlight only makes political sense when the opposition is vulnerable on the issue; when they fear it could result in a populist backlash against them. Even then, the principles at stake mean a very strong backlash would be required to justify restraint on simple pragmatic grounds. There is no prospect of such a backlash in this case: as Grant says, the statement is “extreme and appalling”. Does Grant think his own sense of what is extreme and appalling differs so much from that of the electorate that they will not agree with him? The worst possible course of action for ACT and the government is to allow this topic to remain at the top of the political agenda for as long as possible. Failing to even try to keep it there shows a lack of political nerve on the part of the opposition; a continuation of the failed strategy employed prior to the election, which Key won in no small part because the very people who should be fighting against him bolstered his public image as a mild, simple, non-threatening chap. Genuine threats must be neither mocked or minimised; the “extreme and appalling” should not be laughed off or left unchallenged. This is the sort of weak-kneed liberal wimpishness and lack of rectitude which leads many voters to mistrust parties on the left, and cleave to parties and leaders whose convictions are firm and forthrightly held. The good and the just does not speak for itself, much as we might wish it would. It requires champions to stand for it, and evil truimphs when those champions fail to stand and fight.

To do so is not the “dirty” personalisation of politics: the character and views of a man who sits on the Law and Order select committee, and in the future could conceivably hold a warrant for Justice, Corrections or Police are perfectly legitimate matters for political debate, which speak both to his ability to represent the interests of New Zealanders and to the quality of the processes and people which allowed him to attain such a position.

The Garrett Solution, as I’ve argued elsewhere, contradicts almost everything the small-government right claims to stand for. After a decade of howling about “Nanny State in the bedroom” and “social engineering” we now see that their erstwhile objections to both these things were not principled, as they claimed, but were in fact just objections on the merits. Social engineering is wrong, they say, unless it’s at the genetic level. It’s also not new: this sort of thing was enthusiastically embraced during the last government by the more unhinged members of the extreme right, and now it has gone mainstream.

The topic of eugenics is the strongest symbolic matter introduced to the political sphere by any participant this term; it is a topic on which the right can only lose, and introduced by someone who is already vulnerable. The grass is high around the government’s camp, the fire is set by one of their own: now, if they are to gain an advantage, the opposition must fan the flames and beat the drums.

L