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Thursday, August 19, 2010
Poll shows 'mood for change'
Labor Deputy Leader Julia Gillard says new poll figures show a "mood for change" in Australia, despite a majority of people continuing to favour the Coalition on economic issues.
Today's Fairfax AC Nielsen poll puts the Opposition ahead by 58 per cent to 42 per cent on a two-party preferred basis.
Voters regard the Federal Government as a better economic manager than Labor, but the majority believe the Opposition is the best party for industrial relations.
The Government's primary vote has edged up for the second consecutive month, rising two points to 39 per cent compared to Labor's 48 per cent.
Two weeks after the federal Budget, 60 per cent of voters believe the Government is the best economic manager, compared to 30 per cent for Labor.
But Labor Deputy Leader Julia Gillard is focusing on the Opposition's clear lead on industrial relations issues - 59 per cent to the Coalition's 31 per cent.
"There is a mood for change in the Australian community," she said.
"I think that they do want a different style of leadership in this country and I think these polls are particularly showing that people think Mr Howard's industrial relations laws have gone too far."
Meanwhile a Federal Government backbencher says he is confused by the poll results.
Liberal MP Dennis Jensen says Labor has run an effective scare campaign on IR, but he does not see the negative sentiment directed towards the Government in his Western Australian electorate.
"I really don't know what people are looking for," he said.
Today's Fairfax AC Nielsen poll puts the Opposition ahead by 58 per cent to 42 per cent on a two-party preferred basis.
Voters regard the Federal Government as a better economic manager than Labor, but the majority believe the Opposition is the best party for industrial relations.
The Government's primary vote has edged up for the second consecutive month, rising two points to 39 per cent compared to Labor's 48 per cent.
Two weeks after the federal Budget, 60 per cent of voters believe the Government is the best economic manager, compared to 30 per cent for Labor.
But Labor Deputy Leader Julia Gillard is focusing on the Opposition's clear lead on industrial relations issues - 59 per cent to the Coalition's 31 per cent.
"There is a mood for change in the Australian community," she said.
"I think that they do want a different style of leadership in this country and I think these polls are particularly showing that people think Mr Howard's industrial relations laws have gone too far."
Meanwhile a Federal Government backbencher says he is confused by the poll results.
Liberal MP Dennis Jensen says Labor has run an effective scare campaign on IR, but he does not see the negative sentiment directed towards the Government in his Western Australian electorate.
"I really don't know what people are looking for," he said.
"Clearly the IR laws are doing the job that they were designed to do, which is create work and create better living conditions for all Australians."
Liberal decision over economic report expected
Liberal Leader Michael Ignatieff could announce as early as Monday morning whether Canadians can expect to head back to the polls, or if his party will support the Conservative government’s economic report.
Ignatieff has scheduled an announcement at 11 a.m. ET after taking the weekend to weigh his options.
Ignatieff’s call will determine whether the last week of the spring parliamentary session comes to a close Friday with a bang or a whimper.
All eyes are on Ignatieff, however, because both the Bloc Quebecois and the NDP have already opposed the government’s progress report on the economy, which was released Thursday. All three parties would have to unite behind a motion declaring non-confidence in the government to bring it down and force a summer election.
Ignatieff told reporters after the report was released that he wanted a few days to analyze the 234-page document, which says, among other things, that most of the funds set aside to stimulate the economy have started flowing, or are at least tied to specific commitments.
Late last week, Prime Minister Stephen Harper weighed in on the issue, telling reporters that Canadians don’t want an election during a recession.
The Liberals have enjoyed an uptick in recent public opinion polls, prompting some hawks in the party to push for an election to take advantage of the minority government’s problems over the economy, the ballooning government deficit and the medical isotope crisis.
Even though an election cannot be ruled out, few observers are predicting with any confidence that Canadians will be going to the polls this summer.
Ignatieff has scheduled an announcement at 11 a.m. ET after taking the weekend to weigh his options.
Ignatieff’s call will determine whether the last week of the spring parliamentary session comes to a close Friday with a bang or a whimper.
All eyes are on Ignatieff, however, because both the Bloc Quebecois and the NDP have already opposed the government’s progress report on the economy, which was released Thursday. All three parties would have to unite behind a motion declaring non-confidence in the government to bring it down and force a summer election.
Ignatieff told reporters after the report was released that he wanted a few days to analyze the 234-page document, which says, among other things, that most of the funds set aside to stimulate the economy have started flowing, or are at least tied to specific commitments.
Late last week, Prime Minister Stephen Harper weighed in on the issue, telling reporters that Canadians don’t want an election during a recession.
The Liberals have enjoyed an uptick in recent public opinion polls, prompting some hawks in the party to push for an election to take advantage of the minority government’s problems over the economy, the ballooning government deficit and the medical isotope crisis.
Even though an election cannot be ruled out, few observers are predicting with any confidence that Canadians will be going to the polls this summer.
Economic point men battle over deficit
The increasingly heated exchanges inside and outside the House of Commons are part of a bigger debate over which party is better suited to manage the country in an economic crisis.
Following a Conservative caucus meeting Wednesday morning, Jim Flaherty, the Finance Minister, warned reporters that the country’s finances would be in peril under the proposed Liberal-NDP coalition. He said he was particularly concerned over the two-year fiscal stimulus package the coalition is proposing.
“I understand that the opposition [coalition] is planning a $30-billion package which would mean our country would go under permanent deficit like the Liberals did to our country in the 1970s,” he told reporters in a brief scrum.
The $30-billion is the equivalent of 2% of GDP, or what the Group of 20 nations agreed to commit toward fiscal measures aimed at pulling the global economy out of a recession. Liberal MPs Martha Hall Findlay and David McGuinty told the Reuters News Agency Wednesday that the stimulus package would cost roughly $30-billion.
The chief Liberal economic spokesman, John McCallum, called the Conservative allegations “entirely wrong,” adding the stimulus package the coalition has under consideration would cost “significantly less” than $30-billion. He also said there would be no structural deficit under the coalition because the policy framework calls for a return to surplus in the fourth year after it assumes power.
Mr. McCallum — considered one of two top contenders to be the coalition’s Finance Minister — said Ms. Hall Findlay and Mr. McGuinty were “wrong” because they had “misunderstood” the situation.
Until Wednesday, Mr. McCallum and other Liberals have declined to provide details of the cost of the coalition’s stimulus package. Under the coalition’s policy framework pact, the package would focus on infrastructure, housing construction and retrofits, as well as aid to the ailing auto and forestry sectors.
Mr. McCallum signalled the package could be pared back depending on the size of the deficit the coalition would stand to inherit.
“If the Conservatives are hiding a deficit of $15-billion, let’s say, we will obviously have less money at our disposal than if it is $5-billion,” Mr. McCallum said. “It would be irresponsible, and fiscally imprudent, for a future government to give any figure until we can see the books.”
Bay Street economists and analysts have warned the country risks sliding back down the slope to structural, or permanent, deficits if the Liberal-NDP stimulus plan costs $30-billion.
Douglas Porter, deputy chief economist at BMO Capital Markets, said the deficit could swell to $20-billion next year.
Conservative Self-Delusion On Liberal Economic Policy
The Anonymous Liberal has reviewed a number of conservative blogs and finds the same signs of self-delusion among many of them which I have pointed out in numerous posts (including here, here and here along with the previous post).
Most of the posts I read were filled with complete nonsense about the dangers of government interference with private industry (as if that’s not what always happens when companies go bankrupt). Many indulged in the paranoid fantasy that the Obama administration wants to take over and run GM, that administration officials would soon be sitting in the board room telling GM what cars to make, who to hire, where to build factories, etc. Others warned that this was a dangerous power grab by the Obama administration, that it was the first major step toward turning the country into a socialist state.
I’m always amazed by how willing conservatives are to believe their own lazy caricatures and, as a result, how completely and utterly they fail to understand the actual motivations and beliefs of their political opponents. The reality is that liberals in this country — including Obama — have absolutely no desire whatsoever to nationalize private enterprise. They’re not going around looking for excuses to take over corporations. Quite the opposite, actually…
The notion that there is anyone of significance on the American left who still believes in anything approaching genuine socialism is pure fantasy. That debate, to the extent it ever really happened in this country, was settled a long time ago. What we’re dealing with right now are differences of opinion regarding how best to manage the failure of a number of major companies. It’s not a debate about socialism vs. capitalism; it’s a debate about methods of damage control. But many conservatives have so deluded themselves with their own propaganda that they’re not even capable of following the conversation any more. So instead they spend all day indulging in paranoid delusions and debates that have no relevance to current events. It’s a sad spectacle.
Most of the posts I read were filled with complete nonsense about the dangers of government interference with private industry (as if that’s not what always happens when companies go bankrupt). Many indulged in the paranoid fantasy that the Obama administration wants to take over and run GM, that administration officials would soon be sitting in the board room telling GM what cars to make, who to hire, where to build factories, etc. Others warned that this was a dangerous power grab by the Obama administration, that it was the first major step toward turning the country into a socialist state.
I’m always amazed by how willing conservatives are to believe their own lazy caricatures and, as a result, how completely and utterly they fail to understand the actual motivations and beliefs of their political opponents. The reality is that liberals in this country — including Obama — have absolutely no desire whatsoever to nationalize private enterprise. They’re not going around looking for excuses to take over corporations. Quite the opposite, actually…
The notion that there is anyone of significance on the American left who still believes in anything approaching genuine socialism is pure fantasy. That debate, to the extent it ever really happened in this country, was settled a long time ago. What we’re dealing with right now are differences of opinion regarding how best to manage the failure of a number of major companies. It’s not a debate about socialism vs. capitalism; it’s a debate about methods of damage control. But many conservatives have so deluded themselves with their own propaganda that they’re not even capable of following the conversation any more. So instead they spend all day indulging in paranoid delusions and debates that have no relevance to current events. It’s a sad spectacle.
Liberal Economic Obfuscation
Sunday talk shows and the Liberal drum pounding wears on me like stench from a skunk. Oh for the Clinton years, Oh for the economic boom! Hogwash in triplicate! Hillary Clinton suggests taking the profits of oil companies to use for energy entitlements of her design, crying over the 10 long years of no minimum wage hike, complaining about the so-called “rich” and the beat goes on.
Liberals don’t like to discuss the “dot-com bubble” or reforms brought forward by the Republican Congress and the “Contract with America.” While Liberals were relying on polls and public opinion at every turn Bill Clinton had to stay politically centered or look like a fool, which he took care of all by himself in the privacy of the oval office.
The hand wringing continues with former Reagan Secretary of the Navy, Sen. Jim Webb (D-VA) trying to explain everything wrong with America and blaming President Bush for the downturn of the United States. He sounds embarrassed to be American.
Comparing the numbers:
Liberals don’t like to discuss the “dot-com bubble” or reforms brought forward by the Republican Congress and the “Contract with America.” While Liberals were relying on polls and public opinion at every turn Bill Clinton had to stay politically centered or look like a fool, which he took care of all by himself in the privacy of the oval office.
The hand wringing continues with former Reagan Secretary of the Navy, Sen. Jim Webb (D-VA) trying to explain everything wrong with America and blaming President Bush for the downturn of the United States. He sounds embarrassed to be American.
Comparing the numbers:
- Between 1991 and 1996, the unemployment rate averaged 6.4%.
- Between 2001 and 2006, the unemployment rate averaged 5.4%.
- Real (inflation-adjusted) wage growth, averaged 0.6% annually for non-farm workers in the first half of the 1990s.
- Real (inflation-adjusted) wage growth, is averaging 1.5% annually for non-farm workers this decade. For the last 12 months, real wages have risen even faster, at a 1.7% clip.
Current Numbers:
- Exports are now booming (up 10% last year), especially to the countries with which the U.S. has signed free-trade agreements.
- At the end of last year’s third quarter, U.S. household net worth had climbed to $54.1 trillion, an increase of more than $3 trillion over the previous four quarters.
Should We Worry?
Inflation needs to be watched carefully and it seems the Fed is in good hands. The political risk is real and Democrats hate the Bush tax cuts, have not kept their promise of earmark reform entirely and relish the opportunity to set up government controlled health care, crushing any school voucher system and rejecting free trade.
The Democrats are busy using their bully pulpit to sound the alarms, many of which are simply “false alarms” to gain power.
Inflation needs to be watched carefully and it seems the Fed is in good hands. The political risk is real and Democrats hate the Bush tax cuts, have not kept their promise of earmark reform entirely and relish the opportunity to set up government controlled health care, crushing any school voucher system and rejecting free trade.
The Democrats are busy using their bully pulpit to sound the alarms, many of which are simply “false alarms” to gain power.
The Provocateur
Bush: Economic Liberal
A few weeks ago, I examined President Bush's legacy. As it turns out, my analysis is likely to be obselete. That's because the analysis was done prior to the financial meltdown and the manner in which this bailout will play out will most certainly affect his legacy. If this financial meltdown leads to a bad recession, then I believe his legacy will continue to remain mixed as I wrote. If, on the other hand, it leads to a long and painful depression, then that will tarnish President Bush's legacy in a manner that will make his Presidency among the worst of all time.
One thing I don't have to wait to analyze though is President Bush's legacy as an economic conservative. On this issue he has failed miserably. In fact, his record is so economically liberal that in my opinion it challenges the economic liberalism of Franklin Delano Roosevelt.
Now, President Bush endeared the hearts of economic and fiscal conservatives everywhere right away when he passed sweeping and across the board tax cuts to combat the weakening economy in 2001. Ironically enough, the most economically conservative idea that President Bush offered never became law when he pushed for privatizing social security accounts. Bush has also shown great conservative economic credentials on the issue of trade. We have seen very few more pro free trade Presidents than George W. Bush. As a result, we have had a landmark agreement with the Latin American sphere as well as smaller agreements with the Far East and Middle East. Still, this is where his conservative economic record ends and his liberal economic record is much longer.
The biggest affront that President Bush has perpetrated to economic conservatism has of course been spending. Rather than curbing spending when he implemented these tax cuts, he allowed the Congress that his own party controlled to go on unlimited spending sprees without ever once vetoing one budget due to the pork in it.
Spending is just one way to look at President Bush's economic liberalism. Another way to look at his economic liberalism is the massive increase in government bureaucracy under his administration. Both of No Child Left Behind and the creation of the Department of Homeland Security added tens of thousands of new bureaucrats into the Federal government. Nationalizing education may have been a hallmark of Compassionate Conservatism but it was certainly not economic conservatism.
Besides this, President Bush was also the architect of the massive new prescription drug benefit program. Putting to the side the merits of providing government subsidies for seniors struggling to pay for prescription drugs, this new roughly $70 billion program (in its inception and it will likely grow) is the furthest thing from economic conservatism. President Bush also signed into law the massive new highway bill in 2005. This nearly $300 billion bill was nothing more than a series of giveaways by the Federal government for local and state projects. It also appears that the highway bill was a major boon personally for its main Congressional architect Dennis Hastert. In July of this year, President Bush signed into law a massive bailout of distressed borrowers, a bill co authored by the dubious Chris Dodd. This bill, worth in excess of $300 billion, would have the FHA back loans for troubled borrowers in which they would get rates and even loan balances that they neither deserve and nor would they get in the open market. This bill was not only an affront to free markets but to economic conservatism.
That brings us to the present. In response to a financial crisis, President Bush threw all appearance of the belief in free markets and economic conservatism out the window in announcing his bailout proposal. Now, the President has backed a $700 billion bailout of financial institutions by buying up their distressed Mortgage Backed Securities. Meanwhile, he has authorized government intervention to bailout both Fannie Mae and Freddie Mac and to guarantee loans to the automakers. Beyond this, his Treasury Secretary has been authorized to begin buying up preferred stock in major U.S. financial institutions. In fact, the President is now coordinating a world wide and massive socialization of the world wide financial system. The President in the last few months has gone from economic liberal to economic socialist.
America Declares Obama-Pelosi-Reid Liberal Economic Experiment A Failure
I have been predicting for weeks that the liberal economic stimulus experiment would fail – and is failing. I also noted the reason why it would and is failing – the lethargic federal government is too damn bloated and slow to ’stimulate’ anything. The liberals shunned the obvious quick solution – tax cuts – and went with liberal fantasies of a government run economy. It was never in doubt what would happen, at least not to me.
Now it is clear to an increasing number of Americans the liberal fantasy is a disastrous failure and action needs to be taken now to turn the unemployment mess around. First, they have come to conclusion the failed experiment needs to be stopped immediately:
Forty-five percent (45%) of Americans say the rest of the new government spending authorized in the $787-billion economic stimulus plan should now be canceled. A new Rasmussen Reports national telephone survey found that just 36% disagree and 20% are not sure.
And now Americans are saying it is time to go with the tried and true (and conservative) approach of tax cuts:
Fifty-one percent (51%) of Americans favor an across-the-board tax cut for all Americans to stimulate the U.S. economy, according to a new Rasmussen Reports national telephone survey.
Thirty-four percent (34%) oppose such a tax cut, and 15% are undecided.
Fifty-nine percent (59%) of both Republicans and adults not affiliated with either major political party think an across-the-board tax cut is a good idea. Democrats are fairly evenly divided on the wisdom of such a tax cut.
These numbers are not even close, and note where the center lined up - with the tax cuts (those mushy, squishy traitors – what are they thinking!). As the unemployment picture continues to sink during the rest of this year there will be an increased outcry to end the failure and get it right. The only question is whether the liberal Dems will admit defeat (not likely) or stick in their heals and try and put lipstick on their pig of a plan. If the Dems dig in their heels they will be out of power in 2010 and then possibly in 2012.
This will be very, very interesting to watch play out. Everything is set in motion and nothing can change the direction of the liberal train wreck – except admitting they were wrong.
Now it is clear to an increasing number of Americans the liberal fantasy is a disastrous failure and action needs to be taken now to turn the unemployment mess around. First, they have come to conclusion the failed experiment needs to be stopped immediately:
Forty-five percent (45%) of Americans say the rest of the new government spending authorized in the $787-billion economic stimulus plan should now be canceled. A new Rasmussen Reports national telephone survey found that just 36% disagree and 20% are not sure.
And now Americans are saying it is time to go with the tried and true (and conservative) approach of tax cuts:
Fifty-one percent (51%) of Americans favor an across-the-board tax cut for all Americans to stimulate the U.S. economy, according to a new Rasmussen Reports national telephone survey.
Thirty-four percent (34%) oppose such a tax cut, and 15% are undecided.
Fifty-nine percent (59%) of both Republicans and adults not affiliated with either major political party think an across-the-board tax cut is a good idea. Democrats are fairly evenly divided on the wisdom of such a tax cut.
These numbers are not even close, and note where the center lined up - with the tax cuts (those mushy, squishy traitors – what are they thinking!). As the unemployment picture continues to sink during the rest of this year there will be an increased outcry to end the failure and get it right. The only question is whether the liberal Dems will admit defeat (not likely) or stick in their heals and try and put lipstick on their pig of a plan. If the Dems dig in their heels they will be out of power in 2010 and then possibly in 2012.
This will be very, very interesting to watch play out. Everything is set in motion and nothing can change the direction of the liberal train wreck – except admitting they were wrong.
Are liberals economic idiots?
Liberals have a poor understanding of economics and, thus, should not be entrusted with running the country.
That's the grand conclusion reached by George Mason University economics professor Daniel B. Klein in a recent Wall Street Journal commentary. Too bad the professor reached that conclusion using analytical methods unworthy of a callow undergrad.
One of the most important things I learned 25 years ago while studying for my master's degree in International Relations was to not take statistical analysis on face value. Numbers don't always lie, but they are all too frequently massaged to support the analyst's preconceived notions. Here's what Klein did with the numbers from a Zogby International survey of 4,835 American adults...
Klein presented eight assertions and asked members of the survey group if they agreed or disagreed with them and too what degree. Here are the assertions and the response Klein defined as wrong:
• Restrictions on housing development make housing less affordable (Disagreement is wrong).
• Mandatory licensing of professional services increases the prices of those services (Disagreement is wrong).
• Overall, the standard of living is higher today than it was 30 years ago (Disagreement is wrong).
• Rent control leads to housing shortages (Disagreement is wrong).
• A company with the largest market share is a monopoly (Agreement is wrong).
• Third World workers working for American companies overseas are being exploited (Agreement is wrong).
• Free trade leads to unemployment (Agreement is wrong).
• Minimum wage laws raise unemployment (Disagreement is wrong).
The result? People identifying themselves as libertarians or conservative generally got all but one or two of the questions "right." Liberals and progressives generally got five or more answers "wrong."
From this, Klein deduced that conservatives are "better informed about the policy choices facing the country" and he warned:
To begin with, his presumption that all eight assertions are unambiguously true is, shall we say, presumptuous. I will agree with him that anyone who equates a monopoly with market dominance and who still thinks rent control is a great idea probably has not been paying attention. But some of the other statements are more values-laden and, while factual, do not tell the whole story.
For instance, licensing of professional services probably does raise the cost of those services, but that may be because licensing excludes charlatans who would lure consumers with cheap prices and then deliver poor service. Restrictions on housing development do generally drive up housing costs but may also create value by preserving farmland and wild spaces, which some would consider a good thing.
Technically, many liberals got those wrong, but they may be right that licensing and zoning laws are sound public policy.
Other assertions leave room for reasonable quibbling. Yes, the standard of living by conventional measures is higher now than it was 30 years ago, but a liberal might note that the rise is dependent on two-worker households that have seen their incomes stagnate over the last decade. Free trade may increase employment overall, but some American workers, unquestionably, are dislocated by open competition. Third World workers making products for American companies are probably, as a whole, better off than their countrymen, but there are many examples of awful working conditions at foreign companies that contract for work with U.S. businesses. It's a bit much to contend that anyone who sees a big gray area on this issue is an economic knucklehead.
Klein acknowledges that the eight statements do not "challenge the political sensibilities of conservatives and libertarians" the way they do liberals. Clearly, a number of liberals were answering from their gut, not their brain. But Klein fails to acknowledge that, because the statements reinforce the way conservatives and libertarians see the world, they may also be answering with their gut rather than from superior knowledge of economics.
Klein's survey proves nothing but the obvious fact that many people answer questions based on their pre-conceived notions. It would be easy to create a different set of statements skewed toward liberal views that could make conservatives look uninformed. For instance:
• Iraq had no weapons of mass destruction at the time of the American invasion.
• Saddam Hussein had no connection to the attacks on September 11, 2001.
• Victory, along the lines of the victory over Nazi Germany, cannot be achieved in Afghanistan.
• Fighting terrorists over there does not mean we won't have to fight them here.
• The U.S. banking system would have collapsed in 2008 if government had not stepped in.
• Excluding Social Security and Medicare, the contribution of welfare programs to the federal deficit is tiny compared to the cost of the military.
• If allowed to continue over the next decade, tax cuts for the wealthy will drive up the deficit far more than bank bailouts, stimulus packages and the wars in Iraq and Afghanistan combined.
Following Klein's lead, I could make a strong argument that, if a person disagrees with these assertions, his connection to reality is minimal and he should not be allowed to run the country. And really, don't these issues have far more to do with "the policy choices facing the country," in Klein's words, than the topics in the professor's economics quiz? (Is rent control on anyone's national crisis list?)
Another important rule I learned in grad' school was that something is not true just because you agree with it. I fight that very human tendency ever day. It's easy to latch on to the latest wild revelation flying through cyberspace -- such as Klein's survey -- to reinforce what one wants to believe. This phenomenon contributes to the extreme partisanship that has overtaken political discourse in the country. We no longer just agree to disagree with our fellow citizens, we insist they are fools and dupes, if not subversives and traitors, who want to drive the nation to ruin.
As someone on the center-left, I miss the style of that great conservative, William F. Buckley, who could challenge and change my ideas with his intellectual brilliance and civilized discourse. I even miss Ronald Reagan who stayed friends with his political adversaries, adapted his strong beliefs to new realities and partnered with an "enemy," Mikhail Gorbachev, to make the world a better and safer place.
Those were conservatives with whom I could disagree, yet find common ground. I can't say the same for the many arrogant, rude ideologues who claim to be their heirs. I can easily imagine the depth of their glee at discovering "proof" that liberals are just plain stupid.
That's the grand conclusion reached by George Mason University economics professor Daniel B. Klein in a recent Wall Street Journal commentary. Too bad the professor reached that conclusion using analytical methods unworthy of a callow undergrad.
One of the most important things I learned 25 years ago while studying for my master's degree in International Relations was to not take statistical analysis on face value. Numbers don't always lie, but they are all too frequently massaged to support the analyst's preconceived notions. Here's what Klein did with the numbers from a Zogby International survey of 4,835 American adults...
Klein presented eight assertions and asked members of the survey group if they agreed or disagreed with them and too what degree. Here are the assertions and the response Klein defined as wrong:
• Restrictions on housing development make housing less affordable (Disagreement is wrong).
• Mandatory licensing of professional services increases the prices of those services (Disagreement is wrong).
• Overall, the standard of living is higher today than it was 30 years ago (Disagreement is wrong).
• Rent control leads to housing shortages (Disagreement is wrong).
• A company with the largest market share is a monopoly (Agreement is wrong).
• Third World workers working for American companies overseas are being exploited (Agreement is wrong).
• Free trade leads to unemployment (Agreement is wrong).
• Minimum wage laws raise unemployment (Disagreement is wrong).
The result? People identifying themselves as libertarians or conservative generally got all but one or two of the questions "right." Liberals and progressives generally got five or more answers "wrong."
From this, Klein deduced that conservatives are "better informed about the policy choices facing the country" and he warned:
Governmental power joined with wrongheadedness is something terrible, but all too common. Realizing that many of our leaders and their constituents are economically unenlightened sheds light on the troubles that surround us.As the esteemed George Will would say (while sighing deeply), "Well...." Here are a few things about Klein's analysis and conclusion that are misleading.
To begin with, his presumption that all eight assertions are unambiguously true is, shall we say, presumptuous. I will agree with him that anyone who equates a monopoly with market dominance and who still thinks rent control is a great idea probably has not been paying attention. But some of the other statements are more values-laden and, while factual, do not tell the whole story.
For instance, licensing of professional services probably does raise the cost of those services, but that may be because licensing excludes charlatans who would lure consumers with cheap prices and then deliver poor service. Restrictions on housing development do generally drive up housing costs but may also create value by preserving farmland and wild spaces, which some would consider a good thing.
Technically, many liberals got those wrong, but they may be right that licensing and zoning laws are sound public policy.
Other assertions leave room for reasonable quibbling. Yes, the standard of living by conventional measures is higher now than it was 30 years ago, but a liberal might note that the rise is dependent on two-worker households that have seen their incomes stagnate over the last decade. Free trade may increase employment overall, but some American workers, unquestionably, are dislocated by open competition. Third World workers making products for American companies are probably, as a whole, better off than their countrymen, but there are many examples of awful working conditions at foreign companies that contract for work with U.S. businesses. It's a bit much to contend that anyone who sees a big gray area on this issue is an economic knucklehead.
Klein acknowledges that the eight statements do not "challenge the political sensibilities of conservatives and libertarians" the way they do liberals. Clearly, a number of liberals were answering from their gut, not their brain. But Klein fails to acknowledge that, because the statements reinforce the way conservatives and libertarians see the world, they may also be answering with their gut rather than from superior knowledge of economics.
Klein's survey proves nothing but the obvious fact that many people answer questions based on their pre-conceived notions. It would be easy to create a different set of statements skewed toward liberal views that could make conservatives look uninformed. For instance:
• Iraq had no weapons of mass destruction at the time of the American invasion.
• Saddam Hussein had no connection to the attacks on September 11, 2001.
• Victory, along the lines of the victory over Nazi Germany, cannot be achieved in Afghanistan.
• Fighting terrorists over there does not mean we won't have to fight them here.
• The U.S. banking system would have collapsed in 2008 if government had not stepped in.
• Excluding Social Security and Medicare, the contribution of welfare programs to the federal deficit is tiny compared to the cost of the military.
• If allowed to continue over the next decade, tax cuts for the wealthy will drive up the deficit far more than bank bailouts, stimulus packages and the wars in Iraq and Afghanistan combined.
Following Klein's lead, I could make a strong argument that, if a person disagrees with these assertions, his connection to reality is minimal and he should not be allowed to run the country. And really, don't these issues have far more to do with "the policy choices facing the country," in Klein's words, than the topics in the professor's economics quiz? (Is rent control on anyone's national crisis list?)
Another important rule I learned in grad' school was that something is not true just because you agree with it. I fight that very human tendency ever day. It's easy to latch on to the latest wild revelation flying through cyberspace -- such as Klein's survey -- to reinforce what one wants to believe. This phenomenon contributes to the extreme partisanship that has overtaken political discourse in the country. We no longer just agree to disagree with our fellow citizens, we insist they are fools and dupes, if not subversives and traitors, who want to drive the nation to ruin.
As someone on the center-left, I miss the style of that great conservative, William F. Buckley, who could challenge and change my ideas with his intellectual brilliance and civilized discourse. I even miss Ronald Reagan who stayed friends with his political adversaries, adapted his strong beliefs to new realities and partnered with an "enemy," Mikhail Gorbachev, to make the world a better and safer place.
Those were conservatives with whom I could disagree, yet find common ground. I can't say the same for the many arrogant, rude ideologues who claim to be their heirs. I can easily imagine the depth of their glee at discovering "proof" that liberals are just plain stupid.
An Anarchist response to the British Army Barracks Attack
A member of the Belfast branch of the WSM gives his opinion of the March 2009 attack on Massereene British Army barracks by armed republicans.
The armed and indiscriminate attack on the Massereene British Army barracks in Antrim on Saturday night is futile and counter-productive which only serves to strengthen the status-quo.
These attacks along with the killing of a police officer will only heighten sectarian divisions in times of growing alienation and disillusionment in working-class communities. Especially, in the midst of a global economic recession with an increase in class struggle at home and abroad. Convienently, diverting attention away from the disastrous neo-liberal economic polices pursued by our rulers at Stormont.
The armed and indiscriminate attack on the Massereene British Army barracks in Antrim on Saturday night is futile and counter-productive which only serves to strengthen the status-quo.
These attacks along with the killing of a police officer will only heighten sectarian divisions in times of growing alienation and disillusionment in working-class communities. Especially, in the midst of a global economic recession with an increase in class struggle at home and abroad. Convienently, diverting attention away from the disastrous neo-liberal economic polices pursued by our rulers at Stormont.
The attack has left two off duty soldiers dead, Mark Quinsey, 23, and Patrick Azimkar, 21 as well as four others injured including two pizza delivery workers.
Their use and justification of using two civilian workers as human bait in the assault is disgusting and once again highlights the failures of republican militarism. It should be remembered that in the past this was also the practice of the Provisional IRA and other republican armed groups. For example, the Teebane Massacre in 1992 in which eight protestant construction workers were murdered.
We must also resist attempts by these highly infiltrated authoritarian armed groups to drag working-class communities back to conflict and provoke state repression. Despite carrying out sporadic attacks in recent years they are unable to mount a sustained campaign and have always shown like all paramilitaries they are more of a threat to working-class communities and the building of a viable non-sectarian revolutionary alternative, than the status-quo.
Taken from a section of the WSM position paper on the ‘Partition of Ireland’.
“The tactic of armed struggle, as carried out by the Republicans, was never capable of forcing the withdrawal of the British state because it was incapable of delivering a military victory over the British army. The British ruling class cares little for the deaths of individual soldiers in its army. The 'commercial bombing campaign' caused civilian casualties and heightened sectarian tensions.
The armed struggle was also faulted because it relied on the actions of a few, with the masses left in either a totally inactive role, or one limited to providing intelligence and shelter to the few. It is claimed that it did serve to maintain the gains made in the 60s and early 70s. The mass campaigns (civil disobedience, rent & rates strike, street committees, etc.) would have been a far greater protection for the gains won than the elitist militarism of a few.
The British state is responsible for the long history of armed conflict in Ireland. As long as the British state remains in Ireland there remains the possibility of armed struggle against it, especially when there is no mass movement to demonstrate an alternative to militarism. We have opposed the republican armed struggle because it was an impediment to working class unity. It was based on wrong politics, it was a wrong strategy and it used wrong tactics. However we refused to blame the republicans for the situation in the six counties. Their campaign was the result of a problem and must not be confused with its cause. In the final analysis, the cause lies with the continuing occupation by the British state.”
related link: http://www.wsm.ie/story/804
Following the winding up of ‘Operation Banner’ in July 2007, there are still around 5,000 garrison troops in North based on pre-1969 level. Their role is mainly for training and operations abroad in countries such as Iraq and Afghanistan and additional and technical support to the police if necessary.
This attack comes against the backdrop of the ‘dissident republican threat’ being raised to severe and the MI5 stating that 15% of their resources are geared towards ‘domestic terrorism’. The security agency is now based in a state of the art headquarters at Place Barracks near Hollywood, Co. Down. There are believed to be around 150 military operatives based here.
Last week, also saw fractures begin to emerge at the Policing Board whenever Hugh Orde Chief Constable announced the 're-deployment' of the shadowy Special Reconnaissance Regiment (SRR) to target ‘dissident republicans’. In 2005 the 14th Intelligence Company and the Force Research Unit amalgamated to form the SRR who have a history of collusion with loyalist paramilitaries. His announcement was criticised by mainly nationalist politicians from Sinn Fein and the SDLP for failing to announce this at the board and therefore undermining the accountability and scrutiny function of the Board.
This bickering only demonstrates that the Policing Board the District Policing Partnerships are merely ‘talking shops’, despite token gestures of opposition from opportunist politicians. The fact is Hugh Orde is well within his remit based on operational and national security to evade scrutiny.
As the former British Spy master Martin Ingram revealed to the Irish News on Saturday 7th March anyone who believed that British Army Special Forces were not active in Northern Ireland was “living in cloud-cuckoo land.” Special forces will always been an integral part of states armed forces and no amount of token reforms designed to camouflage there repressive functions will change this.
The challenge is to build a mass movement which not only removes the blight of statism and militarism from our society whether in the form of the police, army or paramilitaries, but also virus of capitalism and various shades of reactionary nationalism.
At the end of the day capitalism is a social relationship played out in our everyday lives, in our communites and workplaces based on exploitation of our labour and leisure. It cant be bombed out of existance. Only working-class mass action can get rid of the system and put something better in its place- revolutionary anarchism.
The armed and indiscriminate attack on the Massereene British Army barracks in Antrim on Saturday night is futile and counter-productive which only serves to strengthen the status-quo.
These attacks along with the killing of a police officer will only heighten sectarian divisions in times of growing alienation and disillusionment in working-class communities. Especially, in the midst of a global economic recession with an increase in class struggle at home and abroad. Convienently, diverting attention away from the disastrous neo-liberal economic polices pursued by our rulers at Stormont.
The armed and indiscriminate attack on the Massereene British Army barracks in Antrim on Saturday night is futile and counter-productive which only serves to strengthen the status-quo.
These attacks along with the killing of a police officer will only heighten sectarian divisions in times of growing alienation and disillusionment in working-class communities. Especially, in the midst of a global economic recession with an increase in class struggle at home and abroad. Convienently, diverting attention away from the disastrous neo-liberal economic polices pursued by our rulers at Stormont.
The attack has left two off duty soldiers dead, Mark Quinsey, 23, and Patrick Azimkar, 21 as well as four others injured including two pizza delivery workers.
Their use and justification of using two civilian workers as human bait in the assault is disgusting and once again highlights the failures of republican militarism. It should be remembered that in the past this was also the practice of the Provisional IRA and other republican armed groups. For example, the Teebane Massacre in 1992 in which eight protestant construction workers were murdered.
We must also resist attempts by these highly infiltrated authoritarian armed groups to drag working-class communities back to conflict and provoke state repression. Despite carrying out sporadic attacks in recent years they are unable to mount a sustained campaign and have always shown like all paramilitaries they are more of a threat to working-class communities and the building of a viable non-sectarian revolutionary alternative, than the status-quo.
Taken from a section of the WSM position paper on the ‘Partition of Ireland’.
“The tactic of armed struggle, as carried out by the Republicans, was never capable of forcing the withdrawal of the British state because it was incapable of delivering a military victory over the British army. The British ruling class cares little for the deaths of individual soldiers in its army. The 'commercial bombing campaign' caused civilian casualties and heightened sectarian tensions.
The armed struggle was also faulted because it relied on the actions of a few, with the masses left in either a totally inactive role, or one limited to providing intelligence and shelter to the few. It is claimed that it did serve to maintain the gains made in the 60s and early 70s. The mass campaigns (civil disobedience, rent & rates strike, street committees, etc.) would have been a far greater protection for the gains won than the elitist militarism of a few.
The British state is responsible for the long history of armed conflict in Ireland. As long as the British state remains in Ireland there remains the possibility of armed struggle against it, especially when there is no mass movement to demonstrate an alternative to militarism. We have opposed the republican armed struggle because it was an impediment to working class unity. It was based on wrong politics, it was a wrong strategy and it used wrong tactics. However we refused to blame the republicans for the situation in the six counties. Their campaign was the result of a problem and must not be confused with its cause. In the final analysis, the cause lies with the continuing occupation by the British state.”
related link: http://www.wsm.ie/story/804
Following the winding up of ‘Operation Banner’ in July 2007, there are still around 5,000 garrison troops in North based on pre-1969 level. Their role is mainly for training and operations abroad in countries such as Iraq and Afghanistan and additional and technical support to the police if necessary.
This attack comes against the backdrop of the ‘dissident republican threat’ being raised to severe and the MI5 stating that 15% of their resources are geared towards ‘domestic terrorism’. The security agency is now based in a state of the art headquarters at Place Barracks near Hollywood, Co. Down. There are believed to be around 150 military operatives based here.
Last week, also saw fractures begin to emerge at the Policing Board whenever Hugh Orde Chief Constable announced the 're-deployment' of the shadowy Special Reconnaissance Regiment (SRR) to target ‘dissident republicans’. In 2005 the 14th Intelligence Company and the Force Research Unit amalgamated to form the SRR who have a history of collusion with loyalist paramilitaries. His announcement was criticised by mainly nationalist politicians from Sinn Fein and the SDLP for failing to announce this at the board and therefore undermining the accountability and scrutiny function of the Board.
This bickering only demonstrates that the Policing Board the District Policing Partnerships are merely ‘talking shops’, despite token gestures of opposition from opportunist politicians. The fact is Hugh Orde is well within his remit based on operational and national security to evade scrutiny.
As the former British Spy master Martin Ingram revealed to the Irish News on Saturday 7th March anyone who believed that British Army Special Forces were not active in Northern Ireland was “living in cloud-cuckoo land.” Special forces will always been an integral part of states armed forces and no amount of token reforms designed to camouflage there repressive functions will change this.
The challenge is to build a mass movement which not only removes the blight of statism and militarism from our society whether in the form of the police, army or paramilitaries, but also virus of capitalism and various shades of reactionary nationalism.
At the end of the day capitalism is a social relationship played out in our everyday lives, in our communites and workplaces based on exploitation of our labour and leisure. It cant be bombed out of existance. Only working-class mass action can get rid of the system and put something better in its place- revolutionary anarchism.
Krugman Tries to Scare Up More Government Spending with 'Third Depression' Rhetoric
Forget about the riots in Greece over a social welfare system the government couldn't maintain or a $1.4 trillion annual U.S. budget deficit. Krugman claimed that the threat of deflation supersedes both of those results of runaway government spending - that is higher taxes in the long run and a debt to future generations.
In his June 28 column for The New York Times, Krugman wrote: "We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost - to the world economy and, above all, to the millions of lives blighted by the absence of jobs - will nonetheless be immense."
At the G-20 meeting in Toronto last week, European leaders encouraged fiscal discipline from the United States, while President Barack Obama pushed an opposite approach. That disappointed the Times columnist.
"And this third depression will be primarily a failure of policy," Krugman continued. "Around the world - most recently at last weekend's deeply discouraging G-20 meeting - governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending."
Krugman has rarely been concerned by government debt, unless it was for a war or could be used to bash former President George W. Bush. Maintaining his spendthrift perspective, he insisted the concerns raised over government spending have nothing to do with a genuine concern for the financial insolvency of the government or the threat of runaway inflation, but were part of an irrational "orthodoxy."
"So I don't think this is really about Greece, or indeed about any realistic appreciation of the tradeoffs between deficits and jobs," Krugman wrote. "It is, instead, the victory of an orthodoxy that has little to do with rational analysis, whose main tenet is that imposing suffering on other people is how you show leadership in tough times. And who will pay the price for this triumph of orthodoxy? The answer is, tens of millions of unemployed workers, many of whom will go jobless for years, and some of whom will never work again."
For 2010, the federal deficit, as a percentage of U.S. gross domestic product is a whopping 10.64 percent, the highest since 1945 in the midst of World War II - an imbalance that worries many people, just not Krugman.
Over the past couple years, Krugman has been an outspoken advocate of government stimulus spending, criticized a $775 billion stimulus plan for being too small, called for a second stimulus, and even claimed in 2008 that "we probably have $10 trillion of running room" when asked how much the government could spend to turn the economy around.
First official statement from Workers’ Day Ceremony Council
5pm, Saturday May 1st, 2010, Tehran, In front of the Ministry of Labor
Workers, Teachers, Students, Nurses, Working Men!
Men, Women and Freedom-loving Public!
This year, International Labor day on May 1st is the day to combine our democratic and liberal, economic and political demands.
Without collaboration between our economic demands through the power of our class and liberal and democratic demands, our protests are will only serve as tools to empower other wings of capitalism. The concept of economic equality and social-political equality is meaningless without one another. This year, on International Workers’ Day we are protesting against poverty, inequality, low wages, unpaid salaries, lack of job security, elimination of subsidies, political and social repression and the suppression of human dignity.
On Workers’ Day of of 1389/2010 (Saturday, May 1st), the most important desires and demands of the public and especially those of labor workers as listed below, are included in our slogans. We will put all of our efforts to propose these demands not only on the day of this event, but at any time, anywhere.
1 – We demand the immediate and unconditional release of all political prisoners (including worker prisoners and teachers, students, child rights activists, journalists) and all prisoners of conscience and as well as those imprisoned following recent events. Protest and freedom of expression are among the basic and inalienable rights of the people. All judicial sentences for political-social activists and workers are to be cancelled and prosecution against them ceased.
2 – Freedom of expression, association and assembly and the freedom to strike. We will not stop fighting for the freedom to exercise these rights.
3 – The determination of 303 tomans as a minimum wage by the Supreme Council of the labor, when the poverty line as announced by several official institutions is 900 tomans, is a sign of the endless thirst of a capitalist system to exploit more workers and wage earners to maximize profit. We want the minimum wage to be announced by the representatives of independent worker organizations and their independent association based on a dignified and humanitarian life.
4 – We gather against anti-human and barbaric profit based plans and removal of subsidies (to targeted subsidies) that is nothing but complaisance to serve the interests of domestic and global capitalism, and will not stop any strike and protest and are inviting the public to protest against these anti-humanity class actions.
5 – We emphasize the necessity of providing retirees with the basic needs for a dignified life, and want the elimination of all modern slavery and its methods, including the signing of blank contracts and temporary contracts.
6 – We want all members of society to benefit from free education, health and public services.
7 – We are in solidarity with other social movements like women’s and children’s rights movements and the student movement, and consider any offense towards them, an attack towards workers movement and an invasion of human dignity of the majority of our society.
8 – We support migrant workers, including Afghan refugees in Iran, and count ourselves in the international fight in support of the needs and demands of all workers of the world. We also ask that May 1st be recognized as a national holiday without restriction on ceremonies of all kind on this day.
Long live international solidarity of the working class -5/2/89
(1may1389@gmail.com) Cermonial Workers’ Day Council – 89 years
The Ceremonial Worker’s Day Council celebration of 1389/2010 in terms of facilities while inviting other individuals and groups whom had suggested other places due to delay in announcing the program and lack of cohesion for a predetermined program, announces that we workers, independent of any demands and programs affiliated with any political group will come together with our slogans on Saturday, May 1st, and shout our demands.
International Workers’ Day celebration: Tehran, 5 pm, Freedom Street, in font of the Ministry of Labor, followed by a march towards Revolution Square, (crossing Khosh St., Rudaki St., Navab St., Eskandari St., Jamalzadeh St.) and in other cities in front of work places and at times determined by workers themselves.
PM claims Liberal economic strategy rudderless
The push to gain a foothold in the Dickson electorate has started early, with the party leaders of both sides of federal politics spruiking their party’s virtues during recent visits to the Pine Rivers region.
Less than a week after Opposition Leader Tony Abbott visited Liberal Party faithful at Strathpine, Prime Minister Kevin Rudd was in the area on Monday to trump the benefits of Labor.
Flanked by ALP candidate for Dickson Fiona McNamara, Mr Rudd inspected Moreton Bay Regional Council’s plans to revamp the Strathpine CBD,followed
by a visit to the Strathpine GP Super Clinic.While Mr Rudd said he had not yet discussed the Strathpine renewal project with Moreton Bay Mayor Allan Sutherland, he said it would receive his support if it helped improve “the local quality of life”.
But when asked if the Federal Government would lend financial support to the project, Mr Rudd replied: “Let’s have a look at it and see what we can do.”
Mr Rudd challenged Mr Abbott and Federal Member for Dickson Peter Dutton on the future of the government’s ongoing economic stimulus programs, claiming the Liberal Party lacked economic foresight.
He said the Coalition planned to abolish the economic stimulus schemes, including funding for school building projects.
“Mr Abbott and Mr Dutton are intent on abolishing all the economic stimulus programs we have put in place,” he said.
“If he (Mr Dutton) is fair dinkum about this he should list all the school projects in Dickson that he wants to pull the plug on.”
Mr Rudd said the issue of complaints about the schools infrastructure program was largely a “media beat up”, claiming complaints had been received for around only 100 of the 26,000 projects undertaken at schools across the country.
When asked how the Federal Budget would be received by families when it is released next week, Mr Rudd declined to discuss the matter further, except to say: “the Budget will speak for itself”.
Mr Rudd said Labor’s financial commitment to Dickson included raising pensions for around 14,000 pensioners in the region, as well as spending $3.6 million on social housing in the area.
“I fully support affordable housing for all Australians, and it takes proper plans to bring things together,” he said.
“That goes for everywhere from Greater Sydney to regional areas and outer urban communities like this.”
Mr Rudd said the government had also spent $2.5 million on local traffic black spot projects and provided almost $45,000 to rehabilitate biodiversity corridors around the South Pine River.
The Equation Defined
This equation is a work in progress for me. I have tried an econometric model but it crashed my computer. Seriously, we are losing sight of the much bigger picture that is playing out across the country. Our policy makers are distracted by this financial crisis or intentionally ignore the plight of the Middle Class in the U.S.
This equation was derived from reading a debate between Professors Branko Milanovic and Ashok Bardhan: Two Views on the Cause of Global Crisis (Here and Here). These two professors debated the causes of the global financial crisis. Milanovic argued that income inequality was the root cause of the financial crisis while Bardhan argued that globalization and financialization were the causes of the financial crisis. I argue they are both right. But they highlight a much bigger problem that is being overlooked by this financial crisis.
Most arguments about what caused the global financial crisis ignore a more insidious problem that is being overlooked in all the discussion and policy proposals: the destruction of the Middle Class. This global financial crisis has negatively impacted the Middle Class more than any other income group. A report by Bank of American/Merrill Lynch shows that (via LA Times). Tom Petruno summarizes the BofA Merrill report this way:
The report hammers home what you might already suspect: The consumer debt problem in the economy really is a debt problem for the middle class. The need to work off a chunk of that debt will sap middle-class families’ spending power for perhaps years to come.
It estimates that middle-class families’ debt as a percentage of disposable income was 205% in 2007, a function of the level of trading-up during the housing boom and of the cash people pulled from their houses via home-equity loans.
By contrast, lower-income families’ debt-to-disposable-income ratio was a much less onerous 133%. And for the wealthy the percentage was lower still, at 116%.
What’s more, on the asset side, BofA Merrill says the middle-class has suffered more than the wealthy from the housing crash because middle-class families tended to rely more on their homes to build savings through rising equity. Also, the wealthy naturally had a much larger and more diverse portfolio of assets -- stocks, bonds, etc. -- which have mostly bounced back significantly this year.
I strongly encourage people to click the LA Times link above to read Tom Petruno's story because he raises a very important policy question.
The negative impact of this financial crisis on the Middle Class is a symptom of a more larger problem or disease. As Dr. Thomas Palley points out in his report: "American's Exhausted Paradigm", our economic growth model (which he calls a neo-liberal growth model) is terrible flawed. The equation - Income Inequality + Financialization + Globalization = Destruction of Middle Class is meant to symbolize the flawed model. It is this flawed neo-liberal model that needs to be corrected if the Middle Class is to survive.
All this talk and policy proposals of re-regulating the financial sector are just treating the symptoms and not the disease.
INCOME INEQUALITY
The first part of the equation. This is no surprise that there is income inequality in the U.S: a small number of people earn a lot more money than the rest of us. What is surprising is the magnitude of the inequality. This magnitude of inequality is not a good thing.
Branko Milanovic summarized income inequality in the U.S. this way:
In the United States, the top 1 percent of the population doubled its share in national income from around 8 percent in the mid-1970s to almost 16 percent in the early 2000s. That eerily replicated the situation that existed just prior to the crash of 1929, when the top 1 percent share reached its previous high watermark American income inequality over the last hundred years thus basically charted a gigantic U, going down from its 1929 peak all the way to the late 1970s, and then rising again for thirty years.
Then we got this stunning graph from Professor Emmanuel Saez's updated report on income inequality in the U.S.:
Notice how income distribution really starts to change right around the early 1980's. That is the time which Dr. Palley rightfully claims that the neo-liberal economic growth model - our current growth model - began to take hold. And another thing, this graph only shows incomes as low as $109,600 which means that a very large group of Americans making less money have a very small share of total income. That is why this graph is so startling.
Some people may say that income inequality is not a big deal. Oh yeah. Well income inequality creates huge inefficiencies in the economy in terms of allocation of resources. It also creates the potential for an aristocracy (or financial oligarchy) that will do whatever it can to protect its dominate position in society. A better description would be the creation of a two-tiered economy - kind of like many Latin American countries - what our economy is starting to look like.
Professor Emmauel Saez in his report "Striking it Richer" offers this suggestion for the huge income inequality:
The labor market has been creating much more inequality over the last thirty years, with the very top earners capturing a large fraction of macroeconomic productivity gains. A number of factors may help explain this increase in inequality, not only underlying technological changes but also the retreat of institutions developed during the New Deal and World War II - such as progressive tax policies, powerful unions, corporate provision of health and retirement benefits, and changing social norms regarding pay inequality.
Emphasis is mine.
Interesting, that bold phrase is what Dr. Palley is railing about in his report regarding our flawed neo-liberal economic growth model.
FINANCIALIZATION
Financialization means the increasing position/size of financial assets and the financial sector in the economy. This financialization was facilitated by de-regulation of the financial sector. Professor Ashok Bardhan explains financialization:
Over-financialization could be seen in rise in the size of financial assets relative to the real economy as indicated by gross domestic product. Globally, the holdings of financial assets, comprising equities, government and private bonds and bank deposits ballooned way out of proportion to global GDP, the primary underlying measure of real economic activity (see Figure 1). Similarly, the gross market value of outstanding derivative contracts more than doubled between mid-2006 and mid-2008. The share of financial services in GDP has increased dramatically in the US and UK in recent years; in the latter it has doubled in the last decade alone. In many countries, the financial sector grew to a size disproportionate to its primary raison d'etre - to efficiently bring savers and borrowers together, allocate savings to viable investments, and manage diversification of risk. Liquid and deep financial markets are necessary; indeed, they are the lifeblood of economic activity, but to extend the analogy, not if they cause high blood pressure to the economy!
This Financialization was indicative of a much larger problem. What replaced wage growth was asset price inflation and rising indebtedness. For example, as the BoA Merrill report points out above, Middle Class families relied heavily on the equity in their homes - this was an important savings vehicle. Consider this from Dr. Palley's report:
- Since 1980, each U.S. business cycle has seen successively higher debt/income ratios at end of expansions, and the economy has become increasingly dependent on asset price inflation to spur the growth of aggregate demand.
- Over the last 20 years, the economy has tended to expand when house price inflation has exceeded CPI (consumer price index) inflation. This was true for the last three years of the Reagan expansion. It was true for the Clinton expansion. And it was true for the Bush-Cheney expansion. The one period of sustained house price stagnation was 1990–95, which was a period of recession and extended jobless recovery.
Financialization is a symptom to the disease that is destroying the Middle Class.
GLOBALIZATION
Globalization can be defined by the free flow of trade and capital from country to country. The policies implemented since 1980 have precipitated globalization which has forced American workers to compete with much lower-paid foreign workers. But there is more to it. Our current, neo-liberal, incredibly flawed, economic growth model depends on CHEAP IMPORTS. The impact from wage stagnation is covered up by cheap imports - it is a way to pacify Middle Class families. What better way to make us feel like we have a lot of purchasing power by having access to incredibly cheap consumer goods from a big retailer.
Dr. Palley describes it this way:
The reality is that the structure of U.S. international engagement, with its lack of attention to the trade deficit and manufacturing, contributed to a disastrous acceleration of the contradictions inherent in the neo-liberal growth model. That model always had a problem regarding sustainable generation of demand because of its imposition of wage stagnation and high income inequality. Flawed international economic engagement aggravated this problem by creating a triple hemorrhage that drained consumer spending, manufacturing jobs, and investment and industrial capacity. This in turn compelled even deeper reliance on the unsustainable stopgaps of borrowing and asset price inflation to compensate.
THE EQUATION
Like I said, it is a work in progress but hopeful something that people, especially policy makers, will understand:
Income Inequality + Financialization + Globalization = Destruction of the Middle Class
Together these factors have contributed to the destruction of the Middle Class. Some economists, like Dr. Palley, argue that our current, neo-liberal, economic growth model is not sustainable. I would argue that it is not so much that this economic model is not sustainable, because I am sure that the financial oligarchy and corporate aristocracy would keep it going, but it will destroy the most important aspect to any stable economy - the Middle Class.
The Tax and Spend Party
Coming to power amid a fanfare of public support, the Labour government was gifted a growing economy with falling unemployment, a budget surplus and low inflation. No party had ever come to power in such good economic times, and they had only done so by accepting the Conservative economic plans and their neo-liberal economic theories. For a few years, all seemed to go well, prudence was the keyword, used as often as possible and shown wherever possible. However, as is now clear, Labour soon returned to a “spend” government, and soon will have the “tax” prefix.
To see how much has changed, the first few years must be noted. During this time the party spent less than even the Conservatives planned to, gave independence to the Bank of England, enjoyed a budget surplus using it to repay national debt, and even cut income tax by 1%. It would be hard to have been further from “tax and spend” if you tried. But the true test of a government is not during inherited prosperous times, but as the first economic wobbles shook at the turn of the Millennium, a change in gear occurred. Here comes the “spend”.
At the start of the 21st Century, the pound rode high in the currency markets, a stable and trusted currency amid a sea of untried and untested new Euros. Exports slumped, growth stalled, and unemployment started to climb. The Bank of England predicted a housing crash, whilst recession was prophesised by all. With the election just a year away, panic set in. Weathering the storm was not an option for new Labour. Suddenly, but quietly, it borrowed a lead from old Labour, create artificial employment. The first argument that Labour has reverted to its old big spending ways is through government jobs. Previously, the number of civil service posts had dropped 816,000 from 1992 to 1998 and continued to fall, including before that period. However, since 1998 the figure has rose every year. Today 20.4%, or over 1 in 5 people, are government employees. The figure today is 680,000 higher than in 1998. Few of these jobs are beneficial, for instance the number of pen-pushers in the English schools has risen by 47% to 59,000 whilst the number of teachers increased by just 8.6%, the number of doctors increased by 30% whilst NHS managers have increased by 66%, police officers up by 11.4% but admin staff up by 34%. The vast unproductive bureaucracy grows further through quango agencies and local government agencies, and the many contractors employed for unnecessary jobs.
Labour has moved from publicly creating artificial employment through inefficient nationalised industry to creating artificial employment through a vast, ever increasing and all interfering bureaucracy. The words of government do not match the actions. As Gordon Brown promises 80,000 job cuts, thousands more are employed. Even these cuts are not cuts, most are relocations to the North of England and Scotland, the others job redefinitions.
Meanwhile, whilst employing a city the size of Canterbury to manage hospitals, the government has enjoyed other spending sprees as well. Is children’s day care a government job? Apparently, and that’s £1.5 billion a year from the Treasury just for Sure Start. Money has been ploughed into departments, but has much improved? The major works are funded through the PFI (Private Finance Initiative) and are effectively paid for on credit, so this isn’t the big drain. Billions have however, and are still being, wasted through bureaucracy, poor management, and on services which should not be part of the government mandate.
Public sector net borrowing is predicted to be £32bln in 2005/2006, and these figures rely heavily on high growth of around 4%, which hasn’t been forthcoming, and have been understated for each and every one of Gordon Brown’s annual budgets. Current projections are for 1.5% growth instead. Net debt as percentage of GDP has increased from 30% in 2002 to 35% today, with the trend very visibly upwards. Compare this to Australia, where national debt will be eliminated by 2006, or the three years before, when net debt dropped by 9% of GDP. The Golden Rule, of maintaining budgetary balance over the economic cycle except for investment, has been missed and fudged, first with reclassifying certain running costs as investment, then later extending the cycle. Even the golden rule is more bronze, since debt for investment is still debt with interest, and still costs. A true golden rule, and a prudent government, would maintain budget balance including all costs over the cycle, or even on each budget, preferably with a surplus to repay debt. With figures like these, Labour has clearly become a big spending government, mostly on bureaucracy.
And to a very great extent Labour has already returned to its “tax” ethos. By freezing the income tax bands, more and more people find themselves in higher bands due to increased earnings and inflation. This “fiscal drag” has raised many billions for the Treasury. In addition, rising council tax bills, due to decreased government grants and increased demands of local councils, has seen council tax bills double since its introduction. Stamp duty raised £5bln in 2005, again due to fiscal drag from house price rises, it having raised just £675m in 1997. Even the very much publicised rise in rates cut just £250m from the revenue and effected a tiny percentage of homes. Tax has in general risen sharply through fiscal drag, in 1997 the average standard rate payer earning £25,000 a year paid 36% of earnings in taxation, today they pay 41%. Higher rate payers earning £40,000 contributed 36% in 1997 and over 50% today. Since 1997 about 1.6 million have become higher rate tax payers due to fiscal drag. This year 200,000 people will be fiscally dragged into the higher rate, with 100,000 entering the lower rate by the same process. The higher rate band of £37,295 is only 60% above the average. The income tax revenue has increased from £69bln in 1997 to £123bln in 2005, inheritance tax from £1.6bln to £2.9bln and capital gains tax from £1.1bln to £2.3bln today. In total, the increased tax by Labour since 1997 is £1.5bln every week. All of this by stealth.
With this tax ethos and low interest rates, consumer debt has soared. Now with debts of over £1 trillion, the public are facing a bleak future. As consumer spending, which has propped the economy up since 2000 along with the government spending, hits the buffers, growth has halved and the deficit is estimated at £36bln. To meet his own damaged but publicly known golden rule, Gordon Brown must raise £11bln a year. Already clearly a tax and spend government, fiscal drag may have reached its end, and income tax will have to be raised by 3% to cover this shortfall, as spending cuts are unlikely.
Since 1997 a total of 66 stealth taxes have been introduced, and in 2005 the government covered up the Treasury’s report on flat rate income tax. The report, supporting the simple and effective replacement of income tax, had key areas blocked out as part of its release under the Freedom of Information Act. A separate report by the Adam Smith Institute backs a 22% flat rate tax and £12,000 personal allowance/exemption. Under this system the bottom 40% (around 10 million people) would save between 8.9% and 12.1% of their salaries, paying no income tax at all, those earning £11,500 being the best off group (12.1% saving). Only a very few huge earners would save more. The refusal by the government to look into the tax, which has transformed many countries and works well, is another sign of their high tax mentality. The cost of this tax change would be £12bln, less than half the enlarged civil service cost. A major boost to the economy, it is believed to be revenue neutral within 3 years, would end much of the benefits trap, stop the overtime not-worth-it trap, encourage work and help low and middle income families.
But Labour is fundamentally opposed to reforming tax in any way seen as non-progressive, even though the large allowance makes it certainly not regressive, and the spending spree continues. It could be said the first few years were just to build an image, although bureaucrat creation soon soared in 1998, but the first years seemed so prudent. But already a tax and spend party once more, soon taxes will be raised, and the image shattered.
Explaining the Postwar Economic Order in One Chart
What follows may be an oversimplification of the post-WWII order, but you may find that there is no small amount of truth to it. In a few hours, our American friends will inaugurate a new president. Although I am 100% percent certain that he and his advisors are not IPE Zone readers, the economic challenges they face--and indeed, the rest of us as well--can be informed by the following chart. It depicts historical US personal savings rates and is taken from ch. 9 of the EBRI Databook on Employee Benefits:
The important thing for me is, regardless of how you interpret this chart--the US as a spendthrift nation (negative view) or as a facilitator of a liberal economic order (positive view)--the implications you will arrive at remain the same. In both the data series used, the more familiar BEA NIPA or the Fed's Flow of Funds, there is a marked downward trend in personal savings over the last couple of years. There have of course been signs of a rebound in the savings rate in recent months as the credit crisis roils US consumer spending either through a lack of available credit (banks become warier of lending on easy terms), consumers simply hitting the wall (moving perilously close to bankruptcy or foreclosure), or wealth effects (folks tighten their purses as dwindling housing, stock, and retirement holdings make them feel less well off). Let's begin:
(1) The negative view is what you get a regular dose of in this blog and I needn't belabor it much. Here, the US is a once-great nation whose exporting industries have entered terminal decline. That is, its production of tradable goods has given way to a consumption-led Anglo-Saxon model that exacerbates its lack of savings, making the US reliant on the the kindness of strangers to fund its profligacy. Like Rocky-era Survivor, it's changed its passion for glory and lost its grip on the dreams of the past. The US has literally gone soft in the middle, further straining its also parlous public finances.
(2) OTOH, the positive view portrays the US in more flattering terms. Among the proponents of this view are authors championing the existence of a "Bretton Woods II" system. Here, postwar America acted generously by allowing war-torn Europe and Japan to export to the only consumer market left largely intact by WWII. Even the breakdown of the original Bretton Woods II system did not stop the US from acting as the world's consumer of last resort. In effect, newer export-led economies used fixed exchange rates and reserve accumulation to preserve America's status as such. Hence, the so-called Asian tigers (South Korea, Taiwan, Singapore, and Hong Kong) were able to follow Japan's lead and, after a lag, the PRC.
It is at the present time when (1) and (2) converge. With the benefit of hindsight, the US-as-intermediary story in (2) which portrayed the global economic order as "stable and sustainable" has been largely discredited by the credit crunch. The reason is simple: US consumers have simply run out of spending money as personal savings rates approached zero. Of course, there is a grain of truth to (2) in that US consumption has played an important role in the development of the aforementioned export-led economies. Even now, US consumption alone accounts for about 18% of world GDP by my reckoning, although others say it is more like 20%. You may think this isn't much in the global scheme of things, but consider the US as a "swing consumer" that can influence prices for America's all-important consumer credit via its monetary, exchange rate, and trade policies. As consumer of last resort, this role is key.
The chart speaks for itself. Bretton Woods II or whatever you call it has run aground simply due to American consumers hitting rock bottom. Export-led economies can no longer rely on the American consumer to pick up demand slack and must somehow stimulate domestic demand. Conversely, the US will need to address long-neglected industries in the tradable sector to escape the gravitational pull of its consumption-led growth model. Doing so is not an easy task for either as evidenced by US efforts to reflate consumption via virtually zero policy rates and exporters like China ladling on export incentives.
We are entering an interesting new phase for the postwar international economic order. It is often said that America's Anglo-Saxon model based on consumption and financial intermediation is endangered. Less often said is the obverse: Asia's export-led development model cannot which is in no small predicated on US consumption is similarly endangered. How we can move forward is the topic for another post, but the chart above should be plenty to digest for now.
(1) The negative view is what you get a regular dose of in this blog and I needn't belabor it much. Here, the US is a once-great nation whose exporting industries have entered terminal decline. That is, its production of tradable goods has given way to a consumption-led Anglo-Saxon model that exacerbates its lack of savings, making the US reliant on the the kindness of strangers to fund its profligacy. Like Rocky-era Survivor, it's changed its passion for glory and lost its grip on the dreams of the past. The US has literally gone soft in the middle, further straining its also parlous public finances.
(2) OTOH, the positive view portrays the US in more flattering terms. Among the proponents of this view are authors championing the existence of a "Bretton Woods II" system. Here, postwar America acted generously by allowing war-torn Europe and Japan to export to the only consumer market left largely intact by WWII. Even the breakdown of the original Bretton Woods II system did not stop the US from acting as the world's consumer of last resort. In effect, newer export-led economies used fixed exchange rates and reserve accumulation to preserve America's status as such. Hence, the so-called Asian tigers (South Korea, Taiwan, Singapore, and Hong Kong) were able to follow Japan's lead and, after a lag, the PRC.
It is at the present time when (1) and (2) converge. With the benefit of hindsight, the US-as-intermediary story in (2) which portrayed the global economic order as "stable and sustainable" has been largely discredited by the credit crunch. The reason is simple: US consumers have simply run out of spending money as personal savings rates approached zero. Of course, there is a grain of truth to (2) in that US consumption has played an important role in the development of the aforementioned export-led economies. Even now, US consumption alone accounts for about 18% of world GDP by my reckoning, although others say it is more like 20%. You may think this isn't much in the global scheme of things, but consider the US as a "swing consumer" that can influence prices for America's all-important consumer credit via its monetary, exchange rate, and trade policies. As consumer of last resort, this role is key.
The chart speaks for itself. Bretton Woods II or whatever you call it has run aground simply due to American consumers hitting rock bottom. Export-led economies can no longer rely on the American consumer to pick up demand slack and must somehow stimulate domestic demand. Conversely, the US will need to address long-neglected industries in the tradable sector to escape the gravitational pull of its consumption-led growth model. Doing so is not an easy task for either as evidenced by US efforts to reflate consumption via virtually zero policy rates and exporters like China ladling on export incentives.
We are entering an interesting new phase for the postwar international economic order. It is often said that America's Anglo-Saxon model based on consumption and financial intermediation is endangered. Less often said is the obverse: Asia's export-led development model cannot which is in no small predicated on US consumption is similarly endangered. How we can move forward is the topic for another post, but the chart above should be plenty to digest for now.
Centrist economic ideology
It’s becoming increasingly problematic to try to squeeze New Zealand’s political parties into an ideological left-right analytical framework, and this is especially the case with NZ First. Right from the launch of NZ First, most political commentators and voters mistook the party’s disgruntlement with the new political order as indicating the essentially leftwing nature of NZ First. Its basic economic framework – greater social spending, government intervention and economic nationalism – appeared to align the party with Labour and the Alliance, while its Maori candidates tended to be very ‘pro-treaty’, which is a political position that is usually thought of as being leftwing. The leftwing nature of many of NZ First’s early ‘leftwing’ economic positions are very debatable, but essentially the new party was economically centrist
Ideological ambiguity
In many ways this ideological ambiguity is not unusual for a party of the “centre”, as the position usually entails not actually being centrist on all issues, but instead left on some issues and right-wing on others. To do otherwise – and keep a consistent middle line – is to risk being squeezed by the parties on either side that can collect large sections of the centre vote while maintaining voters to the left and right of centre respectively. Marcus Ganley (1997) also argued that a centre party must deviate from the mushy-middle of the political spectrum so that voters have a reason to support it: 'voters are attracted to parties which exhibit a more extreme positioning than the voters do, while being on the same side of an issue or ideological dichotomy as the voters' (Ganley, 1997).
Boston et al. also commented on the ideological ambiguity of the party:
NZ First is by no means a typical centre party in the European tradition. Such parties tend to have their origins either in nineteenth century liberalism or in the representation of agrarian interests. NZ First fits neither category. Founded by Winston Peters, the party quickly developed an image as being strongly nationalistic, anti-establishment, populist, and mildly protectionist. Its most publicised policy commitments emphasised the need to stop the sale of state assets, limit the sale of NZ land and resources to overseas investors, restrict immigration, protect local industry, and hold politicians more accountable. Hence, although it constantly referred to itself as a party of the centre, in many respects its policy positions on key economic and social issues gave it the appearance of a party off-centre to the left. The party's public image was also greatly influenced by the fact that from the 1993 general election its two MPs – Peters and Tau Henare – were both Maori (Boston and McLeay, 1998: p.217).
Peters claimed right from the beginning that NZ First would be a centre party and this was to be expected, as Peters had clearly been on the left of the centre-right National Party – that is, ‘left’ in the sense that he had been critical of the neo-liberal economic policies of his own government.
An economic raison d’être
For a party to establish itself and continue to exist, it must base its ideology and programme on some sort of substantial political issue or social cleavage. The raison d’être chosen by NZ First was basically an economic one. It decided to define itself by its opposition to the economic reforms carried out since 1984. It is not surprising, therefore, that most political commentators saw NZ First as standing to the left of the Labour Party, but to the right of the Alliance – and therefore labeled the party as “centre-left” (see Hames, 1995). However, Winston Peters was quite correct in describing NZ First as a centre party. It seems that most political commentators were prone to regard the party’s position as being “left” due to NZ First’s emphasis on economic politics, which have often been misread as being left-wing – perhaps due to the fact that they are anti-orthodox. As Colin James has put it:
This central positioning was obscured by Peters' personal opposition to Rogernomics from its very beginnings, a stance which glazed him with an apparent "left" orientation. This appeared to be underpinned by his relentless opposition to foreign ownership of NZ companies (James, Policies, Issues and Manifestos, 1998: p.77).
Martin Hames outlines the 1993 election manifesto:
The section giving NZ First's economic policies is brief and vaguely worded, but broadly represents a return to the "Fortress NZ" policies prevailing until 1984. Foreign investment would be restricted and in its place an attempt would be made to provide a pool of domestic savings for investment purposes. There would be tax breaks for business investment. Import protection would be increased. A new banking institution would be set up to improve access to capital for small businesses (Hames, 1995: pp.201-202).
Therefore, in 1993 NZ First’s economic ideology was not dissimilar from the Alliance’s – basically advocating a return to the more controlled and insulated economy of pre-Douglas years. Its 1993 Election Policy contained many overtly leftwing policies (which were, however, later axed). For example, their 1993 tertiary education policy promised to abolish tertiary fees and cancel all student loan obligations to students.
A left-glaze of economic nationalism
The left-glaze of anti-internationalism and opposition to deregulation obscured the real political nature of NZ First’s more reactionary and conservative ideology. Instead of being seen as leftwing, James suggests that NZ First can be seen,
The left-glaze of anti-internationalism and opposition to deregulation obscured the real political nature of NZ First’s more reactionary and conservative ideology. Instead of being seen as leftwing, James suggests that NZ First can be seen,
as a poujadist or "small-people's right wing", the sort of illiberalism mixed with fear that fuels xenophobia, racism and opposition to migration and minorities, which is as wont to turn on "bludgers off welfare" as on big foreign companies and which seeks solace in strong, protective government (James, 1998: p.77).
Also central to the political-economic identity of NZ First was a ‘suspicion of big business’ (Laugesen, MMP Elections, 1996: p.44). This feature, too, was reminiscent of “small-people’s right wing parties” in western Europe. Such a position of opposition to big business allows a party to achieve a radical or socialist-like gleam, thereby giving the party the potential to attract the support of the working class – without having to oppose capitalist relations, or make very specific promises to the working class electorate. The anti-big business position also appeals to many voters of a petty-bourgeois class position, who might be being squeezed by the business operations of much larger companies.
NZ First also expounded corporatist political sentiments in its economic policy. Again, although there is nothing particularly left-wing about corporatism, its association with “collectivism” and “cooperation” and its disassociation with new right political process of the 1980s and 1990s added to the leftwing image.
In fact, on the whole, the economic nationalism espoused by NZ First (or indeed by the Alliance) was not essentially left-wing in ideology at all. The internationalist element of the Labour Party’s open-boarders economic approach was arguably more progressive in terms of ideology. After all, the main current of traditional leftism has always been essentially anti-nationalist – in terms of being in favour of globalisation and breaking down the boarders between nation states. Likewise, the Keynesianist economics of NZ First was never necessarily left wing.
There were some contradictions and problems with NZ First’s economic policy mix. The first was that NZ First also deviated from Keynesianist-type economics, in its advocacy of the impossible mix of both higher spending and lower taxes. Again, this approach conformed to the party’s general ideological approach of combining left-wing positions (ie higher spending) with right-wing positions (ie lower taxes).
Another contradiction was brought about by the fact that NZ First was attempting to appeal, not only to blue collar workers, but also to small business owners. As a result the NZ First programme promised new financial institutions and support for business from government. However, the contradiction of NZ First’s ostensive support for both workers and business owners came to a head in the party’s labour relations policy, due to the fact that many of Peters' supporters in small businesses had found that the ECA was beneficial in lowering their labour costs. Peters’ orientation to the ECA therefore appeared to transform from initial revulsion, towards a new position on labour relations that proposed new legislation which actually differed very little from the existing ECA.
In social policy, too, the effect of the orientation to middle-class support was also obvious. For although NZ First stood somewhere between the Alliance and the Government – in that it was more willing to spend money than the government – it also had a strong political ethos against a hugely expanded state sector (Hames, 1995: pp.193-194). Furthermore, although NZ First were relatively left-wing in social policy, the higher social spending always went hand in hand with deeper social welfare messages which entailed conservative notions about “bludgers on welfare.”
In terms of economics NZ First could be seen to be taking up the old Social Credit position in the party system. Like Social Credit, NZ First was anti-big business, anti-big unions, and anti-big government, economically moderate and nationalist. Just as Social Credit had been ‘for taxpayer-funded social services and a partially regulated economy but not socialist’, NZ First now pushed that same message (James, 17 Nov 1995: p.17). This Social Credit connection was made even more thorough by the fact that so many ex-Social Credit members were involved in NZ First. For example, one of Peters’ key advisers and speechwriter, Terry Heffernan, was an ex-Social Credit party activist. Other ex-Social Creditors included Chris Leitch and Garry Knapp.
Interestingly, Michael Laws purports to have been warned by NZ First lawyer Brian Henry about ‘a Democrat conspiracy involving Heffernan, former leader Garry Knapp and former Alliance candidate Chris Leitch, who intended to promote Knapp and his supporters to key leadership roles within the party' (Laws, 1998: p.398). While this appears to relate to the paranoia of one individual, it does also illustrate the extent of the involvement of ex-Democrat Party members in NZ First.
So while in general it is becoming increasingly problematic to try to squeeze New Zealand’s political parties into an ideological left-right-centre analytical framework, this is especially the case with NZ First. As James puts it, ‘The point about a large proportion of Peters' support is its disgruntlement, not its ideology' (James, The Future, 1994: p.166). Therefore NZ First is, in a sense, less about ideological positioning than about giving expression to the disgruntlement and grievances of a section of society that has been ill-affected by government reforms in recent years.
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