In the days after his late 2006 accession to the National Party leadership John Key apparently told a radio interviewer that he did not recall his attitude to the Springbok tour. At the time, 1981, Key would have been around 21. He is very much of the Springbok Tour Generation. Is it likely that a bright young New Zealander had no views about a controversy that merged several of our national obsessions?

Key should not be blamed for his faulty memory, even if it is selectively vague. His is a political memory, which mandates a certain attention deficit disorder. An ambitious Nationalist knows that there is no right response to such matters. Were he to have backed the tour, Key might have come across as uncool, a provincial - or even a Muldoonist. But had he been a protester, he might have been deemed out of touch with the National heartland. He might have risked being carried in an ebb tide from the Don Brash mainstream. Key realised that any answer would act as a diversion. He was going to stay “on message”, just as that week he had stayed “on message” by shrugging off Orewa-type topics like race relations.

Whatever message Key was to express, his efforts will be economic. Key is a pragmatist. He sees himself as a realist. He is North Shore Man. He’s the closest we’ve had to a Yuppie leader. He’s there to reform the economy. The details that bedevilled Brash, Key will have vowed to himself, will not get in his way. He’ll forget about how many weeks holiday the minimum wage toiler deserves. He won’t fret about nukes. He’ll concede that climate change is happening - even if it wasn’t happening last month. Give them the answer they want and they might go away.

The conventional media response to these responses, the “mainstream” take, is that Key is “positioning” himself as centrist because that’s where the votes lie. That is of course true, but only in the trivial sense that all the parties in Parliament, and especially the two main ones, always do this. There are no grounds for supposing that Key’s necessary gestures are a guide to what a Key government would do. There is nothing in either his background or his foreground to suggest that Key is anything but an economic “dry”, as dry as Brash or Roger Douglas. Like them, he doesn’t define himself as a career politician, in it for the lifestyle. He’s in politics to dry us, and, like the other true-believer neoliberals, he doesn’t need the distraction of other people’s agendas.

For a politician what Key was doing was routine. His task was to “neutralise” potentially damaging issues. He had to “inoculate” National from the diseased citizenry. In his penetrating analysis, Nicky Hager suggests that National’s strategic need is to convince voters that a future government would not be a “back to the 1980s” outfit. Brash would not have been able to do this, and not just because he is a half-generation older than Key. Brash was very much an 80s’ person, but then so is Key. What could be more 80s than a hot-shot career as a London currency trader? Brash, though, was in Wellington, at the Reserve Bank itself.

Another very 80s man is a former adviser to Ronald Reagan, the Washington policy insider Richard Allen. Allen is a part-time Kiwi these days and confidant of National strategists. National is much inspired by the heady successes of the 80s, when The Gipper (Reagan’s nickname. Ed.), the original Teflon Man, reigned sunnily while, across the Atlantic, Margaret Thatcher was Not For Turning. Those were the days. From its inception the National Party has been eager to accept American, or, more particularly, Republican guidance, so Hager’s revelations, though vital, are unsurprising. For a very detailed article on Richard Allen, see Peace Researcher 24, December 2001, “Covert Warrior Comes Out Of The Cold”, by Dennis Small, which can be read online at http://www.converge.org.nz/abc/covert.htm. Ed.

The Reaganite shape of National was seen on the TV news, where Brash used to appear before a backdrop reading “Family, Security, Work, Community, Freedom”. This had been adapted from an American original: “Family, Neighbourhood, Work, Peace, Freedom”. It might seem ironic that National’s formulation reverted to a, once specifically American, McCarthyite repulsion to “Peace”. When in 1951 the first National government wanted to break the trade union movement by locking out the watersiders, they brought John Foster Dulles, Eisenhower’s Secretary of State, literally into the Cabinet Room to give them their orders. That was when Reds were under our beds and “peace” was a commie plot. It’s still a concept that National needs to neutralise”, to “inoculate” itself from.

Spin Doctors, Pointyheads & Mike Moore People

National spin doctors like to pretend that the power of transnational public relations (PR) and advertising firms, the heft of US elites and the united and dedicated efforts of the big NZ corporates is as nothing when it comes across the combined opposition of local dissidents. They want us to despair that our elites tremble before the wrath of the fearless journalists at Fairfax and News Corporation and the outspoken nationalists at CanWest’s TV3. They bang on about the “pundits”, the chattering class, scribes and pointyheads – “pointyheads” is another 50s reversion - and how they dam up the “mainstream”.

Now where have we heard that word before? The pundits and the chattering classes didn’t use it. Oh, yes, Don Brash did. He defined himself as being “mainstream”. For those in a democracy who vote for one of the other parties on offer it might well seem odd that someone seeking to be Prime Minister would have done so by announcing that an opinion that was not his was illegitimate, an eddy on the margins of history. Again, it’s all so oppressive, so conformist, so 50s. Who first waded into the “mainstream”, inducing us to follow? It wasn’t the pointyheaded NZ press? Oh, yes, it was The Gipper.

Hager found that within National circles a “political hygiene test” is conducted so that policies they are planning which the public might not like are disguised. In the words of a strategist, “every time we talk tough on issues we also run hard with a compassionate line”. Now that talk of consultation is fashionable, the spin doctors prescribe verbal placebos. The front men are to look sincere and assure voters that they “hear your concerns”. They express “disappointment”. They’re “listening” and “engaged”. In Hager’s precise summation, “the positive elements provide political cover; the negative bits are what most listeners remember”.

National’s hope is to convert “socially-conservative working-class people” to its cause. With support from this constituency National could secure majorities. Apparently - on the evidence of the spinning e-mails sent to the leader – “Mike Moore* people is the best shorthand” for this target group. This identification surely is derived from the “Reagan Democrats” who provided the Republicans with the majorities that they are only now losing. * It is an indictment of Labour that National should identify people who supported Labour’s former leader – and Prime Minister for the blink of an eye, in 1990 – as a natural constituency to be won over. Moore, of course, went on to greater things, as the Director-General of the World Trade Organisation. Ed.

National has close links to the Australian far Right. In November 2003, Hager relates, a Wellington PR adviser, coached Brash for his Orewa speech: “Dr Brash’s tactics must be to win as much of the Winston Peters vote as he can without doing a Bill English and losing National’s core vote in the process. This is where some ‘dog whistling’ could come in handy”. Hager comments: “Dog whistle politics is the term associated with Australian Prime Minister John Howard and his appeal to so-called blue collar voters [the ‘Mike Moore’ crowd] on anti-immigration and race issues. It refers to political actions and rhetoric that, while superficially appearing reasonable, contain language, claims and racial stereotypes designed to excite the prejudices of certain target audiences, in the same way that dogs will react to a high-pitched whistle that humans cannot hear”.

The Aussie PR outfit which advised Howard was called in. It seems that they’d also been hired by the UK Conservatives to whistle up the doggy issues there. These are, in order of importance: immigration, abortion, taxes, hospital waiting lists and gypsies. One of the more disturbing of Hager’s revelations is not in itself the existence of such cynics. We assumed such types are active. It’s the apparently direct influence they exerted over the doctored Doctor. It’s worth looking at a subsequent Brash speech:

“There is resentment that too many immigrants, and especially those who arrive as refugees, go straight onto a benefit, and live for years at the expense of the hard-working NZ taxpayer... Nor, frankly, do we want immigrants who come with no intention of becoming New Zealanders or adopting NZ values. We do not want those who insist on their right to spit in the street; or demand the right to practice female circumcision; or believe that NZ would be a better place if gays and adulterers were stoned”.

In Australia or Britain this sort of rhetoric might have legs from time to time but there are relatively so few members of the target groups in NZ and so few opportunities to stir trouble that Brash’s remarks read as over-the-top. It’s not likely that either Brash or Key would want to resort to demagoguery. They don’t seem the type. Nor do they really think this way. They are, neither of them, Mike Moore People. Their cocktail party circles would hold such a radio-talk-back view of the world to be uncool; they would know that immigration has been an economic boost to the country.

It’s PC To Bash PC

Hager has an excellent passage on political correctness (PC), which has surely done its dash. But, however tired the polemics around PC, it’s a phrase central to the ministrations of National’s spin doctors, who like nothing more than PC-bashing. As Hager points out, “[t]he political objective was to delegitimise Leftwing social justice ideas and reverse the polarity of blue collar politics from Left to Right”. The road to a “Mike Moore” vote is signposted with ridicule of PC, which is identified in the public mind with Leftist ideology. With a large part of the world to provide them, it’s not hard to find examples of the silliness that the spin doctors seek.

PC’s been around in different guises for some time. Muldoonist (“Mike Moore”) NZ resolved doubt or painted over cracks by opposing whatever seemed “trendy Lefty”. Then we were invited to scorn the “chardonnay socialists”, as though we should be infuriated by the very idea that within one person might be tendencies to both advocate social justice and enjoy a glass of wine. Hager points to a further, crucial, reason why there has been so much fuss about PC. He suggests that accusations of political correctness act as a diversion from real issues and as a screen from examining real privilege. It is not trendy Lefties who set the agenda; it’s the corporate elite who own the media and advertising firms. It’s in their interests that people worry themselves about PC trivia as that means they avoid scrutiny. As long as enough of the public blame trendy Lefties for what ails them they won’t notice that the trends are in fact set by the corporates and their mates.

For National’s spinners, PC serves yet another purpose. It allows the party “to avoid confronting a deep and fundamental rift within its own ranks”. Hager reminds us that National has always played host to contending interests, united by a common need to retard progressive ideals. In its recent form, says Hager, the broad division has been expressed by a Winston Peters-Philip Burdon wing concerned about social stability, and the Ruth Richardson market purists. The former are traditional conservatives; the latter are Tories in a hurry, who ACT up.

This history is reason enough for John Key to forget where he was when the Springboks toured. It’s an unresolved history, for which anti-PC rhetoric serves to hide the division in a common derision of egalitarian ideas. Hager’s analysis here is sharp. It’s not easy to speak for both strands of Nationalist opinion. Consider Mike Moore, the (Labour) man himself. Moore has boasted that when, in the orbit of the World Trade Organisation, he returned to Christchurch, where once he had been an MP, he was confronted by demonstrators, yokels so out of it that they “tucked their shirts into their underpants”. It seems that the latter-day Mike, a post-modern neoliberal, had been confronted by unreconstructed “Mike Moore People”. For more Moore on those underpants, read Jeremy’s review of his book “A World Without Walls”, in Watchdog 103, August 2003, which can be read online at http://www.converge.org.nz/watchdog/03/09.htm . Ed.

National’s spin doctors are adept at “framing”, which Hager explains as the art of “setting a notion not about the issues people think about but giving them a WAY to think about the issues in question, that is giving them a model or a structure or equation”. Hager shows that the PR hacks define issues and create the language with which they come to be discussed. Those trendy Lefties and their PC children have no such reach. They merely spin versions of what results.

During Brash’s tenure the framing was to do with talk of tax cuts, and then, having placed cuts on the national agenda, with equating tax cuts with incentives. The implication has been that cuts were self-evidently good. It’s worked. The other aspect was the relentless nasty insinuations about irrelevant and improbable aspects of Helen Clark’s habits, framed to marry personal abuse with a bit of dog whistling. Was the PM too busy catering to “other people” and not “working families”? Following their work in the UK, the Aussie PR lads deemed that our 2005 election issues were, in order, immigration, the Treaty, health, education, taxation and defence.

From Brash’s Orewa Gambit

Notoriously, the Brash version was the Orewa gambit, a pitch to the perceived middle by whistling the dogs to hunt local aliens. One PR hack wanted an “inoculating” Brash appeal to Maori. Don would host a meaningless hui on the steps of Parliament, an event that would be replete with photo ops and self-satisfaction and a waste of time and money. This gimmick was inspired by an invitation for a heart-to-heart from George Bush to a group of Muslim clerics. Muslims in Washington, Maori in Wellington: what’s the difference?

In a study of the use and misuse of language it is reassuring that Hager writes with a clarity that is rare in NZ political journalism. His definition of neoliberalism is spot on. It is, he writes, “the process whereby power, resources and responsibility for the provision of services are transferred from the public to the private sector; from the state to markets”. Hager goes on discuss a British philosopher, John Gray, a significant source in that in the heady 80s. Gray was regarded as one of the most coherent advocates of neoliberalism. He now disavows it:

“[F]ree markets are creatures of State power, and persist only so long as the State is able to prevent human needs for security and the control of economic risk from finding political expression... The free market is most recklessly short termist in its demolition of the virtues it once relied upon. These virtues - saving, civic pride, respectability, ‘family values’ - are now profitless museum pieces”. In other words, neoliberalism erodes conservatism. Hager confirms this, adding a further complication by pointing out that “the conservative emphasis on social cohesion and stability has more in common with the Left’s emphasis on social justice than with the free market destructiveness of all these values”.

Hager reveals that at least one of the 80s’ Rogernomes was frustrated by the namby-pamby spinning. Roderick Deane remembered that National was supposed to be “halting and reversing ... the pervasive regulation” of the economy. Deane was singing his old, familiar tune. In this context the politics to do with the Resource Management Act (RMA), where developers and the rest of society can collide, has been a favoured target. The RMA can provide the opportunity for propaganda that combines the economic-freedom and the anti-PC, anti-nanny-state modes of Nationalist spin.

Hager prefers facts. These show that by any standards NZ is lightly regulated. Building consents take less time to get than in most comparable jurisdictions. Deane would know this, but Deane also knows that there are such things as inconvenient truths. “In this context”, Deane elaborated, “I use a broad-based definition of regulation to effectively encompass government ownership of commercial assets”. Deane, an architect of Rogernomics, has always been a most overt neoliberal. Unlike the PR types, he is prepared to say that he sees politics as a facade behind which you do whatever you can and say whatever is expedient to help your side win. Abuse language. It’s all win-lose, zero-sum stuff.

Interestingly, Deane wrote this in a letter in March, 2005, to John Key, with a copy to Brash. From clues like this we can make the likely inference that Key had been the preferred option of the neoliberal fundamentalists for some time before Brash’s resignation. Brash, who might have found Deane the most sympathetic of his legion of courtiers, sniffed that he was not in politics to be “Helen Lite”. Deane and Brash made the same mistake. They did not have an appetite for “swallowing dead rats. Swallowing dead rats is like taking your medicine was in the days when medicine had to taste bad to be effective. It’s the act of pretending to go along with some trendy Lefty, welfarist, civil-servant, solo-mother, Treaty, PC drivel so that you get into power. There you can unleash your own neoliberal agenda. Dead rat swallowing is one of the “inoculations” against telling the truth. For more on Roderick Deane, see Jeremy’s review of Michael and Judith Bassett’s biography of him in Watchdog 113, December 2006, which can be read online at http://www.converge.org.nz/watchdog/13/11.htm. Ed.

Just as Helen Clark used to give the impression of having modelled herself on Tony Blair, so has Key apparently been influenced by the likes of David Cameron, the UK Tory leader, and Stephen Harper, the Tory Canadian PM. They’re all trying to appear moderate and reassuring and, most importantly, non-ideological. In office with a majority some of them might be, but who knows which ones? Early in his Presidency - it seems distant now – Bush’s speech writer had him prattling about something called “compassionate conservatism”.

To Key’s Bryndwr State House Gambit

Hager’s expose might have brought forward the Key takeover by as much as a year. The spinners would have hoped that his present honeymoon could have been delayed. That he is largely absent from Hager’s book is not significant. Key was not the leader. No-one was inviting him to a fundraising lunch and serving him dead rats. The Bryndwr gambit, Key’s “Orewa”, has the potential to exploit all the tricks that Hager has exposed, but Key’s unlikely to go canine. He’ll go for the log cabin to the White House look, an American classic since Abe Lincoln’s days. That would be presidential. Key seems to be looking past the Mike Moore People (whom he might well hope to have snared) to urban liberals. Nats like to throw around concepts like “devolution” and “self-management”, sometimes in order to appeal to notions of individual responsibility, but always in order to erode the ethic of universal public entitlement. We might expect Key to appeal to neoliberals within Maoridom, not least those within the Maori Party, by tossing in some “property rights” and well-phrased suggestions about how to make the Treaty “relevant for the 21 st Century”..

It can be said that Key’s childhood was not one of real deprivation. He grew up in a culture of relative equality in a full-employment economy. His local school, Burnside High, where he gave his speech, was, then and now, respected. There wasn’t much under-class about living in a State house a couple of blocks from a Decile Nine high school. But Key would say that all you can do is play the hand you’ve been dealt. As Brash’s would have been, a Key government would be a contest between what he’ll find easy to manage and what he’ll be able to get away with. National’s prospects depend in large part on what policy details emerge before the next election. The risk for National is that Key won’t be able to be vague enough for long enough. After years of fine dining he might gag at dead rats.

It’s not necessarily a bad thing that NZ has not evolved a strong tradition of political writing, but to say that Nicky Hager is our best political journalist is not faint praise. This is a fine book. Hager is of course a thorough and resourceful researcher. He’s also a good writer with a clear narrative line and a subtle intelligence. “The Hollow Men” is the best guide to early 21 st Century NZ politics that we’re likely to see.

“The Democracy Sham:
How Globalisation Devalues Your Vote”
by Bryan Gould, Craig Potton Publishing, Nelson, 2006

“Only a framework of global regulation - of currencies, capital movements, trade and environmental conservation - can enable the creativity of the world economy to be harnessed in the service of human needs”. The conclusion is John Gray’s, as quoted by Nicky Hager. It could have come from Bryan Gould, the recently retired Vice-Chancellor of Waikato University. Gould’s book (which also cites Gray) looks at the effects of globalisation on democracy. It’s a useful companion to Hager’s. Hager looks at how the neoliberalism’s champions go about their business in NZ; Gould looks at some of the consequences. The themes of the books meet in a common interest in the ideology of globalisation.

Gould, a New Zealander, might have been the Prime Minister of the UK. A Rhodes Scholar, he stayed on in Britain, becoming a Labour MP in 1974. In 1992 he unsuccessfully contested the party leadership, returning soon after to a ten year stint at Waikato. These were the high-tide neoliberal years, spent in Thatcherite Britain. Few public-spirited New Zealanders - Hager is another - can have so closely seen the beast in its lair.

Gould warns against dallying with TINA. The nostrum that There Is No Alternative to the “free trade” agenda has been brilliantly successful at implanting itself, but this, Gould insists, is not because it’s worked. It’s due to the influence that its backers have on the world’s opinion makers like the media. Here, too, he and Hager reinforce each other. The bulk of Gould’s book is a discussion of neoliberal policies, and what’s wrong with them.

Neoliberalism Is Very Good For The Rich

Rather, neoliberalism does work - if you’re one of the very rich elite for whom the policies are designed. They have in common the purpose of allowing big money to flow freely around the world, disempowering national governments. They’re there to enable asset inflation. Gould looks at floating exchange rates, the absence of credit controls and the removal of minimum reserve requirements on banks. Public authorities are restricted because they fear that if TINA is crossed she’ll throw her toys out of the cot and leave the State bankrupt.

Democracy is a sham in that the Government can’t make any significant changes to the big things like taxation and interest rates or the deficit. Gould’s point is that governments should be elected to fulfil a mandate from the electorate so that people have room to move where they want. To say it in these terms seems prissy and trite, as though we’re reading an old civics text. It also reads as obsolete. TINA’s made representational democracy seem like yesterday.

It’s argued that TINA’s made us all rich so we shouldn’t bother ourselves because wealth gives us freedom and choice. If it were true, there might be something to be said for that – it’s the endlessly repeated justification for the latest Chinese revolution - but it isn’t true. Gould shows that world Gross Domestic Product (GDP) has grown more slowly in the generation since 1980 (which marks the triumph of Thatcher-Reagan and their frequent daughters TINA) than in the generation which preceded it.

Another popular fallacy is that, while this might be true of the rich world – Europe’s average annual GDP growth has slipped from 5% to 2% - the poorer world is doing famously. Rich world critics are accused of a selfish disregard for the world’s poor. This is a gambit favoured by neoliberal billionaires in New York and Frankfurt, but you’d have to be credulous to believe that they became investment bankers to help out the starving millions. In fact the developing world has done even worse than we have. In the 20 years from 1960 to 1980 Latin America grew at 75%. In the two decades 1980-2000 it grew at 7%. Africa, the poorest of the poor, has sunk from 36% annual growth to just 15%.

The rich are getting richer and the poor are getting poorer. This is true whichever way you look at it, whether between countries or within countries. Between 1960 and 1997 the income gap between the world’s richest 20% and the poorest 20% went up one and a half times, from a ratio of 30:1 to 74:1. In 1960 the richest 20 countries generated a per capita GDP 54 times that of the poorest 20 countries. By 2000 the ratio was 121:1. Worse, as TINA grows, the rate of inequality is increasing.

A similar pattern holds true within developed countries. At the end of the Keynesian era, in 1979, the richest 1% of Americans held wealth 23 times that held by the bottom 20% of their compatriots. By 2000 they had 63 times as much. This is an enormous shafting. In the USA, and in NZ, some of the effects of lower wages have been masked. We’ve become accustomed to traditional two-parent families where both partners work. American statistics show that between 1979 and 2000 the poorest 20% of families eked out a 7.5% pay increase. Without the contribution of newly-working married women, family income would have decreased by 18%.

TINA Doesn’t Let Facts Get In The Way Of Rhetoric

How does TINA reply? She has to ignore the facts and rely on rhetoric. She has bashed unions, eliminated overtime rates and ended the Kiwi weekend so that we all might benefit from a harder working culture. (New Zealanders work about the longest hours in the rich world.) Gould looks at America, which has the fullest statistical record - and the reputation for being productive. Over the last 30 years American productivity increased by 72%. That sounds good, justification perhaps for the minimum wage to have fallen by 22% (in real terms) and average hourly wages to have fallen by 10%. Yet in the previous period, 1947-1973, the era that TINA sees as a disaster, both productivity - 104% - and wages - 101% - increased. And a lot more. And they did so together.

TINA hears the sad news. She feels our pain. But how much worse it might have been, she sighs, had she not rescued us from a worse fate. Decline is inevitable. Gould is wise to her wiles. He shows how declining productivity and falling wages came about through the policy known as monetarism, with its obsessive insistence that inflation is the one evil from which all flows. Monetarism’s theory goes that as politicians cause inflation (because they spend too much of other people’s money on unproductive nonsense) TINA’s first job was to sideline the small-minded MPs who thought only of how to offer enough parochial bribes to get re-elected. We’ve heard her song a thousand times. We’ve sung it ourselves. Cunning TINA knows we recognise its truth.

Hack politicians want to be TINA’s friend. Yes, they agree, we’re powerless. Your husband’s unemployed? Your town’s polluted? Don’t blame me. I didn’t do it. These things are the inevitable consequence of Progress. It’s Global. Politicians - especially those who lecture us on the need for us to take personal responsibility for our lives - make a career of taking no responsibility. They’re aided and abetted by TINA’s economist handmaidens, who are content to blame earlier politicians for whatever ails. It’s always someone else’s fault.

Gould’s explanation of monetarism and its motivations is excellent, authoritative but accessible. He shows that its self-congratulatory love of “discipline” means that it’s forever “deflating the economy by keeping productive resources out of use”. And the resources that are most likely to be sidelined are people. Because TINA wants our economy to prostrate itself to curry favour with foreign bankers, she babbles about “credibility”. She seeks the “confidence” of foreigners. The typical and persistent results are the high interest rates and the high exchange rate that please Japanese widows looking for a nice return, but the real economy suffers. Michael Cullen runs up fat surpluses, but his priority of repaying debt comes at the expense of productive investment.

Mistaking effect for cause, the monetarists chastise us for our lax habits with money. Gould writes: “Failure to save is merely a restatement - not a cause - of the problems. It is the direct consequence of monetary policies that that have stimulated asset inflation, made investment for productive purposes unattractive, and encouraged spending on artificially cheap imports”. In a volatile and dependent economy, when TINA’s mates have a good year through currency gains, they see their profits as windfalls, so the capital is consumed, not invested. In Gould’s summation, monetarism is marked by the unfortunate “primacy of monetary over fiscal policy”. Unemployment must go up because wage earners in the productive economy are TINA’s toy. “It is this sector of society that must fund the resources to transfer to those who benefit from asset inflation. By definition, under a monetarist regime those resources must come not from inflating the money supply, but by transfer from some other part of the economy - this inevitably means those who do not own significant assets”.

60% Poorer; 10% A Lot Richer

Surely, TINA gasps, you must concede that I’ve licked inflation and its attendant ills. Gould denies this. The anti-inflationary moves, like the 1989 independence of the Reserve Bank and the Fiscal Responsibility Act in 1994, were enacted after inflation had been subdued. Anyway, inflation is a global thing. NZ’s rate has never strayed far from the rate in comparable economies. The objection to monetarism is partly a moral matter, but the objection is also practical. The inequality it fosters is inefficient, creating the big social costs that have been so much in the news of late. When John Key looks back at his Bryndwr State house upbringing, he’d do well to reflect that his Mum brought him up before the days of systemic unemployment.

“As a consequence of globalisation”, Gould concludes, “the State has been recruited as just one more soldier to the cause. It is now just one more mechanism for ensuring that the prescriptions of global investors are followed faithfully....This is not just a matter of the freedom to debate and choose different political systems, remedies and approaches. It is also a real loss of freedom to act and govern one’s own life”.

Gould’s experience in public life arms him against the usual sniping that the neolibs aim at critics. He has all the “credibility” that they claim for themselves. His alternatives are moderate enough. Some form of “Tobin Tax” would help. This is named after an economist who suggested that a small fee for currency transactions might be designed to deter speculative, destabilising runs on national economies. Gould takes up a suggestion from George Soros (who himself made billions from currency speculation) that a body could be set up to regulate international loans and guarantee credits. We could bring back foreign exchange controls.

These might not be new ideas, as Gould would no doubt happily admit. After all, his thesis is that we should return to what used to be common practices. There is, however, an ambivalence about his remedies. He makes a convincing case that we have lost a good measure of control over our lives. And he thinks that the intentions of the neolibs are nasty. Yet, in the final analysis, he advocates merely a loosening of tight monetarist controls. If, to take the central example, it is undemocratic for a country’s government to lose control over interest rates, then we should restore that power to the Minister of Finance. We should trust him to act in our best interests. Gould seems to back away from this, happy to ask for a kinder, gentler Reserve Bank.

“World Investment Prospects To 2010: Boom Or Backlash?”;
Economist Intelligence Unit, New York, 2006

The Economist puts out a weekly magazine which is seen as authoritative, and its hunches about the next few years reflect the opinions that are doing the rounds among policy makers. If the Economist picks a trend, it’s probable that central bankers and ministers of finance are planning along the same lines. Often, in its short-term predictions, the Economist has been wrong. This doesn’t necessarily invalidate its expertise, but it serves as a reminder that the dismal science is not an exact science. One trouble the punters have had is that they’ve relied on a textbook that they themselves wrote. A few years ago they were calling for a stockmarket bust, but the market went on booming, and now, like most other gurus, they’re hedging their bets. And for the last several years the Economist has been warning of a house price collapse, but lately they’ve gone quiet about that too.

The Economist has never been noted for its modesty, but you’d think they’d learn from their mistakes. Short-term prices are unpredictable because lots of things influence them that aren’t, in theory, supposed to happen. Sometimes, by the time a trend is apparent, the reasons for its existence have changed. Picking exact numbers can be a mug’s game, but the Economist likes precision because that’s what you get when you put all the data into the computer.

There is a more significant problem. The Economist likes to think of itself as objective and scientific, but more than a hint of wishful thinking gets in the way. As self-proclaimed champions of neoliberalism, its experts have never seen a “free trade” economy that they didn’t like. During Rogernomics and Ruthanasia, the Economist was touting NZ as a favourite. They put NZ at or near the top of its many lists denoting policy virtue. Around the world - or, more particularly the so-called Anglo-Saxon economies where the Economist is influential - the devastation of the NZ social fabric was much admired.

The Good News Is That These Days NZ Features Hardly At All

The surveys used to be breathless with excitement about NZ’s “competitiveness” or “transparency”. Now we’ve paused for a cuppa. So, mercy, we haven’t been picked to lead any “boom”. That role goes to China, where investment is flooding in at the rate of $US80 billion a year. To keep up the cash flow, China gives a better deal to foreigners than to its own people, taxing them at a mere 15% compared to the locals’ 33%. So it’s good news that, when it comes to that talisman of neoliberal success, foreign direct investment [FDI], NZ lies a humble 49th. The bad news is that our number is low because we haven’t go much left to hawk. Roger and Ruth pretty much emptied the cupboard.

The good news, the Economist fears, is spreading. That’s why they’re worried about a “backlash”. Three threats, as they see it, are populism, nationalism, and protectionism. That’s neoliberal lingo for the risk of national governments asserting their sovereignty so that they make policy in the interests of their citizens rather than the bankers of New York and London. “Resistance”, the survey mutters darkly, is becoming more frequent in places such as the European Union and the US. As they say, there are “tensions and strains arising from MNCs’ [multinational corporations] pursuit of their global corporate interests and governments’ pursuit of national interests. From the point of view of FDI-recipient governments, there can sometimes be a dissonance between policies designed to attract FDI and policies to maximise its benefits. For countries that are not only recipients of FDI, but are also significant outward investors, tensions are possible between the country’s interest as a host country and its interests as an investor country. Finally, there are the constraints that the growing integrated production system ... and international investment laws place on the national policy space of countries”.

What can you say? CAFCA and Watchdog won’t argue. We’ve been documenting this disaster every issue every year. The Economist is making our point: that most people don’t think that encouraging foreigners to make as much money as possible in someone else’s backyard (like China) is not the way to look after the backyard. When these backyards are well-tended by people who have the ability to defend themselves (like Europe and America), they’ll look after their own interests.

That’s only part of the story. Questions arise. Why would a country make rules that treat foreigners better than they treat their own people. They do so because, like Mr Lam (see Jeremy’s review, below, of “ China Blue” for details of Mr Lam. Ed.), they’re not in a position to do what they would like to do. It’s not countries that do these things, not sovereign countries anyway. It is corporations. As the Economist goes on to lament, not so long ago the TNCs (transnational corporations) and MNCs were “often seen as ‘new imperialists’ that hindered development”. Even developed countries “were not immune”.

That’s why the Economist urges client governments to enact “policies toward private enterprise and competition” allowing FDI (in the real world competition is destroyed by foreign corporates). That much-groomed playing field needs to be sloped again. The prophets of deregulation go on to list the various means by which the underground, those resisters in the EU and the US, can be hunted down so that Connecticut and the Home Counties become more like China. The deregulators want loads of rules to bias laws their way. They offer 185 ways how a national government can skew policy to make a friendly ‘business environment”.

It might be argued that the writers of the Economist, who live in Connecticut and the Home Counties, do not really want their suburban villages to resemble Shanghai. Of course not. That does not mean that they are inconsistent or hypocritical. It confirms rather that, to them, the difference between the world’s rich and the world’s poor, the difference between your tribe and the aliens, is not a matter of what country you live in. Money doesn’t work that way.

The Chief Executive Officers and bankers live in these places too, and the most important FDI is in fact that which flows between the rich countries. This often is in the form of mergers and acquisitions - known as M and As in the trade - part of the permanent ebb and flow of the corporate world. Over the last 20 years world FDI has averaged a 16% annual increase. Behind the big numbers is lots of M and A. It makes some traders richer than others, but being merged and acquired doesn’t do much for the rest of us. Among developed countries NZ has been merged and acquired more than most

This absorbing film follows Jasmine, a 14 year-old from rural China, to the big city, where opportunity is said to abound. There she can earn big money - enough to send a few coins home to the village. It’s a story as old as human experience and as new as the next round of “free trade” talks. We all know by now that China is going through a huge transformation. We only have to look at the labels on our shopping or at the faces we pass in the street. China is becoming a factory for the world, making whatever it can turn out more cheaply than other countries. That’s a huge amount.

It’s the scale of Chinese industrialisation that’s hard to absorb. Jasmine is one of the tens, if not hundreds, of millions forced from village deprivation, with no skills and no experience, to throw themselves onto the mercies of the labour market. It’s a market where buyers rule to an extent that might be unique in world history. This is because the vast population of China, its apparent stability, and its traditions of discipline and effort have combined to form a huge and quiescent labour force. Neoliberals are apt to drool over the prospect of what they like to call a “pool” of unemployed and surplus people who drive down wages by competing for work. China is more like an ocean.

Jasmine’s job is to remove lint and snip loose threads in jeans. She and her workmates exist in barracks accommodation, their meals and hours of sleep barely enough to maintain them. We follow the girls, who seem unconscious of the camera, as they go about their daily lives. The boss, known to us as Mr Lam, exudes a confidence that sounds arrogant, but he too is a child of his times. “We shape their basic thinking, like Jesus did”, the boss tells the camera. He’s trying to frame the picture so that Westerners can see clearly. ”Now we are all equal”, he says. Is he talking about that famous level playing field - the one crafted by market forces - that he’s heard so much about in management seminars? Is he thinking of the relationship between China and the West? Or between the girls and him? Probably all of these. He too is adjusting to a new life. He’s proud of his new role and he’s learning his lines.

“These farmers”, the boss sighs, referring to his workforce, “are 20 years behind”. By sweating their labour, he’s doing them a favour, lifting them from the unchanging countryside to the exciting new world of designer labels. He’s a prophet and a saviour. His own wife, he confides, is “a village girl”. Mr Lam comes across as astonishingly unfeeling and unreflective. He routinely lies. But he’s a victim too. He knows that if he relents, his factory will lose its contracts to one of the many desperate rivals prepared to flay the whip that little bit harder. There will always be a demand for the women’s labour, he would be thinking, but he risks being dumped back into the village, a failure and a disgrace in the eyes of his Government and its foreign friends.

It might otherwise surprise that Mr Lam let Peled and her crew into the factory to film. The authorities apparently were never far away, often stopping the shoot. They, too, were ambivalent. Should they be flattered or threatened by the attentions of this Western crew? Current globalisation is not at all a new thing. It’s better seen as a climax of the industrial revolution that steamed up in the eighteenth century. Apologists for “free trade”, then and now, have always been frank in their advocacy of exploitation. Karl Marx considered that (like Mr Lam) the champions of the British Industrial Revolution were informed equally by “cynicism” and “naivete”. A Scot, Andrew Ure, the 19 th Century forerunner of our neoliberal economists and management gurus, wrote the book on how to run a factory. Ure told his fellows that “substituting the less skilled for the more skilled, juvenile for adult, female for male” was the means to “achieve freedom of labour”. Now they are all equal. You can hear Ure echoing Mr Lam.

The aim has always been to employ human beings only if they are cheaper than machines. As Ure explained the matter, the only useful slum-dweller was one willing and able to toil for a pittance. Ure saw himself as the workers’ champion. He would inculcate the highest virtue, “docility”. Education, imagination, a healthy diet, anything that might compromise a child’s ability to labour and not complain, was a threat to this “freedom”. You did a child no favours by making her unemployable.

The Race To The Bottom

Ure was designing a level playing field for displaced British - and especially Irish - villagers, so that they could fill the new industrial towns, and we in NZ are still living through the consequences of that revolution. Ure’s “free trade” zone extended only partially to nearby parts of Europe. And of course to the colonies. “China Blue” is a detail of a wider, global shift. Yet despite the differences of scale, the factories feeding Manchester and the factories feeding Shanghai both use cotton.

Neither the product nor the process has changed. Mr Lam is a latter-day Dr Ure who has not yet needed to disguise his meaning as our post-industrial PR-tutored hacks have been obliged to do. Mr Lam will soon talk gravely of the burden of compliance costs and the slavery of regulation. Mr Lam knows that just as the man next door might cut costs deeper, so might another factory zone undercut both of them. He knows that exploitation is as permanent as it is ruthless. He knows that not so long ago rich Japan was the world’s cheap factory. That’s probably his model economy. China is one of the BRIC countries, the four competing entities presently leading the race to the bottom. The other BRICs are Brazil, Russia and India.

More than anything, “China Blue” is an affirming film. Jasmine and her friends are innocent teens. They have surrendered neither their humanity nor their aspirations. They even organise collectively to win a concession from Mr Lam, a success which suggests that he won’t always be able to count on the perfect docility of their labour. “Who buys the big and fat jeans”? Jasmine asks. She puts a note in the pocket to introduce herself to the Westerner who will wear them. Critics have suggested that this gesture is contemptuous, that Jasmine shares the Western reviewers’ distaste for large American males. No, she’s curious, trying to understand, and you feel that she will. Jasmine is not a cynic.

“ China is master of her fate”, the factory workers sing as they struggle, red banner presumably aloft, to meet their new quota, the toughest yet. The girls will have to cut wasted sleep time. The order is from Wal-Mart, the biggest of them all so the terms are the harshest of all. Mr Lam is fulfilled. What an ending. Micha Peled has recently given us “Store Wars”, a documentary on Wal-Mart, that most rapacious of transnationals. China is the darling of the new imperialists, and, perhaps more than any company, Wal-Mart is the prototype of the new exploitation. Mr Lam is aglow with paternal pride. The workers chant the proud and lying ditty. For all Peled’s subtlety, the world she shows us is a simple world of primary colours. The east is red and the jeans are blue.