Rebecca Macfie’s analysis of the Pike River calamity is brilliant journalism. As a skilled and experienced writer, Macfie tells the story compellingly, with a strong, novelistic, narrative thread. The research is thorough and detailed, and unlike this reviewer, who will spray around all sorts of emotive comments, she lets the facts speak for themselves. For anyone concerned with the way we in New Zealand live and work, this is a must read. I have two small reservations. “Tragedy at Pike River”? Strictly speaking, a tragedy is a drama in which basically good people with a character flaw commit awful acts, unleashing an inevitable sequence of disasters. The deaths at Pike River were entirely avoidable, the work of petty, dismal and entirely unheroic actors. Mass murder would be closer. The other criticism is that the cast of characters included at the start leaves out many of the players.

The 2010 explosions at the Pike River mine on the West Coast were caused by methane, a notoriously volatile gas. Soon after investigation of the site’s potential began, a Japanese expert, Masaoki Nishioka, considered it the gassiest mine he had seen in his 45 years of mining. When, later, the mine’s cutting machines bored through the rock, methane was igniting. Gas had bubbled out of exploratory coal samples. In a six week period between October and November 2010, there were 48 reported instances of methane levels being either dangerous or potentially explosive. Nishioka would not have been told that cigarette butts, lighters and aluminium drink cans – all prohibited items underground – had been found in the mine’s tunnels. All this aside, he was against trying to mine at Pike in any case as there would not have been enough of the right sort of coal to be financially viable. Macfie writes: “With a soaring escarpment and national park on one side and a densely forested wilderness on the surface, access would be difficult and expensive”. 

Ventilation shafts are a basic requirement in any coal mine, but at Pike the shaft was positioned in such a way that some gases would have remained trapped below. The vertical shaft was supposed to double as the essential emergency exit, though Macfie shows that the notion of heavily laden and tired miners climbing one by one up a ladder inside a mountain is absurd. The explosion might have ended any chance of getting out, but the shaft would have been useless in any lesser exigency.   

A former mines inspector, Harry Bell, reported that the managers’ estimate of costs and benefits was dishonest. The mine would never have been as profitable as Pike boss Peter Whittall was claiming. In fact the company was “cheating”. Bell knew as much about mines as anyone, and certainly a whole lot more than anyone in Pike’s management. In 1992 he had ordered the Huntly West Mine closed after workers noticed smoke emerging from an area of old workings. He was pressured to retract but stood firm. Three days later an “enormous explosion ripped through the mine. Thanks to Bell’s dictate, the mine was empty and no one was killed”. That was in the bad old days when inspectors and unions mitigated the effects of the privateers (just; the Employment Contracts Act, designed to erode the ability of unions to protect workers, had been passed the previous year).

Pike Never Had Much Going For It

This didn’t stop Whittall and his mates from issuing regular and fictional accounts of how great were the prospects. This excited stock marketeers, who seemed to have taken at face value Pike’s talk. The company’s management style was similarly – and deliberately - haphazard. Whittall made serious decisions based on whims and seemingly arbitrary preferences, contributing to a rapid staff turnover. In the two years before the calamity, there were six managers at the mine. Almost all the miners were locals, but other characters were often from overseas mining economies. In none of the UK, Japan, South Africa and Australia, experts from all of which appear, would the recklessness of Pike have been allowed. This was very much a made in New Zealand disaster.

In what’s called managerialism these days, senior staffers don’t necessarily know about the product with which they’re working. Pike’s bosses weren’t there because they understood coal or mining or economics or geology, being chosen for their supposedly generic skills. Minarco, an Australian consultancy, contracted to produce a feasibility study, went one step further, advising that it was best to hire managers who knew nothing at all. Macfie (who has extensive experience as a writer on business) suggests that in their hands Pike’s “proposal’s weaknesses were redefined as strengths”. In its bullish report Minarco advised that Pike River Coal Ltd’s “’absence of coal mining experience is expected to be an advantage as there is no preconception on management issues’. The company’s unfamiliarity with the coal industry would not be a problem “provided relationships with key advisers are appropriately structured and managed’”.

If you don’t know what’s correct procedure and what’s dangerous, then you won’t think about health and safety and your conscience might not be troubled if you murder 29 men. Older readers might remember Sergeant Schultz (“I know nothing”) from the 1960s’ American TV comedy series Hogan’s Heroes, a comic version of this propensity. Whittall’s mandate was to appropriately structure and manage his succession of senior staffers, his Schultzes. He was chosen for his ability to bully and bluff.

The potential for disaster was further increased by a companion neo-liberal doctrine, the insistence that “governance” and “management” are rigidly separated. The theory is to thwart corruption and inefficiency with impersonal lines of authority, but in Pike’s case it was all about cronies and mates. Three of Pike River’s directors from 2005 to 2011 were investors in India. They appear in the narrative only for Macfie to note that one was supposedly a “visionary” who missed most board meetings. Another director was from Minarco. “Governance” policy didn’t need to be spelled out. Pike River’s one responsibility was to make as much money as possible as soon as possible. To attract workers to the Coast, wages had to be reasonably high, so the scrimping had to come from other expenses.

Appalling Mismanagement

Then, after the explosions, even more abuse. The August 2010 survival of 33 miners in Chile, rescued after 17 days underground, encouraged the families waiting in Greymouth a few months later to cling to the prospect of a miracle. They weren’t thinking that the mine in Chile was dug for gold and copper, minerals which do not produce methane, but the difference between coal and copper mining is a basic understanding for anyone in the industry, possibly even for those in Pike management. Yet for days Whittall and his executives allowed false hope to linger, so he could play the nice guy while the more honest Police chief, Gary Knowles, was painted as unsympathetic. Knowles didn’t hide behind a public relations company, and, even more unexpectedly in this age of smoke and mirrors, he might not have had media training. To mental cruelty, add tactlessness. When he had finally to admit to the families that there was no chance of survival, Whittall blundered into giving an impression that there was in fact still hope. Others had to stop him in mid-sentence.

Even without the appalling mismanagement, and had there been no explosion, Pike’s future would have been dim. In 2008 the price of the sort of coal that Pike River would mine had risen 200%, enabling Pike to sell its first product at $US300 a tonne, three times better than the price forecast in the prospectus 18 months earlier. But by the time of writing (February 2014) that coal is selling at $US120 a tonne and the more experienced Bathurst has put off its planned Denniston operation just up the coast in Buller, saying that for further work to be viable the price needs to be at least $US150. This indicates that Pike River’s management had no clue about global coal markets. They had lucked into a historically and flukily high price at a time when they were about to go bust. Had markets been as they expected, their finances would have been bleaker yet. Even with Bathurst, which you’d expect to be a more professional and researched outfit, the global boffins who actually study economic trends have been wildly wrong. In January 2011, when Bathurst shares were going for $A97c, Credit Suisse picked then to “outperform” the market at a future price of $A1.50. Just three years later, Bathurst’s shares are selling at ten cents.

Since publication of the book came news that Whittall’s lawyers had offered cash if charges were dropped. In a March 2014 article (Listener, 8/3/14, “The $3.41 Million Question”) Macfie has listed 14 specific and deliberate failures to ensure the mine was safe. Each should have been sufficient to prosecute Pike River. Yet the system says no-one was responsible, just as no-one was responsible for the CTV Building collapse in the February 2011 Christchurch earthquake, which killed 115 people – also investigated by Macfie in the Listener.

Neo-Liberal “Light Handed Regulation” Is To Blame

Despite the Pike River operation’s heavy dependence on the personal qualities of its miners and managers, individual people aren’t to blame. Instead it’s systems. It’s all too hard to pin down. On the other hand, when it comes to drafting regulations so that they advantage business, the biggest and most impersonal global corporations are said to be “persons”, human beings being “natural persons”. The first explosion was at 3.44 on a Friday afternoon. Sound recordings from the final, fatal day between 9.20 am and 3.00 pm reveal three separate equipment failures, and three separate reports of high methane levels (Campbell Live, TV3, 10/2/14). The breakdowns were unconnected to the gas emissions, so it could have been just another average day. Perhaps the three methane reports were too.

Who should have been charged, and for what? There were sins of commission and sins of omission. Culpability ranged from carelessness and ignorance to the wilful endangerment of the 29, but the longest sentence, for the guilty verdict that decency demands, should be handed to the practice of neo-liberalism, whose aim is to regulate the conditions for corporations to extract the most profit at the least cost. So-called “light-handed regulation”, as expressed through the dismantling of an inspectorate, the removal of safety checks, the absence of equipment, the lack of training, the contempt for workers, was the expression of a fad created by politicians. Successive Governments created the conditions for disaster. Pike might have been an extreme case, but a mine with only a few of its many faults would still have been dangerous. In a logical world, the longest sentence would go to all the Rogernomes over the last 30 years, but when elites are complicit, politeness dictates that we see and speak and hear no evil.

Myths, Politicians & Money:

The Truth Behind The Free Market

by Bryan Gould, Palgrave Macmillan, London, 2013

Forty years ago, before the rules were changed to allow big money to slosh around the world pretty much as it liked, daily turnover across the world’s foreign exchanges totalled about $US18 billion. By 2012 more than $US4 trillion a day was on the move. This astonishing statistic is a starting point in Bryan Gould’s analysis, included under a sub-heading “What Changed?” What got us into the current mess? The unleashing of capital has been the dominant influence in the world economy, the expression of neo-liberalism, the enabler of “free trade”. By removing big money from any responsibility to governments, businesses would be freed from the dead hand of bureaucrats to give us all what we wanted. We’d all finish up better off in that brighter future.

That’s been the theory, as we’ve been lectured ceaselessly by every Finance Minister from Roger Douglas to Bill English. Finance Ministers like precise numbers as they ponder interest rates and the gross domestic product (GDP), so let’s follow their example. Four trillion is about 222 times bigger than 18 billion, so we should be 222 times better off. But we’re not. In fact many of us are worse off. Gould says that the Ministry of Social Development reported in 2012 “that, after housing costs, real household disposable incomes fell across the board between 2010 and 2011. At the median the drop was 4%; for three of the lowest four deciles the fall was more than 7%. By this measure, according to the report, “from a longer-term perspective, in 2010 the incomes of the bottom 30% of the population were on average only a little better off in real terms than their counterparts almost 30 years ago in 1982”. By contrast, a household at the bottom of the top decile was 40% better off in terms of real disposable income after housing costs. 2011 in fact marked the greatest inequality ever – to then at least. Over these last 30 years real income grew four times faster at the higher end than at the low end.

99% Of Capital Flows Unrelated To Production

What changed was that the amount of capital being traded has been a hundred times more than the amount of goods and services being traded – the ostensible reason for the liberalisation. In other words, only 1% of the four trillion dollars has been about the real economy. 99% of the capital flows are unrelated to production. Much of the cash has been purely speculative and often criminal. Gould mentions the findings of James Henry in “The Price Of Offshore”, which I reviewed in Watchdog 131 (December, 2012, http://www.converge.org.nz/watchdog/31/12.html. See below for more from the Tax Justice Network). Henry’s best guess is that up to $US32 trillion, a sum equivalent to the combined GDP of the USA and Japan, has been hidden from the world’s authorities by the super rich. His research indicates that half of these assets are owned by 0.001% of the world’s population.

Unearned fortunes have been made by speculators like Merrill Lynch’s John Key, whose computer programmes allow them to place bets on very short-term trends in currencies, an occupation which is only tenuously connected to economics. Yet the media suppose that the Prime Minister of New Zealand’s past life as a gambler in a company that went bust qualifies him as a whiz on matters financial. Gould argues the reverse: that the casino economy’s exploitation of currencies, unrelated to the needs of the economy, is a major part of what went wrong. NZ, being small, has been highly vulnerable to foreign predators.

In 2008, of course, the whole corrupt system collapsed, but as Gould argues, nothing much has changed. The big banks have been bailed out, the bonuses keep rolling on, executives are still paid absurdly vast sums – and NZ is pushing for the Trans-Pacific Partnership Agreement (TPPA), the ultimate deal, effectively a neo-liberal constitution that would remove any lingering abilities of our Parliament to enact meaningful changes. Here Gould gets to a central argument. In “free trading” circles, NZ was praised for taking from democratic control the ability to set the official cash rate. The Reserve Bank, not the Government, sets interest rates, a situation unquestioned by conventional “wisdom” or the parties in Parliament. The Bank is independent, it’s said, as though it is self-evidently a good thing; that public policy is made by a banker and not by the representatives of the people of New Zealand. The Governor knows best.

And it is all major public policy that’s at stake. The Governor is there because he’s a servant of the system that didn’t know best. He’s a monetarist. We often get to hear the word, but seldom is it explained as clearly as it is here. Monetarism is the financial expression of neo-liberal ideology, the means by which the economy is manipulated to allow real power to pass from public scrutiny to private interests. As “[t]he only business of Government, it is said, is to maintain the value of assets, and particularly the currency, by controlling inflation, and this task being essentially technical, it is not really the business of politicians or the concern of democratic processes at all”. Inflation can be controlled, as decreed by the Governor of the Reserve Bank, through adjustments to the “official cash rate” – the OCR that every so often we hear about on the news.

The 1970’s had been marked by “stagflation”, a decade of high inflation and little growth, so the doctrine had some immediate superficial appeal - though Gould argues that the subsequent global fall in inflation was not in truth a result of monetarism. What did fall in the so-called Anglo-Saxon countries (that’s the UK, US, Canada, Australia and NZ), where neo-liberalism was most extreme, were production and wages. What rose were interest rates and the exchange rate. High interest rates reward importers over exporters, and by tipping the scales towards those who already hold assets and cash they favour those who are already rich. High interest rates led to the asset bubbles, notably in housing, that have plagued the neo-liberal economies for a generation, while productive investment lags.

Monetarism Recipe For Nil Or Slow Growth

Monetarists said they hoped to restrain the costs of domestic production to maintain competitiveness, but at the same time “free trade” deals brought a huge increase from cheap foreign labour that flooded the “rich world” with imports. “In practice monetarist discipline turns out to be nothing more than a means of deflating the economy by using high interest rates and overvaluation to keep some productive resource out of use. If keeping those resources out of use as a precondition of controlling inflation is maintained for any length of time (as is almost inevitably and invariably the case), the resources eventually cease to have any value, even as a margin of spare capacity for the purposes of controlling inflation. The long-term unemployed lose skills and the habit of work and become unemployable; unused plant becomes outdated and pre-existing technologies are overtaken by new developments; markets are lost and cannot be regained…. Monetarist policy, in other words, is a recipe for continuing and intensifying nil or slow growth”.

Another obvious factor has been the rapid increase of technological change, further driving down the cost of production and driving up unemployment. Modern economies are essentially about goods and services, with a long-term trend of the production of goods being outsourced while service jobs increase, partially replacing lost manufacturing. While the disappearing factory workers tended to have been paid wages near the median, service pay tends be either low (all those McJobs) or high. Gould has some interesting remarks here. He cites an analysis that suggests that, regardless of increased productivity “made possible by new technology and innovative work methods …there would be many undertakings that would essentially demand the same amount of time for their performance. It would still take a pianist the same time to play a Mozart sonata, a barber the same time to cut the hair of the average customer and a primary school teacher the same time to read a story to her class”.

Investment In Human Beings Is Wasteful

There are only so many hamburgers to flip, and in future we might expect relatively lower pay for unskilled work and ever more jobless youth. At the other, more expensive end, the arts, culture, health, education, those activities where skilled people cannot be entirely eliminated, are in for a rough ride. Skilled workers, artists and professionals can expect ever more insults from the neo-liberal gallery. This is because – the bottom line, let’s say - the one permanent, over-riding impulse of the monetarists is to rort the system to extract as much profit for the privateers as possible. To a mindset that knows only that costs need to be minimal, investment in human beings is wasteful.

This applies to anyone paid by the State, most obviously public servants. We’ve been conditioned to disdain anyone we might call a bureaucrat and to be wary of anyone paid from the public purse (except those at the very top end, like Prime Ministers and Reserve Bank Governors).  Struggling to pay the mortgage (at an anti-socially high rate of interest) we can respond to the populist demand from the bankers that we need to tighten our belts. Yes, paying off debt is the best thing an individual can do, but if everyone scrimped, the economy would spiral down the gurgler. That’s why, in tough times, governments need to spend, to invest. Gould looks closely at the current UK government, showing how its reduced public spending has deepened a recession and widened inequality.

In this context, he quotes John Key. In a television interview (13/2/12) the PM said that “any tax sucks money out of the economy. There’s a limited amount of money in the economy. So when you put up a new tax, or you tax people more, it sucks that money out”.  Key is wrong about the amount being fixed, the whole point about modern banking being its ability to create credit, but the more important error is the unexamined prejudice that money that’s not devoted to the immediate creation of profit is unproductive. Gould’s correction: “If it is ‘sucked out’ of the economy, where does he think it goes to – into the stratosphere? And are all those schools and hospitals, all those police and servicemen, all those roads and railways, all those paid elements that are critical to our living standards and that are paid for out of taxation, of no economic value?” Not long ago, such a question would have been rhetorical. Of course not. But to Key and English and Steven Joyce, the answer would seem to be: yes, mostly they’re losers – except for the roads.

And so the old compromises wither away, and with them the old values, “conservative values, such as loyalty, honesty, duty and patriotism, as well as more progressive values such as tolerance, compassion, collective enterprise, social responsibility and generosity…abandoned in favour of a more aggressive sense that the only value by which actions and attitudes are to be judged is the pursuit of individual self-interest.” This, Gould argues, is the root cause of so many of our contemporary aberrations. Why have executive bonuses and chief executive officer pay cheques become so grossly huge? Why do the media treat the very rich as its reservoirs of wisdom? In this light so many current crudities make sense. Why does Key want his NZ Inc. to brand its flag to resemble a corporate logo? Why are reality TV shows all the rage? Why the obsession with celebrity? Why all the social media look-at-me narcissism? Gould sticks to his theme of economic neuroticism, but his approach makes a powerful case for seeing all the exhibitionist individualism as the child of neo-liberalism.

It helps to recall Gould’s experiences. Not long ago he retired as Vice-Chancellor of Waikato University, having returned from the UK. As a Rhodes Scholar he had gone to Oxford, later working as a diplomat and law don. He entered Parliament for Labour, where he became interested in macroeconomic policy. These were key years. Gould was in Opposition when the Thatcher government led the global neo-liberal revolt. In 1992 he stood for the leadership of his Party, basing his candidacy at least partly on a sceptical look at the emerging neo-liberalism - which might well be why he lost. He was a contender and could have been PM. A decade before his counterparts in his native NZ were swallowing the neo-liberal bait, hook, line and sinker, Gould had already urged British social democrats to swim elsewhere. His views are worth our attention.

He’s included some intriguing insights into British policy, the European Community and the travails of Cyprus and Greece. In all his discussion the same monetarist villain is centre stage: small countries cannot legislate independently in their own interests when their currencies and banks aren’t governed in the interests of local democracy (for more on the travails of small islands, see the review below). The unctuous Tony Blair and “New Labour” make repeated appearances. Blair managed to combine the twin enthusiasms of neo-liberal economics and imperial warmongering.

A Dictatorship Of Big Money

Suddenly it’s become fashionable to talk about inequality, but usually it’s considered impolite to ask why the attacks on living standards got so extreme. That’s because the more sophisticated marketeers know that inequality is the intended outcome. Blair was a great admirer of Margaret Thatcher, whose adviser Alan Budd got so weary of explaining to his more naïve cronies that he wrote an article to explain that, yes, the Lefties were right, the Iron Lady and he were all about bashing the workers:

“The nightmare I sometimes have about this whole experience runs as follows: I was involved in making a number of proposals which were partly at least adopted by the Government and put into play by the Government. My worry is as follows; that there may have been people making the actual policy decisions, or people behind them, or people behind them, who never believed for a moment that this was the correct way to bring down inflation. They did however see that this would be a very good way to raise unemployment. And raising unemployment was an extremely desirable way of reducing the strength of the working classes; if you like, that what was engineered here – in Marxist terms – was a crisis of capitalism which recreated the reserve army of labour” (see Unite NZ online, who revealed this rare example of neo-liberal honesty. Unite have surprisingly left out the clause that followed: “…and has allowed the capitalists to make high profits ever since”. My emphasis. Budd was knighted)..

“The Truth Behind The Free Market’ is that it’s tied us to a dictatorship of big money. Our social relations, technically free, are based on a ubiquitous, if often disguised, alienation. Unfortunately in New Zealand, in an election year, the debate will be all about the symptoms of a sluggish economy and increased inequality – the necessary, intended consequences of neo-liberalism.  We won’t get to choose a Government that wants to end the nonsense. We won’t hear aspiring politicians call for public control over interest rates or domestic control over the Kiwi dollar. We won’t hear of a Tobin tax to discourage speculation. We won’t hear that they’re walking away from the TPPA. So the systemic – and expensive - problems of crime, violence, unemployment, poverty, sickness and ignorance will remain. The best we can hope for is that a few extra dollars trickling to early childhood education or health care will temporarily hold the line.

The Finance Curse:

How Oversized Financial Centres Attack Democracy And Corrupt Economies

by Nicholas Shaxson and John Christensen, Tax Justice Network, UK, 2013

The Tax Justice Network (TJN) is doing excellent work by revealing the ways in which taxes are and are not assessed. It’s previously shown how the mega rich often pay nothing (see the above review of Bryan Gould’s book). Based in the UK, the TJN now looks at what happens when an economy is dominated by Big Finance. In a word, it’s a curse. For such a project, there’s no better place to work. Of all the world’s major economies, none is more skewed towards banking than Britain, and the financial hub of London, the City.

Shaxson and Christensen‘s title is a conscious borrowing from what’s been called the resource curse, the widely noted correlation between having an economy dominated by a few resources and having a corrupt and inefficient government.  Examples are legion: Nigeria and oil; Central America and fruit; the Philippines, Indonesia, Angola, Congo, etcetera and minerals etcetera…. Dependence on a few products has tended to tip societies into corruption and autocracy. Riches are shipped out, but few benefits accrue locally. The reverse is more likely, as giant corporations come to dominate weak and often poor national governments. Inequality opens wide.

“Free traders” wanted to deny the link, but the pattern is too thoroughly documented to be dismissed. But finance? In London? In Switzerland? These are among the first of First World countries.  We’re not talking copper mines in Africa. TJN doesn’t agree. A concentration on finance, they argue, is essentially as hazardous as a concentration on primary production. To the obvious rejoinder that Zurich and London are peaceful and rich places, the authors reverse matters. Finance didn’t make them so. Money went there because they were already within stable and sophisticated modern economies.

Just as with an economy that depends on resource extraction, dependence on finance induces inequality and poverty: “This is partly because resource rents are easily appropriated by elites, and partly because of the death of alternative economic sectors, reducing opportunities for the majority…. Higher levels of inequality are also apparent in finance-dependent economies, often (but not always) for similar reasons”. The thesis is not that finance in itself is a bad thing, just as minerals in themselves are not bad things. The authors are working within the framework of orthodoxy, assuming the need for investment in a modern economy. Their argument is that above a certain level trouble brews (authors’ emphases). They illustrate this claim by quoting from a 2013 statistic from one of the big global corporations, McKinsey & Co: “Financing for household and corporations accounted for just over one-fourth of the rise in global financial depth from 1995 to 2007 – an astonishingly small share, since providing credit to these sectors is the fundamental purpose of finance”.

Financialisation

They call it “financialisation”, defined here as “the increasing elevation of financial capitalism over the industrial economy, and the expropriation of economic profits by financial actors through financial techniques. It involves manufacturing or services entities becoming more leveraged (in debt) and increasingly resembling financial businesses, dominated and led by financial markets. It involves financial services growing as a share of the economy, and often serving as a cuckoo in the nest that pushes out, hollows out and harms productive economic sectors. Meanwhile financial elites gain greater influence over economic policy”.

The object being to make a quick buck, financialisation has meant that longer term planning and research is dropped. A professor from the Harvard Business School (a sort of cathedral for the worshippers of Big Finance) points out that what the trade calls a RONA, a Return on Net Assets, is emphasised: “A company could improve its RONA by generating more revenue… But the other way … is by a company getting rid of assets. Reducing assets is much easier than increasing revenue” (or, in the case of NZ Inc, by a whole country getting rid of assets). “Empowering innovations tend to emerge five to ten years after the investment. But IRRR [that’s Internal Rate of Return] encourages investors to get in and out of a company fast”.

It’s all about quick trades and unearned capital gains, expressed by cooking the numbers through the RONA and the IRRR. It’s a Merrill Lynch-type casino. What the bankers don’t need is the importunities of small businesses and householders asking for a loan to develop a business. That‘s what old-fashioned banks did in the bad old days when the productive economy was growing. An example of this was revealed when a flipchart from a major UK bank was left in the foyer of a branch: Titled “We Don’t Want”, the chart said “new business startups, businesses that deal with coinage, taxi drivers, window cleaners, market traders and shops and supermarkets would not be welcomed as customers”.

Another American academic accuses Big Finance of waging a deliberate assault on society: “Financialisation’s tactic is to load economies (governments, companies and families) with debt, siphon off their income as debt service and then foreclose when debtors lack the means to pay. Indebting government gives creditors a lever to pry away land, public infrastructure and other property in the public domain. Indebting companies enables creditors to seize employee pension savings. And indebting labour means that it no longer is necessary to hire strike breakers to attack union organisers and strikers… The aim is not merely to acquire land, natural resources and key infrastructure rents as in military warfare; it is to centralise creditor control over society”.

Accelerating Inequality

The extent to which finance is conspiring as consciously and consistently as this against civilised values will be debatable. What cannot be denied is the result of financialisation. In the words of an Irish academic, private equity is “not even a zero-sum game but a game that involves both value shifting and value co-destruction”. Independent research has identified Britain as having “the worst social mobility in the Western world”, with one in five people living in poverty. The top 10% of the population had 97 times the wealth of the bottom 10%. Inside London the figure (in 2011) was 273 to one. Even if matters were to be left as they are, and the City had a cuppa, the natural trend that sees the rich get richer and the poor get poorer will guarantee that the rate of inequality will keep increasing, both within the citizenry as a whole and between regions.

It’s more likely that the war on common sense will intensify. There’s no indication that the powers that be in the UK and the US are anything other than certain that they’re doing the right thing. All they hear are reassuring voices from the very rich. A Washington report has found that the top 20 banks met with policy leaders like the Treasury and the Federal Reserve 1,298 times between 2010 and 2012. Two big brokerage firms alone met them 356 times. “That’s 114 more times than all the financial reform groups combined”.

If inequality is the consequence of financialisation in the UK, the tendency is that much more pronounced in smaller jurisdictions given over to banking. The authors look at Cyprus, the island of Jersey and various scattered tax haven “satellites” in islands left over from the days of the Empire. They call it “country capture”. In each case the social climate is uneasy. Passing reference is made to countries considered to be among the “least corrupt”. To the authors this distinction is dubious as the list is said to include “some of the world’s biggest and murkiest tax havens”: Switzerland, Singapore, Luxemburg, Hong Kong – and New Zealand. No elaboration is presented.

One counter-example to the depressing pattern is discussed. Despite its oil, Norway is doing well, and the authors offer it as an example of how to avoid being cursed by riches. Firstly, Norway put revenues derived from oil in a separate fund. Other tactics have been: centralised and coordinated wages and incomes; a local content policy for supply chains to the oil industry; heavy investment in education and research and development; strongly counter-cyclical economic policies, and expansion of the public service to boost employment. It’d be good if John Key played some golf in Norway.

Peace, Power & Politics:

How New Zealand Became Nuclear Free

by Maire Leadbeater, Otago University Press, 2013

At the start Maire Leadbeater writes that she intends this history of the New Zealand peace movement to be a continuation of her mother’s “Peace People”, a story which ended at 1975. Leadbeater takes us from then till the present. So partly she is paying tribute to her mum, the marvellous Elsie Locke*. They’re both excellent witnesses and although comparisons are odious, one might be ventured. Reflecting perhaps developments in technology, “Peace, Power & Politics” is a more colourful and attractive presentation. It’s a handsome book, full of illustrations, cartoons and posters from the various campaigns, achieved with no loss of the thoroughness that marked Locke’s book *Murray Horton’s obituary of Elsie Locke is in Watchdog 97, August 2001, http://www.converge.org.nz/watchdog/97/13.htm;  his review of Maureen Birchfield’s “Looking For Answers: A Life Of Elsie Locke” is in Watchdog 122, December 2009, http://www.converge.org.nz/watchdog/22/09.htm; and his review of Elsie’s “Peace People” is in Watchdog 71, November 1992, http://www.historicalwatchdog.blogspot.co.nz/2009/12/foreign-control-watchdog-november-1992.html. Ed.

Of course both mother and daughter were/are activists. Usually when public figures put out books it’s to justify themselves. The political autobiography is seldom a reliable record of “the life and times”. Usually the text been drafted by a ghost writer, so we’re never quite sure whose voice we’re hearing. With Leadbeater there’s no such problem. Unlike the self-serving inflating of politicians’ egos, the power she’s writing about is the power of the people of New Zealand. Here the situation is reversed, the author having largely written herself out of her history. She’s not in the copious index, though she can’t help but appear in some of the photographs. The commitment is to the cause rather than to the career.

This modesty means that the campaigns with which the author was personally involved are given the same sort of emphasis that another historian might have given them. Leadbeater’s long and consistent experience has been informed by an appreciation that what we call the peace movement takes many forms. At the core of the book is a balance, a judicious linking of the various themes. On the cover is a tribute from Nicky Hager to the effect that “I cannot think of anyone better to have written this history”.

Neither can I. Leadbeater was long involved in the country’s most well-known advocacy, for a nuclear-free New Zealand. She’s also published “Negligent Neighbour” (reviewed by Jeremy in Peace Researcher 34, July 2007, http://www.converge.org.nz/abc/pr34-141b.html Ed.), her 2006 account of the travails of Timor Leste, a topic she leaves out this time round. Her fluency and her unassuming proximity to all the main currents in the flow of our recent history make her an excellent guide. 

Remarkably, The Policy Remains Intact

1975 was a good place to start, that being the year when the Peace Squadron first set sail from Auckland’s Mission Bay to protest against nuclear ship visits. NZ was nuclear-free by then, but policy was teetering, with the PM, Bill Rowling, saying that the Government was about to “re-examine” matters. The decades following, when pressure on succeeding Governments seldom relented, are the main topic of “Peace, Power & Politics”.  Remarkably, the policy remains intact. Leadbeater shows us why. Her account pays tribute to the ingenuity and determination of public protest. This is very much history from the bottom up. While there are several names that deservedly recur in her story, peace activism in NZ has been marked by its spontaneous and non-hierarchical nature.

1975 was also the year when the New Zealand Foundation for Peace Studies was launched, a detail that’s significant in this context in that it’s a reminder of how activism and analysis have tended to complement each other. Another event from that year was the Maori land march led by Whina Cooper. That gets a mention too, a mutual linking of peace and justice themes being another recurring theme. And 1975 marked the election of the Muldoon National government, after a campaign in which television ads showed those notorious dancing Cossacks. Radicals were stirring and that meant that the Russians would come (Cossacks were in fact violently anti-Communist, but never mind). Muldoon hated peaceniks and wanted to outlaw “political” strikes or strikes that had the potential to “inflict inconvenience on the community”, while his new Minister of Foreign Affairs, Brian Talboys, wasn’t about to endorse the drive for a South Pacific Nuclear Free Zone, letting it be known, mysteriously, that “one might as well seek the creation of a Devil-free zone”. Yet just a decade later, in January 1985, NZ was officially declared nuclear-free. Leadbeater’s account of how the change came about is absorbing reading. Tactics were often imaginative. In 1981 Devonport, host to the NZ Navy, became the first local authority to declare itself nuclear free. Other Auckland boroughs followed suit. The next year Christchurch became the first major city to be a nuclear-free zone, with Wellington and Manukau doing so soon after. It was becoming clear that at the grassroots the peace movement was widely supported. Other ideas were to declare houses, schools and businesses nuke-free.

Owen Wilkes: Peace Researcher Without Peer

Meanwhile, from Norway, Owen Wilkes (see Murray Horton’s obituary of Owen in Watchdog 109, August 2005, http://www.converge.org.nz/watchdog/09/09.htm. Ed.)reported that the US Navy’s plan to build a “transit facility” on the Black Birch mountain range near Blenheim was needed, as the Yanks put matters, “to obtain the location of the stars in the Southern Hemisphere with the increased accuracy that is required for military purposes” This “increased accuracy” was not part of the proclaimed deterrence policy. It could have been needed only in order to hit enemy missiles in their silos, something you do only if you are planning for a first-strike capacity. In March 1982, CAFCINZ, CAFCA’s original name, held a public meeting in Blenheim to alert the locals, and in 1986 CAFCA scaled the barren peaks and put up a banner with the slogan ‘Star Gazing Yes – Star Wars No” (for more details, see Maire Leadbeater’s article in this issue: “Our History As An Anti-Bases Campaign: From CAFMANZ to CAFCINZ To CAFCA [& Then To ABC]”. Ed.)

Another example of Wilkes’ cunning was his hunch that a group of antennae must exist somewhere in the country. A long established Defence communications base near Waiouru was an obvious bet, but when film makers Alister Barry, Russell Campbell and Rod Prosser approached the perimeter fence a disembodied voice told them to scram (they were researching their seminal 1980s’ Vanguard Films documentary “Islands Of the Empire”. Ed.). Barry checked phone directories, where he noted that several radio operators who had worked from Waiouru now had addresses near Foxton Beach. That’s how the Tangimoana base was found at the mouth of the Rangitikei River.

Leadbeater outlines the struggle of public opinion to halt a proposal to buy Anzac frigates for somewhere around $2 billion. The NZ Navy did need some new vessels to patrol the economic zone and perhaps they’d be useful for disaster relief, but these were tasks for which frigates are unsuitable. They were “’blue water’ fighting ships – valued for their role in providing anti-submarine protection for large groups of allied warships. But since there was no submarine threat or actual or potential threat of invasion, the frigates seemed destined to be used to keep our allies happy and pave the way for our Navy to continue playing war games in South East Asia. Naturally enough, defence officials were keen to support the Australian proposal for precisely the reason that peace activists were opposed – the frigates would be a ticket back into major exercises with at least some of our traditional allies”. Leadbeater is referring to the US and Australia, this being the period when in public the Lange government was dithering over whether to allow nuclear-armed ships to visit our ports, prompting all those much photographed peace flotillas. However, hidden from public scrutiny, Tangimoana and Black Birch were secretly being commissioned to herd NZ into complicity with a US global war-fighting capability.

“‘In 1987”, Lange wrote in his autobiography, quoted here, “the Cabinet agreed to build an electronic interception facility at Waihopai to complement the installation we already had at Tangimoana. We did this as part of our obligations under the UKUSA security agreement … I thought we should build the base because it seemed unwise at the time to further upset the Americans who were the chief beneficiaries of the information it provided”. Note the reference to UKUSA (now commonly called Five Eyes. Ed.). There’s no NZ. The Prime Minister did not think the spy bases were connected to his country’s interests. Waihopai was a sort of Guantanamo.

Book Most Welcome Addition To Our National Library

Wilkes predicted that “Big Brother GCSB (Government Communications Security Bureau) will be working with bigger brother DSD (Defence Signals Directorate, now the Australian Signals Directorate) for bigger Brother the US National Security Agency (NSA). Its data will end up being used to undermine whatever privacy, secrecy, independence and sovereignty South Pacific micro-states currently enjoy”. Yes, it all sounds very contemporary; it’s something we all are now aware of. But Wilkes was writing in 1988 when analyses of such accuracy were ridiculed. We’ve been lied to for a generation. This book is a most welcome addition to our national library. NZ’s peace activists have done much to forge our identity as a mature, sovereign, democratic nation and reflecting on their journey would be a wise thing to do in an election year.