This monograph is one of an excellent series which aims to put out “short books on big subjects”. The authors are both tax specialists, and one of them, Deborah Russell, adds a disclosure that she is also now an MP, for Labour. We might add another admission: she was a judge for the (since ended) Roger Award for the Worst Transnational Corporation Operating in Aotearoa/New Zealand, in both 2015 & 16.

As the authors point out, “fairness” is a key Kiwi virtue, and if there is a perception that taxation is levied unfairly, the country will be in trouble. Russell and Baucher’s take is that, fiscally speaking, we’re not doing too badly. Of course, it’s all comparative. The authors deal very much within the limits of what is presently attainable.

NZ Is Kind To Its Wealthy

The top tax rate of 33% is paid on income above $70,000. To compare this with the usual suspects, our Five Eyes mates, Australia and the UK, have a top rate of 45% and the US has 39.6%. This means that even within the “Anglo-Saxon” economies – the Organisation for Economic Cooperation and Development (OECD) economies that have most ardently embraced neoliberalism’s drive to bring on inequality – New Zealand is kind to its wealthy.

Is $70,000 a lot of money? It’s closer to an average amount these days, and for a family with a mortgage not much of it will remain after the kids’ ballet lessons, rugby boots and school fees have been paid. “Bracket creep” refers to the way inflation is continually upping the numbers, and to treat teachers and truck drivers as having the same ability to pay as NZ’s frequent millionaires – and even billionaires - is not efficient, or fair. The “rich” could be considered to be better off than the present ceiling suggests. And there is plenty of room to add a further category – or categories - to catch the seriously wealthy at a higher rate.

Neither is it fair that in 2010 goods and services tax (GST) was boosted to 15%. The affluent pay only a trifling percentage of their income on day to day consumption; the middle classes spend almost all their money on it, and the poor, all of it - and often need to incur debts to keep going. The high GST is regressive and to lower the percentage while upping income tax on the wealthy would be both fairer and a more efficient way to generate societal wellbeing.

To allow perspective, the authors point out that in the last (Muldoon National) government before the 1984 Lange Labour government ushered in its neoliberal experiment, a top rate of 66% was levied on income above $22,000 (i.e. $75,000 in today’s terms). In 1988 the rate became 33%. This was said to be equitable as it treated everyone the same.

While they do not comment on Rogernomic logic in this context, the authors do endorse the theoretical simplicity of Geoffrey Palmer/Roger Douglas when it comes to GST, arguing against any social engineering such as has been mooted, for example, to encourage children to be offered cheaper fruit and veges and to discourage sugary soft drinks.

With the “precariat” being squeezed by short term contracts and a severely weakened trade union presence, financial insecurity is being constantly – and deliberately – compromised. Between 1990 and 2006 the number of superannuation schemes in NZ fell from 2,863 to 576 and the number of workers covered by them fell from 22% to 13%.

The aspect of taxation that has generated the most comment in recent years is the debate around capital gains. Like most economists, the authors see the logic for such a tax as compelling. In the OECD jurisdictions they’re certainly common and enjoy a general acceptance with the public. Not here in NZ, where politicians tremble before the threat from vested interests that is so persuasive that it does not have to be spoken out loud.

Since Thomas Piketty’s exhaustive analysis in his “Capital In The Twenty-First Century” *, the case for taxing wealth has been increasingly heard. Piketty’s thesis is that inherited wealth in the form of property and investments will always tend to increase more than earned income from work. That being the case, it is hard to resist the idea that wealth needs to contribute more to the country than it does. * For a detailed analysis of Piketty, see Bryan Gould’s “Capitalism Produces Greater & Greater Inequality: Ever Increasing Concentration Of Wealth Among Owners Of Capital” in Watchdog 136, September 2014, http://www.converge.org.nz/watchdog/36/06.html. Ed.

Some of the rationales offered by officialdom for not taxing wealth might strike the reader as being tortuously evasive in their desire not to offend the status quo. Gareth Morgan’s tilt at the matter during the 2017 election came from a more honest motivation but was short of compelling.  The authors have a good look at the looming debate we might expect: how and if land might be fairly taxed.

Transnational Corporate Tax Dodgers

Tax evasions by foreign corporations deprive the nation State – all of them – of massive amounts. We’re given the notorious examples of Facebook and Google. In 2014 the former paid the NZ Treasury $43,000; the latter paid $233,000. The authors point out that the biggest players in this game exploit differences between countries rather than loopholes within them, so what is needed is a coalition of governments uniting to change the rules.

This won’t be easy. Not long ago, Ireland got upset at the very idea of asking its parasite corporations to pay a fair share. They’re OK with the race to the bottom that current practices encourage and there is little evidence that other countries of comparable size – like NZ – will be any bolder. See Murray Horton’s “Taxing Times For Transnationals? We Live In Hope”, in Watchdog 147, April 2018, http://www.converge.org.nz/watchdog/47/03.html. Ed.

The Tobin tax (named for the economist who proposed it) would levy a small charge on financial transfers as one way of discouraging the sort of speculative gains that gave us the 2008 collapse. So, it has been derided by corporate interests and their surrogates in the media. It would have been helpful had the authors given the idea space, but it is not mentioned. Neither is there room in a brisk survey to consider NZ’s role as a tax haven, as revealed in the Panama Papers. This awaits further detailed research.

“We should smile when we pay our taxes”, the authors conclude, because without a robust public purse civilisation would not be possible. Of course, that is the case, but now the American stage is occupied by Donald Trump and his mates in Poland, Hungary and Italy – to name just three other countries lurching to the extremes. A big part of why Trumpism insults and destroys governmental norms is so that Big Money and its needs are not held to account.

“Politics, logic and tax are rarely comfortable bedmates”, the authors sigh, hinting that they might have wanted their critique to go deeper than it does. There is some modest progress to report. We need a more coherent policy that avoids the ideological silos of neoliberal orthodoxy, and the Ardern government has implemented little steps towards a more pragmatic approach by providing tax credits for research and development, and by introducing a GST on e-buying. It’s not much, no, but it’s a start.

THE CANDIDATE:
Jeremy Corbyn’s Improbable Path To Power
by Alex Nunns, OR Books, UK, 2018

The candidate was chosen because he had no chance of winning and the British Labour Party was not keen to embarrass a more likely representative. Labour was so far behind the governing Conservatives that there was none of the usual hopeful bravado. That was why Jeremy Corbyn, a leader of the Leftist Campaign Group, with just 24 of 353 Labour MPs, was picked as Party Leader. With the prevailing Rightwing MPs sure that any squeak from Labour’s mouse would serve only to augment the Tory lion’s roar, they were hoping to sit out the imminent election by offering as little as possible.

The Rightists, dubbed Blairites, named for Tony Blair, PM from 1997 to 2007, were into what Blair had called the Third Way, the other two ways being traditional Labour and traditional Conservative. Labour’s problem, said Blair, was that it stood for now irrelevant and unpopular notions. “All the isms”, quipped Tony, “are wasms”.

In this account, penned by a Labourite who lets slip that he too did not originally support him, Corbyn comes across as a thoroughly decent bloke, the sort you’d have a cuppa with after the seminar on GBLT rights. He’d been an MP for a London constituency for 32 years, during which, we’re told, he had made no enemies.

There are repeated claims along these lines. Corbyn was universally liked and admired for his consistently principled positions. A significant example: in 1998 he was the only Labour MP to defy the whip to support a Liberal Democrat amendment to the Human Rights Bill to outlaw discrimination based on sexuality. This was twelve years before an Equality Act was passed. Such is the tediously petty nature of modern parliamentary democracies that what matters to MPs is not what sense nor morality dictates; it’s all about whose tribe is claiming the credit.

Dangerously Honest

Corbyn had always been seen by the Blairites as dangerously honest. Tories had always ignored him, knowing only that the man wore bad suits and prattled on about loser issues like Palestine and Sinn Fein. Uninterested in the baubles of office, he was to be put up as a “caretaker” until somehow, someday, the Tories might become vulnerable and a shiny new Blairite could front operations.

The Blairites had always wanted to keep control of Party matters well clear from the membership, who could not always be relied on to hold correct views. But by 2015 they had changed their minds, assuming that, after years of Tony’s rule, New Labourites would be “centrist”. In Scotland at this time the Scottish Nationalists had 56 MPs and Labour but one. Corbyn recognised that this was not really about a traditional Labour stronghold opting for independence; it was a vote against Blairism, ideologically centred in the City of London, and its refusal to oppose Tory austerity.

“Ideologically” our diarist observes, the Blairites “exhibited all the signs of rigor mortis”. This was necessary in that by abandoning the wasms they had nothing to say. Offering not even token opposition to Tory nostrums, they stood for nothing, preferring to stand aside. As the Labour Right just knew that any mention of those embarrassing wasms would grow the Tory vote, they perfected instead the meaningless abstractions of corporate-talk. A candidate, in the example cited here, needs to be “credible, compassionate, creative and connected to the day-to-day realities of life beyond the old labels of Left and Right”. She needs to “make life better for families”.

Beyond the empty alliteration these words say nothing. They offer no information about what policies might be enacted. The real message is a coded one: do not vote for Corbyn, whose antiquated wasms repel decent ordinary mums and dads. The Labour Party had actually moved to the Right of the Conservatives, with the Shadow Chancellor (the Minister of Finance) in waiting calling for “massive public spending cuts”. 

Yes, Labour would have gone into the election inviting its supporters – the millions of Britons struggling amid rampant inequality and fraying public infrastructure – to yearn for deeper austerity. In 2007 the Tory PM, David Cameron, had undertaken to match Labour’s investment. The Blairites could not even match that.

In 2008, as the Global Financial Crisis (GFC) struck, Labour’s leaders had called for the Government to run a big surplus. Some version of the GFC was the inevitable consequence of neoliberalism, with its “too big to fail ‘investment’” – i.e. speculating – banks. The collapse should have signaled the end of the deregulation mania; it should have led policy makers in the Organisation for Economic Cooperation and Development (OECD) to seek to temper the trend to corporate dictatorship. At the very least, it should have ushered in social democrats in the UK. Instead, abjectly, absurdly, the Labour Party took the blame. It had caused the crash.

Revolt Against Falsity & Blairite Bullshit

Blairite bullshit had it that Labour was losing elections because it was against “ambition and aspiration as well as compassion and care”. Meaning: Labour championed wastrels on welfare. And of course, it was said that the Party needed to move to the “centre” to gain support. That “centre”, as we have seen, was actually to the Right of the Right. The “centrists” of the 21st Century are the Liberal Democrats. Their vote collapsed (and in an earlier cycle, the Social Democrats, a “third way” that preceded Tony’s third way - when his leadership was taken to retain residual wasist Left tendencies - had also withered away).

Of course, these Parties fail. They don’t appeal to anywhere in particular beyond the banal middle ground that other Parties are said to ignore. So, there’s no reason to support them. Which won’t stop the pundits from harping on about the virtues of “centrism” next time around. The contrary explanation is the more likely. Labour’s voters deserted when no-one knew what the Party stood for. If a public relations company writes stuff about being “credible, compassionate, creative and connected” the target audience will not be inspired. They will be bored. They will think they are being manipulated as if they are oafs by a detached technocratic elite who don’t care a stuff about them.

What the spin doctors and place seekers missed was the revolt against this falsity. A characteristic example was the “no cuts” call from the Beard Liberation Front, who looked at the hirsute Corbyn in his op shop suit and liked what they saw. Even as the Corbyn bandwagon gained speed, MPs and the media, who never mix with the mums and dads they patronise, did not notice the change. When at last polls confirmed that the “unelectable” Corbyn was ahead of all his rivals for the leadership, there was at first bewilderment and then panic.

We’re offered a sampling of the comments from the BBC and the “quality” papers. Support for Corbyn was “scary”; “they’re morons, morons”. If Corbyn did become Leader it would be “disastrous for the Labour Party”. Was this the “longest suicide note in history?” asked one of the most influential columnists. Another snorted: “People need to get a grip”.

Hostility to Corbyn and the majority of Party members who agreed with him was universal across the media (in her NZ Listener column [25/6/18] the usually cheerful Jane Clifton, writing about Shane Jones, adds a gratuitous and unexplained reference to the UK’s “vengefully hyper-Left Labour Party”. She must have read the UK papers and ignored the actual policy statements. Thus, the conventional unwisdom spreads). The Guardian is the most influential sort-of-progressive outlet. We’re told that despite the paper’s constant ridiculing of Corbyn, 73% of its readers voted Labour. 51% of them supported Corbyn as Leader, with the other four “centrist” candidates garnering 25% between them.

Young people were among the most likely to support Corbyn although – of course – they were also less likely to vote, with but 52% of 18 to 24 year olds turning up at the polls, as compared to 79% of the over 65s. These figures suggest that were younger adults bothered to take a few minutes to vote every four years or so there could be a permanent majority for social democracy. Their refusal to vote must be especially annoying for Labour because big crowds of the young shouted for Corbyn at rallies which consumed a lot more of their time than the simple act of voting would have.

For the young, who rarely read newspapers, the rants of the Murdoch tabloids would not have been a barrier for a progressive vote. Living in a post-Cold War environment, they found the hysteria absurd. Corbyn was criticised by what’s (inaccurately) called the “mainstream” for not having more to say about Brexit, but he wanted to focus on core domestic issues. There would have been calculation in his reluctance as 2/3 of Labour voters were Remainers but 2/3 of Labour areas were Leavers.

Ideas Not “Unelectable” At All

So how was it that the “loony Left” Corbyn, the old man with the beard, swept aside his Blairite rivals and then almost caught up the robotic Theresa May? Issues he emphasised at his energetic rallies included a living wage, a winter fuel allowance, and student fees. These modest themes are identical to those being advanced by the New Zealand Labour Party at the same time, and they are not at all “unelectable” ideas.

In the event Labour’s 9.5% gain was its biggest since the epochal 1945 election, while the Tories garnered 42%, the most they had won since 1992. Four conclusions suggest themselves: the “centre” could not hold, as it offered nothing; the Conservative vote held because its core supporters understand their class interest; Labour did well because it offered some practical solutions to the concerns of ordinary people – and the media and the Blairites should get out more.

Blair is a despicable type. Not content with ruining Iraq with all the daily outrages that have followed from his war, he tours the world pocketing huge fees for offering to broker a Middle East “peace”. He is treacherous enough to have openly called for Labour’s defeat. As the author notes, he never slums it with the hoi polloi, sending his media invites only to the safely smooth and insincere. You want some wasms, Tony? How about sending neoliberalism and managerialism into the past tense?   

The author’s conclusion says it well. Corbyn is that rare animal, a politician who is actually “authentic”: “Every time he opens his mouth there is a dangerous possibility that he will say something interesting. People listen. He is actually communicating with the audience using language they understand. Politically he is well to the Left of most in the room, but they appreciate that he is expressing clear, jargon-free opinions. And what he says sounds like it makes sense”.

DISASTER CAPITALISM
A Film By Antony Loewenstein

Afghanistan

The years roll by but the news from Afghanistan scarcely changes. From the dry hills in landlocked Asia we glimpse mad mullahs shooting their rifles into the air. We see Humvees straining up a mountain pass and wait for the ambush. Underneath the banner news rolls through: a suicide truck has blown up a dozen pedestrians in Kabul.  

Few of the many disasters that our information screens send our way are as wearying as the scenes from this war, the one that 30 years ago was dubbed “the forgotten war” because sometimes, back then, it wasn’t getting much air time. These days we’re all too likely to hear the inevitable soothing words that follow from the President, but whoever he is this time, no-one is listening.

On comes an American general. Just a few more troops, he assures us, and all will be well. Just a few more years and we’ll deliver you a shiny new democracy. Be patient. Rome wasn’t built in a day. But despite the assurances of the nation builders, peace in Afghanistan hasn’t been built in centuries. The waste, the futility of it all has a cartoonish quality: the US Army as Homer Simpson; the jihadi as … Jihadi. Boring. We flick the channel to the newest cooking show.

It’s the lack of any of this tedium that makes Antony Loewenstein’s analysis so welcome. By steering clear from cliché we’re allowed to see Afghanistan as the sort of place – an open plain, not some dizzying crag - that is not all that different from some parts of Loewenstein’s native Australia, perhaps, or America. He gets driven just an hour from the capital and talks to some quite normal locals. They were promised decent jobs and social development from a mine. It becomes clear that the foreign corporation never intended to make good on the deal, and that the Government’s undertaking to hold the company to account was similarly fraudulent.

Back in Kabul Loewenstein seeks answers from the bureaucrats who oversee the mining industry, No, Mr X is unavailable; Mr Y is busy. Mr Z? No, it is not possible. Leave the building. In other words, standard obstruction, standard corruption. Afghanistan’s misery is not primarily religious or tribalist. It’s the lack of trust that spawns those reactions. Fanaticism and tribalism are the poisoned fruit that grow from the seed of betrayal.

Loewenstein is showing us that, far from being uniquely messed up, Afghanistan is a template for a more general failure. That the mining company happens to be Chinese is an additional advantage in that the offender is not wearing the usual black hat. Villainy is not the monopoly of swaggering Uncle Sam. Take unaccountable big money and a corrupt State and moral failure is universal.

A modernist Afghan is interviewed, putting the case for the US to remain. If the troops go, he suggests, the warlords will swarm into the vacuum and there will be chaos and killings for an indefinite period. But what’s the alternative? The Vietnam gambit was often “to destroy a village in order to save it” – that’s a quote from the 1960s, not a mischievous paraphrase – and killing in Afghanistan will beget only more killing. Maybe everyone else just needs to leave them to it.

Loewenstein tells us that the amount the US military has cost in Afghanistan is more than what it invested in Europe after World War 2. As his topic of disaster capitalism is to do with how the world’s bullies go about “making money from misery”, that might be a reason his treatment ignores all the fundamentalist mayhem.

The huge spend has been about resisting the Taliban and now ISIS - and before that, let’s not forget, the former USSR (Union of Soviet Socialist Republics, better known as the Soviet Union). As such, while the post-World War 2 Marshall Plan set the US up for global dominance and hastened Europe’s recovery, the misadventures in Afghanistan have been unproductive to a point that future observers might regard as inexplicable (even Establishment types are now saying that about the domino theories that launched the Vietnam follies).

Just as it’s more than a truism – more a platitude – that wars never turn out how the belligerents intended, so too are the conventional wisdoms that inform life at home a poor guide for how Johnny Foreigner will react to being invaded. He won’t like it. So, it is that while the wise men in Washington are accustomed to thinking in terms of spending money in order to achieve results, in Afghanistan the opposite occurs. More money and more soldiers equal more chances for cock-ups and corruption.

As a frequent US visitor puts it here: “The more I go, the less I see”. More money being poured into the sinkhole makes matters ever worse. As he notes, saving money takes too much time. We’re in a hole. Keep digging and we’ll find a way out. Duh (the joke is that sometimes you win even when you lose. Vietnam now is much as US warmongers would have hoped it would have turned out to be had they won the war).

Haiti & Bougainville

Loewenstein’s other visits were to Haiti and Bougainville. In the former, US cash was meant to aid recovery from a devastating 2010 earthquake. This was very much a Clintonian intervention. We see Bill and Hillary in all their smarmy complacency rabbiting on about an investment zone where their corporate mates provide factory work for locals at five dollars a day. But the enterprises are not where the quakes struck. There, nothing has changed.

The final stop is closer to Loewenstein’s Aussie home, where another mining giant, Rio Tinto, has left a ruined landscape and a shattered society. Villagers faced a basic dilemma, one that confronts all such ravaged places: Do they want the mine to reopen so that they have a job, or do they want it to remain closed so that they can somehow, sometime, recover a stolen identity? It’s a fitting place to end this skillfully constructed doco. There is one final deft detail, tying the themes. Just as we’re given Afghanistan minus the hackneyed images, we see the usually ubiquitous Donald Trump only to conclude matters. He has spent one trillion dollars on mining ventures.