Joe Hendren

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Tuesday, September 29, 2009

Kia kaha Sue, we will miss you

On Friday Green MP Sue Bradford announced her retirement from Parliament. While she expressed a little regret she that she would not have the opportunity to change things for the better as Minister of Social Development or Minister of Housing, I hope Sue leaves Parliament with her head held high.

Some ministers manage to go through their entire ministerial career without even passing one significant bill. Some even manage to pass no laws at all. Yet Bradford as a backbench MP, introduced three private members bills in one parliamentary term, and succeeded in having all three passed into law. Bradford proved you didn't have to be a minister to get things done.

A significantly greater number of 16 and 17 year old workers will now be paid adult rates for an adult job, following Sue's bill that sought to remove youth rates. The bill as passed got very close to achieving its goal, despite significant opposition from senior Labour party ministers. Again, thanks to Sue, mothers in prison will now be able to keep their babies with them for up to 2 years.

Her most controversial and significant achievement is the Child Discipline Act which removed the defence of 'reasonable force'. Child abusers were using this defence in court as an excuse for excessive violence towards their kids. In the future I suspect many will look back at this debate in bewilderment and wonder how on earth a small number of small minded (so called christian) conservatives were so successful in hijacking the debate over the 'anti-smacking' bill. Bradford's opponents were never challenged on their wider agenda - promoting a narrow view of family values where the wider community has no say in the education and development of the value systems of children (this aids indoctrination).

In an interview with Katherine Ryan on Nine to Noon on Friday, I thought Sue identified a key insight about this debate. Radio NZ only keep interviews on their website for a week, so I retyped Sue's words as I thought they deserved more than being wiped off the internet after only a week. When asked how being on the front line of the debate over Section 59 bill had affected her Bradford said:

"I have no regrets, I am really honoured that I was able to play the role in this very deep controversy."

"It has hurt me and saddened me. I think what has affected me most, when I think back on again quite recently, is the violent minds and natures of some of the people who are so keen to retain the legal right to assault their kids as part of bringing them up, that that kind of psychological violence is then directed at people like me who are the champion of the other side."

Bradford confirmed she had received death threats and "really nasty emails". She also expressed some dismay that:

"(In) our country, so many people are so fundamentally violent in the way they see the world; and the way this reflects on how they view their children as property. Anything I've done to be able to help to begin to shift that culture seeing our children as property, seeing our children as worth less than us adults to see our children as less than human in some way that we should be able to legally hit whack them etc as part of bringing them up. I just hope we continue to change that culture."

It is an irony that in the same day Bradford spoke these words, the right wing of the blogosphere went out of their way to demonstrate their accuracy. Just take one look at Whale Oil or the comments on Kiwiblog to see violent minds at work. That said, its good to see both Farrar and Whale Oil have spoken out against the death threats.

While Bradford was talking about the controversy over the Child Discipline Bill, I could not help but think her words are also relevant to the issue of Palestine. In defending the right of the Israeli state to make indiscriminate and disproportionate war on Palestinian civilians, there are indeed some who appear to direct psychological violence against those who dare to question the motives behind Israel's actions, and highlight the daily injustice metered out to the Palestinian population. Responding with an accusation of 'anti-Semitism' in this context is nothing more than the actions of a psychological bully who in practice is cheapening the cause of genuine cases of anti-Semitism in this world.

PS: I would have posted this in the weekend but for losing the first version of this post thanks to a computer crash, arrghh!

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Monday, September 21, 2009

Why capitalism fails

The value of a scientific theory is based on its ability to predict phenomena and events, and at least amongst those of a more rationalist persuasion, its explanatory power. Yet free market economics completely failed to predict and explain the financial crisis of 2008-2009. Many are now leaving the free marketeers to their ever increasing Ptolemaic circles, excuses and epicycles and are looking for explanations outside the free market religious cannon.

This has lead to a resurgence of interest an American economist who did see what was coming, Hyman Minsky. Stephen Mihm in The Boston Globe recently wrote about how Minsky's ideas are being given new life in the context of the financial crisis (Hat tip Sam F).

"Minsky called his idea the “Financial Instability Hypothesis.” In the wake of a depression, he noted, financial institutions are extraordinarily conservative, as are businesses. With the borrowers and the lenders who fuel the economy all steering clear of high-risk deals, things go smoothly: loans are almost always paid on time, businesses generally succeed, and everyone does well. That success, however, inevitably encourages borrowers and lenders to take on more risk in the reasonable hope of making more money. As Minsky observed, “Success breeds a disregard of the possibility of failure.”

"As people forget that failure is a possibility, a “euphoric economy” eventually develops, fueled by the rise of far riskier borrowers - what he called speculative borrowers, those whose income would cover interest payments but not the principal; and those he called “Ponzi borrowers,” those whose income could cover neither, and could only pay their bills by borrowing still further. As these latter categories grew, the overall economy would shift from a conservative but profitable environment to a much more freewheeling system dominated by players whose survival depended not on sound business plans, but on borrowed money and freely available credit."

"Once that kind of economy had developed, any panic could wreck the market. The failure of a single firm, for example, or the revelation of a staggering fraud could trigger fear and a sudden, economy-wide attempt to shed debt. This watershed moment - what was later dubbed the “Minsky moment” - would create an environment deeply inhospitable to all borrowers. The speculators and Ponzi borrowers would collapse first, as they lost access to the credit they needed to survive. Even the more stable players might find themselves unable to pay their debt without selling off assets; their forced sales would send asset prices spiraling downward, and inevitably, the entire rickety financial edifice would start to collapse. Businesses would falter, and the crisis would spill over to the “real” economy that depended on the now-collapsing financial system."

From the 1960s to the last years in the 1990s, Minsky warned of the dangers of securitisation and other forms of 'financial innovation'. John Kenneth Gailbraith's (1990) explanation of financial innovation seems particularly relevant: "The world of finance hails the invention of the wheel over and over again, often in a slightly more unstable version. All financial innovation involves, in one form or another, the creation of debt secured in greater or lesser adequacy by real assets". In tracking the changing face of New Zealand capitalism in the 1980s and 1990s, Bruce Jesson tracked the 'financial innovations' that accompanied Rogernomics.

For nearly half a century few economists listened to Minsky.
"By the end of the 20th century, the financial system that Minsky had warned about had materialized, complete with speculative borrowers, Ponzi borrowers, and precious few of the conservative borrowers who were the bedrock of a truly stable economy. Over decades, we really had forgotten the meaning of risk. When storied financial firms started to fall, sending shockwaves through the “real” economy, his predictions started to look a lot like a road map.

“This wasn’t a Minsky moment,” explains Randall Wray. “It was a Minsky half-century.”

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Sunday, September 13, 2009

Open Country Cheese locks out workers seeking a union agreement

Open Country Cheese, a dairy product manufacturer set up by a couple of former National party cabinet ministers is planning to lock out its 100 staff for the audacity of seeking a collective agreement with basic redundancy and transfer of undertakings protection.

The company is also adopting aggressive public relations stance by telling lies about the wage claims made by the members of the Dairy Workers Union, and is enlisting farmers to make unsubstantiated comments in Open Country press releases, and encouraging them to scab on the workers by doing their jobs while they are locked out. The farmers involved are nothing but a modern version of Massey's Cossacks - the farmers who came to town to break the 1913 Waterfront dispute. The farmers ought to be wary here - the distaste of the towns for their behaviour was one of the drivers behind the formation of the Labour party in 1916.

Nor should the farmers be so ready to support Open Country's outright bullying tactics. One only needs to look at how the supermarkets have treated their suppliers to see how easy the company could later decide to maximise its own profits by pressuring the farmers into accepting lower and lower returns.

Open Country farmer Brendan Barrett claims the Dairy Workers Union approach is “outrageous” given the perilous state of the industry. “How the Union can credibly claim anything other than the status quo is beyond me. Suppliers have just had a 35% pay cut this year, and forecast another 15% drop this year. Our own returns have fallen 50% and yet the Union is demanding huge page increases."

Three days after this Open Country press release, the company increased its advance payment to farmers from $2.90 per kg of milk solids to $3.05, which appears to contradict the attempt at doom and gloom above. Is the timing of this increase really an coincidence?

Over on Red Alert Dairy Workers Union National Secretary James Ritchie outlines the very moderate claims the workers are seeking:
"There is no wage increase on the table. Workers are seeking a collective agreement which protects them from being made temporary or casual at any time. They want a say on how their rosters and hours of work can be changed so their family lives are not disrupted without notice and consultation. They want temp workers to be paid the same rate for the job after 3 months. They want temp workers to be made permanent after 11 months service. They want redundancy compensation if made redundant and they want to be paid for a meal break if they can’t leave the plant. - Most of all they want to be treated as human beings- not a commodity to be tossed aside when no longer required. They want decent jobs."

The Dairy Workers Union have not been involved in a strike for 20 years, so attempts to portray them as a 'radical union' are not going to have any credibility. Faced with a deeply ideological employer it seems Open Country have given the union no other option but to issue notice of strike action. Like the attitude of Infratil towards their bus drivers, the company have grossly overreacted to the situation by imposing a lockout.

Talleys Group, who the Standard have dubbed 'the worst employers in New Zealand' are the largest shareholder in Open Country Dairy, which in turn owns 100% of Open Country Cheese. Andew Talley and former National party cabinet minister Wyatt Creech are on both Open Country boards.

NoRightTurn points out that the actions of the company in imposing the lockout are a prima facie case of illegal undue influence, as employees have a legal right to decide whether to join the union or not. Open Country have demonstrated their ignorance of current industrial law by calling for industrial action to be restricted in the dairy industry, when in fact the industry already is classed as an 'essential industry'. There is no way protecting farmers profits should be treated as essential as firefighters, so NoRightTurn has drafted a bill to correct this error - it would be great if the bill could be drawn from the ballot in the next six weeks...

Please support the cheese workers at Open Country and help beat these ideological corporate bullies.

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Wednesday, September 09, 2009

Big Business wants First Past the Post to Privatise

Last Saturday the NZ Herald published a column by deputy editor Fran O'Sullivan which revealed that Cabinet was to begin discussions on a public referendum on Mixed Member Proportional(MMP) this week. O'Sullivan makes it clear she supports First Past the Post as an electoral system, if in a runoff against MMP.

O'Sullivan also stated a referendum on MMP is "clearly unfinished business for many Kiwis". Its interesting she used Roger Douglas' turn of phase here, as when she mentions Kiwis she means the section of the business community who genuinely believe the country should be run for their benefit foremost, and ask the rest of us to believe in the trickle down theory. O'Sullivan concludes:
"Fighting the next election on an electoral system - even First Past the Post - which gave more power to the major party to implement sensible policies would do more to even the gap with Australia than endless horsetrading."

Horsetrading, in this context means that annoying thing called democracy - ie the thing we did not have when the Labour Government of 1984-1990 and National Government of 1990-96 used cabinet majorities to push through far right neo-liberal 'reforms'. Funnily enough the gap with Australia became significantly wider in these twelve years. Not that the new right would ever be intellectually honest enough to admit it might have been a combination of their chosen polices and the method of their execution.

In a later interview with Larry Williams on NewsTalk ZB (hat tip Frog), O'Sullivan described what she meant by 'sensible policies', explaining what MMP had stopped for the last decade or so.
"…various single issue or smaller parties will be able to point to wins they have had through [their] influence on the major parties that happens to be in power. But there are also some big things that aren’t happening – there are things from a business perspective. No-one can talk about privatisation… "

So there you have it - the sponger side of business community wants a return to First Past the Post in order to restart the privatisation agenda. The business community do not believe they can convince over 50% of New Zealanders to adopt their chosen policies based on a system where votes are of equal value.

In 1993 the Anti-MMP campaign was headed by Telecom Chairman Peter Shirtcliffe who bankrolled the misnamed Campaign for Better Government (CBG) along with other big business backers. I really hope some of the 1993 advertising is replayed and replayed - as it will completely do in Shirtcliffe's crediability. In 1993 CBG warned MMP would put our future at risk alongside the chorus of crying babies - yes really - see here. Now it can be seen for the scaremongering nonsense it is, as well as a dummy run for the National party's Hollow Men campaign of 2005.

Fran O'Sullivan quickly responded to Frog's post. She clarified that she only became aware of the forthcoming cabinet discussions following a question raised by a participant at business breakfast meet in Auckland. In second comment O'Sullivan said:
"To clarify – Personally I favour either FPP or STV – I do not like a system where the party vote delivers half the MPs. Would prefer to tick a candidate."

Yet there is only one system that will deliver the 'unfinished business' of privatisation that Fran champions above - a rotten borough system* known as First Past the Post. This impression is also reinforced by Fran's endorsement of Shirtcliffe's timetable for a referendum - a single referendum held in 2010, and applied at the 2011 election. O'Sullivan says "Frankly, Key should adopt Shirtcliffe's timetable. If past polling is anything to go by, many Kiwis would vote MMP down if given the chance". Clearly Shirtcliffe can't wait, and sees an opportunity to remove MMP by doing it quickly - this was also the strategy of Roger Douglas to avoid the interference of democracy.

That said, on this occasion I am prepared to give Fran the benefit of the doubt. I note she sometimes uses her columns to channel the views of others, and sometimes this can give the strong impression these are the views she also supports. Yet if Fran was being a complete partisan hack it is likely she would have downplayed the reemergence of Peter Shirtcliffe and not raised the "fundamental issue of fairness" raised by the differing treatment of Act and NZFirst at the last election, where Act remained in parliament despite receiving around 10,000 less votes than NZ First.

I would suggest people look at the campaign to keep meaningful proportional representation in New Zealand as a long game. Having journalists write stories about 'the other side' can at times be useful, as well as adding to the debate in a useful way. If Fran found out more about who was funding the anti-MMP campaign - this would be worth a few hail Mary's would it not?

* I am defining rotten borough in this context to mean any system where a vote is not necessarily of near equal worth. John Key's preferred option of Supplementary member is just a rotten borough with a thin layer of icing designed to cover up the rottenness.

PS: Fran in case I have your attention I would appreciate it if the next time you wrote one of your fawning columns about the 'benefits' of free trade with the USA you would also mention the potential costs. This comes from a solid source, the US Trade Representative's publication 'Foreign Trade Barriers', but the majority of pro-free trade business journalists either don't know, or perhaps more likely don't want to know such a document exists - if the risk is Kiwis paying more for their medications surely the public deserve better than journalists who stick their fingers in their ears and chant 'see no evil'.

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Monday, September 07, 2009

Film Archive says Happy Birthday to Vanguard Films

For 30 years Vanguard Films have done a great job recording some of New Zealand's most important social and protest movements, often raising facts, voices and issues not to be heard in the mainstream media. The Film Archive in Wellington is showing a retrospective of their work this week, with showings of their films playing each day until Saturday.

A few films have screened already, but there is still plenty of good stuff to see this week.

The Lumiere Reader summarise Vanguard's history and achievements.
"[Vanguard are] behind some of the most politically radical cinema to come out of this country, from films such as A Century’s Struggle (a film about the seamen’s union) to Wild Cat (striking forestry workers in the Bay of Plenty) to Rebels in Retrospect (the Progressive Youth Movement’s reunion in Christchurch). The films gave voice to people who were usually denied theirs in mainstream media. While the films have traditionally been marginalised (and even lambasted in Parliament) some of Vanguard’s latest efforts have gathered much more widespread coverage – films such as Alister Barry’s The Hollow Men or Russell Campbell’s film on World War II dissenters Sedition. "

I reviewed Sedition here.

Of the Vanguard films I have seen I admit my favorite is probably Rebels in Retrospect - memoirs of the Progressive Youth Movement (PYM) - largely because many of the late 1960s and 1970s activists in the film are now my friends. The PYM were a key part of the anti-Vietnam war movement, and highlighted (some previously unknown) US military links in New Zealand. Did you know a very young Murray Horton got his photo in the Press calling for a system of free bicycles for the citizens of Christchurch? That was over 30 years ago, and its still a good idea. Rebels in Retrospect screens on Wednesday.

Someone Else's Country looked at how a new right power elite imposed neo-liberal reforms on New Zealand, and is one of their few films to be screened on television, even if it did take TVNZ 11 years to get around to it. (Thursday)

I would love to see more of Vanguard's earlier films, particularly Islands of the Empire (1984) which examined the military links between the US and New Zealand during the ANZUS years. Unfortunately many of their earlier films are difficult to get a hold of, particularly as many are only on VHS if you happen to know someone who has a copy (my video recorder died years ago). There is now another political generation who would love to see these films (hint hint), so I hope Vanguard consider making them available on DVD (how about a compilation DIVX DVD?).

On National Radio yesterday Chris Laidlaw interviewed Russell Campbell and Alister Barry from Vanguard (this link will work for about a week). Short exerts of their films can be seen on youtube.

The retrospective at the Film Archive is screening until September 12. Now I wish I was in Wellington this week...

Another world is possible

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Tuesday, September 01, 2009

Left party make big gains in German elections

Rather enthused with the success of the Left party in the recent German state elections. Conservative Chancellor Angela Merkel will be feeling less confident about the upcoming federal election in four weeks time, after some significant defeats in two of the three state ballots over the weekend.

The Christian Democratic Union (CDU) has lost its majority (31.2%) in the eastern state of Thrirrua. The Left party received 27.4% of the vote beating the SPD into third place on 18.5%. If the Left and the SPD are able to form a coalition there is a chance the Left's Bodo Ramelow will become the party's first ever Premier of a state.

In the West German state of the Saarland, home to Left party co-leader Oscar Lafontine, the Left got 21.3% of the vote, a big improvement on their 2004 result of 2.4%. With 24.5% for the SPD and 5.9% for the Greens, there is the potential to chuck the CDU out of another state.

The CDU did better in Saxony (40.2%) and will probably govern with the FDP(10%). In this state the Left (20.6%) got nearly twice the vote of the SPD (10.4%).

Germany is currently governed at the federal level by a grand coalition of the largest centre right party, the CDU/CSU and the historically centre-left SPD. In the upcoming federal election Merkel hopes to gain the numbers to spurn the SPD in favor of the free market FDP.

The Left party was formed in 2007 as a coalition between a breakaway group from the SPD, WASG, largely based in Western Germany, and the Party of Democratic Socialism (PDS) from the East. WASG included many trade unionists, and a former leader of the SPD, Oscar Lafontane, who is now co-leader of the Left. Its economic policy is not that much more radical than the policies of New Zealand's first Labour Government when it was elected in 1935. Central to the economic policy of the German Left party is: "a Keynesian use of state intervention to balance market forces. In the current election program, this includes socializing the entire banking system, outlawing non-transparent financial products, hedge funds, and venture capitalism, and restricting currency markets."

In many ways the low vote for the SPD in Sunday's elections is a continuation of the loss of support that occured under SPD Chancellor Gerhard Schröder's administration, where he pushed the SPD towards more neoliberal economic policies and cut back the welfare state. Unfortunately, the current SPD leader Frank-Walter Steinmeir is regarded with suspicion by many on the left, given he was an architect of Schroder's right wing welfare and labour reforms.

The SPD has continued to refuse to form a federal coalition that involves the Left party, on the grounds that the PDS was once the old East German Communist Party. In the last federal election in 2005, a majority of Germans voted for a centre-left government, yet they got a centre-right Government instead because the SPD chose to form a government with the conservatives rather than deal with the left. Now the SPD risks loosing its brand from being in bed with the conservatives.

"On the federal level it's very clear, there will not be cooperation with the Left," said SPD head Franz Muentering after preliminary election results from Sunday announced.

Of course a better explanation for the SPD sniping, is that like other former social democratic parties that have embraced key principles of neo-liberalism, it just hates having competition to its left. The attitute of the German Greens towards the left has also been hostile, despite the Left highlighting the common policies of the two parties.

The SDP may fear the reaction of the CDU to a centre-left-left coalition, as the CDU runs hysterical scare campaigns against the prospect of a so called red-red coalition, highlighting the 'communist past' of the PDS and the Left party. I find it quite bizarre that large sections of the German media have bought into this neo-McCarthist nonsense and refer to the left as 'toxic' and the 'political pariah' of German politics.

It is time that someone called the CDU's bluff - most importantly because the CDU can't claim to have a perfect history either. One of the CDU precursor parties, the German National People's Party formed a coalition with the Nazis in 1931. As part of the short lived Government of National Concentration, the party supported Adolf Hitler as Chancellor and the Enabling Act which was the key step towards establishing Hitler's dictatorship. Another CDU forerunner, the Centre Party, more reluctantly supported the Enabling Act. To cap it all off, in December 1966 the CDU made a former Nazi the Chancellor of Germany. Chancellor Kurt Georg Kiesinger was a former card carrying Nazi and worked in radio propaganda section of the Nazi Foreign Ministry. I don't wish to make strong comparisons here, only to demonstrate that perhaps those in glass houses should not be so ready to throw stones.

There must become a point where all the huffing and puffing attempting to associate the Left with the PDS communist past simply becomes stale and irrelevant. Given the passage of 20 years, it is close to the point where the political generation with that past has passed the torch to new representatives. Even those who were involved with the Socialist Unity Party in East Germany, such as Lothar Binksy, were from the younger generation who supported Mikhail Gorbachev's glasnost and perestroika. Binsky is now part of the moderate social democrat faction of the Left, and a co-leader of the party.

The fact that the SPD and the Left have been in coalition government together in Berlin since 2001 ought to cut the wind from the windbags.

For the record I greatly admire what the SPD managed to achieve in the years after World War I, where they created a welfare state well ahead of its time, despite the crippling economic burdens of the Treaty of Versillies. It also must be said the SPD were intollerant of their left even then. But the SPD can't continue to trade on its history while appeasing the neoliberals in its ranks.

Under a political squeeze from the Greens and the Left, the SPD has adopted some politices that we would be unlikely to see from New Zealand Labour at the moment, such as a small tax rise for high income earners and free tertiary education for a person's first degree. We are talking about continential Europe here - not the wannabe Anglo American wild west.

A coalition with the Left Party may have the effect of revitalising the SPD, in a similar way to the way the involvement of the New Zealand Alliance in the government in 1999-2002 gave the appearance of rehabilitating the Labour party from its rabid neoliberal 1980s. A SPD-Left coalition would also serve to rehabitate the Left from its proported past - perhaps thats just what the SPD are afraid of.

So next month I am hoping that Germany will once again give the combined forces of the The Left, The SPD and the Greens a majority of support. Lets hope the SPD learn the lesson from 2005 and remember whose side they are meant to be on.

It is possible left leaning German voters used these state elections to send a message to the SPD - the question is - are they listening?

Unfortunately the current polls seem to indicate a CDU/FDP government is more likely, with the FDP also doing well in Sunday's state polls. One poll showed the Left party on an all time high of 15%, 5% behind the SPD, with the Greens on 10%. The CDU/CSU/FDP together gained 49% support.

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