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Monday, November 10, 2008

The new statesman

Sound familiar anyone? A politics of aspirational individualism is not a new phrase: indeed it is the phrase the entire US model has been built on. Like John Key, the poor individual makes good and rises to success through the very beads of sweat of his own work. It is the National Party narrative of rags to riches, of entry to the coveted realm of the selected few, the notion that we can all rise above our constrictions to bathe in the rewards of success.

Like Owen Glenn's Bond-like entrance into New Zealand, Key's Corporate Cabs ascension to the glittery interior of a swanky party at New Zealand's premier casino has captivated our fair nation. While Key's ascension speech proved he certainly ain't no Oprah without an autocue, the message of aspirational politics clearly resonated with voters on election day who voted en masse for "change" (or at least a move away from what they considered the minutae of politics).

So if change is related to a politics of aspirational individualism, what does this mean for people? It means more than just the battle over whether the Government or business can run our resources more efficiently, it signifies a shift in emphasis from the government to the individual in dealing with the key issue a National-led coalition will be facing: the problem of the economy.

We, like the rest of the world, need to keep spending. If we stop spending, our economy will collapse. The financial turmoils of the US sub-prime markets have sent off a chain effect across economies. Spending in the US is slowing alarmingly, while surveys indicate that consumer confidence has dropped from 50% to 37%. We are now a nation of debt attempting to stem the tide of being dependent on a global market. The National party intends to bring in a series of tax cuts to act as a stimulus to the economy and encourage us to continue spending. Tax cuts, in many ways, are a bandaid to greater systemic problems with the way our economy runs.

American Canadian economist John Galbraith was writing on these problems more than four decades ago. Galbraith, a Keynesian, noted that for the first half of the 20th century following the growth of industrialisation, capitalism was democratising the experience of consumption. Everyone was buying goods, enabled by their mass production. However, Galbraith was alarmed that during the latter half of the 20th century, the wealthy were beginning to limit their consumption and accumulate wealth, whereas the poor kept spending. This meant that running the economy would in many ways be dependent on the poorest people. In order to keep the economy turning over, governments would need to find a way of ensuring that money kept circulating through these groups. The solution to this issue Galbraith identifies has been the creation of a credit market that allows people to begin borrowing the money that they otherwise wouldn't have creating the conditions for the turbulence in the economy we now face. This is why two-thirds of the countries in the OECD have experienced a widening gap between rich and poor in the last five years, the majority of the wealth becomes concentrated and, like a house of cards, the potential for accumulating further wealth and thus stimulating the economy becomes dependent on those who have the least resources continuing to circulate money. This is also why many of the countries experiencing the most growth are those developing nations, and highly industrialised nations like the US are beginning to plateau (of course with the exception of Ireland).

So how will National deal with this issue? The idea is through a series of progressive tax cuts, household spending will rise up to levels similar to before. Further gains can be made through streamlining Government, thus giving more money back to the taxpayer. The problem is that this doesn't necessarily fix the problem. American taxpayers received a hefty cashback from their Government preceding the recession, but once spent, returned swiftly back to square one. Streamlining Government spending to a business model didn't resolve the problems in the US, it exacerbated them as essential services now resided in the hands of business, rather than the accountable hands of Government. As Government was linked to business, the interests of these groups did not necessarily coincide with the need for a democratic Government to strive to take care of the interests of the people. The increasing gulf between rich and poor meant that those who could not afford did not have access to vital resources such as healthcare. Having too many poor poses a problem for the security of the wealthy. Dealing with this is not an exercise in redistribution under this model, it's a business opportunity - you employ more police, build more prisons, or in the case of New York mayor Rudolf Guiliani, turn the city into a police state and buy homeless people bus tickets to San Francisco. Making wealth at the expense of an unstable, unsafe society under the neoconservatives has been one of the major reasons for Obama's election.

Key's rhetoric smacks of neoconservatism, no surprise considering the National party's ideological affinity. A politics of aspirational individualism has the potential to have great benefits for our economy in the short-term. We need, however, to make sure that these benefits are also maintained for the future, retain assets and understand the repercussions of our decisions.


At 10/11/08 11:05 am, Anonymous Anonymous said...

Excellent analysis Phoebe, some of the best I've read on Keys election triumph.

At 10/11/08 12:09 pm, Anonymous Anonymous said...


like miserable cookie cutter suburban houses with nearly new Holden Commodores parked outside.

like bequiffed provincial matrons decked out in Trelise Cooper threads and a smug sense of superiority.

like the casually racist patron of the local rugby club, a 'self made' man who doesn't see the colour of skin and social advantage actually made him.


At 10/11/08 12:12 pm, Anonymous Anonymous said...


like miserable cookie cutter suburban houses with nearly new Holden Commodores parked outside.

like bequiffed provincial matrons decked out in Trelise Cooper threads and a smug sense of superiority.

like the casually racist patron of the local rugby club, a 'self made' man who doesn't see the colour of skin and social advantage actually made him.


Yeah, those disgusting proles shouldn't be allowed to vote!
Who'd a thnk there be so much bitterness from the left?

At 10/11/08 12:16 pm, Anonymous Anonymous said...

Don't forget that Obama is more right wing than National.

Peg spending to inflation and stimulate growth through tax cuts.

Good work on those mainstream tv shows Bomber.

At 10/11/08 12:23 pm, Blogger Phoebe Fletcher said...

Yes but Obama attempting to move a nation based on right wing philosophies to the left - somewhat akin to the restorative work a future Government may have to do.

At 10/11/08 1:12 pm, Anonymous Anonymous said...

Can you believe how dumb NZers are?

At 10/11/08 1:15 pm, Anonymous nepenthe said...

anon12.16 Absolute bullshit. Obama plans to strengthen the unions. National plans to smash them. Obama is raising taxes on the wealthy National is cutting them. Obama is bring in windfall taxes to oil companies. Obama wants to make America a world leader on climate change. Most of National don't beleive it's happening. Obama wants to raise the minimum wages across the states. National hasn't made any commitment whatsoever. You're talking absolute shit and you know this.

At 10/11/08 2:22 pm, Blogger Truth Seeker said...

Progressive, redistributive taxation lead to the most prosperous civilisation in human history.....until the rich decided to stop paying the tax at that level and sought the political power to enbale that view. Portraying it as good for everyone - aspirational - was the bait.

At the SAME TIME they began to move the jobs that pay the lower orders the money they spend to even cheaper countries. The long term macro-economic effects of this shift, accelerating over the past decade, are now being felt and are not trivial.

There is much more to the big picture, but this aspect alone was going to create trouble all by itself eventually.

You can't keep cutting wages and conditions and expecting overall spending power to increase. Not possible....and cheap credit on inflated asset values only delayed the inevitable.

At 10/11/08 2:24 pm, Anonymous Anonymous said...

Good luck to President Obama but America will always be to the right of centre.

At some moment paranoia about the rise of asia/russia will supersede left-wing ideas and USA will remember the policies that made it the world's only superpower.

phoebe: are you suggesting Obama has a secret agenda? "may" is the important qualifier there....

nepenthe: look at the tax brackets, now understand why NZ productivity/worker is .56 of the State's!

At 10/11/08 5:59 pm, Anonymous Anonymous said...

Key wants NZ to be more like the US.
More productivity of workers means higher exploitation.
More productivity for capital (a la Roger Douglas) equals higher profits.

At 10/11/08 6:21 pm, Blogger Phoebe Fletcher said...

Not suggesting he has a "secret" agenda, just suggesting that in order to get progressive reforms through on domestic issues I think there may be some trade off at an international level.

Obama is fresh air, but the stale breath of neocons still may be holding the tiller in that there are an awful lot of people with less progressive views he has to get that past. I don't trust his advisers, particularly those that have been buying books on the Weimer Republic.


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