Wednesday, 30 March 2016

Our barking mad PM howls at the moon on economics, poverty housing.

Recently, as discussions around the concept of an Unconditional Basic Income featured at a Future of Work conference hosted by a major opposition party, New Zealand Prime Minister John Key trawled his extensive lexicon to find what he judged to be the most eloquent and edifying terminology for the concept which has been carefully trialed, and is being seriously explored in Europe, the America's, and has been been praised by a UK think tank that concluded that this idea will be essential to the proper functioning of communities in the UK. And what was our illustrious leaders carefully chosen nomenclature? Would you believe "barking mad".

I'm sure there will be some surprise among National's voters as they learn that Dear Leader has declared them insane, as they have already come to understand that work for wages will be no longer enough to sustain the masses, who are already hungry as the income distribution system has decayed enough to allow 1 in 4 New Zealand children to languish in poverty and continues to collapse.

No society can ignore the physiological fact that low blood sugar breaks concentration, inhibits learning, and increases aggression. The last thing anyone wants is 1,000,000 people with low blood sugar, a burning sense of injustice, and a growing desire to rip someone's head off. So, as much as some people begrudge giving away money as handouts to the poor, they should fear more the consequences of not ensuring decent living conditions for neighbours in their community.

As for so called bludgers, how about that Google walking away with over NZ$400m in unpaid tax, there are others of course, Apple. Inland Revenue estimates $6b in tax evasion - yes that is the one that is a crime in this country.  There is strangely a legal form of tax evasion called the "industry tax credit". Why steel from the government when you can have the government do it for you. "we'll need to offer those to attract foreign investment" Perhaps but do we need to pay locusts to eat our crops? The corporations that enter countries that offer such subsidies do fantastically well, even when we subtract the effect of the subsidy. If there is a suggestion that such subsidies come to an end, these companies have been known to threaten to leave, and often governments back down. But it can happen at a regional level too. When Seattle was campaigning for a US$15/hr minimum wage, Boeing threatened to close their Oregon factory. Eventually a deal was reached. But Boeing is a fantastically profitable company and this factory employees skilled labour mostly not on minimum wage. Why would they be so resistant to a more reasonable wage in the community? Perhaps because growing the broad economy is seen as a drain on the speculation economy, cross cutting that whole raison-detre of the "managerial aristocracy" "simply paying itself alot" for the almighty plutonomy.

Our government was dead keen to allow private foreign interests to pillage New Zealand's mineral resources. They told us we'd get royalties, but these would be piddling revenues compared to those gained by a nationalised extraction enterprise. Such revenues, could as Norway did, be put into a national wealth fund that would pay for a UBI. Today, every Norwegian is on paper a millionaire. Given how the extraction of mineral wealth is highly damaging to the environment locally and globally, and that we were hardly going to see the full value these enterprises, this plan seems doubly and triply, as Dear Leader said, "barking mad".

We hear often that Indonesia's economy is doing fantastically well, booming even. For whom is it booming. Certainly not most of its working people, their own government admits the average wage in Indonesia is around 60% of a living wage for that country. Foreign corporations are doing well though. Corrupt politicians, hangers on from the Suharto regime. Let's not forget that he came to power by slaughtering 1,000,000 indonesians with the complicity of UK, and US agencies and corporations who drew up lists of people they wanted dead. The World bank says billions in loans for development projects were diverted by Suharto to private associates and to his personal affairs.  Our leaders like to say all this is fair, but everything we buy from there contributes and maintains slavery conditions in 40degC factories, with 24hour work shifts, and worker intimidation, and thuggery against unions. And then there is the slaughter in West Papua - what's being stolen there?

Still Minister Finance Bill English's fine economic management has failed to reduce unemployment and wages have continued to shrink. While it is rare to get a pay cut, redundancies small and headline news making abound, new jobs are appearing in the market but they pay significantly less than the jobs being lost. This came as a bit of a shock to George Osborne, after a stunning collapse in PAYE revenues prompted an examination of the labour market.

Our government says our economy is growing, but this would be news to the average kiwi's wallet. Now we have people under 30, with no career narrative, they can't say anymore "this is the thing I do". Now they are commodified. like lego-blocks, common, indistinct, personality free. Just as if they were androids. Worst still actual androids are coming.  AI already drives better than humans, and Deep Learning is reaching a point where soon it will replace a large segment of well paid professional jobs. This change will happen rapidly.  Sure people can study for new jobs, but they will be outpaced by AI. The singularity is coming, and for now it looks like a giant clusterfuck for most people.

What are the benefits of a Unconditional basic income.
It's cheaper to administer - the state doesn't have bother with weekly income reporting, seeing who is shacking up with whom, means testing.
It allows people to plan ahead, avoid financial penalties, save, perhaps in vest in equipment for a small business.
It allows communities to pool resources for the common good, building infrastructure, community projects, even industrial equipment.
It lowers prices - yes this really terrifies the banksters. People can accept lower prices for the goods they offer, and they as many work to provide various goods to the market supply grows. This much more free market than what we are being offered today.
It increases stability in education, moving disrupts child education as every time move, they go a new school that has already taught material these new pupils/students have not yet seen and will not be covered again.
It reduces child hunger and many studies show how this markedly increases the effectiveness of education, this has flow on effect for greater productivity. Why not pay kids to not be stupid?
It grows entrepreneurialism, having just a little resource to spend on getting ahead has been shown to be a huge benefit, it has been shown to take people from absolute poverty to self sufficiency quite quickly.
It breaks debt traps. Money that services debt does not largely contribute to growth which depends on aggregate demand (aka household income, formerly know as wages). Any income entering a debt trap can be quickly sucked up with out creating any opportunity for improvement that would benefit either the debtor or the creditor.  Millennials are increasingly on the edge unsustainable debt, from student loans to pay day lenders.  Industry reports their greatest constraint is not availability of credit, it is weak demand.
It increases tax revenues without increasing the burden on PAYE tax payers. Sure some may pay more tax, but because they are getting paid more than the extra tax they pay it is not a burden. Largely taxes can be applied to industries which are inordinately profitable in relation to the rest of the economy, finance, insurance, real-estate. Of course plutocratic leaders of these sectors spend a lot of money on politicians to keep the proletariat's hands off of their particular golden calves and scream like little girls at any suggestion that the dark spectre of taxation should visit their door.

But why have these benefits if a UBI, when you can get busy with punching down of the poor, and lionising of the rich until a mob wielding pitchforks turns up at the door for a reckoning. Or as I like to call it a set up for a barking mad system of privation, injustice and retribution.

Rentiers have an unusual place in our economy, they are grabbing the lions share of income, 80% of income in some households, in others it's even higher, As they do they capture broad money and convert it into the speculative economies of finance, real estate, and insurance. These are growing faster than the rest of the economy, based on debt leveraging. eventually those debts will be called in. and a YUGE collapse will come. Jobs will tank (again) further collapsing income distribution. To some extent, the rentiers are themselves squeezed by their insurers, bankers, the real estate agents. who have been demanding increased premiums, interest, an commissions. Not necessarily by increased rates, but because the prices are inflating fast. Yet revenues for rentiers remain stagnant at best. Their only hope is to find more affluent tenants, thus green eyes stare longingly at state house tenants paying near market rents, who may be able to better afford actual market rents that the incumbent tenants who part time work or complete lack of work entitles them to Job Seeker allowance despite 500 job applications(like buying lottery tickets only more labour intensive - and not always cheaper).  The rentiers proposed swap does nothing to address the real problem that income distribution through the exchange of labour for wages has collapsed. Worst still it will concentrate poverty, when people who are poor themselves see poverty all around them they lose hope, they do what they can to get by - and this sometimes means breaking laws because for them survival is more compelling than legal niceties.

Keep howling at the moon for your tea-towel, rockstar economy and denials of new Zealand's housing crisis - Rentier in Chief Mr Key, your lease hold on the Beehive is due to expire, Hasta la vista baby.

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