Entering a Post-literacy World

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New Zealand Author (winter 2020)

Unlike in some other places, the New Zealand Government decided that books were not essential goods and closed all bookshops during Alert Level 4. Even during Alert Level 3 you can only buy books online.

What a contrast from when import licensing was introduced in 1938, and again in 1958, when books were among a handful of goods on which there were no restrictions (censorship aside).

We read in those days. Downie Stewart, one of the conservative Ministers of Finance during the Great Depression, imported two copies of a book at a time, reading one and giving the other to Labour MPs John A Lee and Peter Fraser. Harry Holland, Leader of the Labour Opposition, gave away just about everything he had to the unemployed, but kept his library. Sometimes, I think we should require that personalities who are being profiled to tell us what they are reading. Some may answer like Jimmy Durante’s ‘one day I read a book, I can’t remember when, but one o’ these days I’m gonna do it again’.

We do not know to what extent the Government is involved in the collapse of the magazine market which depended largely on advertising which was failing. No doubt you missed in your lockdown the arrival of the autumn edition of the New Zealand Review of Books, thanks to Creative New Zealand’s shafting of its public funding at the end of 2019. Who needs serious book reviews?

It seems to me there was an overreaction to the loss of those magazines by the literary community. Yes, the New Zealand Listener once played a central role in the literary world, but recently it has been more likely to profile a personality than a book. The NZRB was founded 27 years ago because the Listener had announced it was then cutting back on its reviewing.

The fall in advertising for print is a serious matter, especially as it was an indirect source of income for writers. The Minister of Broadcasting, Communications and Digital Media gave an insipid response when he was asked about the Australian initiative to require Google and Facebook to pay for the news that they filched from the primary news websites. Perhaps the Australians are going about it the wrong way, but they are not sitting in the middle of the road looking into oncoming lights.

The negligent attitude of CNZ towards books is exactly what the late Terry Sturm, last chair of the Literary Fund Committee, predicted. (Read about it in Elizabeth Caffin’s The Deepening Stream: A History of the New Zealand Literary Fund – by the way it’s a book; a wonderful account of how an informed and engaged government agency promoted New Zealand literature.) The literature portfolio should be transferred to the National Library.

Except the National Library  is getting a rough deal from its host, the Department of Internal Affairs. So is Archives New Zealand. A retired professor of accounting, Don Gilling, has shown that,  faced with financial repression, the DIA has diverted funds from those areas which provide services to the public to management operations.

If politicians could read, they might go to the Labour Party 2017 election manifesto which promised that the responsibilities of the National Library and Archives New Zealand would be transferred to better host institutions – perhaps to the Ministry of Culture and Heritage for the former and by making the Chief Archivist an Officer of the Parliament.

The government has made some timid attempts to implement its promise but has been stymied by the obduracy of bureaucrats concerned about losing power and the funding for managerial overheads (and, apparently, a compliant minister). Sturm called this combination ‘Villaintown’. So, the underfunded National Library is planning to dispose of up to 600,000 of its book collection; the similarly underfunded Archives New Zealand does not seem to be vigorously meeting all its statutory functions, while it has cut back public access to its files.

(And since underfunding is mentioned, is it not time to put authors’ remuneration from the Public Lending Right on a sound footing reflecting writer’s effort, by first raising the rate and then increasing it annually in line with increases in the minimum wage and the numbers of books?)

This is a long list of failures of government support for the text and its writers. Is it just this government, and its predecessors, struggle to read anything more complicated than what the lobbyists feed to them, or is there some kind of structural long-term change going on which undermining serious reading?

It is said that we are entering a post-literacy world in which most people read only the trivia, the public relations handouts, the commercial guff. If so, it will be a sadder world, a world of less imagination and lacking a public intellectual dialogue, a world in which one is ultimately judged as a consumer and worker, not as a person and citizen.

The argument is based on the rise of the web and web-based entertainment channels. It is true that new technologies change the way we read – ask Johannes Gutenberg. And it is true that the web and e-books have destroyed some categories of books such as encyclopaedias. Apparently it has changed the market for romance novels but, even so, only half of the 125 million copies of the Fifty Shades of Grey series, the most significant publication in this genre in recent years, were e-books. (In fact, 6.5 billion print books were sold over the past decade, compared to just 1.8 billion e-books.)

What is needed is a campaign; let’s call it ‘Reading New Zealand’, to get people into the habit of reading. There was such a campaign, called ‘Hooked on Books’, for adolescents based on the reviews of youth fiction in the New Zealand Review of Books. It was, of course, slashed by Creative New Zealand.

But it is not only adolescents who need to be encouraged to read. The campaign should be targeting all adults to get into the habit of serious reading. (Promoting adult literacy would be just one element.) Ideally it would be led by the National Library linking into the network of local libraries. But it would be hopeless if the National Library was still located in the Department of Internal Affairs.

Ultimately public responsibility for a post-literacy world in which reading remains a central activity, rests with the government. Perhaps it should start off, by reading what is not going on.

Debunking the Egalitarian Myth

This entry was posted in Distributional Economics, Political Economy & History and tagged on by .

NZ Herald, 14 May 2020.

An edited extract from Brian Easton’s new book ‘Not in Narrow Seas: The Economic History of Aotearoa New Zealand’.

Once upon a time New Zealand identified itself as egalitarian. New Zealanders liked to talk about their ‘classless society’, to boast that ‘Jack’s as good as his master’, to tell themselves they live in ‘a working man’s democracy’.

Hard questions began to challenge these comfortable national myths. Jack may have been as good as his master, but what about Haki? What about Jill? It was a shock when Haki and Jill started to appear in the urban working life of the Pākehā bloke.

The ultimate defence of the idea that New Zealand was classless was to claim that this was a country of equal opportunity. There are plenty of complacent anecdotes intending to prove it, for  boys from low status families were sometimes successful and the girls could marry well too.

But there was little attention to those who did not succeed, some of whom may have been equally talented. The systematic evidence, such as that collected by UNICEF, suggests that in fact New Zealand has a low ranking among rich countries on educational opportunity.

Perhaps the most charitable interpretation of the myth was that New Zealand as an egalitarian society was an aspiration; it was what New Zealanders wanted their society to be.

 Is it still true?

Inequality was fairly high before the Second World War but fell in the three decades after it. Major factors seem to have been low unemployment and the increasing trend for women to take up paid work. Perhaps the fall coincided with increasing opportunity for those at the bottom.

This trend changes in the 1980s. The fall in inequality of personal market incomes ceased and the shares between deciles stabilised.  Household shares were relatively stable in the early 1980s and after 1992.

However the story of household spending power after tax and benefit changes is very different. The changes between 1988 and 1992 markedly favoured those at the top. The tax and benefit changes markedly favoured those at the top between 1988 and 1992.

Another measure of household inequality is poverty. The data shows that poverty rose in a similar pattern, if a relative poverty line which increases with increases in the general standard of living is used.

However there was some reduction in absolute poverty from the mid-1990s as a consequence of the rising standard of living.

The poverty at the bottom of the household disposable income in the early 1990s fell mainly upon children and their carers. Poverty measurement is a complex exercise, but according to various relative poverty lines, poverty among children doubled between the pre-1990 years and the post-1990 years, following the National Government’s 1990 benefit cuts.

Add in their carers, and most of the increases of those in poverty involved households with children.

In the mid-2010s there was a major public outcry. New Zealand had been facing high child poverty for a quarter of a century – by 2015 children born into poverty in 1990 had become adults, many with their own children also in poverty.

Why did it not show up before then? The short answer is that those who looked were ignored. Governments responded to revelations of poverty by targeting income supplements to the ‘deserving’ poor: that is, broadly speaking, those who were employed.

The first was the National  Government’s Independent Family Tax Credit in 1996. At the time the Labour Opposition were extremely critical. In government, a decade later, Labour chose a similar approach with their Working for Families tax credit.

Some claimed, as though this somehow reduced the size of the problem, that the poor were mostly Māori and Pasifika. In fact, while the proportions of Māori and Pasifika in poverty are higher, on most measures there are more poor Pākehā because they are a larger share of the population.

The sadly limited social science research in this area also reported that those on low incomes had poor health as a result of poor housing and lack of access to good nutrition and medical care. There is plenty of evidence, throughout the world, that health status is related to class.

 There is less evidence about the impact of economic inequality on opportunity, but it matters. Hugh Lauder and David Hughes showed that a child from a working-class background on average had to have a significantly higher IQ in order to get into university.

This was based on 1980s data; did things get harder after 1990? Lower relative social security benefits may have helped to ghettoise the poorest.

Perhaps the most persuasive evidence is from the OECD, based on many studies from many countries. It concludes that inequality inhibits long-run economic growth.

This is largely because poor children do not acquire the skills required by a modern economy, and this drags down their economic performance. The OECD cites one econometric study suggesting that the rise in New Zealand income inequality reduced its economic growth rate.

Why might a young person in poverty not acquire skills? It may be that the poor have a parent or parents less able to bring up children. The problem may not be poverty itself, or it may be that they too were brought up in deprived circumstances, which leads to poor health, poor formal education and poor informal education such as a lack of books and computers in the home or inadequate space to study.

Lack of funding may also prevent the student from participating in out-of-school activities enjoyed by classmates from more affluent backgrounds. Students learn informally from their peers, and this learning enhances their formal education; able poorer children may adopt the ambitions of their peer group.

Many of these processes, especially the last, require the family to have enough for the student to participate and belong to their community. Providing only enough to sustain life and health will mean the young person increasingly falls behind their successful peers.

There are a few studies on intergenerational occupational or income mobility in New Zealand. Not surprisingly, they demonstrate that an adult benefits from a superior family background.

One must be cautious; but undoubtedly family background counts. In the first four decades after the Second World War, New Zealand may have had greater intergenerational mobility than Britain or Germany, but on the whole it seems to be a middling country in this matter.

Most of the data refers to cohorts born well before the dramatic social-welfare reductions in the early 1990s.

On the basis of the international findings we might expect that New Zealand’s ranking on social mobility will deteriorate for those born after 1990.

In short: New Zealand has never been classless, but for some decades after World War Two inequality lessened. The Rogernomics revolution widened inequality, and relative poverty increased.

And that almost certainly meant that “equality of opportunity” also waned.

We are not nearly as egalitarian as we like to think we are.

Introduction to Not in Narrow Seas: The Economic History of Aotearoa New Zealand

This entry was posted in Political Economy & History on by .


Published in The VUP Home Reader 2020 p.131-143

Not in Narrow Seas borrows its title from Allen Curnow’s pioneering 1939 work, a collection of great poems evoking New Zealand’s isolation and fragility. ‘In your atlas two islands not in narrow seas / Like a child’s kite anchored in the indifferent blue,’ says the opening poem, ‘Statement’. New Zealand is seen as ‘cringing’ beneath a cold wind from Antarctica, ‘Two islands pointing from the Pole, upward / From the Ross Sea and the tall havenless ice’. Curnow famously suggested that the inhabitants of these remote islands were still not sure who they were: it was ‘a land of settlers / With never a soul at home.’ And his next collection (Sailing or Drowning, 1943) concludes with the endlessly recycled lines ‘Not I, some child, born in a marvellous year, / Will learn the trick of standing upright here.’

            Curnow’s poetry is a gift for an economist. It captures certain brutal truths about our country. If the land mass later known as New Zealand had sunk beneath the waves 23 million-odd years ago, the history of the world would have been little different. If the tyranny of distance and global insignificance gave life here a particular edge, its economic effects were profound and permanent. Curnow’s ‘anti-myth’ about the anxiety and uncertainty of the nation’s people perhaps bred the familiar counter-myth described by historian Keith Sinclair as the LBW syndrome: New Zealand ‘leading-the-bloody-world’ or sometimes ‘lagging the bloody world.’ In fact New Zealand usually ranks in the middle of the bunch of the 30 or so rich countries. Global interconnectedness is more complex and subtle than LBW supposes.

            As for New Zealanders’ recurrent obsession with their identity, this too has deep economic roots. Once the European settlers exposed New Zealand to the world, it had colonial (or neocolonial) status. As Britain’s imperial reach shrank, its ties to Britain loosened and New Zealand began to engage with more of the world’s economy. Because it is small, it remains a ‘neocolony of the world’; in a globalised age most economies do. Hence New Zealand’s constant preoccupation with nationalism and national identity. Even the common nineteenth century idea that New Zealand was a ‘better Britain’ articulated some sense of national uniqueness, however subservient it might now seem.

            New Zealand’s story is about immigrants and how the newcomers coped. Each wave of settlers arrived with a great weight of cultural baggage, accumulated over generations. We can’t understand our history unless we understand something of the migrants’ back-story. So it is necessary to consider where the proto-Maori came from, to delve back into the seventeenth century to understand nineteenth-century British immigrants, and to describe the last two centuries of the Pacific islands whence came New Zealand’s Pasifika people. In each case the immigrants had to adapt their inherited ways to life here.

            The islands they came to were not passive; they interacted with the humans, each shaping the other. The earliest settlers, having made a heroic 3000-kilometre ocean journey from east Polynesia, found that some staples of their diet (kumara) would grow here but others (taro) would not. These migrants were truly on their own in the new land as climate change made the journeying back too difficult. It was perhaps inevitable that their economy was based first on mining the country’s resources, starting especially with the most easily available: the staggering riches of the sea, the lumbering meat larder of moa, seals, and some of the native birds.

            This is the economy of the quarry, and it would be replicated by the European settlers. In each case the result was the same: depletion and even disappearance of resources that could not be readily replaced (cleared forests and dying species; the moa and the whale are totems). At a certain point the problem of resource sustainability had to be faced, and it was then that the now-celebrated Green Maori appeared with a hard-won strategy of the rahui, a ban on the taking of depleting resources. The European settlers’ quarry economy, of course, caused a much greater devastation and the effects are all around us. Fishing quotas, native forest protection regimes and even the measures to combat global warming are modern versions of rahui.

            Many historians have told the New Zealand story before; but an economist uses a particular lens and, I would argue, helps us to see our nation’s history in a new way. Too often we take the hard economic core of our history for granted, or we give it merely fleeting attention. Sex is notably absent from the Victorian novel; the economy is almost as rare among recent novels and histories. To give an account of a society without paying attention to its economic underpinnings is about as sensible as telling a love story without sex. It can be done, of course, but certain vital facts of life are left out.

            The biographies of some of our most famous politicians, for instance, rarely consider the economic environment in which they lived. The Liberal Premier Richard John Seddon and Labour Prime Minister Michael Joseph Savage governed in periods of prosperity, and it is partly for that reason that they are remembered. Contrast them with two equally important but far less well-known politicians who led their country, Harry Atkinson from the nineteenth century and Gordon Coates from the early-middle twentieth. Both were important precursors to the two great reforming leaders Seddon and Savage, with Atkinson an early advocate of the welfare state and Coates of a more active form of economic management. But they were long undervalued and remain inadequately remembered, partly because they both held power during economic depression and stagnation. Politicians who live in hard times tend to get a bad press, if any.

            Or consider the much-celebrated political break-up of the great settler farming estates by the Liberal Government at the end of the nineteenth century. This was a major political and economic reform. The great sheep stations represented a hierarchical, class-bound society; the much smaller family farms created by their dismemberment symbolised a more egalitarian, family-based and less formal one. But the changes were driven by economic factors and would probably have taken place anyway and that the political reform was much less important than the economic drivers that helped make it possible. Refrigeration and the rise of the meat industry made the break-up more profitable for the estate owners. They had good economic reasons to dismember their vast holdings.

            Or take the role of the gold rushes in the quarry economy and the rise of the cities. Histories of my own home town of Christchurch, for example, tend to take its early prosperity as a given. That contrasts with most other settlements which, after an initial boom, lapsed into depression. The difference with Christchurch seems to have been that about the time it should have gone through the same down cycle, the Melbourne goldfields opened up (in 1851). Christchurch prospered, as did other regions, by supplying the miners with food. So economic facts neglected by historians throw a new light on the city’s story.

            Similarly, Britain’s entry into the European Economic Community in 1973, is often seen as a major break in New Zealand’s history. This, so the story goes, shocked New Zealand into diversifying its export market and its economy more generally. It would have to sell to the world and not just the Mother Country. The reality is rather different. In 1973 the diversification was already underway. The Britain export market was already in rapid decline. It was certainly still a major buyer of farm products such as butter, cheese and lamb; but by then these made up only 30 per cent of New Zealand’s total exports of goods. So the diversification was driven by the market rather than British politicians. A far more important change to the economy was the almost permanent collapse of the wool price at the end of 1966, effectively ending the political economy which had reigned since 1882.

            An even more important economic event in New Zealand’s history was the introduction of refrigerated shipping in 1882 – and other related technologies – which substantially reduced the tyranny of distance. It enabled the country to sell meat and dairy products to markets – Britain above all – on the other side of the world. But it also made possible a more sustainable economy in a land whose quarry economy was being exhausted and increasingly looked as though it could not pay its way in the world. It transformed the political economy to one where the family farm was at its centre.

            Modern New Zealand is a market economy which sells its products to the world; the fact is so familiar that we tend to forget how important the non-market economy has always been. The economy of the Maori was based on Polynesian gift-exchange, where the transaction was more about mana than profit. Similarly, European settlers sprang from pre-market or even feudal Britain. Nor did they entirely leave that pre-market when they came to New Zealand. Much of their small farming was self-sufficient or near-subsistence. While family farms had become commercial operations by the end of the nineteenth century, subsistence farming (supplemented by some off-farm sources of cash income) continued in Maoridom until well into the twentieth century.

            Economic activities in the home occur largely in the non-market economy. Changes there, driven by new technologies and changes in family size and composition, led to big changes in the story of New Zealand as well as of the economy. The entry of women into the workforce, partly freed from the household by labour-saving devices, changed everything. The largely invisible half of the workforce – traditionally not even included when workers or the unemployed were counted – could no longer be ignored.

            Modern New Zealand is politically centralised. The line between direction by the market and by the state has shifted over the years, but compared with other economies with similar standards of living, the state has played a very central role in the economy. Part of the reason is that government preceded European mass settlement. In other former colonies such as the United States, settlement began 150 years before a federal government was formed. This meant that American society produced deeply rooted social institutions with which the state had to negotiate or contend. New Zealand, by contrast, was a ‘hollow’ society, without independent entities to mediate between the government and individuals.

            The implications for our development are many, not all of them positive. The state developed a commanding presence and could powerfully affect economic development. But the state could also create institutions which were mere creatures of statute and without statutory support might weaken and even die. The history of trade unionism is a case in point. Long sponsored by the state, when unionism lost that support with the introduction of the anti-union Employment Contracts Act of 1991, the unions withered.

            Some powerful economic myths have played a major role in the history of New Zealand; one is the claim that it is an egalitarian country, where Jack is as good as his master and wealth and incomes are evenly spread. It is hard to judge how much truth there is in the myth. There is some evidence for it in colonial times, when British farm workers had the opportunity in the colony to become small farmers. And in the 30 years after the Second World War there is strong evidence of a reduction in inequality of incomes. However, inequality grew markedly during the top-down economic revolution (1985-1993) known as Rogernomics.

            The argument about inequality also raises the spectre of New Zealand as ‘the land of the long pink cloud’. Much of our history has indeed been written from a leftish perspective. However, the pink cloud obscures the real story of New Zealand’s development. The history of the labour movement, for instance, tends to focus more on its militant wing – perhaps inevitably, since that was the one whose activities were so controversial – than on the quieter working majority.

            The left perspective sets out a tension between the pink progressive governments and the blue conservative ones in which the former win in the long run despite being out of power for two-thirds of the time. However, many of the blues were also progressives – National governments have a tradition of accepting the reforms of their Labour forerunners – but with a different agenda. New Zealand may be the land of the long white cloud. But it is a green land nestled in blue sea and sky.

            This takes us back to the ‘colonial cringe’. The mistake of the pink cloud thesis arose from taking well-established foreign theories but failing to adapt them to local conditions. Rather than thinking through the local problem, those suffering from the cringe grab whatever is going off a foreign shelf. This is a long-standing habit in New Zealand. At the heart of Rogernomics, for instance, was the application of an extremist form of free-market theory to New Zealand as though the country was an idealised United States. The result was a deep and self-inflicted wound to the economy arguably unique in our history. The period of stagnation between 1986 and 1993 was the result of the influence of ideology, unlike previous recessions and depressions, which were generally caused by contractions in our overseas markets.

            This history falls into six parts.

            The first covers the physical development of the islands and the economy of the first Polynesian settlers up till the arrival of the European settlers. The proto-Maori and Maori economy was a subsistence one, but subsistence did not mean starvation. Their gardens and fishing grounds provided adequate food, and economic surpluses went into artistic creation and community-building activity. The people generally lived the good life. Tsunamis and earthquakes could cause sudden devastation, but the effects were usually local and limited. When the Europeans arrived Maori life expectancy was probably not much different from their visitors’.

            Economic exchange in pre-European times was typically of the ‘gift exchange’ variety, where the focus was on the transactors rather than the transaction. ‘Gifts’ brought an obligation of reciprocity sooner or later, an obligation not captured in the English word. The relative values of the goods or services exchanged, moreover, were well understood. Some of the exchanges amounted to bartering. This meant Maori were experienced traders, and they quickly became expert at trading with the European settlers.

            Maori attitudes to land, however, were utterly unlike those of the Europeans. The idea of permanent alienation of land through sale – the dominant European idea – had no place in traditional Maoridom. If land was transferred, it was to cement marriage and diplomatic ties, or as a result of conquest in war. There was a gulf in values and in understanding between the two cultures, and it helped lead to war. The European musket had already devastated the Maori world; it turned limited hand-to-hand traditional conflict between tribes into mass slaughter (perhaps 20,000 Maori died). Its economic effects were also large; Te Rauparaha was said at one point to have had 2000 slaves preparing flax to trade for guns.

            As Part II explains, the Europeans brought the market economy to Aotearoa, and its inevitable pattern of boom and bust. The first boom, partly the result of a sudden inundation of settlers, was quickly followed by the first bust. Within a year of the arrival of the Tory, the flagship of the colonising New Zealand Company, the new colony sank into depression. There was not enough land for the colonists, and with a continuing wave of ships arriving there were too many workers and wages slumped.

            And already there were signs that the new European-based quarry economy could not last. By 1845 the whale catch had fallen till it could no longer carry the colony. But what would? In the short run there was the stimulus of war. Wellington became an armed camp by the late 1840s; feeding the soldiers fed the economy too. The New Zealand Wars of 1861-72 helped create an economic infrastructure (roads, bridges, and ports were built for invading soldiers); and the vast confiscation afterwards of Maori lands provided the fertile farmlands the settlers craved. Gold rushes in the 1850s and 1860s provided another source of income, although inevitably a temporary one.

            Wool turned out to be a staple commodity of a more long-lasting economy. But by 1870 many of the fruits of the quarry were disappearing while the wool economy had not yet fully launched. Help arrived in the shape of Julius Vogel, the most significant early example of the Borrow-and Hope, Think-Big politician – a type which would recur. Vogel’s overseas-funded development programme kick-started the economy and built valuable infrastructure. But there was no export staple to pay for it, and his Think Big programme could have led to disaster.

            This very nearly happened, because the long depression of the 1880s and 1890s in the Northern Hemisphere soon spread to New Zealand. Hardrock goldmining boom and its trade with the Australian market helped see Auckland through. But the fundamental risks and dangers of the colonial economy were now clear. How could New Zealand make its way in the world?

            The answer was through refrigeration, as Part III explains. The first frozen lamb was shipped in 1882, leading to a boom in sheepfarming; a dairy boom, also based on refrigerated exports, came a little later. Family farms provided the meat and the wool and stimulated jobs in service industries and towns. Society changed as towns grew into cities with a recognisable working class; politics reflected the change, with the rise of the Liberals, the early welfare state, and then the Labour Party. Women became a more prominent part of public life. But boom times under the Liberals turned to a long period of stagnation as overseas prices fell; depression struck in the early 1930s. Recovery from depression, the result of rising overseas prices and Keynesianism at home, flagged in the late 1930s; but world war brought another boom.

            Postwar New Zealand, as Part Four explains, brought a long-lasting boom and unprecedented social transformation. Class structures were changing and so was politics. Labour Cabinet Minister Bob Semple said ‘the bastards walked to the poll booths [in 1935] to vote us in, and drove to them [in 1949] to vote us out’. Increasing affluence brought increasing conservatism; National proved to be the more enduring party of government. Society was changing fast: Maori flooded into the cities and Pasifika people into New Zealand, mothers flowed into the labour market. National embraced the welfare state after condemning its launch by Labour; it continued to administer an economy heavily controlled by the state, with import licensing at the border and a centralised system of wage-fixing.

            The whole system started to unravel in 1966 when wool prices collapsed. After a brief recovery in the early 1970s, wool prices never returned to their real postwar levels. A major prop of the pastoral economy was undermined. Economic growth slowed; farmers could no longer generate the overseas income the country needed. In a protected and centralised economy the losses were passed on like an economic version of ‘pass the parcel in a Belfast pub’, where the bomb of a real income cut was passed on via price and wage hikes to the next person. Unemployment rose and inflation soared. Robert Muldoon, despite being the most aggressive politician in New Zealand history, could not make the changes desperately needed.

            The revolution in economic policy known as Rogernomics is the focus of Part Five. The aim was to modernise the economy and find an alternative to a framework which had clearly broken down under Muldoon. Undoubtedly a more-market approach to the economy was needed. Import licensing, launched by Labour in 1938, had by the 1980s become a barrier to economic development, locking the manufacturing structure into the past and entrenching manufacturing interests opposed to its dismantling. Unions, similarly, were locked into an inflexible system: compulsory unionism delivered members to often small unions enmeshed in a complex steel web of relativities. The external economy had rapidly diversified; the sclerotic internal system held it back.

            Rogernomics recognised the failures of the system, but its remedies were extreme and often ineffective. The consequence was a rise in social inequality and a rolling back of the welfare state which was only possible because the ‘hollow society’ could not resist it. Labour’s revolution – continued during National’s first term – sparked a populist revolt which upended the Front Runner (Winner-Takes-All) electoral system. While Rogernomics was broadly a failure, however, the political debate about it continued.

            In Allen Curnow’s ‘Out of Sleep’, the newly awoken poet tries to make sense of his surroundings: ‘[A] gust in the damp cedar hissing / Will have the mist right off in half a minute. / You will not grasp the meaning, you will be in it.’ An historian contemplating very recent history faces a similar difficulty. But the attempt must be made; Part Six tries. There has been a renaissance in Maoridom, with the new MMP system giving Maori much more political power. Treaty settlements have also given Maori much more economic clout, though the extent of that new wealth is often exaggerated.

            The increased power of business represents a fundamental change in the political economy. At some time in the late 1990s, however, the business community began concluding that neoliberalism (Rogernomics) no longer served its interests. There was a return to the traditional partnership with government, a revived form of NZ Inc. But what this meant in policy terms remains unclear. We are still trying to decide what to do with the legacy of Rogernomics, and in particular the hefty rise in inequality – and poverty – which it has left.

            The Clark-Cullen Labour Government wanted to reverse the extremism of Rogernomics, but had trouble thinking through alternatives to the neoliberal structure. The Key-English National Government’s pro-business approach included elements of crony capitalism mixed with policy inertia: the politics of manana or, to use the Kiwi version, of ‘she’ll be right’, an approach all too familiar in New Zealand’s history. Jacinda Ardern’s Labour Party did not expect to be elected in 2017, and was hardly prepared in policy terms for government. The resulting coalition government continues to grapple with the implications of promises without policy and a formidable backlog of unmet social and economic needs.

            Under the Ardern-Peters Government, as under those before it, New Zealand is constantly renegotiating its role in the global economy. No man is an island, John Donne said, and no economy is either, even an economy of remote islands set in the vast blue sea.

MUDDLED THINKING ABOUT RNZ.

This entry was posted in Governance, Literature and Culture and tagged , , on by .

On Sunday 9 February 2020, I drafted a Pundit column, discussing the announced proposal to downgrade Concert FM. My practice is to let columns stew before posting them – in this case the plan was to put it up on Tuesday. By Monday the policy turmoil had changed markedly and I had to make major revisions. At the bottom of this note is the Sunday version of the column; here is the posted (Tuesday) version. (Note that not only had I had to change the direction because of developments but I also had to make some regretted cuts in order to try to keep it within word length.)

The RNZ explanation of what they were doing is here.

The Sunday column was provoked by the Minster of Broadcasting saying that he could do nothing because it was an operational matter. (You can hear the officials giving this ponderous advice.)

Five days later (three of which were not working days – Waitangi Day, Saturday and Sunday) the government promised to intervene. The Prime Minister said that it wanted to keep RNZ Concert on the FM network and did not want the abandonment of presenters. She added that she was disappointed that RNZ had ignored the government’s request to delay the decision. (As an aside, it would be very unusual for a state .agency to be so obdurate towards such a reasonable request; one ponders about what exactly happened.)

In the five days there had been considerable political turmoil. There has been a welter of public pronouncements criticising the proposal, ranging from ordinary listeners to the regional orchestras; grandees such as Helen Clark, Michael Cullen, Chris Finlayson and Kiri Te Kanawa deplored the change. There is a substantial electronic petition. The RNZ Concert presenters were subdued by the announcement but heartened by the flood of texted support. Some QCs are threatening to get the court to overturn the RNZ decision, proposing to do it pro bono.

Nor should the role of social media be overlooked. This Facebook thread is both impressive for the number of people who contributed and a reminder that just because one is into baroque one need not be social media ignorant,

The upwelling of anger has undoubtedly surprised RNZ, probably the government and also me. I have been struck how passive the arts community have been in the face of threats to their arts. Why the difference is instructive.

Both writing and reading are solitary activities. Occasional book launches and literary festivals aside, the relevant communities rarely meet collectively. In contrast, music is a collective activity with numerous concerts which bring audiences together, while performance is usually a collective activity.

Most of its provision is tacitly non-commercial. Subscribers to performance-group concerts were emailed encouraging them to sign the petition. The literary equivalent would be a commercial bookshop emailing to its customer list, but this might be considered unethical. So I am not arguing that the classical music community is larger or angrier than the literary or visual arts communities. Rather it is better organised.

(Note that youth have not countered with an outbreak of support for the proposed RNZ network; they are hardly organised at all. How RNZ knows what is best for them is a puzzle.)

Perhaps the coup de grace for the government was a tart Stuff Saturday editorial which included

<> ‘In an election year, Labour should be careful not to take arts-loving voters for granted. The Concert FM news followed closely behind cutbacks at the National Library and Archives NZ and a controversial funding decision that saw the demise of the long-running NZ Books journal. The cultural sector has noticed that Prime Minister Jacinda Ardern seemed unwilling to wade into these issues in her role as the Minister for Arts, Culture and Heritage.’

By Monday the government was taking notice. Apparently it had some spare FM frequencies it is going to make available to RNZ; what the solution to the funding of the presenters remains to be seen. I still think, as both versions of the column say, that it would be wiser to put off a decision until the RNZ-TV1 merger has been settled. I would have thought that the RNZ management would be so up to their ears ensuring that the integrity of public radio was not lost in the merger that they could not handle the RNZ Youth/RNZ Concert changes as well. .

Given things are settling, was it necessary for me to still write a column? The old version is concerned with ministerial responsibility, where we have already seen some progress. But I also included a discussion of what services the state should or should not provide.

I was loathe to abandon the part of the column making this wider point. Opportunities to discuss it do not arise often despite the issue lurking there all the time. Meanwhile, the second column also gave me a chance to use the example of the Red Queen principle. The practice of policy first, analysis after happens far more frequently than just in broadcasting. The revised column was posted on Tuesday 11.

Below is the draft of the Sunday version:

Muddled Thinking About RNZ. (Sunday draft version)

The Minister of Broadcasting, Kris Faafoi, cannot argue that because it is an operational matter, he has no responsibility for the proposed downgrading of RNZ Concert.

The Minister signed up by accepting the RNZ’s 2019 Statement of Intent which said that ‘RNZ plans to grow both the size and diversity of its audiences to 1-in-2 (2.4m people) New Zealanders a week.’ The current figure, which includes listening and online audiences, is about a million. (Some 600,000 listen to RNZ National, 170.000 to RNZ Concert – including 100,000 to both).

If RNZ wants to expand as promised, it is going to have to find new audiences. So it is targeting the youth market. Because it lacks additional frequencies and financial resources, it proposes sacrificing RNZ Concert. (Perhaps its next expansion will be RNZ Sport, shifting RNZ National back to AM frequencies and also cutting its resources.)

Is the expansion necessary? Under chief executive Paul Thompson, RNZ has become the leading source for news and informed features. Meanwhile, RNZ Concert has expanded New Zealand classical music content without sacrificing its commitment to the classics. What next?

Is RNZ Youth the right ‘next’? Businesses like to expand but what happens when their markets get saturated and grow only slowly? Too often, carried away with faith in the excellence of its managerial skills, a business goes into new markets – where it crashes.

There are underlying different philosophies of the role of state – even among democrats. The traditional view has little trust in the ability of the private sector to deliver; so the state should provide as much as possible – including a full menu of broadcasting options.

The alternate view is that sometimes the private sector can be a very poor provider – healthcare is the exemplar – and only then should the state get involved if it can provide a markedly superior service. There are two reasons for this caution. First, the state can be as onerous on and destructive of political liberties as the private sector; its reach needs to be constrained. Second, even with a constrained reach, the state is so overwhelmed with things that need doing it should focus on the really important.

The provision of a high-quality independent news and related broadcasting services are critical. The BBC is the exemplar. Would we really want our politics to be dominated by Rupert Murdoch and Fox News? Hence the state provided and funded RNZ National, with protections from political interference.

Another place where the private sector in a small country manifestly fails is the provision of classical music. Advertising wont pay for it. Hence RNZ Concert.

RNZ Concert actually does a lot of unpaid advertising, with its live diary of the day’s musical events, and its promotion of New Zealand composers and musical groups (including a substantial commitment to young composers and groups who wont get much coverage on RNZ Youth).

Too often our thinking puts a particular service into a silo despite its being really an integral part of an ecology. Thus, the downgrading of RNZ Concert will downgrade the wider musical scene. (Similarly, Creative New Zealand ignored New Zealand Books in the literature ecology.)

RNZ also provides parliamentary radio (why not outsource it to Murdoch?) and Radio Pacific. But I cannot see the case for it providing a youth service for there are already commercial alternatives. The five in Auckland have a weekly audience of 80,000, which suggests an RNZ expansion there will not be that great.

We should not think in silos. That the state provides a radio service for an elderly group with particular musical tastes does not mean it has to provide one for a younger group with other tastes. The young get benefits from the state in other areas. The tradeoff is not within a sector but across all state provision.

Extraordinarily, RNZ is implementing this change while the entire broadcasting sector is in an upheaval from the Minister’s proposal to merge state radio and television. It would be rational to get the sector framework established and then see whether there is a place for a state-provided youth radio network.

In the interim there is surely a case to replace one of the directors on the RNZ board with someone who has a commitment to the wider culture and music which RNZ should be fostering not undermining.

On Bill Rosenberg

This entry was posted in Labour Studies, Portraits and tagged , , on by .

I was asked to make a short contribution at the function on 18 December 2019 for Bill who is retiring from director of policy at the NZCTU. He will continue to work on labour issues part-time.

I’ve known Bill for almost 60 years, for I taught him a little maths before being welcomed into his family’s extended friendship. I’ve watched Bill develop as a talented mathematician, do a doctorate in psychometrics, drive trucks and buses, become a senior member of the Canterbury University Computer Services, while playing a significant role in the university teacher’s union and also a key role in the Campaign Against Foreign Control in Aotearoa New Zealand. Then, a decade ago, he moved to work for the CTU in Wellington.

I recall that there was some disappointment in the Canterbury economics department that he chose psychometrics for his PhD rather than econometrics, but eventually the economics department attracted him, when he took a degree in economics while he was at the Computer Centre. By then the department had a far more neoliberal approach than in my day and Bill used to discuss with .me how to interpret some of the more extreme things he was taught. I was reminded of Joan Robinson’s thesis that one did economics to find out what economists thought rather than to find out about the economy.

Bill’s scepticism plus, no doubt, what he learned at father Wolf’s knee, well-prepared him for the job of policy director at the CTU. He contributed greatly to its resistance to the neoliberal economic stance of governments although, alas, it has been less successful in turning the beast around.

I add that Bill has also made a useful contribution to the economics profession in Wellington. It is a middle class profession but he has reminded us that there are workers too. Perhaps even more important, he has kept the profession empirically grounded rather than fantasising about a world which hardly exists. Wellington and New Zealand economics has been the better off for having Bill, as indeed was it for having his father.

I am glad he is not so much retiring as moving onto to another stage in an impressive career; the CTU needs him, the economics profession needs him, New Zealand needs him.

Wolf and Ann would be so proud of Bill; so am I.

Norm Thomson: 1934-1994

This entry was posted in Portraits and tagged , on by .

A day in Adelaide revived affection memories of an old friend and economist.

Norm Thomson was a visiting economist to the Canterbury department from December 1980 to May 1981. He came over from the University of Adelaide to prepare a New Zealand edition of the textbook An Introduction to the Australian Economy, which he and Ron Hefford (with the help of two teachers) had written. No one else was much interested, so he and I teamed up.

In retrospect the book, An Introduction to the New Zealand Economy, was written in a strange way. I took each chapter of the Australian edition, revised it, handed to Norm; he re-revised it handed it back, and so on. (There were never many reiterations.) But we never actually discussed the text – that was unnecessary.

Instead, we had many convivial discussions on a wide range of matters, which evolved into friendship for life. Our families met: Rosemary and his four children and Jenny and my two. It was before email, so we corresponded including cards for family events, we arranged to meet in Adelaide and Knoxville or wherever. The last time we met was for a dinner in Melbourne when we were both passing through. It was a good evening but other than the friendship the only thing I remember was his mentioning his stupidity as a youth spending so much time in the sun.

In his youth Norm had flown for the Australian Army (sometimes he was based with their Air Force). After that he went teaching. They chose Adelaide because it was between Canberra, where Rosemary came from, and Perth, were Norm he came from. He did an economics degree part-time, and was appointed to the Adelaide faculty when an English staff member refused to return from leave because his wife did not like the place.

Norm was modest about his economic achievements. His interest was in using economic theory as a tool to test ideas or applications. As an applied economist he was passionate about using economics to improve life for everyone.

His research was focused on fiscal policy and the use of cost benefit analysis. It applied to a wide range of issues: agricultural economics, death duties, student assistance, education financing, and the Grants Commission, heritage grants, retention of native vegetation, soil salinity problems, state and federal revenue, and taxation. A lot was done as a consultant. I recall his talking about ‘after sales service’; you included a margin in the fee for it.

Norm was an honest consultant. I once wrote a Listener economics column about the economics of the Australian Grand Prix; Norm had contributed to the report I used. The evaluation was an honest effort. They are not always. The research commissioners usually want a very large dollar number to justify them applying for another large public subsidy. It is quite easy to inflate the truth by using multipliers which are excessive and by ignoring any downside costs. That’s why I will not do an event evaluation.

He was a prime mover in the setting up of the Centre for South Australian Economic Studies and its foundation director, as well as being on several editorial boards and such like.

Despite Norm’s modest claims, he was promoted to the position of Reader in the Adelaide economics department which, at the time, had a higher reputation than any New Zealand department. (He turned down offers of a chair elsewhere.) He became a Dean of Economics and later, following a reorganisation, Dean of Economics and Commerce.

In 1995, I learned that Norm had died at the age of 59. I could not get much information except that it was from melanoma. For a long time I assumed that he knew he had it at our Melbourne dinner and hadn’t told me. I eventually learned that he was referring to a proneness to scabs, that the melanoma had flared up much later and he had died within a year. I do not know much about the course of the illness but apparently seven weeks before he went, he had gone out flying, returning with the cheerful news he had beaten it; he hadn’t.

After he died, a university fund was set up to award the ‘Norman John Thomson Memorial Prize’ to an undergraduate or a postgraduate student for advanced study in public finance.

Adelaide

For 25 years I was left with the unfinished business of not knowing what happened to him nor of paying my respects. But recently I was in Adelaide. One day, her last in town before she visited grandchildren in Brisbane and Hobart, Rosemary picked us up, and we went to the cemetery where he was buried, near Stirling where she and Norm had lived. We met there John and Brian, two now-retired colleagues,

The Stirling cemetery is a standard one, almost full with plots. Norm’s grave is down at the far end near a steep bank of Australian bush (gum trees). Apparently it was bought early: Norm shorted the market when the local council was threatening to raise prices, although he did not plan to use it quite so soon. It has a local Adelaide stone (bluestone) surround, a wooden cross with his name and tributes on, no overing stone with flowering plants growing out of the gravel. Despite the twenty-five years, the grave is still regularly visited. I left flowers.

We went for coffee at a local shopping centre. Rosemary and Elizabeth talked family and places to visit. The men gossiped economics. Rosemary ran us home showing us around the attractive central city.

It was hello again, Norm; not goodbye – you’ll always be with me.

Dad’s highest commendation is that ‘he was a good bloke’. Norm was a good bloke.

Rosemary Thomson helped by providing detail on Norm’s background. Thankyou.

Engaging with Alan Duff

This entry was posted in Maori, Political Economy & History on by .

A Conversation with My Country by Alan Duff

(Random House, $38.95, 246pp)

New Zealand Books, Volume 29 | Number 3 | Issue 127 | Spring 2019

In 1990, a comet brightened the New Zealand literary scene and society with the publication of Alan Duff’s Once Were Warriors, for it involved both an extraordinary literary style and a powerful story.

It was welcomed in the very first edition of New Zealand Books by the late Bruce Stewart, a playwright, ex-prisoner and founder of the Tapu Te Ranga Marae, important to Wellington down and outs. He opened his review with

At last a Maori writer has managed to hang out all the dirty Maori washing with some kind of dignity and at the same time place the blame where it belongs. No other Maori writer has achieved this to the same degree – small loads of dirty washing yes, but not the front fence covered in rags and holey underwear. Most of the Maori writers have been careful not to hang it out in case the Pakehas would see it and use it against them. In the backyard – amongst themselves, it’s family and it’s okay.

This reader was struck by the novel’s vigorous and innovative writing but it also told a troubling story about New Zealand’s underclass and the horrific lives they can lead. I cannot recall that my focus was particularly on the Maori dimension of the narrative. Yes, that the characters were Maori was an integral part of the story. But I knew that while Maori were more likely to be members of the underclass, there were probably more Pakeha in total.

According to Duff in his A Conversation with My Country, a collection of essays around a common theme, many Maori, unlike Bruce Stewart, objected to the novel, because they thought it would be taken to reflect all Maori. The thought never occurred to me, because I already knew that there were more Maori who were not in the underclass.

One may be surprised at the reaction. The late Rosie Scott’s Glory Days, published two years earlier, is about the Pakeha underclass. One did not assume that it characterised all Pakeha; I even gave a copy to one of its (admittedly literate) members to help her understand her situation. Clearly the Maori middle class were much more sensitive.

Having been battered by his critics, Duff goes on to argue that Maori have done a lot better since the book’s publication, claiming that Maori are the ‘most well-adjusted, self-asserted indigenous race in human history.’ He says that he would not write Once Were Warriors again, because Maori culture has progressed far beyond Jake ‘The Muss’,

I would be more cautious. I plead no-contest to claims about being in the front of human history; they are difficult to define and defend, and usually extravagant. But the dysfunctional underclass is still with us although they are more involved with drugs than liquor  today. Moreover, to present Maori as if Jake was typical in 1990 ignores the majority at the time. Certainly most were at the lower end of the social scale but membership of the underclass was not predominant.

Duff is right that there is some movement up the scale over the years, but it is more incremental than he presents, partly by making the past worse than it was. As an example – there are many – Duff writes that All Black selection was once racist. But ‘in the last 30 years more enlightened attitudes have opened the door for more Maori’. In fact, the All Black team which finally beat the Springboks 63 years ago had five Maori, more than double their population weight. (Its captain, Bob Duff (no relation), was preceded by a Maori, Pat Vincent.) The protests which objected to excluding Maori from the tour to South Africa, beginning in 1949, reflected a recognition that Maori were being normally selected and should have gone.

The problem we all face understanding late twentieth-century Maori history is that the vast majority of Maori in the early twentieth century lived in rural localities. After the War they first trickled and then streamed into the cities. They were poorly prepared for the challenges of urban living. Some like Jake, sank, others flourished, most adapted. Duff is right that we should celebrate this adaptation and the success that has gone with it, but not uncritically, for the Jakes and Beths are still there.

The book discusses two ways of evolving the adaptation. Duff is proud of his books-in-homes program. Allow me a caution. His evidence for the program’s success is the number of distributed books, but there seems to be no systematic assessment of whether, or how much, they have changed lives. I have been in a middle-class Pakeha home with an entire wall of a filled bookcase, the occupier saying he had not read any of them. My mother, a high-school librarian, suggests a different solution. They named the school library after when she retired, not just for the way she had built up its resources but because she helped so many of the school’s students to get into the habit of reading. Duff tells a similar story of his father; it was not so much that his home had books but that he had a lifelong conversation with Gowan. The mentoring by parents, teachers, librarians, even neighbours is probably more important than the artefacts themselves (although, of course, they are needed).

I also caution about Duff’s second enthusiasm – education. Undoubtedly the discipline of schooling – attendance, classroom cooperation, literacy and numeracy and the like – is usually important for later success in life. But it could be argued that in a key respect the New Zealand education system is failing us. The poor quality of public discussion, and the uncritical popularity of some commentators, suggests that our students leave school unable to handle a complicated debate. Do they have any sense of the treachery of ‘truthiness’, that if something conforms to one’s views it must be true. We bemoan the phenomenon overseas, especially as it gives Donald Trump, and others, their popular base. The difference here is only one of degree.

To give a slightly complicated example which Duff addresses. He argues that blaming ‘colonisation’ and ‘racism’ for the problems of Maori is a major roadblock to further progress, Such political correctness prevents proper discussion; in order to move forward it is necessary to ditch  labels that make Maori victims and non-Maori oppressors.

I agree. Too often terms like ‘colonisation’ and ‘racism‘ – there are others – are a signal that the speaker has stopped thinking and does not understand the issues he or she is talking about. Labels become a block to progress not a pathway.

Duff has dislikes. We need to be more subtle than his views of gangs. Undoubtedly some, and some parts of others, are involved in crime and drugs and behaviour as heinous as Jake’s community. But are they all like that? Rather than starting off condemning them, we first need to know more. My hypothesis is that they are a social form arising from adapting to urbanisation, that we see only the prominent failures and not the quiet successes. We rely on truthiness.

Duff’s remarks on the welfare system are even more troubling. There are two broad views. Duff’s is that it encourages social delinquency and that the welfare recipients should get off their bums and look after themselves rather than relying on the state. The other is that a market economy inevitably fails to provide an adequate standard of living for all, especially for those doing valuable social activities outside the market, such as child-rearing, or those who lack the capabilities to earn adequate market incomes – the sick, invalids and the retired. The welfare system is a way of modifying market outcomes to address this failure.

Both accounts are, to some extent, correct, but applying the first diagnosis to those suffering the second condition is futile and corruptive (although it is terribly popular with the political right). What is needed is to address the second group, get that right and then address the residual; there are probably fewer bludgers than the right thinks.

While writing this review, but after the book went to press, the (latest) row in regard to Oranga Tamariki blew up. I know little about the facts of the originating case which involves a disputed uplifting of a newly born child from a Maori mother. There has been public outrage and some Maori are organising against the ministry, including objecting to its Maori name.

Recall its original English name was ‘Ministry for Vulnerable Children’, the adjective indicating that the agency was fundamentally dysfunctional in conception. The name was changed to ‘Ministry for Children’ although, as far as one can judge, nothing else has been done to address the underlying dysfunction. The ministry’s Maori name, ‘Oranga Tamariki’, was not changed, and has no overtone of vulnerability. It means ‘wellbeing of children’, an even better title than ‘Ministry of Children’,

It is true that the majority of children in state care are categorised as Maori – looks like the prison population, does it not? – but that was not true at the previous peak in 2008. What has happened belongs to another public discussion, which the Maori protest may be triggering.

My point is a simpler one. Once more we have given primacy to the Maori dimension of a phenomenon involving widespread failure and dysfunction. I would regret losing the name, ‘Oranga Tamariki’, for a functioning Ministry of Children although one appreciates the Maori frustration with the equating of this perfectly appropriate term with ‘vulnerability’.

I doubt that I would have written the last few paragraphs without the stimulation of Duff’s A Conversation with New Zealand. Many readers may dismiss the book because of its errors, its misunderstandings and its political conservatism – their truthiness against his. Instead they should take up his invitation to engage with a viewpoint which may have its limitations but is offering a conversation about one of the acutest issues facing Aotearoa/New Zealand.

Notes to Select Committee Considering the Zero Carbon Bill

This entry was posted in Environment & Resources on by .

Presentation on 26 August, 2019. The full submission is here.

Summary

1. Climate change and sea level rising is one of the greatest challenges the world faces.

2. New Zealand should play its part in the world’s effort to restrain greenhouse gas emissions.

3. I broadly endorse the intention of the Climate Change Response (Zero Carbon) Amendment Bill.

4. My recommendation is that all specific references to biogenic methane emissions should be removed and that methane should be treated on the same basis as all the other greenhouse gases.

Methane

5. Compared to carbon dioxide, methane is an especially burdensome greenhouse gas.

6. On the other hand, compared to most other greenhouse gases, it has a short half life – between 10 and 12 years. It is analytically important to distinguish between gross and net emissions in a way that is not as important for other  greenhouse gases. 

7. In the past New Zealand generated a substantial methane cloud, mainly from the past  expansion of its livestock industry.

8. However, the methane cloud is no longer increasing. That is because gross annual methane emissions have been (roughly) stagnant and are being offset by the breakdown of methane in the existing cloud. Thus while gross emissions are substantial, the net emissions are near enough to zero. 

9.Methane from the livestock industry is not adding to global warming as its current emissions are being offset by reductions in the effect from its past emissions.

The Proposed Legislation

10. The proposed legislation treats biogenic methane differently from other  greenhouse gases including thermogenic methane. It is not clear why it should be separated out.

11. In particular it is not obvious why biogenic methane, which is treated in gross terms, should be distinguished from thermogenic methane which is treated in net terms.

12. Nor is it obvious why emissions from fossil fuels may be netted off against carbon sinks (such as trees), while biogenic methane may not be netted off, especially against previous methane emissions.

14. Alternately it is not obvious why we should ignore the past emissions from fossil fuels which contribute to global warming but give the livestock industry no credit for the fact that its past contribution to global warming emissions is diminishing.

15. A further weakness of the bill is that it quantifies in statute precise targets for gross biogenic greenhouse emission based on experts’ best guesses about the technological possibilities of methane reduction thirty years on. That is bad law. (Also, what happens if they have underestimated the possible reductions? )

16. It is proposed that the new law treat biogenic methane the same as other greenhouse gases by removing all reference to it. Section 5O of the bill would now read

(1) The target for emissions reduction (the 2050 target) requires that-

(a) net emissions of greenhouse gases in a calendar year, are zero by the calendar year beginning on 1 January 2050 and for each subsequent calendar year;

The Effect of the Proposed Change

17 The proposed change would remove the anomalies and inconsistencies in the bill as it now stands.

18. It does not affect the intention of the bill, nor add to the challenges the proposed commission faces.

19. It does not reduce the urgency of the need to reduce gross biogenic methane  emissions nor of all greenhouse gas emissions.

In summary the references to methane in the bill are unnecessary, discriminatory, divisive and bad law.

NOTES ON SOCIAL COSTS STUDIES

This entry was posted in Health on by .

This note is written in response to a request about the details of how to do a social cost study on alcohol (misuse). It is written by an economist who has long been involved in the area both theoretically and practically. [1]

The point of this note is that it is important to understand that there is a deep theory for social cost estimates as far as economists are concerned.  That creates a framework for the measurement of social costs. Economists doing a social cost should have recourse to the theory to apply the framework.

At the heart of the deep theory is the notion of that an economic cost is an ‘opportunity cost’ that is the cost of anything is the opportunity forgone. For an economist, then, one is always looking at an alternative,

In social cost estimation, the alternative is called the ‘counterfactual’ to be compared with the ‘actual’ situation. A social cost measurement exercise should always state what the counterfactual is. Without one the exercise is meaningless. There is rarely a unique or even obvious one.

For instance, it might be that the counterfactual is that there never has been any alcohol consumption, or it that all alcohol consumption ceases on a certain date or that on a certain date that alcohol consumption is reduced to the point where there was no misuse of alcohol although moderate consumption continued, or that there has never been any alcohol misuse. (The latter is the one I used.) Each counterfactual will lead to a different magnitude for the social cost.

(There is much puzzlement over the necessity of considering ‘avoidable costs’. They arise from a counterfactual scenario where, say, alcohol consumption had existed in the past but it stopped overnight. Costs arising from the past consumption will continue to occur after the cut off day (for instance there will be still be treatment costs and deaths from cirrhosis of the liver long after the cutoff date.) The costs are considered unavoidable and the counterfactual focuses on avoidable costs those that do not continue.)

The actual and counterfactual scenarios will have different outcomes. In principle a list is made of all the items in the two outcomes with particular attention to the differences between them. (For instance as alcohol consumption is reduced or eliminated, cirrhosis of the liver will decline.) The items are then valued according to the standards of economic ‘value theory’ thereby giv8ing two gross magnitudes, the differences of which is the social cost revealed by the counterfactual.

In practice every item is not identified – some remain the same, others are compared in aggregate. So the exercise is not as complicated as the previous paragraph might suggest. But that is the underlying notion and should be referred to when there is a doubt.

I do not propose here to discuss the valuation method that could end up a very long note.

However the implicit assumption is that all people’s consumption is valued the same, and that distributional issues are irrelevant. That is almost standard in economic analysis of alcohol consumption, except for some hand-waving. It is not my choice but I have found it difficult to offer an alternative paradigm. The best I can do is to split the aggregate into sectors – the recommended practice rarely followed in any detail. I add that this issue explains why transfers (such as taxes and benefits) are not included in social costs, although those not using the deep analysis sometimes get confused by how to treat transfers.

The simple summary is this. There is a well-developed tool in economics called cost benefit analysis (CBA), based on deep theory, with manuals that explain the framework and practice. It is used for many purposes, ranging from project evaluation to pharmaceutical evaluation. The economists’ approach to social costs of alcohol (and other drugs) is based upon CBA. Indeed done properly, were the need for a CBA arose, the calculations could use the cost-of-illness material. In effect the cost-of-illness exercise is a CBA with a particular counterfactual scenario. The rules and interpretations are the same.

One further issue needs to be mentioned. When CBA was first developed, it was applied to situations where the purpose was to change market output – GDP. However once it became used for analyses in the social sector, the issue of consequences in the nonmarket economy needed to be considered. For instance, two different methods of treating an illness may involve either the person being kept in a hospital or sent home. The first option impacts on GDP but the second has a similar impact on the care provided by the household which is not included in GDP. To ignore the household impact would be to bias treatments toward cost-shifting. Nowadays one would want to take the nonmarket sector into account in a CBA and therefore in a cost of illness study.

The issue deepens when one is concerned with wellbeing which is hardly measured in market GDP. For instance the effect of a pharmaceutical treatment may be to add to a person’s quality of life or to extend that life. The issue was not unappreciated in early CBAs. (One of my earliest introductions to CBA was how to deal with deaths in road accidents.) If this wellbeing is not taken into consideration treatments would be based in favour of one which resulted in shorter lives and greater discomfort for the patient because it was so much cheaper. The same analysis applies to social costs of drug measurement. In my experience the difference in quality of life/wellbeing aggregates far exceed to GDP ones.

[1]       e.g. International Guidelines for Estimating the Costs of Substance Abuse, 2ed (WHO 2003) (also Canadian Centre for Substance Abuse, 2002) with E. SINGLE, D. COLLINS, H. HARWOOD, P. KOPP, H. LAPSLEY & E. WILSON; and        The Social Costs of Tobacco Use and Alcohol Misuse (Department of Public Health, Wellington Medical School, Research Paper 2)

Climate Change Response (Zero Carbon) Amendment Bill

This entry was posted in Environment & Resources on by .

Submission to Select Committee reviewing the bill

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July 2019                                                                                                            

Fundamental Recommendation

That the 2050 target in the legislation be defined in terms of ‘net’ methane emissions rather than ‘gross’ methane emissions.

Proposed Amendment

That all references to biogenic methane emissions in Clause 5O be deleted.

In particular the current proposed clause 5O

5O Target for 2050

(1) The target for emissions reduction (the 2050 target) requires that—

(a) net emissions of greenhouse gases in a calendar year, other than biogenic methane, are zero by the calendar year beginning on 1 January 2050 and for each subsequent calendar year; and

(b) gross emissions of biogenic methane in a calendar year—

                               (i) are 10% less than 2017 emissions by the calendar year beginning on 1 January 2030; and

                               (ii) are at least 24% to 47% less than 2017 emissions by the calendar year beginning on 1 January 2050 and for each subsequent calendar year.

(2) In this section, 2017 emissions means the gross emissions of biogenic methane for the calendar year beginning on 1 January 2017.

Should be amended to

5O Target for 2050

(1) The target for emissions reduction (the 2050 target) requires that—

(a) net emissions of greenhouse gases in a calendar year, other than biogenic methane, are zero by the calendar year beginning on 1 January 2050 and for each subsequent calendar year; and

(b) gross emissions of biogenic methane in a calendar year—

                                (i) are 10% less than 2017 emissions by the calendar year beginning on 1 January 2030; and

                               (ii) are at least 24% to 47% less than 2017 emissions by the calendar year beginning on 1 January 2050 and for each subsequent calendar year.

(2) In this section, 2017 emissions means the gross emissions of biogenic methane for the calendar year beginning on 1 January 2017.

So that it reads:

5O Target for 2050

The target for emissions reduction (the 2050 target) requires that net emissions of greenhouse gases in a calendar year are zero by the calendar year beginning on 1 January 2050 and for each subsequent calendar year.

It will also be unnecessary to define ‘biogenic methane’ in Section 4(1).

Short Justification

There is no need to separate biogenic methane from other emissions (including non-biogenic (thermogenic) methane).

            It penalises farming unnecessarily;

            It involves arbitrary targets;

            It overachieves the stated aim of the proposed legislation, and

            It makes the legislation and its implementation overly complicated;

Background

Methane is a greenhouse gas which contributes to global warming. It is unusual in that its half-life is relatively short – 10 to 12 years – which means that (biogenic) methane being emitted in 2019 while the legislation is being passed will make virtually no contribution to global warming by the target date of the legislation (2050).

This is because of the nature of the methane cycle. The breakdown from livestock methane is, in effect, to nothing. Its carbon came from atmospheric carbon-dioxide converted into grass, eaten, ruminated, belched and as methane breaks down, eventually returned to atmospheric carbon-dioxide, completing the cycle.

This is already happening. Gross methane emissions from livestock have been stable for about four decades. As a consequence, for some time net livestock emissions – that is, current gross emissions offset by past emissions breaking down – have been near zero; sometimes slightly positive, sometimes slightly negative.

(The methane cloud generated from New Zealand livestock emissions is about 13MTs (million tonnes) of methane. In 2017, around 1.1MTs of it broke down into atmospheric carbon-dioxide. Meanwhile our livestock belched another 1.1MTs – almost exactly the same as the breakdown tonnage.)

Measuring, as the proposed legislation currently does, biogenic methane emissions in gross terms and ignoring the offsetting breakdown of past biogenic methane emissions does not make sense in terms of the purpose of the bill while also complicating its implementation.

Longer Justification: It Penalises Farming Unnecessarily

The farm sector may reasonably ask why other sectors are entitled to use offsets to their emissions while farmers are not. For instance, a motorist using petrol which emits carbon dioxide is permitted to use carbon sinks (such as trees) to offset her or his contribution to global warming.

Farming is also penalised compared to industry sources of non-biogenic (thermogenic) methane, which in the proposed legislation is treated in net terms. Why the legislation makes the distinction is unclear.

It is not at all evident – fair or wise – that the farm sector should be asked to bear a higher share of the burden of New Zealand’s campaign to eliminate net greenhouse gas emissions.

Longer Justification: It Involves Arbitrary Targets

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Leaving aside whether it is a good principle to include specific quantitative targets in legislation (and the rather odd phrase ‘ at least 24% to 47%’, for the significance of last two words is unclear) the targets are, at best, guesstimates and contestable. They assume certain scientific advances which may, or may not, come to pass.

It would seem unwise – if not heroic – to project scientific achievements three decades out, let alone to also legislate any such projection.

Longer Justification: It Overachieves the Stated Aim of the Proposed Legislation

The purpose of the amendment is zero carbon emissions by 2050. The effect of the legislation, if successful, will result in negative net emissions for New Zealand by that date.

The reason is that emissions which are not biogenic methane will be in balance, but biogenic methane’s contribution will be negative, so that, overall, net emissions will be negative.

If the real purpose of the proposed amendment is that New Zealand should be a negative contributor by 2050, that purpose should be made clear, perhaps by replacing the ‘zero’ in the bill’s title by ‘negative’.

Longer Justification: It Makes the Legislation and Its Implementation Overly Complicated

The legislation is long and complicated which adds to the difficulty of implementation. The proposed amendment deletes ten unnecessary and complicating lines.

Moreover, by focusing on net emissions for all greenhouse gases rather than treating some GHGs differently from others, the proposed target is more understandable.

Conclusion

The recommended change makes the legislation more coherent and the implementation of the amendment’s intention simpler.

It does not exempt biogenic methane from the exercise. Insofar as livestock emissions can be reduced, they will make the overall target easier. But any reduction needs to be approached in the light of the application of scientific developments. They will, no doubt, be carefully monitored by proposed Climate Change Commission.

There is nothing in the submission which denies the urgency and importance of the world limiting climate change by reducing the warming effects from greenhouse gas emissions.

References

The underlying technical paper is

            New Zealand’s Methane Cloud

<><> <>NEW ZEALAND’S METHANE CLOUD<>

A non-technical account of the paper is

            Up in the Clouds

<><> https://pundit.co.nz/content/up-in-the-clouds