The big picture for this tax-or-spend election

Tax is now on the table. Do the numbers, decide your vote. Is that the election?

Or do you add up what parties want to spend on you or your children or on roads or police or your special fancy?

Helen Clark has studied John Howard’s election-winning technique in Australia’s election last October. Howard spent the bank and won a fourth term. Don Brash is taking a leaf from George Bush’s election-winning book: tax cuts will make us all rich.

It’s the economy, stupid. Flaunt it while you’ve got it. The government has been saving too much. It’s time for a share for us, the non-savers. Tomorrow is another day.

Essentially, Michael Cullen and John Key are spending the dividend from the hard years in the 1980s-90s when the economy was made flexible and resilient and faster-growing.

The fact that there is a whopping balance of payments deficit that is going to get worse — much worse if the currency falls, as it must — is holding neither back, even though it might well cause a hard landing which would cut revenue and take us back to deficit Budgets and all the angst that goes with them.

But there is a much bigger context for the economics of this election. It falls in a comfort zone between the big wrench of the past 20 years and another to come in the next 20 or 40.

Since 1840 we have been in the north Atlantic sphere of strategic and economic influence. Our settlers, investment, scientific innovations and ideologies have originated in Europe or north America. The north Atlantic has dominated the world.

But now we are moving into the east Asian sphere of influence. China’s rise is seeing to that. It will be a profound wrench. It promises to make our politics more fraught as the effects flow through.

Winston Peters has for 10 years made a career of highlighting one dimension: immigration.

New Zealand is an attractive place. There are investment opportunities. We locals take a relaxed approach to learning, working and saving, compared with Chinese habits. Expect more Chinese money and more Chinese here to manage it.

That leads to the second dimension: trade. Labour and National agree on the value of a trade agreement with China, so we are almost certain to push ahead, whatever the election result.

That will tie us more tightly into the Chinese economy, as supplier and as purchaser. Over time China will almost certainly become our biggest trading partner.

And dealing with China will not be easy.

Close relative Australia is no cruise, as it makes clear by the problems with apples and potatoes and the way it is putting the screws on over banking regulation and continually stalls progress on the single economic market. Cousin United States is no better: remember the lamb tariff.

If our mates treat us like that, we can hardly expect an easier ride from a country run by people with a very different history, tradition, mores and ways of thinking.

Moreover, it is a country with a very long history of empire. For a couple of millennia till about the time of the Treaty of Waitangi China was accustomed to running itself as it pleased and treating surrounding peoples as vassals.

For now China is internationalist, careful not to throw its weight around (except over Taiwan) in world bodies. But strategic analysts in next-door Japan are nervous about how the awakening giant might behave in a decade or two once it has built its economy and developed its armed forces.

Then there is science. For centuries Europe, then the United States, have produced nearly all the new science. China is investing heavily in basic science. We can expect over time at least some of our new science to come from China.

And ideas: we may well not just dabble in different ways of spiritual thinking but have to respond to different ways of organising societies, economies and power — that is, different ideologies. There is no inevitability about the continued triumph of “western” ways of thinking.

Thus in 20 years we may no longer ask: are we more or less taxed and regulated than the OECD average? China may well be the benchmark for the rest of Asia and, perforce, for us. That will not make for easy politics.

And in case you think the United States and Europe will be a comforting counterweight to China, stir in India. It is slower developing than China, because less disciplined. But some think it, too, will become an economic powerhouse. That would draw us more tightly into Asia, maybe as a sort of southern apex of intersection between the two giants.

Of course, this is not part of the election on September 17. For that we can focus inwards — or at most argue about nuclear-powered warships.

But it may be worth bearing in the backs of our minds that in the very big picture this lolly-scramble election comes in a lull in the transition between two wrenching changes in our economy.

It also comes amid two other large transitions: the civil/moral shift and the making of an indigenised nation. I will explore those in my next two columns.