The law, trust and predistributive justice

Comments to a lawyers in government conference

First, some context. We are living through a turbulent decade.

One element is the coming of age of a disruptive technology, digital technology, which is turning a hyperglobalised world into one that is hyperconnected and hyperdatamined and which is rapidly and radically transforming how goods and services – no longer distinct categories, by the way – are designed, funded, made and marketed, how children are educated and how adults add to their skills and how illness and disability can be treated, for example with nerve interference devices and gene manipulation. These changes open extraordinary new opportunities but also pose major issues of privacy and trust, ethics and ownership of ideas. We are only beginning to get an inkling of the extent and complexity of those issues, let alone write laws for them or develop social customs to manage them and even when we do, they go quickly out of date.

This disruptive technological change is a principal driver of major social change, including, critically, in the nature of work, akin to the change driven by the industrial revolution but very many times faster. This will in turn drive big changes in our politics and policy imperatives.

Moreover, this disruptive technological change comes during the aftermath of a disjunctive shock, which we have nicknamed, antiseptically but incompletely, the global financial crisis. This gross failure of the financial system, itself hyperconnected and maybe ungovernable, has reignited first-principles debate on the political economy, a debate which spreads across economic, political, policy and social theory and practice. The Friedmanite orthodoxy of the past 40 years no longer satisfies even some of its earlier disciples. Fiscal and monetary authorities in old rich countries have behaved in highly unorthodox ways. We might even be on the cusp of a deeper change of thinking as in the Malthus/Smith/Marx era but we don’t need to go that far to recognise that we will not return to the status-quo-ante of 2008, though we can’t yet know what the status-quo-post will be. A symptom of that turmoil is the rise of populism of widely varying sorts in the old rich northern hemisphere countries in response to stress and resentment.

These mind-jarring, tectonic shifts come at a time when the global economic and political map is being redrawn in favour of China and other “emerging-economy” countries, when globalisation of people is enriching, diversifying and disrupting societies (300 million live outside the borders of the countries they were born in), when globalisation of economic activity is relocating jobs and, combined with the technological change, redefining “work” and its rewards, when life-sustaining ecosystems are being destabilised and other resources put under strain and when war has been reframed in ways that make it difficult to work out who the enemy is, as we have seen in Afghanistan and are seeing in the Levant (Syria and Iraq). Our trade destinations and inbound tourism sources have radically changed.

We are in a very different world from 20 years ago and probably a very different one from 20 years hence.

Turbulent times can strain trust, as the rise of populism indicates. Trust is critical to a well-functioning society and economy and is central to a modern democracy. Lawyers’ job, as I see it – and I include law drafters and judges – is to ensure and underpin trust, by writing and/or serving and upholding knowable, impartial, equitable, rights-respecting and independently justiciable rules which regulate how people deal with each other. That is what I understand by the rule of law. Trust in societies where the law does not rule is confined to small groups and informal arrangements. Liberal-capitalist societies, as Francis Fukuyama wrote in 1996 [Trust: The Social Virtues and the Creation of Prosperity, Simon and Schuster, 1996], depend on systems that engender and enable trust between strangers.

But for the rule of law to work well and uphold trust, it must be the law that rules, not the lawyers. I worry that we may be following the United States from the rule of law to the rule of lawyers.

I say that not from lengthy analysis but from personal experience. In the 1990s Gary Hawke who ran Victoria University’s Institute of Policy Studies would ask me to do things, I would do them and he would pay me – all arranged informally, done entirely on trust. Now the university has a complex legal document which purports to require me to give the university an open-ended indemnity. (We have come to an arrangement that limits the indemnity to what I have been paid.) I have contributed to three editions of a politics 101 textbook published by Oxford on the basis of an exchange of emails; Oxford got a free chapter; I got a free book; no money changed hands. This year I got a heavy-handed lawyer’s letter with an open-ended indemnity. Again, we have come to an arrangement. For the few rare contracts I have with government agencies the arrangement has also gone from verbal agreement to complex documentation and this year has wandered off into banana territory.

The government does not trust me. Should I trust the government?

So what? Well, this complicated legalism ties up in expensive knots the not-for-profits which work with government agencies. Of course, public money must be carefully managed and used only for what the taxpayers’ representatives’ agents specify. But heavy-handed contracts reduce the not-for-profits to contractors doing the government’s bidding. That negates an ambition for “partnership” ministers have frequently talked up, in expectation of thereby getting three advantages over delivering only through government-owned agencies: a lower taxpayer outlay; more flexibility and reach to the people the service is intended for; and innovation. What not-for-profits tell me is that legalistic contracting undermines both flexibility and innovation. Why put in the effort if the government fundamentally doesn’t trust you?

The loss to the taxpayer is not just the financial cost of dealing with heavy-handed contracts. It is that the best of the not-for-profits do innovate. They are entrepreneurs. And entrepreneurship entails some risk. So the government machine needs to work out how to take some of that risk, if it is to get better public services better targeted to better-defined outcomes, which ministers say they want. Helen Clark’s speedy dumping of a social entrepreneurship programme after a couple of not-quite kosher episodes has cast a long shadow.

There is an example of that sort of risk-taking that so far has not brought this government down and has caused only modest embarrassment which it has shrugged off without a public opinion poll collapse. That is whanau ora. There have been some irregularities and worse. But the programme continues. That is partly because it is a concession by the National party to a useful support party. But it might also indicate that a degree of risk is acceptable to the broader society. At the least it is an arguable policy objective to take some risk in pursuit of positive results, given that enormous risks were taken by failing to regulate finance companies and coalmine safety, with disastrous human and monetary results. Lawyers in government might usefully work out where they fit in rebalancing risk and whether they can help.

My broader point in raising the legalistic contracting of not-for-profits is that the artificial boundaries which post-1984 Friedmanite policies drew between “private” and “public” have blurred. The “private good, public bad”/”public good, private bad” catechisms have lost their hold on the congregation. In some quarters you can hear echoes of “mixed-economy” thinking which ruled for half a century up till 1984.

For example, is a not-for-profit private or public? What is a public-private partnership to build a road or a school? Does it matter to someone with a dicky heart or failing eyesight whether the person who fixes it up is in the private or public sector? Does it matter that a “private” employer pays only part of someone’s income and the “public” pays the rest through Working for Families?

The underlying objective of good government policy is that everyone gets a fair go. [For those who are interested, I outlined what I think are the principles of good public policy in comments I made to the Workplace for the Future conference last Thursday. See my website at ]

That phrase, the “fair go”, used to encapsulate how New Zealanders thought about themselves. It is foremost an individualist notion: I should have as good a chance as possible to get on in life and do the things I want to do. Other people, including bureaucrats, should not get in the way. It is also an essentially egalitarian notion: there are supposed to be no arbitrary barriers, as, for example, class is in Britain. Everyone gets a fair go. But this is not a free-for-all: the fair go requires reciprocity, each individual backing others to get a fair go, too, and not getting in the way of their fair go. Fair’s fair, as we used to say when I was young. Hence the welfare state: you can’t get a genuine fair go without a decent education, a decent house and decent health care and some financial help when you can’t help yourself. The 1972 Royal Commission on Social Security framed this as the government should “ensure . . . that everyone is able to enjoy a standard of living much like that of the rest of the community and thus is able to feel a sense of participation and belonging to the community”. Here, too, the fair go requires reciprocity: you are expected to do your best and not sponge off government assistance for any more than what you cannot do for yourself because every bit that comes from the collective is a bit off others’ fair go.

So a fair go entails individuality, collective support and reciprocity – core attributes of a cohesive society. All else being equal, a cohesive society is likely to be more prosperous than a fractured or fractious society: people who feel part of society, who feel included, are more likely to do their share than those who feel left out with nothing or little to gain by contributing.

In that sense, a cohesive society is infrastructure, analogous to roads and water. It is social and economic infrastructure. Sensible people invest in and maintain infrastructure in good repair.

That takes us back to trust. A cohesive society is a society of high trust because without trust there cannot be cohesion. Turn that round: without cohesion there cannot be trust. And that word “trust” takes us back to your role as lawyers: a society of high trust is a just society, a society in which the great majority feel there is justice.

Maintaining a cohesive, high-trust society is a very tall order in this hyperglobalised and hyperconnected world in a decade of disruptive and disjunctive change. There is a high risk – which you might say is now all too evident in fact here – that large numbers get left or locked out and lead the sorts of lives which upset social order and undermine trust. Unmet need is the enemy of justice.

But what is justice? In modern Aotearoa it is rooted in citizenship. Citizenship is the essence of democracy and the essence of citizenship is equal membership of society in the sense the 1972 Royal Commission implied in its principle. As I have argued in an Institute for Governance and Policy Studies note on vested interests, this goes far beyond “formal” equality of citizenship before the law (which in any case is dubious, given how much legal action costs). The remarkable “Hutchison” parliamentary health select committee report last November pulled together much research on epigenetics and nutrition and the world-unique 40-year Dunedin longitudinal study and elsewhere. That research presents a compelling case that conditions in the womb and the nutritional, emotional and cognitive experience in the first three years of life have a profound effect on the degree to which children can genuinely access education and then later as adults live fulfilling lives in the workforce and society – fulfilling to themselves and to others. If the government is to ensure such a genuine opportunity for that “full” equal citizenship, many agencies have very demanding responsibilities. Meeting those responsibilities requires both innovation and intelligent application of high-quality, science-based information in policymaking and implementation, as Chief Science Adviser Sir Peter Gluckman argued in a report last year, on the basis of which he is appointing departmental science advisers. By comparison with this “full citizenship” challenge, balancing the budget and the current account are a doddle.

This is a far cry from soft-left keening and handwringing about poverty and inequality and old-style liberal-left palliative interventions. Justice as citizenship is a conservative issue as much as a liberal-left one: half the 10 MPs on the unanimous Hutchison committee were conservatives, more interested in investing for measurable results than spending on palliative care. Moderate conservatives’ principal concern is to conserve society from decay or radical change. If there is not a reasonable measure of justice in that broad sense of full equal citizenship, market capitalism and the liberal order will be at risk from populist reaction which would produce erratic policy (and not address the essential issues). In the twentieth century that risk was averted in our sorts of societies by a social democratic initiative, social security, embedded by moderate-conservative buy-in. Moderate conservatives recognised, particularly from the 1930s on, that to conserve their society some change was necessary. There is growing recognition from moderate conservatives now in this society and in some other societies like ours of a similar need for change. Paul Hutchison is a moderate conservative and so, most of the time, is Bill English.

This is a project for the collective – that is, the public as a whole and the many publics which make up that public. And the agent of that collective is the public service. I say public service, not state service, because I think it is important to distinguish the public from the state. The state exists independently of the public. The state’s role is essentially to defend the border from external existential threats and to maintain order within. In a modern democracy the state is subject to its citizens because the citizens choose from amongst themselves those who make the laws and arrange for the administration of the laws and all citizens are eligible to be chosen. [For a fuller explanation of my argument here, go to]

Which brings me back to citizenship and justice.

Most people think of justice as distributive: it distributes retribution, punishment and penalty, with restitution and rehabilitation tacked on. It is payback for a damaging event after the event. The police and prisons, with courts sandwiched between, are the principal agents of this distributive sort of justice: law and order. That is crime justice. There is, of course, also distribution of justice through resolution of disputes by lawyers, mediators, arbitrators and the courts: the contract and tort dimension of justice, a critical ingredient in a well-functioning society.

The liberal-left has long argued (though less so recently) for what it calls social justice: fixing up the worst inequalities by taxing people (the better-off more than others) and delivering services to those in need and also by delivering most of those services through public mechanisms which it thinks are more likely than private purchase-and-provision to equalise the quality and quantity of the services. This the liberal-left calls redistribution: social injustices are corrected after they appear through this redistributive justice.

More recently the liberal-left has talked up “predistribution”: instead of subsidising wages, as with the Working for Families tax rebates, housing rental assistance and other financial help, it would be better, the liberal-left says, if wages alone were high enough to sustain a household. There would be more dignity, more self-worth, better social integration. That, in fact, was what the first Labour government in the 1930s did by regulating wage-setting and making union membership compulsory: just about any wage would modestly support a household. Many on the left want to revive the concept (if not the mechanism, which was abolished in 1991 and is in any case impractical in a hyperglobalised world) by backing the likes of the living wage.

Apply that thinking to justice. And go back to the Hutchison report – remember, a report backed equally by moderate conservatives and liberal-leftists. If we take justice as full equal citizenship and not just police-courts-prison (or contract or tort law), we might talk of “predistributive” justice: predistributing to all from the earliest stages of life the capacity to take a full part in society and the economy and, with that, a diminished inclination to do antisocial things. To put it another way, the justice pipeline starts not with the police but from conception or before. Unmet need is the enemy of justice.

It’s a matter of trust. Those who feel they belong are more likely to trust others. With higher trust comes greater social cohesion. And in a more cohesive, trusting – just – society lawyers could reverse out from the path towards the rule of lawyers and return to the rule of law and thereby further strengthen trust. We would be richer, in all meanings of that word.

Your job would be more satisfying. But there would be fewer of you.