Phil Goff wants to pay Auckland Council employees at least the living wage. Is that moral or practical? Is it attacking capitalism or saving it?
Apple shuffles money around to evade tax, the European Union reminded us last week, demanding it pay the Irish government around $NZ20 billion. Is Apple stoking capitalism or sinking it?
The Organisation for Economic Cooperation and Development implies Apple is damaging capitalism. The OECD has been developing a mechanism for states to collectively cut down transnational companies’ routine Apple-type profit-shifting and tax underpayment.
What is legal is not necessarily moral, as John Key acknowledged in comments on the Apple affair.
Legality alone is not enough to hold societies and polities together. So governments are likely to find themselves under increasing voter pressure to do something about global firms that play rough. Key got a warning flick after his initial bland response to the Panama papers trust exposures.
At stake is the liberal capitalist democratic system that made Europe, North America and Australasia — and, in their own ways, Japan and more recently some other Asian nations — prosperous and stable.
The puzzle is that those with directly the most to lose seldom deplore the wayward.
I have not seen a flood of press releases from Business New Zealand about shonky steel, restaurants treating migrants like slaves or transnational tax evaders.
Kim Campbell, Employers and Manufacturers Association chief executive, scoffed that Goff’s living wage promise (emulating Wellington City Council’s action) “turns the clock back to an argument we thought we had buried”.
Some with bigger minds than Campbell’s have been worrying about just where the hands are on that clock.
The Economist magazine agonised after Brexit that the “narrow technocratic politics” of the past quarter-century had left “plenty of voters” feeling “as if they have been left behind” and “their anger is justified”.
“The intellectual underpinnings of liberalism have been neglected,” the Economist said. “Liberalism needs to fight its ground all over again.” There was a “need for policies to ensure the diffusion of prosperity”. (A real living wage?)
The Financial Times’ eminent Martin Wolf, once a cheerleader for the financial practices that gave us the global financial crisis, last week asked: “Is the marriage between liberal democracy and global capitalism an enduring one?”
He went on: “Democracy is egalitarian. Capitalism is inegalitarian, at least in terms of outcomes.”
“Widely shared increases in real incomes played a vital part in legitimising capitalism and stabilising democracy.” But now there is a “poisonous brew” of “growing inequality and slowing productivity growth”.
Key and Bill English insist inequality has not been growing here since the big rise in from the mid-1980s to the mid-1990s. Inequality went down a bit during Labour’s nine years (Working for Families) and is back up a bit during National’s eight but not dramatically so.
Yet over the past year homelessness has become a big story — and there does some to be a genuine increase. The same goes for children deprived of some necessities, commonly called poverty. Sociologist Damon Salesa says young Pasifika in South Auckland are growing up poorer than their parents.
How come? It’s the hysteresis effect — which is when the full effect of a change becomes evident only some time later.
As inequality has embedded in this country, now infecting a third generation, the full effect has been hardening.
The social logic of that is hardening class division. Once we proclaimed a “fair go” and equal opportunity. The political logic is at some point a version of the populisms that are redrawing North Atlantic countries’ electoral maps. Key’s government is struggling to understand and respond.
Some see the end of capitalism. One is Nick Srnicek, “post-capitalist” author of “Inventing the Future”, keynote speaker to numerous enthusiasts at the Wellington launch on Friday of former Green MP Sue Bradford’s leftwing think tank.
On cue Winston Peters’ 23-year-old nationalist New Zealand First party is averaging around 9% in polls, a firm launchpad a year or so out from the 2017 election.
He told his well-attended, cosy “convention” in Dunedin at the weekend that the “neoliberal experiment”, which he called “capitalism without a conscience”, is over. It was “economic treason” and “we are not going with anything like that ever again”, which could be read as a half-apology for going with National in 1996.
And, thanks to the hysteresis effect, Peters has much more disgruntlement and discomfort among voters to work on than in 1996 or in 2005 when he went with Labour. “We hear you,” he said, pitching to these “forgotten people”.
That is an electoral poser for National and Labour+Greens next year. A far more complex challenge is to remake social cohesion.
Goff’s living wage aims down that track — but is too taxing for business.