Tuesday, June 9, 2015

The myth of "Retirement Savings"


Advocates of Kiwisaver and other funded retirement savings schemes perpetuate the fundamental misunderstanding that "conventional" in New Zealand's case "neo-liberal" economists, speculators, finance companies, politicians and those with a lot of share holding wealth in non-productive enterprises like to perpetuate.

In other words all those who gain from wealth transfer from workers to non-productive wealthy parasites.

The myth is that, if we give our wealth to any of the above they will magically increase it due to the "miracle" of compounding interest from investment. Then give it back to us with extra when we retire.
US retirees are already finding out how that works.
The wealthy are keeping the retirement funds. Thanks very much!

"Saving" for retirement relies on three assumptions.

One. That an ever increasing amount of money equals a similar supply of real wealth and real capital.
Two. That an exponentially increasing wealth per person is possible in a finite world reaching resource limits.
Three. That putting money into increasing land prices and increasing derivative prices in the USA, a failing State, will somehow, "magically" mean more money (Healthcare, food, Housing etc) to support you or me in our retirement.

Retirement income, real income as opposed to monetary income, as does schooling healthcare, infrastructure supply and food, always comes from current production. If I do not eat my dinner today, it does not mean there is someone who can give me my dinner in my eighties.

If however, I ensure our young people have enough to eat, good health, training in skilled jobs, functioning and effective infrastructure and good jobs, or if these are not available, at least enough to live on, then New Zealand will be prosperous enough to support me in my old age.

The best investment for my old age then, is not giving my money away for financial wizards to lose, but to pay taxes to make sure that the next generation are happy, healthy, educated, employed and comfortable.

Also published in "The Standard".

Thursday, July 10, 2014

The real aims of National’s “Education” policy.


If the aims of National/ACT’s education policy were, genuinely, to to improve the learning, education and career choices for our children, including the ones that are failing at present, they would not be following policies which have signally failed to achieve any of these goals, anywhere else they have been tried.

When you realise the real results of the polices that National, and ACT, want to introduce in other countries, you begin to see the real aims.

A two tier education system.

One tier, of private schools, entrenching wealth and privilege.

“jobs today — “particularly the most lucrative” — have become, they add, “available almost exclusively to young people from wealthy backgrounds. One example: In the UK, only 7 percent of children attend private schools. But two-thirds of the nation’s doctors have been privately educated”.

National are even more cheeky. They still want us to fund their spoilt brats privileged education, while they cut funding to our children..

Tier two. “Education factories” designed to teach the minimum, while making profits for private owners.

A tier, of cheap, production line, “education” in conformity,  and the minimum required for working in dead end jobs. Unthinking cannon fodder for poor employers. The Teaching of critical and independent thought to be removed as far as possible. (So the accumulation of wealth by a few non working bludgers, and their spoilt offspring,  is unquestioned). Reading, writing and arithmetic. (National standards).

Of course, the destruction of Teachers collective voice, the unions, is needed, to remove opposition to dumbing down and “privatising” education..

The bribing of compliant “executive Teachers” that conform to National’s “vision” of education is, of course, designed to help the true aims.

Hostage Taking in The Classroom
“The commercial application of this extortion scheme is straightforward. In shock-doctrine-like fashion, the corporate community that typically lobbies against higher taxes to fund schools makes a business opportunity out of schools’ subsequent budget crises”.
“Ultimately, the public is removed from its own public education system and faraway moguls turn education policy into their ideological plaything, consequences be damned. Worst of all, the hostages are left to suffer – and have no hope of ever being released”.

When you see that the goal is to commercialise public education, regardless of education quality, and entrench the privileged, wealthy “class”, the seeming ineptitude and incompetence in “improving” “education” from National and ACT, makes sense.

Also Published in The standard.

Wednesday, January 22, 2014

UBI (3). Taxes, income and Welfare.


An often repeated argument against increases in welfare, including UBI, minimum wages or payments to alleviate poverty, is that it will fuel inflation and most will end up no better off. (More market advocates don't seem to have the same faith in "the market" to hold prices down for the poor, as they do for the rich).
We never see that argument made against the 17 to 20% increases at the top end, which are already fuelling inflation, in food and housing, making prices too high for poorer people.

The answer is, to make the rich less wealthy.

The Laffer curve theory, the idea that Government share of the economy displaces private share, is often cited as a reason for not expanding the size of Government spending.
The theory is generally given as an argument against higher taxes along with the idea that higher taxes will simply be avoided.
 The evidence shows, however, up to a certain point, Government spending on infrastructure, education, health, services, welfare and social policy helps the private sector as well.
The worlds most successful economies generally have a Government share of the economy greater than ours. We have a lot of room to move in this direction.
However, a UBI is a change in distribution of incomes, not an increase in the size of Government.
WINZ will shrink, for a start. So will tax compliance costs for small business.

Higher progressive taxes are inevitable. As Obama said "it is math". We cannot have a viable economy/society while reducing Government services below a minimum and continuing to borrow, so a few wealthy people can pay less tax.
We cannot afford the compounding interest, on the billions required over time, for National's unaffordable tax cuts.

Middle to upper middle income PAYE earners claim, with some justification, they are paying a disproportionate share of taxes.
They are in the middle, between the better off, who can use tax dodges, and the poor, who do not have enough to pay tax.
A more even distribution of taxes, maybe, with capital gains taxes, financial transaction taxes, wealth taxes, which share costs more fairly around all sources of income/wealth, will  allow us to reduce PAYE income taxes share..
Broader definitions of income, for tax, makes the system fairer.

The psychological effect of universality. "I am getting something back for my taxes, even if I am paying more tax than I am getting back" should not be underestimated.
If New Zealand super was not universal, it would have been steeply reduced, or gone, 2 decades ago.

The highest marginal tax rates are paid by those on the lowest incomes. Then there are regressive taxes such as GST.  At the bottom end high marginal rates really are a disincentive to work. Abatement rates, plus work and transport costs means a welfare recipient that does some work is often worse off. At the other end I do not know of anyone who will turn down an extra million dollars in income becuase they may have to pay 600 thousand in tax.
Certainly didn't stop me from trying to work harder to raise my income, when marginal tax rates were 60%, in the early 80's..

I have no sympathy at all with those on high incomes who complain they use the same services as those on low incomes, but are paying a greater dollar amount of tax.
They are benefiting the most from the society NZ taxpayers and workers have built, and from Government services. That is how they became  wealthier! It is only fair that they pay the most. Chances are,  if they had been born in a country without our education, infrastructure, social and health systems, they would be the one in the cardboard box on the street.

Progressive taxation  is the price of living in a well resourced, pleasant, and cohesive society.

If you don't like it, move, to a tax free paradise, like Somalia!

But first, Please be consistent with your principles, and give back to New Zealanders all the proportion of your wealth that you earned because of our  efforts and support.

UBI (2) Why should we push for a UBI? (Universal basic income).

Why a UBI?

Firstly. To overturn some paradigms:
That a great many people should lead poor and constricted lives, so a very few can be rich.
That ordinary people are disposable economic production units.

The economy, and I use the word in its broadest sense, exists for people, not the other way around.

New Zealanders, apart from a few extremists, generally accept that some of the income/resources available to those in paid work is transferred to those who are too young, old, ill or incapable to undertake paid work and those who undertake work, such as childcare, which is essential to our society.

The debate is about the amount, and how to fund and distribute it.

So. Why should we use a UBI?

A UBI empowers everyone, especially those who are currently marginalised, with the principle, everyone should have enough of societies resources as of right, for, at least, the necessities of life. I would go further, and say that everyone deserves enough, to be a inclusive part of the community.

A UBI acknowledges, and enables a living, for the many people, such as those bringing up children, (Mostly women) who carry out essential, but currently poorly paid or unpaid, services for our society.

A UBI looks after those whose work is displaced by the necessary shift to a more energy efficient and environmentally sustainable economy.
We cannot expect the involved workers, for example, coal miners, to bear the whole costs of the shift.

A redistribution of income to those at the lower end, who have to spend all their income, will be “good for business”, especially local small and medium enterprises (SME’s).

A UBI and initial flat tax rates removes the high marginal rates on low income earners. Encouraging workforce participation, entrepreneurship and progress away from “welfare dependency”..

The simpler tax system possible with a UBI makes compliance easier, especially for SME’s, and avoidance harder.

Redistributing income to those who spend it locally, instead of on Maseratis, Hawaii holidays and imported electronic junk is good for our balance of payments.

It reverses the, economically and socially disastrous, re-distribution of income upwards of the last 3 decades.

Increases the money available for savings and investment locally.

Libertarians, the principled ones, can see a lot to like in giving people choices in how they spend income, rather than giving it to the Government to spend. Less Government involvement in income redistribution and allocation may well “shrink” some parts of Government. We see from the “mincome” experiment http://en.wikipedia.org/wiki/Mincome , that spending on welfare, health care, crime and other effects, of poverty and social dysfunction, will reduce over time.

A UBI allows time out; to study, get well, bring up children, carry out voluntary community work, teach, start a business, avoid burnout, add to community services/wealth.

We already have a UBI, for older people. NZ super.
It has been totally successful in removing poverty amongst the elderly, (less than 3% in poverty).

We can, at least, extend it to children.

Time we “made poverty, history!”

Also published in  The Standard

UBI (1). Memes and Paradigms.

This post is a follow up from.  http://thestandard.org.nz/ubi/

The way human beings process information means that  memes and slogans  are powerful ways of influencing people.
We are all aware of the persistence of memes like “we cannot afford super”, “bludging beneficiaries”,  “poverty is unsolvable”, people will only work if forced” etc……….

Propagandists know that if you repeat a meme or slogan often enough it becomes truth, even in the minds of those who should know better. The extreme right wing know this. Which is why they often just endlessly parrot the same mindless slogans.

More thoughtful people try and counter memes with facts and figures. Trying to persuade with reality.
In fact we  need to counter memes with our own.
“We cannot afford super/welfare”.
With;  We did in the 30’s to the 70’s when New Zealand was supposedly much poorer. Or, “We do very well out of the unpaid contributions of the elderly,  (and mothers,  carers, and all the other unpaid community workers). ”.
“Bludging beneficiaries”.
With;  “Those on welfare are you and me,  given a bit of bad luck or ill health”.
“People  are inherently lazy and need to be forced to work”. (I consider this a piece of projection from the greedy section of the right, who cannot conceive of anyone doing anything without reward).
With;  Most people contribute to society if they can.
“Poverty is unsolvable”.
With;  We solved it for the elderly in New Zealand.  (less than 3% in poverty).

A paradigm shift happens when someone challenges the accepted way of doing things.
When, for example, they ask.  “Why should electric vehicles be the same as fossil fuelled ones?”.

Those growing up after the 80’s will find it hard to imagine the paradigm shift, that was the rise of Neo-liberalism, in the 80’s, in New Zealand. The colossal untested experiment, it really was,  and the huge shift of wealth from the lower and middle classes to the richest of us.

Fairness, inclusiveness, equality, and the right of everyone to a decent life, was basically accepted by the left and right wing in New Zealand.  It wasn’t perfect, of course, but the existence of the ladder to a decent life, for everyone, was a large part of our national goals. Something we were, rightly, proud of.
The great neo-liberal experiment has succeeded in changing our social paradigm to a much more “dog eat dog”,  unequal and mean spirited society. The promised economic gains have only eventuated for a very few.

I don’t want to paint us into a corner and say that a UBI is the only answer.  (Thanks McFlock)  It is not,  it may not even be the right one.  (More on pros and cons next post).  Big changes  without deep thought,  examination, research, discussion and consensus,  is something we should leave to the other side.

But. In exploring ideas like this (Thanks Weka) we are, hopefully, starting a paradigm shift away from Neo-liberal acceptance of meanness and inequity  towards inclusiveness, equity, fairness and the right of all of us to a decent and hopeful life.
Why should we accept poverty in a country which has more than enough resources for everyone?
New Zealand once led the world in social policy. New Zealanders, of all political colours, are proud of our world leading human rights and social welfare initiatives.

Dauphin was the “town without poverty” http://en.wikipedia.org/wiki/Mincome

New Zealand could be,

The country without poverty” .

Also Published in The Standard


Thanks to NZ Femme who put up this link.

“‘It Can Be Done! Conquering Poverty in the US by 1976’, James Tobin, who would go on to win a Nobel Prize, wrote in 1967. At that time, almost 80% of the American population was in favor of adopting a small basic income. Here is an interesting article about this episode of American history. Nevertheless, Ronald Reagan sneered years later: ‘In the sixties we waged a war on poverty, and poverty won.’
Milestones of civilization are often first considered impossible utopias. Albert Hirschman, one of the great sociologists of the previous century, wrote that utopian dreams are usually rebutted on three grounds: futility (it is impossible), danger (the risks are too big) and perversity (its realization will result in the opposite: a dystopia). Yet Hirschmann also described how, once implemented, ideas previously considered utopian are quickly accepted as normal.”

Encapsulates the empowerment of people inherent in both income security and real democracy.
“Almost 80% of the American population was in favor of adopting a small basic income”.

New Zealand was once considered one of the best places on earth to live.

It could be again …

Also published in The Standard. UBI.

Thursday, December 12, 2013

How to: Pick an Excuse for Not doing Anything About Poverty


Right wing, excuses reasons, for not doing anything about children in poverty.

1. "It costs too much".
2. "Taxation is theft".
3. "They are not as poor as they are in (Insert a third world Nation with less than half our GDP, and a 10th of our resources per capita)".
4. "The statistics are wrong".
5. "It is not as many as they claim".
6. "You can't get rid of poverty by giving people money".
7. "I was in a poor persons house and they had "Chocolate biscuits, a colour TV, or, horrors, a bottle of beer"!!
8. "It's all those solo mothers on the DPB breeding for a living".
9. "I know a person who.............."
10. "It is a choice they make".
11. "It is people who make poor choices".
12. "They shouldn't have had kids they couldn't afford".
13. "Why should "I" pay for other peoples kids".
14. "The centre will never vote for it".
15. "We will do something if finances allow".
16. "Giving them money made them poor".
17. "Those socialists made them poor by giving them benefits".
18. "I pay enough taxes".
19. "There are no poor in New Zealand".
20. "Not now, later!"

Thursday, September 5, 2013

Universal Basic Income. UBI.


The concept of UBI has a long history in New Zealand.

Of course, we already have a UBI for those over 65.  Which has been extremely successful at eliminating poverty amongst the elderly, at a very moderate cost by international standards.

“In fact super has been so effective in removing poverty amongst the elderly it should be extended to everyone in the form of a guaranteed minimum income. There is no excuse for having people with inadequate food and housing in a country which is capable of supplying an excess of both internally”. http://kjt-kt.blogspot.co.nz/2011/06/on-retirement-pensions-and-age-of.html

It has been a policy plank of various minor political parties, such as Social Credit. http://en.wikipedia.org/wiki/New_Zealand_Democratic_Party_for_Social_Credit

Currently, the Greens have discussed a UBI as part of welfare and economic policy development.
Many organisations, and individuals both left and right wing, have discussed  the idea. Including the darling of the extreme right, Roger Douglas.

Recently Gareth Morgan has been an advocate. He puts the case rather well. http://www.bigkahuna.org.nz/universal-basic-income.aspx
Paying universal transfers acknowledges that every individual has the same unconditional right – to a basic income sufficient for them to live in dignity. The Unconditional Basic Income (UBI) provides this.
With this basic protection in place people are then free to add to that income through paid work if they choose. Equally, they can live on the UBI and pursue other activities – doing the unpaid work of caring for children or others in their community for example, or studying full time, or pursuing new business ventures. The UBI offers the prospect of ensuring everyone has the means to live while giving them the freedom to live their lives as they choose.”  

However David Preston from the MSD exemplifies what seems to be the main concern and almost the only real objection to a UBI.  People may chose to go surfing instead of working. Horrors! http://www.msd.govt.nz/about-msd-and-our-work/publications-resources/journals-and-magazines/social-policy-journal/spj10/universal-basic-income-cure-or-disease.html
The vision, of 80 year old pensioners surfing, this engenders,  caused me a great deal of mirth.

In fact the only real experiment with a universal basic income.  http://en.wikipedia.org/wiki/Mincome ,showed that the overwhelming majority, even with guaranteed income, chose to do something constructive.  Work, study or raising children. In the 70′s in New Zealand, with a much more generous unemployment benefit than we have now, almost everyone still chose to work.

The biggest advantage of a UBI, of course, is the almost total elimination of poverty, with all the savings in the accompanying economic and social costs. There is also the not inconsiderable savings in administration of welfare, simplified tax systems and the hit or miss nature of targeted welfare. Because it is universal, there is less incentive for the wealthy to try and destroy it, to cut taxes.

The main objection, apart from the horror of some people that recipients may simply go surfing, A horror they do not seem to extend to the inheritors of unearned extreme wealth, is cost!

It is not, however, a given, that the overall cost of a UBI would be more than that of a fair targeted welfare system.
Of course those same people  throw up their hands object to the cost of current welfare. They cannot understand why the poor are not made to live in cardboard boxes and starve quietly as they do in their ideal economies, just so those on high incomes can pay a few dollars less taxes.

Universal superannuation in New Zealand has been considerably cheaper and more effective than targeted schemes elsewhere.
Don’t see why a UBI should not pay for itself in the savings in administration, the decreased costs of poverty and the extra tax take from extra income within the economy. Flat taxes over the UBI rate, are possible, which should cheer up the right wing.
The removal of abatement rates for working and the removal of the penalty of extreme poverty for business failure, for those not already millionaires, can only help more people into work, study and entrepreneurship. For others, it frees them up for socially useful unpaid work, such as sport coaching, teaching and the myriads of other unpaid and unrecognized work which makes for a functional society.

Lastly. In an era where resources are running out, being able to survive without having to find ever more creative ways of using up resources, and ripping off your fellow citizens, is an essential step towards a steady state sustainable society.

Also published in  The Standard

Wednesday, June 26, 2013

New Zealand Joins the Roll of Shame.

New Zealand joins the roll of shame.

With recent legislation New Zealand's Government continues it's shameful attacks on human rights.

Bill allowing detention without trial, of refugees.

Joins the roll of shame, of countries which allow detention without trial.

We were already on the roll of countries that convict on secret evidence the accused is not allowed to see. Bill_Sutch  Achmed Zaoui

"First they came for"

Next it will be you and I!

This on top of a year of extensions in police powers, police assaults on legitimate demonstrators, Police forcibly arrest demonstrators despite them being within the law. legalising, formerly illegal spying and search and surveillance, Police and spy agencies broke the law so Government races to make their actions legal. and making recourse to the courts, against Government policy,  illegal  National stymies caregivers recourse to justice.. And continued attacks on workers rights. Jami Lee Ross' scab bill. The scab bill is probably too extreme even for National, but under its cover they are bringing in only slightly less repressive restrictions on workers rights.

New Zealand, the USA and UK were always democracies more in name than reality.
Now  with Governments almost daily restricting individual freedom, legitimate protest and democracy, they are becoming more and more like the totalitarian States we used to criticise, for their lack of consideration for human rights and the wishes, and best interests, of the Governed.

Then of course, we have the USA pursuing a man all around the world simply for telling their citizens how much their privacy was being breached, by their Government!

We are getting the type of repressive dictatorship, we used to fight against.

Our Governments seem determined to return, slowly so we don't fight back, the rule of,  the KGB, the Stasi or the Gestapo.

Sunday, May 19, 2013

An Alternative Budget.


An alternative Budget, From Matt McCarten.
  Matt has posed this as a "left wing" budget.

However many of the ideas would have been considered centrist economic thinking not long ago.
Just shows how much right wing extremists have dominated economic thinking.

"1. Abolish 15 per cent GST. Replace with 1 per cent financial transaction tax as recommended by the New Zealand Bankers Association. Same money."
An idea which is being looked at seriously all around the world. It does need adoption by many countries at once to prevent banks dodging it.
"2. Abolish PAYE on wages and salaries. Replace it with a wealth tax and a capital gains tax when shares, businesses, land and property are sold. People are taxed when they're cashing up, not when they are making it."
Actually an idea of that noted arch socialist, economic thinker, Adam Smith. "Tax the owners of capital and land, not labour and entrepreneurs, because they produce the wealth".
"3. 90 per cent Death Tax. You can't take it with you. Grown-up kids should earn their own money anyway."
True, but I think their should be a threshold, say, a million dollars. No reason why one family should be allowed to accumulate ever increasing wealth over generations., and many sound economic and social justice reasons why they shouldn't. However parents should be able to pass on some to their kids.
"4. Rent-to-buy homes underwritten by the state. Limiting homes to two a family and having a capital gains tax will keep prices affordable."
Exemptions for family homes or restrictions on the number of homes a family has may not work. How do you define family?  Better to again have a threshold. Maybe set at the current median price.
"5. State-created work schemes for all long-term jobless."
Not bad, but I think a Guaranteed income is better, bearing in mind that in a steady state sustainable economy we do not need all those working hours.
"6. A living wage set at $20 an hour minimum. It would be a stimulus package."
Contrary to often expressed opinions from the rabid right, minimum wages increase demand and increase jobs and business profits. A better form of stimulus than gifting money to the banks, who lost it in the first place.
"7. No tax on profits kept in a business."
An incentive to invest in business growth, entrepreneurship and employment, not speculation.
"8. Free public transport in major cities. That would get people out of their cars."
Likely to save on roading, energy, and other costs long term.
"9. Victims get 100 per cent state compensation for loss or injury. Offenders work it off if necessary.
I hope that is extended to those who knowingly sell harmful products and politicians who work against their constituents best interests.
"10. Make KiwiSaver a state-owned fund and buy all the Government's non-core commercial assets."
Still doesn't give the investment in sustainable productivity we need for the future, but better than putting it in the financial lottery that is overseas financial markets. The same ones that lost all the US pension funds.

All in all a much more progressive and sound budget than National's recent mean spirited and dysfunctional, joke.