New-left rallies its forces to take on the new-right

By Matt McCarten
from Herald on Sunday

After two years it seemed the left was never going to get a break. I’m stoked to announce we have got it at last.

Two weekends ago we had our first good news when the mayoral front-runners in our five major cities lost. The wins were significant politically in Auckland and Wellington.

Who would have thought a small grey man called Brown could arouse so much enthusiasm? Mind you, if the right relies on a grey man called John Key to keep their party in the stratosphere I guess we can swoon for Brown.

And just when the left were still hugging each other in delight, the Labour Party for the first time since who knows when got excited about being left-wing again.

UN report exposes BBC bias against Palestine

by Grant Morgan  
Co-organiser of Kia Ora Gaza
23 September 2010


A panel of experts appointed by the UN Human Rights Council has slammed Israel for raiding a Gaza aid flotilla last May, saying its military forces killed and tortured humanitarian volunteers in breach of international law.

“The conduct of the Israeli military and other personnel toward the flotilla passengers,” the UN panel declared, “demonstrated levels of totally unnecessary and incredible violence. It betrayed an unacceptable level of brutality.”

The three UN human rights experts who found the Israeli raid “clearly unlawful” are:

• Former UN war crimes prosecutor Desmond de Silva.
• Trinidad judge Karl Hudson-Phillips.
• Malaysian women’s rights advocate Mary Shanthi Dairiam.

The findings of these internationally respected human rights experts contradicts the thrust of a recent BBC Panorama story titled ‘Death in the Med’. 

This BBC story, filmed in partnership with the secretive Israeli commandos who stormed the flotilla, suggested that the civilian aid workers were the aggressors, not the victims of an unlawful and brutal action by overwhelming military forces.

In effect, the UN report exposes untruthful bias in the BBC story.

And here are two further exposures of the pro-Israeli propaganda themes in the Panorama film:

Expose Panorama bias (click to read)

Kia Ora Gaza - Breaking the siege of Palestine

The Kia Ora Gaza team and the entire Viva Palestina 5 convoy continues its way through Europe. Daily reports are featuring on the Kia Ora Gaza website.

I thought the following summary by Omar Hameed as Socialist Aotearoa was particularly pertinent.

It’s sickening to watch the Delhi Commonwealth games descends into utter shambles and absurdity with pampered athletes moaning about their (obviously unclean) accomodation in a country where the population of people living in slums is set to be 93.06 million next year.

23 times the population of Aotearoa living in houses without access to drinking water, toilets or drainage and yet the major story is that the building dust hasn’t been cleaned out of the bathrooms. For many Indians it would be nice just to have a bathroom.

On the other hand one Kiwi team we should be all cheering for is the Kia Ora Gaza crew, trekking their way across Europe on the way to break the siege of Palestine. With nearly $90k of their $100k target raised these activists have strengthened and demonstrated the support for the Palestinian people in this country.

As Chris Van Ryn, one of the activists on board the convoy described life on the road,

It’s hard. It’s stressful. It’s uncomfortable.

And it’s so worth doing.

We’re here to do a job, not have a party. Our focus is to supply aid to suffering people in Gaza and break the globally condemned Israeli siege. That’s the thread binding our convoy together. For a month we put aside our own needs for the much greater needs of oppressed Palestinians.

The closer we get to Gaza, the stronger our feeling for the one-and-a-half million people imprisoned on that small strip of land. We feel their plight.

Hundreds of determined people being supported by thousands of ordinary people around the world, united in their determination to rebuild international co-operation and solidarity between people through hard work and shared physical hardship. You won't find it at the Commonwealth games but you will find it with the courageous volunteers on the road to Palestine. This is one team to keep an eye on this spring.

Savings? That’s a laugh

By Peter de Waal

On 27 April this year the 6pm TV3 News reported:

  60% earn under 40,000 per annum

  88.1% earn less than 70,000 per annum

  6.8% earn 70,000 – 100,000 per annum

  5.1% earn over 100,000 per annum

The average rent for a two bedroom house in Auckland is $400/a week or $20,800 a year. For the “average” worker (see above) earning $45,000 per annum before tax, $20,800 a year represents 46% of gross income in rent alone.

Once you deduct income tax at 33%, and the extra 10% tax paid for your Student Loan on top of that (the uneducated seldom earn $45,000 per annum) what’s left for food, power, phone, car payments, etc?

International guidelines say any rental or mortgage payments over 33% of gross family income constitute true poverty and hardship. Who can raise a family, pay the vastly inflated rents or mortgage and have any money left over at the end of the week on figures like those?

Most people’s earnings are 25-50% of what they were 25 years ago in inflation-adjusted terms. So it’s a bit rich for Mike Heath – the wealthy banker from Rabo Direct, to chide workers for “failing to save” when people like him have spent the last 25 years grinding down wage and salary earners incomes in order to save the capitalist system from itself.

John Minto: A simple question from a taxpayer

By John Minto
from Frontline

The Christchurch earthquake has (quite rightly) knocked several important issues from the front pages and off the TV news. Now that the worst appears to be over, it's time to revisit those issues - the most pressing of which is the biggest corporate bailout in New Zealand history.

There are many questions demanding answers after taxpayers forked out $1.7 billion to buy debt-laden South Canterbury Finance. For example, last week I was sent information suggesting one individual bought $17 million in SCF bonds at 20 per cent of their face value as the company, in its dying days, desperately tried to raise funds to stay afloat. It seems this money was invested in the names of various entities rather than in one person's name and because SCF went into receivership the government deposit guarantee scheme means this individual will be paid out at the full 100 per cent value of the bonds. A bit of arithmetic shows a payout at $85 million - or $68 million profit, courtesy of taxpayers, after just a few weeks.

My question to Finance Minister Bill English is simple. Is this just water cooler gossip or is it true?

John Minto: Key teaches class-quake lessons

By John Minto
from Frontline

It took three days but it was a welcome announcement from Prime Minister John Key that the government will meet some wage costs for Christchurch workers in small businesses (less than 20 employees) who are unable to work because of the earthquake.

Key's payment plan expects to help around 10,000 workers meaning an initial cost of $15 million. It sounds a lot but it's a piddle in the pool compared to the eye-popping sums we are likely to hear before the end of the week when the government announces its first comprehensive rebuilding plans.

The government will provide $350 a week for the next four weeks and John Key hopes employers will top up the pay to each worker's usual rate when they are unable to work. In general terms (and yes there will be exceptions) companies are more easily able to withstand the financial shock of four weeks without work than are families which struggle to make ends meet in our chronic low-pay economy.

Moana Jackson on new foreshore and seabed law

A further primer on the foreshore and seabed
the Marine and Coastal Area (Takutai Moana) Bill

Formatted printable version

---

8 September 2010

‘I once spoke of our people who have their mana attacked being like a beached whale struggling to live … what I say now is to remember how often the sea casts the whale on the shore’. - Te Ataria, 1889.

‘The question that must always be asked of legislation is not whether it is a legislative compromise or even whether it is practical, but whether it is just’. - Justice Thurgood Marshall, U.S. Supreme Court, 1970.

Abstract

This Primer is part of material produced for hui within Ngati Kahungunu on the foreshore and seabed that began with the original proposals put forward on the issue by the last government in 2003.

It addresses some of the main parts of the new Marine and Coastal Area (Takutai Moana) Bill and asks questions about the new regime it establishes for the foreshore and seabed.

It tries to provide some context for the Bill by considering the grounds that have compelled Maori to so forcefully and consistently voice concern about the issue over the last several years - it considers the attempts the people have made to avoid being ‘beached’ by the various Crown proposals since 2003.

It also tries to apply the test for legislative legitimacy outlined by Justice Marshall and assesses whether the Bill is just.

It regrettably concludes that it is not.

It further concludes that the proposed Bill simply consolidates the main inequities of the 2004 Seabed and Foreshore Act that the Waitangi Tribunal found to be problematic in terms of Te Tiriti o Waitangi and the United Nations Committee on the Elimination of Racial Discrimination held to be racially discriminatory.

In that context the Prime Minister’s statement that the Bill will be a full and final settlement of the issue is simply inaccurate because rather than removing the injustice it actually compounds it.  

- Moana Jackson

Why We Need To Tax Financial Speculation

By Vaughan Gunson
Tax Justice campaign coordinator
from CAFCA’s “Foreign Control Watchdog”, August 2010

The figures are mind blowing. The International Monetary Fund (IMF) estimates that the financial crisis cost the world $US11.9 trillion. The human cost is immeasurable. And it ain’t over. The international bailouts of banks and other financial institutions have seen trillions of dollars of private debt off-loaded onto governments. The financial crisis has not been fixed. The problem has just been shifted. The bailouts have created a “sovereign debt crisis”, which is breaking first in Europe. Governments worldwide are scrambling to get debt under control. The “fiscal stimulus” that accompanied the wave of banking bailouts has now passed over to “austerity measures”, which means cuts to public services and higher taxes for grassroots people. Those who had no part, no say, and no responsibility for the financial crisis are being made the victims, many times over.

The leaders of a club of rich countries called the G20 (Group of 20) recently met in Toronto, Canada. The strategy of making us pay for the crisis was clear. G20 leaders issued a joint statement on 27/6/10 committing member countries to halving their budget deficits by 2013 [1]. As Toronto resident and anti-capitalist campaigner Naomi Klein wrote: “Faced with the effects of a crisis created by the world’s wealthiest and most privileged strata, they decided to stick the poorest and most vulnerable people in their countries with the bill” [2]. This is what the world’s elite are trying to get away with, if we let them.

Austerity Hits New Zealand

The New Zealand economy nose-dived into recession in 2009 as the financial crisis quickly spread to the real economy. There have been widespread job losses and general job insecurity, as well as stagnant or declining wages relative to inflation. Many people are struggling under the burden of mortgage and credit card debt. Our Government has not bailed out banks like the US or Britain, but the impact of the crisis on the Government’s budget has been similar to overseas: declining tax revenue from falling economic activity, combined with increased spending demands, like unemployment benefits.

The policy “solution” that the John Key government is pursuing is no different from the dominant policy response by governments around the globe. Protect the rich and do everything possible to get the economy going again under much the same model as before. Increase taxes on grassroots people, while restricting their access to public services. National’s 2010 Budget saw direct cuts to Government spending, like early child care. And effective cuts, as funding increases for health and education failed to keep pace with inflation. More social spending cuts have been signalled. Many public sector employees are facing the axe as the budgets of Government departments are slashed.

Amidst this austerity, National still delivered tax cuts to the rich and big corporates. This benevolence to the rich was funded by increasing the goods and services tax (GST) from 12.5% to 15%. It’s widely accepted that GST is a regressive tax which disproportionately impacts on grassroots people, who spend most of their weekly income on the basics. Many people in New Zealand and around the world smell a rat. The scale of the much reported banking bailouts, the ongoing impact of the crisis on our lives, as we worry about our jobs and paying off debt, has raised the question for many: is there something wrong here?

The Speculators

We need to understand what’s wrong so we can organise strategically to defend ourselves. Crucial to that understanding, is grasping the dominant role financial speculation has assumed in the world economy. Financial speculation is defined on Wikipedia as “the buying, holding, selling, and short-selling of stocks, bonds, commodities, currencies, collectibles, real estate, derivatives, or any valuable financial instrument to profit from fluctuations in its price, irrespective of its underlying value” [3]. Speculation has long been a part of the capitalist economy, with its damaging effects well documented, if often ignored.

But what we’re seeing today is historically unprecedented. In 2008, the trade in derivatives [4]– the most speculative of financial transactions – was $US500 trillion, which was ten times the value of the entire world’s output of tangible products and services. Much of this speculative activity is computer automated, with “purchases” lasting minutes or even seconds. The rapid growth in commodity speculation over the last decade has led to such perverse phenomena as a barrel of oil being traded, on average, 27 times before it reaches the pumps.

The reason for all this speculation is quite simple: the profits to be made from traditional investment in capitalist enterprises that produce something of value has been in decline since the post-war economic boom came to an end in the early 1970s. Today’s unprecedented levels of financial speculation represents the desire, on the part of the world’s elite, to continue reaping high profits, way more than the stagnant real economy will allow [5]. To achieve this, governments worldwide have removed all barriers to financial speculation and encouraged a supply of cheap credit by banks and other sanctioned lenders. A giant financial casino has been created, where everything that fluctuates in price has attracted the speculators [6].

Just like in the real economy, where large companies grow to dominate industries, so it is in the world of financial speculation. The last two decades have seen the rise of giant investment funds, where investors – usually rich wealthy ones – pool their money together in the hope of achieving better returns from long term investments and short term speculation. Billion dollar pension funds and hedge funds, by the very size, can influence the markets. In 2008, it was estimated that pension funds globally controlled US$20 trillion in assets. Hedge funds, which are most often involved in pure speculation, managed around $US2.5 trillion immediately prior to the financial crisis[7]. In sum, financial speculation has grown to 60 times the level of the world’s combined gross domestic product (GDP)[8].

Government-Banks-Speculator Nexus

The governments of the world have acted as the “public facilitators” of global financial speculation. They’ve done so in partnership with the big banks, who are the “private facilitators” of speculation. The world’s big banks are either directly engaged in speculation, being at the epicentre of all financial activity and thus able to read trends and manipulate the markets, or they supply the credit with which others play in the casino. Thus the banks are the biggest speculators of them all. And they’ve got fatter and fatter. America’s six largest banks have combined assets totalling 63% of the United State’s gross domestic product. The extent of the banks’ ascendency is revealed by the fact that only 15 years ago the combined assets of the six biggest banks were 17% of GDP9.

It’s an open secret that Wall Street banks have entered markets with the aim of generating a price bubble. After making their speculative profits they’ve exited the market, collapsing the bubble, before moving on to the next market. The housing bubble followed the dot.com bubble, then the oil price bubble. Next it was the food price bubble. These aren’t speculative bubbles caused by the random vagaries of the market, but orchestrated on high by powerful banking interests, with the blessing of Washington regulators.

Grant Morgan, in his essay “Beware! The End is Nigh! Why global capitalism is tipping towards collapse, and how we can act for a decent future”, argues that financialisation is the central pillar of neo-liberalism, the economic agenda promoted by Big Business and imposed by governments around the world over the last three decades. He likens the massive expansion of the financial sector, with its easy credit and speculative bubbles, to a global Ponzi* scam, one protected by government laws, corporate politicians and state officials[10].

[*A pyramid scheme whereby original investors are paid beguiling dividends from new advances. Bernie Madoff is the most high profile recent perpetrator. These scams are still called Ponzi schemes, after Charles Ponzi, who provoked the 1925 Florida real estate bubble. Ed.]

Speculation has been hard-wired into the global economy. Those who control financial systems reap the rewards, but only by causing structural damage to the whole system. All reasonable logic says that this must end, that it’s unsustainable. But as global capitalism has bet everything on financialisation, there’s no possibility of turning back. The government-banks-speculator nexus, from the point of the view of the world’s elite, has to continue[11].

Crimes Against Humanity

Waves of global speculation have had an enormous impact on the world economy and the lives of the grassroots majority. The housing bubble pushed house prices through the roof and caused grassroots people to be burdened with historically high levels of debt. When the housing bubble in the US burst in 2007, the big financial players quickly went looking for a new market to speculate in. They turned to another necessity of life: food. World rice prices – a staple for much of the world’s population – increased by 320% between January 2007 and June 2008. The price for wheat went up 240%[12]. There was no reason for this other than the deliberate creation of a price bubble by powerful financial players able to shift billions into these markets, chiefly big American banks, with the rest following.

That bubble burst as the financial crisis hit, but food prices haven’t come all the way back down. Once prices rise, other corporates in the food chain have an interest in keeping prices at the higher level. Food distributors and supermarket chains are quick to seize the opportunity to skim some extra profit. So we’re still paying more for rice and bread than we were in 2007. Governments, big and small, are facilitating this crime against humanity. In 2000, the United States government passed the Commodity Futures Modernization Act, which allowed non-grain producers to buy derivatives on the grain futures market. The intended beneficiaries of the law change: pension funds, hedge funds, and all sorts of other financial speculators, including big banks.

Of course if you’re a big corporate bank you don’t want to actually physically own a whole lot of grain, to sell or do anything else with it. But what derivatives markets do is allow speculators to trade in pieces of paper (“promises to buy” in the future) instead. Jayati Ghosh, a respected Indian researcher and campaigner, explains: “[W]hat’s happened, really, in this decade, is that the possibility of speculation in food grain has been delinked from the physical holding of the commodity: you don’t need to hold a commodity anymore; you can hold pieces of paper, which are contracts on the price for the future”[13] .

Speculative bubbles never last, but if you’re a big player able to manipulate prices through the sheer scale of your purchases, then you can make a killing. And it’s a killing field indeed, because grain, or any other basic food commodity that gets turned into a speculative bubble, means a global price spike, which causes the world’s poorest to starve. In 2007-08, the number of people suffering from malnutrition globally rose from 800 million to one billion. This was the direct result of financial speculation in food. Ghosh believes another food bubble is being manufactured. World food prices have been rising since April 2009, and not because of increasing demand or contracting supply, but speculation again in commodity futures markets.

Speculation In New Zealand

While New Zealand’s finance sector is not big by world standards, the same banks-speculators-government nexus exists. Since 1984 a priority of both Labour and National governments has been deregulation of all parts of the financial industry. This has opened up New Zealand’s financial markets to international and local speculators, resulting in price volatility and inevitable cycles of boom and bust. One market that attracts high levels of speculation is the New Zealand currency market. The Kiwi dollar is the 11th most traded currency in the world. New Zealand certainly isn’t the 11th biggest economy in the world with a massive turn over of trade. Global speculators have created a market for the Kiwi dollar. It’s like a special game of roulette has been created in the South Pacific for the world’s high rollers.

Despite its relatively small size the New Zealand stock market is also subject to plenty of speculative activity. The volume of shares traded is quite substantial. In June 2010, for example, daily turnover ranged between $50 million and $120 million. Like all stock markets around the world a large percentage of this trade is by speculators – mostly overseas ones – betting on share price fluctuations. Share purchases for long term investment are only a small fraction of regular trading activity.

The John Key government wants to encourage more speculation in New Zealand. Perhaps this is not surprising, given that John Key made his fortune in the world of high finance. But it also reflects the fact that the Government, and the economy as it stands, is locked in tight to the model of hyper-financialisation which remains the source of so much profit for the rich. The Government has given the green light for NZX, the company that runs the New Zealand stock market, to create a derivatives market for milk. This market for “promises to buy” will see milk prices directly influenced by local and international speculators. Milk and milk products will therefore get caught up in any food price bubble[14].

John Key has also floated the idea of turning New Zealand into a “financial hub”. The plan rests on enticing global investors to New Zealand with the promise of tax breaks. A recent Inland Revenue Department report entitled “Allowing a zero per cent tax rate for non-residents investing in a PIE [portfolio investment entity]” reveals what’s being considered. Under this proposal, overseas investors would be allowed to operate in this country and not pay New Zealand tax on their international investments. Perhaps the greatest wrong is the establishment of an Emissions Trading Scheme, or pollution market, as it should truthfully be known. The Government’s pollution market will be another opportunity for the speculators, which is precisely why the world’s big banks and other financial institutions are pushing carbon trading as a solution to climate change. It won’t be a solution, far from it, but it will be another market for them to profit from.

Tax The Speculators!

The scale of the bailouts, in the US and Europe in particular, has caused great anger amongst grassroots people worldwide, and this has led to some politicians proposing measures to try and reform the financial industry. The global crisis has not, however, reversed the “free licence” that governments have given to the world’s financial speculators. Their ability to grow their wealth and power remains intact. But they are potentially vulnerable, for the reason that the role the banks and other financial institutions have played in the crisis is becoming understood by many grassroots people. It’s therefore imperative that our side flames the fires of anger by further exposing the government-banks-speculator nexus, while at the same time putting forward solutions.

That’s where the New Zealand campaign for tax justice launched by Socialist Worker and the Alliance Party comes in. The immediate focus of the campaign is a non-citizens’ initiated referendum petition which requests Parliament to 1) Remove GST from food; and 2) Tax financial speculation. These two demands address major injustices in New Zealand’s tax system. Grassroots people have to pay tax on one of life’s necessities, food, while financial speculation goes untaxed. Overseas speculators playing New Zealand’s financial markets do not pay a cent of tax on their market gains to the New Zealand government. Likewise, the rich in this country pay no tax on their wheeling and dealing. The main exemption from GST today is for “financial services”, which includes all the activities associated with financial speculation. Taxing financial speculation, as demanded by the Tax Justice petition, would be a progressive reform of a tax system that currently favours the wealthy[15].

Build The Real Economy

The first principle of progressive taxation is that you tax the rich more than poor. On this count taxing financial speculation is progressive. It’s only the very rich who speculate. The second principle of progressive taxation is that you tax things that society wants to discourage. Global financial speculation ruins more lives than smoking, and costs society astronomically more in dollar terms, so if any bad habit needed to be taxed, it’s financial speculation. The best way to make the speculators pay more tax is to hit them at the point where they accumulate their wealth, which is when they buy and sell. This can be done through what’s called a Financial Transaction Tax (FTT), a small percentage tax (perhaps 1% or less) on financial transactions.

Barry Coates, executive director of Oxfam New Zealand, is all for a Financial Transaction Tax, so that “taxes on life’s essentials [like GST]” can be replaced “with a tax on socially destructive financial speculation”[16]. A Financial Transaction Tax would net billions, for example, from speculative trading in the Kiwi dollar alone. Not all of this trade occurs in New Zealand, but a sovereign country can place a tax or levy on the trade of its own currency taking place any where in the world17. A big positive of a FTT is that it would reduce the volume of short-term financial transactions, often computer automated, by large institutional speculators, big banks, pension funds, hedge funds, and the like. A small percentage tax at the point of purchase and sale would wipe out any profits the really big spenders are able to make from short term speculation.

The main obstacle to taxing the speculators is political. The beneficiaries of the current environment of gung ho speculation will oppose any move to curb their profits and power. That’s what privileged elites have always done. They’ll put up arguments like: “it’s too difficult”, when it’s not. They’ll say it will cost “Kiwi jobs”. It won’t, because speculation only benefits the speculator, creating economic havoc in the process. The global financial meltdown of 2008 will forever be proof of this. The political arguments for taxing the speculators can be won. Following the global financial implosion, the time is right to popularise a tax which hits the most hated global purveyors of greed and exploitation. That’s the aim of the Tax Justice campaign (for more information go to http://www.nogstonfood.org/).

In the longer term we need to wrest control of the economy off the speculators, banks, and those politicians wedded to hyper-financialised capitalism. We need to re-engineer the economy and direct energy and expertise into the sustainable production of real things, useful things, by useful people. Deciding the direction to go is not really the problem, there’s plenty of good ideas around that can guide us towards a more people-centred economy. The challenge is connecting with people on a mass scale, and achieving the necessary unity of action to begin that journey. A popular campaign for tax justice could be a spearhead for a wider movement that takes on the speculators and raises an alternative vision of an economy that works for us.


End Notes

1. Larry Elliott and Patrick Wintour, “G20 nations commit to halving budget deficits by 2013”, guardian.co.uk, 28/6/10.

2. Naomi Klein, “Let’s take no orders to slash and burn from this G20 club”, from guardian.co.uk, 29/6/10.

3. See http://en.wikipedia.org/wiki/Speculation.

4. Derivatives are contractual promises to buy a commodity at an agreed price in the future. See http://en.wikipedia.org/wiki/Derivative_(finance).

5. One measure of the floundering real economy is under-utilisation of industry capacity, which was 70-80% prior to the financial crisis, and has worsened since.

6. See the section on financialisation, “Follow the money”, in Grant Morgan’s essay, “Beware! The end is nigh! Why global capitalism is tipping towards collapse, and how we can act for a decent future”, Unity Journal, March 2010, pp16-27.

7. See http://en.wikipedia.org/wiki/Hedge_funds.

8. Barry Coates, “We could replace tax on essentials with one on destructive speculation”, Stuff News, 2/3/10.

9. Grant Morgan, “Beware! The end is nigh! Why global capitalism is tipping towards collapse, and how we can act for a decent future”, Unity Journal, March 2010, pp.20-21.

10. Grant Morgan, ibid. p.21

11. But the point where it’s impossible for governments to be the “lender of last resort”, and bailout the system again, is fast approaching. The whole hyper-financialised world economy faces collapse as it comes up against real world economic and political limits.

12. Jayati Ghowsh interview, The Real News Network, http://therealnews.com/t2/index.php?option+com_content&task+view&id+31&Itemid+74&jumival+5067

13. Jayati Ghowsh interview, ibid.

14. Hamish Rutherford, ‘‘Serious interest’ in derivatives”, 18/4/10.

15. He wasn’t speaking for all New Zealand’s mega-wealthy, but Trade Me founder Sam Morgan was telling the truth when he said he hardly pays any tax.

16. Barry Coates, “We could replace tax on essentials with one on destructive speculation”, 2 /3/10.

17. Barry Coates, ibid. Collecting this levy should be one of the functions of a Reserve Bank operating in the interests of the grassroots New Zealanders rather than the international financial institutions.

Will uninsured be out in the cold?

By David Colyer
in Christchurch

I’m shocked to learn that the Earthquake commission’s “EQCover applies only to residential homes that are insured against fire.”

In my naivety I had always assumed that the state’s EQC covered everyone, because private insurance wouldn’t cover earthquake damage. I should have known better.

So will all those too poor to afford fire insurance be out in the cold?

The Cabinet is meeting today and John Key has already recognized that the bill beyond what is covered by insurance will be “large”.

The government was quick to extend the South Canterbury Finance bailout to investors who weren’t covered under the Government Guarantees Scheme.

The Left must demand that the same thing happens to the far needier victims of the Christchurch earthquake.

And we must work to ensure that Christchurch doesn’t end up like New Orleans, where working class people received little or no assistance, while the disaster was used as an excuse to unleash an experiment in “disaster capitalism”.

Matt McCarten: Sorry folks, but cancer won’t be shutting me up

By Matt McCarten
from Herald on Sunday

It can be boring when someone talks about themselves. Today I’ll take the risk.

I know I get into scraps and sometimes overstep the mark in clipping my opponents - and there’s always a few of them waiting impatiently for my demise.

They may not have to wait too much longer. I was diagnosed a year ago with the killing kind of cancer.

Christchurch earthquake

By David Colyer

Residents of Christchurch and nearby towns now, perhaps know a little of what it feels like to be in a city in Afghanistan when it's under attack from “Coalition Forces”.

Except no one here is dead and although the ground continues to shake from time to time, we can be fairly confident the worst is over, and we know, of course, that none of this was deliberately planned to kill and destroy. Nevertheless, there must be some similarity in all such disasters, whether “natural” or deliberate.

The sense of fear, confusion and isolation, with the power, phone and water cut off (fortunately none of these things happened in my neighborhood), not knowing the fate of friends and family, not knowing if you have suffered more or less than others.

The varying reactions of panic and calm, “let’s get out of here”, or “let’s go back to bed” (do these things always happen in the middle of the night?).

Then the warnings (ignored) about keeping off the roads, about boiling water for three minutes (does the jug do that?) and not flushing the toilet, because the sewerage system is wrecked. Cooking on the fire, as my parents are doing, or making alternative toilet arrangements as we are.

Seeing the cracks in the chimney, seeing the holes in neighbors roofs, hearing of those injured and wondering if it's safe to sit near it.

And now, learning that the damage is worse than first thought, of the of the central city and Kaiapoi evacuations, of the shelters set up in schools. I’m thinking of all the plumbers and electricians who will be working flat out for the next few days, while many of us aren’t sure what to do.

‘The Long Emergency’, capitalism in PERIL

By Peter de Waal

James Howard Kunstler seems to have absorbed the ideas of Grant Morgan’s essay about the collapse of capitalism I forwarded to him some months ago: http://unityaotearoa.blogspot.com/2010/03/grant-morgan-beware-end-is-nigh.html

Kunstler’s version is encapsulated in his latest on-line Pod cast – “KunstlerCast #122: A Grand Wobble”: http://www.kunstlercast.com

At almost 49 minutes it is nearly a verbatim transcript of the essay’s key ideas. There are a few differences. Kunstler is unable to admit that “The Long Emergency” as he calls it could also mean the end of the capitalistic economic order as Grant suggests. You would expect that from an individual who describes himself as a “left-democrat.” Politics in the US seems unable to find another perspective. As Gore Vidal put it so succinctly: “America is a country governed by a single political party with two right wings.”

Kunstler is also fixated on the paramount importance of the “peak oil” crisis as the key to understanding the current situation capitalism finds itself in. Capitalism certainly is facing energy crises, but if you stop there you would fail to see the other four crises baring down on the system:

• Profitability crisis – squeezing the lifeblood of capitalism, capitalism has always had a "free lunch" from the earth and workers, now that’s over

• Ecological crisis – undermining the natural basis for civilisation

• Resource crises –  oil, water, food, minerals, land, you name it

• Imperial crisis – US Power is declining, but global capitalism cannot support a bigger hegemon. Forget China – it can’t happen

• Legitimacy crisis – both the leaders and the led are loosing faith in capitalism's destiny as it becomes more transparently undemocratic

This is our PERIL thesis. Essentially the system has a number of problems that it can't resolve. Political systems can withstand one or two problems and work around them, but this is five all at the same time with no solutions available. Typically this is how civilisations end.

Kunstler has an Americo-centric viewpoint. As my good friend Danny puts it: “You can’t read the label if you’re inside the bottle.” He would know, he’s from Texas, which generally has a reputation of being very inward looking and captured by Fox-thought from Chairman Murdoch. (not our Danny though, he’s a gem!)

To a dweller in the southern ocean like me, the issue is not just the problem with this or that aspect of capitalism in America, it’s the whole damn system that’s in trouble world-wide.

At one point Kunstler claims that financial speculation is counter-productive to the needs of humanity and what is instead needed is investment in the manufacture of real, useful products. This is ignoring the reason that capitalism turned in the late 1970s to financialisation in the first place, that is the falling rate of profit from investment in the production of ‘real objects’ due to market saturation.

To deal with the problem of working class power and union organisation in the 1970s, raising wages in absolute terms and reducing profitability, manufacturing jobs were off-shored to brutal police states, like China. This created the problem of falling consumption, threatening the survival of the system.
The answer was to lend Western workers and the middle classes, professionals and small businesses money via easy-credit schemes to maintain consumption, and therefore keep the third-world factories running.

This is called “compensatory borrowing” by economists and was funded by creating massive inflation, particularly in the housing markets. Vast quantities of fictitious capital was created by “fractional reserve banking systems” and loaned out. The crisis of 2007-08 was about the loss of nerve amongst lenders, because it became impossible to disguise the fact that off-shored manufacturing and an economy of casualised low-pay jobs in the “service sector” means that the money loaned to the West can never be paid back.

Essentially what we have is an economy that is a world-wide Ponzi scam. Unless “growth” can be maintained, asset values will plummet, halting the circulation of capital, world trade, etc. Sound familiar?

At the end of his PodCast Kunstler admits that the reason Obama is so quiet at the moment is that he probably realises or has been told that the US economy is totally dependent on profits from the financialisation industry. Quite an admission and a key idea from Grant’s thesis.

Still, listen to James Howard Kunstler on financialistion if you have the time. It’s a very good summary of how things are being run at the moment, an essentially is an admission that capitalism can’t fix it’s problems.

NZ–tax haven for the international rich

By Peter de Waal

The conservative UK Sunday Times newspaper recently published a survey of countries with a comfortable western standard of living wealthy tax-exiles could consider escaping to.

This article [only available online for a fee], published on July 11th 2010, described New Zealand’s 2010 budget as “the most radical change to taxation in 25 years.” Compare this to Key’s local attempts to downplay the importance and impact of the 2010 budget.

For a British boss or money speculator making £150,000 a year, Switzerland will take only £40,000 a year, yet “socialist” New Zealand is next cheapest tax shelter with just £50,000 of income taxes.

For this, the wealthy ex-pat gets access to a free world class health system, cheap housing conveniently out of reach for 90% of the population, anti-labour union laws such as the 90-day “fire at will” law that makes the setting up of a tax-loss generating “business” simple and relatively risk-free, and much more.

The cost of these gifts to the transient wealthy is a massive destruction of citizenship rights for Kiwis, with swingeing cuts to ACC entitlements, access to education, health rationing, the protection of union membership, GST rising to 15%, etc. Key’s austerity policies for the poor and working class are costing some their lives and making survival near-impossible for many families.

John Key sold himself to the electorate on the basis of tax cuts, but many didn’t realise that these cuts are biased towards the ultra-rich top 2% of the workforce. Key has transformed New Zealand into a tax-exile destination and articles such as this one in Bloomberg are here to sell the results of these decisions to the world’s rich.


‘Smiling assassin’ targets rich immigrants

By William Mellor 

Bloomberg via NZ Herald

Wednesday Aug 25, 2010

Business news agency Bloomberg takes an outsider’s look at where it thinks New Zealand and John Key are heading.

Prime Minister John Key promoted New Zealand on David Letterman’s Late Show last year. Photo / AP

2000 in Wellington, but only 600 in Auckland, is this true?

Christchurch rally

 By David Colyer

TV3’s estimate of 400 in Christchurch is pretty accurate (I was going to say 500). But I hope their figure of 600 in Auckland is a serious miscount. 2000 in Wellington is respectable, but if these figures are accurate, why were the numbers in the bigger centres so low?

People at the rally I spoke to were clearly pissed off about the attacks, but I didn’t get much sense of a fighting spirit. Attempts to get the crowd chanting were half-hearted and didn’t take off.

The highlight came early, when two marches arrived in the square. They did have their chants sorted out. The traditionally conservative Pubic Service Association calling for “Fairness at Work”, while the slightly smaller radical fringe of the Workers Party and Beyond Resistance, declaring their intention to fight back against the “Class War” waged by the bosses. [I will post videos of both, when I can get it working.] I hope the next protest, on October 20 is a march, not just a rally.

Even double these numbers would not cause the Nats any concern. And it now seems unlikely that the mobilisations will grow big enough, quickly enough to stop the law from passing. Unfortunately, it's at this point that far too many campaigns admit defeat and give up.

The one bright spark is that unions are now naming and shaming the employers who have used the existing 90-day law to sack workers. The CTU’s videos, Unite’s Utu Squads, and the stories of the workers that have been mistreated, could tip the balance of public opinion. And if the Utu protests catch on, they could encourage more workers to come forward, and warn employers off the scheme.

As part of building for the next national day of action on October 20, all unions should get behind the name and shame campaign. You can play your part by forwarding the CTU’s video, or the TV3 link below, and asking around to see if anyone you know has been unfairly treated under this law.

Tax Justice campaign in Truth

The following article appeared in a recent edition of the weekly tabloid Truth:

On 1st October a long black cloud will descend on the lives of grassroots New Zealanders. GST will increase from 12.5% to 15%. Everything will be more expensive.

On the same day, the National government’s other tax changes will come into place, including cuts to income tax.

However, for low-to-middle income earners the small improvements to take-home pay will be mostly wiped out by the increased GST on food, clothing, electricity, rates, and other items that must be accounted for in weekly budgets. It’s the rich and wealthy corporates who’ll get by far the most from the tax cuts.

Prime minister John Key claims the tax changes will result in “a fairer tax system”. That won’t be the case.

It’s because we need to address imbalances in New Zealand’s tax system that the Tax Justice campaign was launched on 22 May. The focus of the campaign is a petition calling on parliament to:

1. Remove GST from food.
2. Tax financial speculation.

Taking GST off food would deliver a tax cut more substantial than what the majority of us are going to get from National’s tax changes.

And instead we’re saying tax the financial speculators, who currently pay no tax. Zilch.

Is it fair that we have to pay tax on one of life’s necessities, food, while something as destructive to the economy as financial speculation goes untaxed? I don’t think so Mr Key.

Introducing a Financial Transactions Tax (FTT) would be the best way to make financial speculators pay tax at the point where their profits are accumulated.

A small percentage tax on financial transactions would net huge sums from mostly overseas speculators, but also local ones. It would be like GST for the rich.

In the last two months we’ve collected over 5,000 signatures for the Tax Justice petition. As more people find out about the campaign we’re confident it’s going to get bigger and bigger. We want to see that black cloud lifted.

To join the Tax Justice campaign, email svpl(at)xtra.co.nz or ph/txt 021-0415 082. 
Or visit our webpage www.nogstonfood.org

NZ soldier killed, ‘Better ties’ with US ‘on cards’

By David Colyer

The first New Zealand soldier has been killed in Afghanistan.  

Labour leader Phil Goff (chief champion of this war), is reported to have said it was “not a day for politics”, which simply reflects the fact that on this, as with so many other issues, he has no political differences with the current government.

Green Party Defence Spokesman Keith Locke, once a prominent campaigner against New Zealand participation in this war, now claims to be “proud of the good peacekeeping and reconstruction work that our Provincial Reconstruction Team has done in Bamian Province, and we mourn the loss of one of its members.”

It’s an unfortunate time for Locke and the Greens to jump on the pro-war bandwagon. As UNITYblog posts over the last week have shown, support for the war is collapsing everywhere else. Over the last nine years the anti-war movement has been consistently correct in our predictions about what the results of this war would be.

Thousands of Afghanis have been killed, maimed and made homeless. And what for? They are not “liberated”, but subject to foreign occupation, corrupt central government and local war lords who are just as brutal and intolerant as the old Taliban. Many see the resistance grouped around the “new Taliban” as their only hope regaining national independence.

Osama Bin Laden (remember him?) has never been “bought to justice”, the US are no longer looking for him. Meanwhile, like Bin Laden, the war has crossed over in to Pakistan, killing hundreds and causing tens of thousands to flee their homes.

In the West the war has fed that cancerous growth of Islamophobic racism. Such racism goes hand-in-hand with imperialist war, based as it is on the assumption of the superior value of the life and culture of the “advanced” nations.

The right of the US (along with UK, Australia, New Zealand and the rest of the “coalition of the willing”) to invade other countries and rearrange them to the satisfaction of the corporate lobbyists at the State Department, bestowing the free market and puppet “democracy” is taken for granted.

Murdering 3000 people in the US on September 11, 2001 was a “crime against humanity”, but murdering many, many more people in Afghanistan, Iraq, Pakistan, Palestine, Lebanon and elsewhere is merely “collateral damage” and hardly worth worrying about.

The death of one soldier (occupying someone elses country) is treated as a “national tragedy”, but how many Afghans have been killed by New Zealand troops in nine years of war?

Of course the role of the NZDF in Afghanistan is not primarily killing Afghans, it’s providing support and cover for those who do. Under the guise of a “UN mandate” and “Provincial Reconstruction”, “our leaders” have deployed their forces to lend credibility to US imperialism, in return for closer trade and military ties to the US, (and a boost for Helen Clark’s career at the UN).

In this, the combined effort of Labour and National (oh, and the soldiers too), appears to be paying off. “Better ties with NZ on US cards”, according to a report on Stuff today, “including a step-up in military training and exercises between the two countries.”

MORE LINKS

Also worth checking out is this post from Socialist Aotearoa, which links to articles by Gordon Campbell and Afghan women’s rights activist Malalai Joya.

And statements from Peace Action Wellington, And Global Peace & Justice Auckland.

Workers rights: what will it take to win?

By David Colyer

What will it take to defeat the government? Big, big protests for one thing. So the Fairness at Work protests called by the CTU for Augsut 21 are good next step. The 40,000-strong anti-mining march has shown that a big mobilisation can force National to back down.

However, there is more at stake for the government and the employers on this issue, so it is likely they will be more willing to endure protests. Their side knows that the long-term gains from beating the unions will out way short-term damage to National’s popularity. So it’s going to take more than one big rally.

We need a campaign of escalating mass protests until these plans are dropped. The starting point has to be educating and then mobilising the existing union membership, some 350,000 people. But the campaign must look to go beyond them and reach out and win over the unorganised majority.

If the ruling class fear this campaign is drawing in, politicising and organising previously unorganised workers, they will back down.

I’ve heard (and read) various people on the Marxist and anarchist left talk about the likely inadequacy of the response from the Council of Trade Unions (CTU) and big unions, and the need for the socialist / anti-capitalist left to offer some sort of alternative. As Wellington unionist and Workers Party activist Don Franks put it in a comment here on my previous post on this issue, “Workers who really want this legislation stopped in its tracks will have to go beyond the politics of the CTU.”

I don’t see any point in counter-posing the two. Even if we all pull together, the socialist left is in no position to organise the mass mobilisation of union members that must be at the heart of this campaign. So we have to work with the CTU-led campaign, even as we seek to go beyond it.

What can the radical left achieve?

The question is what can we do to make this campaign more successful, to increase the chances, not only of beating the government, but of building a workers’ movement that is politically and organisationally stronger?

One way is for socialists who are union members or organisers to work together to push for a stronger response from their union.

Another is to work to involve those outside the union movement. Officials, necessarily, will be focussed on their own members, but I don’t believe we will win this campaign if it’s seen simply as a struggle between unions and the government. We need to convince the majority of the working class that this is a battle for their rights (and for their pay and conditions) against a government and an employing class that profits from grinding them down.

If currently non-unionised workers see the union movement successfully defending their rights, it could open the doors for a surge of union recruitment. So the more forward-looking union leaders should support this strategic approach.

What can socialists do to involve more non-union workers and to provide a more radical political and organisational lead for union and non-union members alike?

Here in Christchurch the Workers Rights Campaign was established as a coalition of radical left activists when the first Fire at Will law was passed last year. Now an enlarged group of leftists is organising against the new attacks. Following from the first protest the Sunday before last, a second protest has been called for August 8.

It sounds like similar radical coalitions are forming in other parts of the country.

Many within this group share the general desire to link this struggle with an anti-capitalist analysis of why these attacks are happening and what workers can do about it.

So a joint leaflet (and or posters and billboards) is one possibility. Let’s say we agreed on a leaflet combining an a notice about the upcoming actions with arguments against the attacks and an anti-capitalist analysis. We’d need to distribute a fair number to have any real impact on the political consciousness of the Christchurch working class. How many could we afford to print? How many could we distribute? Could we do 30,000? 30 people letter-boxing 1000 each? What would that cost $1000?

It seems to me that’s the sort of scale (on the upper limits of what’s possible) that we need to be looking at, if we’re serious both about reaching out to the working class and pushing the political boundaries of this campaign.

John Minto: Back to the future for National

By John Minto
from Frontline

The changes to employment law outlined by Prime Minister John Key yesterday are the most significant attack on workers’ rights since National’s last big assault via the 1991 Employment Contracts Act.

From a softly-softly approach to industrial relations John Key has taken off the gloves to deliver a barrage of bare-knuckled blows against workers on the job and their rights to organise together.

CTU: Unions do have evidence over 90 Day trial

Council of Trade Unions media release
19 July 2010

Unions do have evidence of workers being dismissed unfairly under the 90 day provisions that operate for small firms.

Helen Kelly, CTU President, said today that the public has been made aware for instance of the worker at Dunbar Sloane auctioneers and also the worker sacked from Take Note Stationery in Waikanae detailed in Saturday’s press who was fired five minutes before the end of her 90th day.

“It’s New Zealand’s tax system that’s unhealthy” says Tax Justice campaign

Tax Justice media release
18 July 2010

The debate around Rahui Katene’s private members bill to remove GST from healthy food needs to be broadened. That’s the message from Tax Justice campaigners.

“We need to address the core injustices in New Zealand’s tax system,” says Vaughan Gunson, Tax Justice campaign coordinator. “Grassroots people are forced to stomach GST on food, while something as destructive to the economy as financial speculation goes untaxed,” says Gunson.