Scoop Election 08: edited by Gordon Campbell

Gordon Campbell on the prelude to the welfare reform package

February 22nd, 2011

At his post-Cabinet press conference yesterday PM John Key identified the root cause of the unrest in Tunisia, Egypt, Bahrain and Libya in terms that sounded like a roll call of his own administration’s failings: ‘It appears to be a popular reaction to the root problems of youth unemployment, high food prices, widening wealth disparity and constraints on liberty.’ So far though, the New Zealand public has not been out in the streets calling for regime change.

Instead – judging by the polls – New Zealanders appear to accept as inevitable a deadly social combo of large numbers of young people unable to find jobs, rising food prices, and increasing gaps between rich and poor. In its response to these trends, the Key government is still stuck in denial.

On RNZ yesterday morning for instance, Agriculture Minister David Carter had only trickle down economics to offer as justification for his refusal to consider the subsidy of dairy products. No, the government would not be subsidizing milk and cheese, no matter how high the international prices for these basic food items should rise. Rising global prices were good news, Carter insisted, and benefitted everyone in the long run.

In reality, the main benefits of higher global food prices are captured by the relatively few. That’s why people are rioting in the streets elsewhere. It is also why income disparity continues to rise in this country, bringing a raft of poor health outcomes, social polarization and criminal behaviours in its wake. The wider failure of this ‘hands off’ approach to economic management will be highlighted later today, when the Welfare Working Group releases its final report.

When the WWG was originally set up, the expectation was that the country would be re-emerging from recession at this time, and welfare reform would be pushing people back to find work within an expanding jobs market. Instead, the reverse has occurred. The economy remains stagnant, and in December the dole numbers were on the rise. Even allowing for seasonal factors, the current economic climate is the exact opposite of the boom conditions that provided the platform for similar welfare reforms in the US during the 1990s.

No sane politician would carry out large-scale welfare reform in the current economic conditions. When the job market is already so tight, the process is almost guaranteed to be a costly failure, especially when it comes to addressing long term unemployment. In addition, a massive increase in childcare provision would be necessary to make any significant dent in the DPB figures. Again, this would not only be very costly. The push would also be likely to deliver only minimal gains, given the state of the New Zealand labour market right now. There is a skills shortage at the top, not a labour shortage at the bottom.

While Key has paid lip service to the notion that high quality childcare will need to be available before any major programme of welfare reform is enacted, there is an obvious scarcity of affordable childcare right now, nationwide. Isn’t this inconvenient truth a good reason for shelving the WWG recommendations until such time as those facilities exist, and the process can be carried out safely, and effectively? We are, after all, playing around with the wellbeing of children here.

Reportedly, a leaked version of the WWG final report includes a recommendation that solo parents should be made to seek paid work as soon as their child turns three. In current conditions that would be insane. True, there are historical precedents for putting parents to work in factories while their children are placed in collectivised childcare facilities run by the state, but I would never have picked John Key to be a fan of them. Perhaps he can explain how this kind of social engineering can possibly be in the best interests of the child.

Does Key really believe it is desirable to forcibly separate a three year old from their mother (usually the solo parent is the mother) for long periods – especially when such children are already likely to be suffering from the trauma of marital breakdown (and separation from their fathers) that for many, will have been the prelude to their mothers going on the DPB? One would have thought that at such a time, ensuring the child’s sense of security and parental support would be the top priority, and in the best interests of the child – and not an enforced separation and replacement of the child’s mother by a stranger paid by the state.

It may well be that this entire welfare reform process will prove to be another government sham. Certainly, the Key government will welcome the opportunity to talk tough on welfare to its real political target – the resentful mass of low and middle income workers – as a way of diverting their attention from its own failure to deliver them job security and a rising standard of living. In similar fashion, centre-right governments elsewhere have found the rhetoric of welfare reform to be a useful means of shifting the political focus away from their own failures of performance. Politicians love welfare reform. They get to preach the traditional virtues of hard work and perseverance, without ever having to provide the necessary means to turn those ideals into reality.

The bottom line is that genuine welfare reform costs money, a lot of money. A system of skills training and quality childcare nationwide – in order to deliver long term results? That sort of long-term social investment is hardly the style of this government. Expect, therefore, the rhetoric of welfare reform to be punitive and ugly – yet how many stories of three year olds abandoned in substandard ‘childcare’ would this government be willing to risk, just so that a few mothers might find a temporary part time job on the minimum wage at a fast food outlet, or in a rest home? To repeat: nothing in today’s welfare reform package will address the causes and alleviation of poverty in this country. It will seize on a symptom – an alleged welfare dependency – and assume the causes are personal ones of motivation and incentives.

Over 50 years ago, the liberal economist J. K. Galbraith (in his book The Affluent Society) blandly described the causes of poverty in modern economies as having a few ‘insular’ rationales, such as living in the wrong part of the country where jobs had disappeared. The other form of enduring poverty he identified as‘case’ poverty – which he felt was “commonly and properly related to [such] characteristics of the individuals so afflicted [as] mental deficiency, bad health, inability to adapt to the discipline of modern economic life, excessive procreation, alcohol, insufficient education.”

That sounds just like the Welfare Working Group diagnosis. Like John Key did last week, Galbraith assumed that‘case’ poverty must be due to individual defects [ie, Key’s ‘lifestyle choices’] since ‘nearly everyone else has mastered his environment; this proves that it is not intractable.’

In reality, benefit levels and wages are so low, an accident or unforeseen crisis can easily tip the best-kept budgets of beneficiary or low income families into debt, poverty and a reliance on food banks. It is as much a matter of luck than good management that sends some families into crisis. Thankfully, the Galbraith/Key forms of Social Darwinism are no longer considered to be acceptable, outside the loonier fringes of the Act Party. Even at the time, Galbraith’s critics pointed out that most of the characteristics he cited were the results of poverty, and not its source. (The fundamental problem is the lack of jobs, not the lack of motivation or the ‘right’ mix of personal incentives.)

Judging by its efforts to date though, the Welfare Working Group still appears to be stuck where Galbraith was back in 1958, and is just as prone to reading the effects of poverty as its causes.


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    1. 6 Responses to “Gordon Campbell on the prelude to the welfare reform package”

    2. By Tara on Feb 22, 2011 | Reply

      So the social welfare reform group are really the”trickle down” of dead Regan/Thatcher agricultural economist’s dogma.

      At least we are not still spending money to entertain the idea of letting an expired agricultural economist reform NZ’s social policies.(?!)

      “Economics is extremely useful as a form of employment for economists” Galbraith
      I am sure the same thing could be said for Galbraith’s flawed research in the area of social science.
      To give him credit before he died in an interview he did say, and appeared to understand, how his old research was incorrect and that there was a”likelyhood of being wrong”.
      The whole timing and structure of this economic driven social ‘exercise’ is insane and will backfire.

    3. By Josh on Feb 22, 2011 | Reply

      Great article Gordon, and finally we have started to see some balanced media focus on some of the causes of the every growing poverty problem and income gap in NZ. There should be billbords all over NZ asking where are the jobs John Key? The people are slowly waking up to the fact that the job summit and cycle way were this govt best ideas to deal with the ressesion.

    4. By Ben on Feb 23, 2011 | Reply

      You have mis-represented Galbraith by quoting from another website quoting one of his earliest books out of context. I agree with your sentiment Gordon, but at least be fair in your rationale. Here is what he said back in 1994, before the Republican takeover of Congress. “It’s not a question of liberal versus conservative, but sanity versus insanity,” Galbraith said.
      “Some economists think that if we have a growing economy, the problem of poverty will take care of itself. It doesn’t. People always fall through the cracks. Republicans, like my friend Bob Dole, seem to think there is an inspiring quality in giving more money to the top one percent. When I hear this, I think of the `Horse and Sparrow’ theory of economics; that if you feed enough oats to the horse, some will pass through to feed the sparrows.”
      Improved access to health care, increased investment in education and affordable housing and “a very strong social safety net that comes without a derogatory attitude toward the people who use it [are the most important things to remedy the inequalities.]”
      In Galbraith’s view, the biggest obstacle to accomplishing those goals is the presence of “a large (upper) class with a loud political voice and economic comfort. They vote and the poor do not.”
      “We have to again create the means for upward mobility. It may not be popular politics, but it doesn’t mean that the rest of us have to accept that.”

    5. By Linda Hill on Feb 24, 2011 | Reply

      Re ‘unrest’ in the Middle East, Key wouldn’t recognise a root cause if it jumped up and bit them. What he lists is effects. The undemocratically long terms of office, complete with human rights abuses and corrupt mismanaged government, in many M E countries is funded by oil, either directly and/or indirectly via US military support as part of US oil policy. For blow-by-blow detail, see Blood and Oil by Michael Klare. The media is even more clueless when they attribute it to new social media. Tho I’d agree with whoever on Radio NZ the other day said most infuential new media surely 10 years of El Jazeera. Maybe if NZ had tv like that covering our govt….

    6. By Dr Sensible on Mar 1, 2011 | Reply

      It was heartening to see ‘Inside Job’ win the Best Documentary prize at the Oscars this week for its investigative analysis on the causes of the global recession. The documentary pointed out that Merrill Lynch was at the forefront of the massive toxic-debt fraud which caused the crisis, at a time when John Key was making his millions with the firm. In the light of the savage cuts he intends making to welfare beneficiaries, is it possible to investigate what part he played in the Merrill Lynch toxic-debt scandal outlined in ‘Inside Job’?

    7. By RobertM on Mar 11, 2011 | Reply

      Nothing pains me more than to agree with Sue Bradford, but surely she is right that the Rebstock report simply smacks of Nazism with its attitude that work is the point of life, value,status and work makes free and in the vicious eugenics overlay. Surely beneficiaries and mental patient often have the most brilliant and healthly genes, often they produce genuis. There is not a shred of scientific truth in psychiatry. Most New Zealand employment has always been so featherbedded, dominated by lower middle class bigots and ineefficient that no intelligent person would have wanted to work. I went on the dole in the early l980s because public service employment and the depressed deprived social life of Wellington in the late l970’s with its crude cafes, beer hauls and drab exterior that any any intelligent person would have selected life in the alternative, black and brothel economy. Even Thatcher in the early and mid l980s told Lawson to stuff off that she wasn’t cracking down on beneficiaries or the black economy because social justice and the settlement recognised you accepted human justice.
      On the Nazi outrage of Micheal Laws 3hr Jo Gobbels broadside from 9-12, Rebstock is a hero for wanting to stearilize beneficiaries and mental patients and a vicious desire to stop sexual freedom among such people and turn the clock back to puritan values of the retarded Victorian and Holyoake era.
      Rebstock simply surrenders to the working class male and act party bastardry that hates freedom and hares a desire with the taliban and islamic fundamentalism for the dictorship of ordinary male. Like the Selam report the Rebstock report should be burned.

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