Friday, July 16, 2010

Socialism is dead, long live market democracy.

Jordan Carter has posted on the failure of the centre left. hattip kiwiblog. My response follows.
Your post suffers from its anglospheric focus and your socialist belief that there is a VRWC that is somehow able to command and control things rather than a very large number of human beings interacting in ways that suit them as individuals. Socialism was discredited with the fall of the USSR and China’s realisation that it had not helped its people out of poverty. Capitalism works. It is imperfect but it accepts that self interest is at the heart of all human interaction.
A few snippy comments and some thoughts in response to the graphs posted by dean.
“democratic not command-and-control” – Based on the evidence of Clark & Brown that is the unsustainable Grecian route of bribing voters with other people’s money. Creating more state beneficiaries under your “social democrat” model is unsustainable. It may take years or it may take decades but welfare undermines individual responsibility and society. If you intend to follow the Frank Field model there is a chance.

“connects with the desire that almost everyone has to get ahead in life and make the best of things for themselves and their families” – You are going to support and vote for National and John Key? Look at the UK coalition and their ideas for the “Big society”. They are certainly addressing the fundamental causes of relative poverty in anglo nations rather than creating more dependent beneficiaries

“tackles the huge negative costs of massive inequality that arise from the changes of the past thirty years”
Those graphs Dean posted are interesting and explained by three things. The deliberate policy of increased military spending to bankrupt the USSR, the hollowing out of American low skill manufacturing from the eighties and the tax cuts designed to inflict deficits on following administrations to prevent them raising spending.

The reality is that American manufacturing has hollowed out over the last thirty years. Those jobs have transferred to Asia and Mexico and made the world a richer place. Look at the rise of Walmart. Sales of $1.2bn in 1979, $32bn in 1990, $156bn in 2000, and $408bn in 2009.

Walmart is a fine proxy for outsourced manufacturing. The cheap foreign sourced product it supplies and it’s rise coincides with the economic reform in China.

With low skill western workers unable to compete with Asian workers the rewards to the educated designers and distributors of product have increased in absolute and relative terms whilst the low skilled and beneficiaries have stagnated. Rentiers in financial services have been able to clip the financial ticket on the way through of the vast wealth that has been created by the huge increase in global trade and consumption over the last thirty years.

If you focus purely on the rise in inequality in the anglosphere you can avoid the reality that low skill western jobs have been exported to developing nations and commenced to enrich the genuinely poor workers of those nations. Prosperity and wage rates are increasing substantially in China. Given a few more decades the local low skilled worker will find they are more competitive as Asian wage rates rise. I suspect you do not want to wait that long. Singaporean and South Korean GDP per capita is higher than New Zealand and will continue to rise as they do not handicap themselves by overpricing so much of the productive workforce through stupid rules on benefit abatement and an inflexible minimum wage and probation system. New Zealand can choose to be left behind or use the tool of education in a market democracy to build on its competitive advantages.

The socialist command and control left is doomed. Liberal policies towards trade and business as well as social policy is the only sustainable route. I suggest you read and take this Australian Labor speech on market democracy to heart.

It boils down to a heart-felt rather than lip service belief in capitalism and markets and a belief in the equality of opportunity rather than outcomes. Grow a bigger pie and ensure everyone has a fair chance to get a slice rather than focus on different ways to slice the pie. That requires a complete change in mindset, including the willingness to embrace trade, than has been demonstrated. Good luck!

8 comments:

Redbaiter said...

Reaching out to Jordan Carter. How futile.

Anonymous said...

Capitalism is fine in principle, when our greed is ignored, but is showing a dark side in that it reduces everything to "cheap". The US has shed millions of jobs to poorer countries and lifted them by becoming poorer itself. At that point it starts to look like dividing the pie rather than growing it. Africa will boom next because its even cheaper labour. The west can create airhead jobs in "services" but they are just ticket clipping someone else's real endeavour and are not sustainable.

The west can't keep printing money to pretend its rich. I think it must implode eventually as the base of real wealth shrinks - how ugly it will be.

sagenz said...

anon. Walmart calculates it has saved every American $2500 by reducing the price of goods. So there are some benefits to "cheap"

It has not become poorer in absolute terms over the last 25 years. Even the Western poor have become richer but China has grown faster.

I think Africa has more intractable cultural problems that will continue for decades.

But I agree that printing money is ending badly.

David Choat said...

In a follow-up comment over at Policy Progress, you ask me my definition of a modern progressive. That’s a big topic, but let me throw in this: I think James Purnell offers a critique of the Blair/Brown path that you criticise without needing to jettison quite as much progressive tradition as Frank Field. See my: http://www.policyprogress.org.nz/2010/05/the-state-market-and-society-out-of-balance/

Anonymous said...

Sagenz.
$2500 saving doesn't matter when you have no money because your job was exported to China. What is "poor" depends on how you look at it. Being in debt gives a facade of wealth but its not sustainable as we are now seeing. Something has to give and the higher up the ladder you are the further there is to fall and the more painful the impact. When the middle class starts to hurt it gets nasty. They are and it is.

I agree Africa will pose challenges but its cheap and that will be all the corporate monsters will see until the product recalls start. Same shit, different place.

There is a balance to all this but being soley $ driven isn't balance.

Anonymous said...

you ask me my definition of a modern progressive.

communist traitor. Just like any other "progressive".

Anonymous said...

Reaching out to Jordan Carter. How futile

Not futile if you're reaching out with a cattle prod. or better still, a nice H&K MP5.

Anonymous said...

Singaporean and South Korean GDP per capita is higher than New Zealand and will continue to rise as they do not handicap themselves by overpricing so much of the productive workforce through stupid rules on benefit abatement and an inflexible minimum wage and probation system.

more to the point, they don't handicap their productivity with "unions", with any kind of benefits, or with taxes to pay for education & health - especially for the nonproductive who don't deserve it!

and they don't allow anything like the communists NZ has in parliament (Greens, Labour) anywhere near government or even any position of responsibility

people work harder when the alternative is starvation and anti employer leftists are either jailed or better still found face-down on a local rubbish dump

NZ can choose to be productive - or not.
So far, NZ has chosen to be a country of bludgers.