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Have Western democracies become plutocracies? Where is the anger?

Have Western democracies become plutocracies? Where is the anger?

Neville Bennett

By Neville Bennett

Bernard Hickey, commenting on US banks spending US$340 million in lobbying against regulation, observed "so much for democracy: America is a corporate run plutocracy".

This is a topic which I have been thinking about quite a lot: hence my earlier articles on inequality. So I thought I might take it a bit further and ask "what does plutocracy mean?" and "Is the USA a plutocracy?"

This is a good topic for debate: perhaps readers might like to add their considered thoughts on whether or not New Zealand is a plutocracy.

A brief definition is that a plutocracy is the rule of the wealthy.

Francis Fukuyama who wrote brilliantly on the "Death of Capitalism" and "Trust", says that plutocracy is not just rule by the rich, but rule by and for, the rich: “The rich influence government in such a way as to protect and expand their own wealth and influence, often at the expense of others”.

The rich benefit from lobbying ...
- to shift regulatory costs and other burdens from corporations and onto the public
- to change the tax code
- to allow fullest possible use of corporate money in political campaigns
- lobbying to enable lobbying to go on with the fewest restrictions.

One test of democracy is its ability to extract taxes from its elites. The most dysfunctional states  have elites which succeed in avoiding taxation.

Fukuyama’s next question is: "Why has a significant increase in income inequality in recent decades failed to generate political pressures from the left for redistributional redress, as similar trends did in earlier times?"

This is a good question: I have earlier stressed that about 41 million Americans need food stamps and this is increasing at a geometric rate (13% last year).

I also believe the challenge of present times is to employ youth. I wonder why youth riots in Egypt or Tunisia but not in Spain (which has nearly 40% youth unemployment) or France.

There are not many populist political organisations in the West. Left-leaning organisations often have an underlying Moscow element which cools down demands for fear of Trotskyism. The right wing is more ebullient, especially in Europe. The US seems moribund except for the ostensibly right-wing tea-party.


Inequality has grown remarkably in the last three decades. A recent study shows that between 1978 and 2007 the top 1% of the population’s income share has increased from 9% to 23.5%. Meanwhile, working class incomes have not increased in real terms since the 1970’s.

The stagnation of working class incomes coincided with conservative hegemony in politics.

US conservative ideas played a part: Ronald Reagan opened the door to more competition and entrepreneurship, and conservatives insisted that wealth would trickle down. But the gains by the rich did not trickle down.

One might have expected the US Democrats to intervene but they were market fundamentalists too.

The Great Financial Crisis deepened the mystery. It laid bare unpleasant facts about American capitalism. For example, the banking industry had lobbied heavily in the 1990’s to further free itself of regulation. It had many successes, especially in the 1999 Gramm-Leach-Bliley Act which enabled the emergence of large "universal" banks.

Before the crash, the US financial sector took home 40% of all corporate profits. They also imploded and imposed huge burdens on society and the world.

Lobbyists also established credence to the "efficient market" hypothesis and its corollary that  in competitive markets earnings are closely related to a "social" rate of return. So if a financier earns 100,000 times as much as a plumber it is because his contribution is 100,000 times greater in wealth creation. This concept is flawed: some financiers were destroying rather than creating value.

The trickle down did not happen as many jobs were automated or outsourced abroad.

Many Democrats expected Obama to act like Roosevelt had in 1932 to move the country to the left. He had some programs on these lines, including rescuing the auto industry, reform healthcare and regulate the banks. The stimulus was not a great success, and regulation has not removed absurd incentives. The banks have done well. They are profitable and sure they are too-big-to-fail. Their ownership is now concentrated in fewer hands.

The most energised and angry people are not foreclosed homeowners but people who oppose help to the home owners.

Why isn't there a powerful left-wing movement? Why has anti-elite populism taken a right-wing form? It does not see conspiracies among bankers but in government. Why extend the Bush tax cuts to the wealthy?

There is no question that money buys political influence in the States, but not all money goes to right-wing causes.

While lobbying is important, so too is American exceptionalism: Americans are less bothered than Europeans about unequal distribution. The classic explanation is that America was a land of new settlers imbued with a Lochean belief in liberal opportunity. Americans believe people are responsible for their life outcomes. They care less about equality of outcome than the possibility of social mobility, even if it takes generations to get to the top.

The Lochean liberal emphasis on individual responsibility can be seen in opposition to inheritance taxes, and in support for Clinton’s abolition of the New Deal "Aid to Families with Dependent Children". Most oppose redistribution but in the past supported very progressive income taxes. Most ignore the evidence that social mobility is low, lower than in several other developed countries.

American were not suspicious of redistribution 1933-1969 but they now think the government will waste what it takes. They do not want the government involved in healthcare.

Ideologically the efficient market hypothesis is widely disseminated: bankers believe they are creating value, not ripping off the system.

The real culprit is economics

The economics profession plays a vital role in legitimising the finance-heavy version of market capitalism. The profession swung from Keynesian analysis to monetarism about the time Reagan and Thatcher attained power.

The profession supported liberalisation and the mathematisation of modern economics gave it aura of true science. Wall Street seduced the profession by making it easy to move from lecture room to bank or think tank. Academics got big fees and Wall Street got legitimacy.

Reaganomics provided the principle justification for the rich paying lower taxes. This would unleash entrepreneurs and the benefits would flood downward in new jobs and more revenue.

But although the benefits flooded to the rich, they have not trickled down.


* Neville Bennett was a long-time Senior Lecturer in History at the University of Canterbury, where he taught since 1971. His focus is economic history and markets. He is also a columnist for the NBR.

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As we all know with the recent disaster of Fukushima the shier number of nuclear power stations worldwide is a clear signal, how not only democratic principles/ systems are disappearing, but also how corrupt and organised lobby groups are to carry through unsustainable growth. A number of events lead to massive disasters ruining entire regions, although overwhelming warnings from the public existed. Often the greedy take the profit instantly, while the general public (taxpayer) the burden later. The same scenario applies to the financial side (bubbles etc.). I'm sure Iain P. knows more about the financial side.

In financial, economic and political issues those "secret groups" are dictating/ undermining the government even against the will of a majority of the public (voters).

There is an obvious trend coming from bigger established industries here in New Zealand to do the same mistake, following a similar way then in other countries. Hopefully the younger generation is politically active, the media motivated to uncover and expose such developments.

There is one plutocracy operating in full view, not secretly at all, casting its influence upon the whole world. It holds its status since time immemorial and hasn't changed at all since the medival times. Business interests are at its core interest, dominating even the country that surrounds it. Secretive laws and corrupt laws make that plutocracy an attractive offshore haven for the assets of foreign business. It exerts enormous political influence on the rest of the world. It has fostered criminality because it ranks amongst the least accountable of financial centers on the face of the Earth. Have you guessed it yet? It is the City Of London.

Welcome to the Stonecutters Mr Parker....for you the mortgage sum is limitless and you never have to pay it off plus the rate is fixed at .5% and as an added can claim it back on your tax return...!We will throw in an annual 50 million dollar membership to the club which has several dozen 6 star holiday resorts for you to use...and use them you will with 18 weeks holiday a year. Oh and you will be expected to attend private functions to which we 'invite'..haha love that term...our chosen sovereign leaders!...don't be fooled Mr Parker...we chose who will be the sovereign leaders in all cases everywhere....we call it 'democracy''.....haha.

Now off you go and enjoy the power...all you have to do is a little guiding here and a little threatening there....spread the Stonecutter greed and the rest is easy.

Neville old chap..."where's the anger"'s there won't see it until the day you do...which is why the FBI and a host of other similar bodies are looking to prevent that day. It used to be the pollies were the targets but that was back in the days when the backroom power brokers had not been so visible. I expect the demand for armoured autos and fenced off guarded compounds to house the plutocrats, will be rising rapidly.

"Through pastures green He leadeth me the silent waters by.
With bright knives He releaseth my soul.
He maketh me to hang on hooks in high places.
He converteth me to lamb cutlets..."

...... is that in Jamie Oliver's latest cook-book , KW John ........? ....... Sounds yummy !

I find it interesting that the USA gave the QE1 and 11  to the Banks who then lent it offshore at very low interest rates.  If Obama had told Ben  that that money was to be used to improve the infrastructure in USA, which definitely needs it, they probably wouldn't have needed a QE11.    If USA had closed its 737 military bases in the world and brought the military home to do the work then the deficit would not be what it is today.  


"Why has a significant increase in income inequality in recent decades failed to generate political pressures from the left for redistributional redress, as similar trends did in earlier times?"

When you have a plutocracy combined with a well organised police state  then it would take a million plus rioters to make the changes required. Americans and NZders know this deep down so they are too gutless at this point to bring it on.

Hence they will live prison lives while still breeding  the next generation of prolls hoping that maybe one day when things really get bad enough someone will have the balls to take up arms and start the people's revolution.

You can forget about the Baby boomers bringing about any change. They are a failed generation. They have failed democracy and failed their children. All hope is on Gen X, Y and Z

I've come to think of it as 'economic apartheid':

Interesting article Neville, esp this bit:

"One test of democracy is its ability to extract taxes from its elites. The most dysfunctional states  have elites which succeed in avoiding taxation."

We don't have that problem, do we?

To me Neville there is a cultural link back to the Normans, something about their desire for power and to concentrate and preserve it down the generations.

A lot of our ideas about the evolution of democracy have to do with the rights of the ordinary people (the conquered peoples of the House of Commons) and how these interact with the rights of the wealthy (the conquerors represented in the House of Lords)

I recently read "Wars without End" about the Land Wars in New Zealand and was appalled to realise the author had no idea that individual ownership of land was a fairly recent innovation in England when it was introduced into New Zealand. He appeared to not know much about history.

Anyway, the Normans and the American plutocrats seem identical to me. The way Americans fawn on the wealthy is very redolent of similar behaviour in the remnants of feudalism in the UK.

It seems to me the raw power of the wealthy was broken in Britain by World War 1, with its appalling death toll on the aristocracy and by the death duties levied on the estates of the wealthy to pay for it.

In the US it was broken by FDR confiscating all privately owned gold and then devalueing the dollar! No wonder they thought he was a communist.

These things seem to also result in mass slaughter, the French revolution, Nazi Germany and Soviet Russia spring to mind.

Personally one of the things I love about New Zealand is its emphasis on fairness and relative equality. We do not have the ancestral relics of past billionaires to make us feel small.  We do not talk in hushed tones in the presence of our betters, the very idea is foreign .


Neville Bennett's article: Takes "Bernard Hickey's reference to $340 million of lobbying by the US banking industry" and then turns it into a long discourse of a million words on "plutocracy".

The US lobby industry employs 50,000 lobbyists located in Washington DC alone. The total outlay by the entire lobby industry is massive, exceeding $340 million many times over. And that doesnt include the cost of the resultant earmarks. But why the discourse on what is happening in the USA. Why not disclose what is happening in New Zealand. I follow the NZ MainStream News Media daily and see the fingerprints of the domestic elite if not daily, then every second day. It's not referred to directly. But it's there. In the last week alone the MSN have reported exemptions for two Financial Organisations. Every second day you will see the Judiciary providing name suppression. Soft sentences. More name suppression. The interview with the Property Investors Association was a Lobbyist. The banks are active lobbyists here in New Zealand. A recent article by Gareth Vaughan disclosed the influence of the Business Roundtable. And then disappears off the radar. And a wealthy elite manages to avoid power lines from a wind-farm going over his 2500 hectare property. Get away. There is one prominent NZ figure whose name appears frequently in the press and has spent $2.5 million in the past 6 months lobbying and trying to influence government agencies.

A simple question. Why bother with the USA when there is plenty to get your teeth into locally, and inform the NZ public on who is running the country.

BH posted this a few days back.... maybe it goes some way to explaining who we are...

Excellent article, thanks for the link.

Exactly - let's focus on our home territory.  Here's a good start - let's prosecute these NZ business owners supporting the global slave labour trade; 

Our government has turned a blind eye on this one for years - and let's not forget that a number of these unscrupulous business owners are Maori fishing quota interests.  One has to wonder whether it is this very fact that sees our government protecting them with the blind eye.  



"Is NZ a plutocracy?"

Yes, if the Turitea wind farm forced on the Palmerston North community is anything to go by.


Virtually nothing about Mighty River Power's wind farm has made it into the national media. There has been only the lamest coverage in the local press. Minister Smith has had an Environmental Court judge, Shonagh Kenderdine, do his dirty work. A couple of local land owners stand to benefit while neighbours on their rural residential properties will have noisy, highly intrusive 125 metre turbines towering over them. So much is the "ploutos" or money/wealth pushing the agenda here that the wind farm has been provisionally approved on the Pahiatua fault line. 

So, did I answer the question?

The mistaken belief that NZ is an egalitarian society is but one of a series of convenient excuses held by the privileged and the proletarian to numb the senses when considering our economic performance over the last 20 years. The proles don't know what protest is and the powerful including the chardonnay socialists have no intention of encouraging discourse that may diminish any influence that they currently exercise. 

NZ is as plutocratic as the US and possibly to a greater extent when considering the ease with which lobbyists access government and influencers. Our gullibility to swallow any implausible or desperate line of hope without question and intelligent debate will continiue to handicap genuine econmic progress.

Iconoclast has given some examples of lobbying in NZ and add to that the disproportionately low tax take from the elite and large corporates and you could be forgiven for thinking conspiracy but we're really not that smart and the rest are just naive. 

NZ is run by CEO's just like other western countries. Even in government departments and Local Bodies, all under the screws of the CEO's  Even schools are virtually run like that  where the Principal (alias CEO) controls the place, BOT'S who try to influence the management are told that's the Principal's/CEO's job.  CEO's have one major concern and that is to protect and advance their influence and power (and of course their own remuneration). Big unions were devised as a counter-weight, the plutocrats have now well and truly got rid of or sidelined unions. Hey, but if you can't beat the plutocracy then join them,  it's a lot of fun when you can pretend to be doing things for the common good and in the name of efficiency etc, but really just being first and foremost self-serving and doing great good for yourself.

Many Americans as a whole are anti-socialism as they still believe in the American dream, that you can rise to and can be rich with hard work, look at their reaction to healthcare reform. Until recently the chance to rise in social economic staus was certainly more possible in the US than here. Personally there is still more scope for the young and ambitious there than here...yet we are currently content to pore over their failures rather than our own?

I think New Zealand with it overly socialist view likes to see the US now economically struggle.

My dad told me when I was young if your a smart operator in NZ you will make a good the US you will make a fortune. So I followed my dads footsteps..same result. If you knew real middle america you would still envy what they have in a material sense. They make us look very poor in comparison and it is also a very beautiful country.

To your key question, from observation,it has been the same in both countries since I have been in business, just on a different scale in the US than here.

Your comments on financial economics are valid however lack an insider point of view. The foundations of financial economics are very powerful and holds the most applicable models in long as you really understand the assumptions in play. The problem with the rise of mathematical economics and econometrics was not so much the theory it was the introduction of a level of analysis that applied scientists and mathmaticians were recruited by wall street to attempt to get the edge...however they did not understand economics, risk and its underlying assumptions. Mangement did not understand the analysis and risk..the resulting disaster was only a matter of time. People on the inside had been talking about this for the last ten years however they were not in a position of influence in the large financial institutions and well the quant. guys were the ones making the money....

Speckles, a view from purely your quite right wing view point...IMHO....

I wouldnt have said NZ was overly socialist....or that we are happy the US is suffering....we are talking about would be a very sick minded person that was happy ppl were suffering IMHO.  The US is sufferng because of a few factors, the biggest is their wasteful ways.....all they have managed to do in 100 odd years is bleed their country of resources at a faster rate than anyone else...

eg If we were overly socialist there wouldnt be the ever increasing signs of social in-equality herein NZ, yet that seems to be the case...

Rise in status better in the US, no I wouldnt have said so....the biggest thing to enable a child to get on is education and NZ has one of the highest spends on education in the OECD, and we are continuing to try to protect that in this recession/depression....also you may believe money is the best measure of success, I dont...

Economics, yes but this has also become corrupted by quite partisan politics....the result is the mess we are in now. When you look at the fresh water schools and the salt water schools its pretty obvious that the fresh water schools have been dominant for 3 decades and can take a huge part of the blame for the GFC....

Right now as per the Great Depression I think we are about to see huge change and Im afraid for your view point a swing to the left seems concern is it will go to far....not that it matters too much, increasing GDP ie growth will see us all better off is finished....we have past peak its a bun fight for an ever smaller piece of the pie...both sides of the political spectrum dont get that least not publically...


Graeme Hart has amply proven that a Kiwi boy can rise up from " Struggle Street "  New Zealand .... , and become a mega-wealthy man through risk , ability , and a bucket-load of leverage .......

........ Only to be harangued ,  disparaged  , and the innocent victim of a " hate " campaign , led by our own Bernard Hickey , the "  Tall Poppy " cutter .

GBH - what did he do that was productive?

Anyone can be ruthless, selfish and/or parasitic.


.... Where did I say that Graeme Hart was " productive "  ?  ....... Are you in the Hickster's " Cut the Tall Poppy " cult ?

What makes you say that " Anyone can be ruthless , selfish and/or parasitic " ....... is that really what you think of Hart ? ..... Ever met the guy , personally ........ or even seen him in an interview ?

.... Actually , there's alot of folk in this country who could never be " ruthless , selfish and/or parasitic " , least two of them here in our street alone . 

Steven, I usually ignore your comments however don't kid yourself you know my point of view. Just a few observations.

You use socialism likes its a dirty word....ditto Americans....take it to far as indeed any political idea and that extreme is no different indeed pretty much indistinguishable from any other, and is a failure....What we have in America is similar to socialism gone to far, its known as fascism and its a failure.


By all means, I write here to improve my thoughts, not yours.....


..... and how's that going then , in your humble opinion steven ..... are your thoughts improving from  "  Blogger-Therapy  " ?

If you knew real middle america you would still envy what they have in a material sense. They make us look very poor in comparison  

This statement makes me curious - in what material ways do you think middle Americans are much richer?  I'm from the States (moved here at 21) and have raised a family here.  I compare my and my childrens middle income lifestyles versus those of my siblings and their children in middle America.  My view differs to yours and so I'm curious as to what material things middle Americans have that generally NZers do not.

New Zealands middle class has generally less disposal income and accumlates less investments, that is telling when you have the natural changes of life or broadsided by the unexpected. Money only means one tangible thing to me and that is options. Middle New Zealand when circumstances change generally have less options than middle American that I have dealt with.

My experience is based on eighteen years acting with personal & financial matters of 1400 New Zealanders (800 south island and 600 in the North) and their associated families and 3200 US families across eight states. Interesting to see the relative changes overtime, their view points also interesting, the observations in my earlier post reflect simply observations that I hear repeated so often.

There is an anti-american feeling in New Zealand and negative sterotypes. Most people in NZ have no idea what real america is alike.

Equally interested in your view point. Just some general comments  and there are always exceptions... but the general trends are striking.

A bit difficult to address the claims as they are quite generalised observations - but here are my thoughts; 

As to NZers having less disposable income - I assume you mean middle income NZers have less purchasing power after tax.  My feeling there is that overall taxes ( in the US they pay Federal, social security, State, local + sales tax) in the States are generally higher than in NZ (although if you're a smoker or a drinker in NZ - our excise taxes tend to be higher).  And the after tax costs of medical care (user charges after either private insurance or subsidised goods/services) and insurance in the US are much, much higher.  Most people who commute into their large cities pay tolls on their way to work - again, a user pay type cost which we have few of here.  General household small goods and clothing there used to be much cheaper than here - but globalisation has meant that that lower cost-of-living advantage has been lost in America.

I'm guessing that most middle Americans hold the majority of their savings in their 401K accounts (the equivalent of our Kiwisaver) - and given that employer contributions to retirement/investment schemes has been going much longer there - you could be right in that regard.  But I consider that wealth as a sort of unrealised capital gain.  Similar to real estate investment here - everyone perceives their "wealth" based on these unrealised gains.  Perhaps a greater percentage of middle Americans have invested in precious metals - but they'll be paper assets as well.  And again, the reality/legitimacy of those promisory notes is anyones guess.  I think it's true that both in NZ and the US neither middle class population are net savers.

And I think Americans are far less able to deal with unexpected changes as these usually relate to changes in health - most bankrupcies of middle Americans arise out of a health problem in the family.  It's a huge problem - even for the elder Americans covered by Medicare - the co-pay charges are extremely high - one can eat into a nest egg (or an insurance cap) very, very quickly in that regard.

The other thing that is a disturbing trend I've seen in the States is the move there toward casual conrtact employment (they have a different word for it, which I can't recall at the moment) which don't carry with the contracts the standard health benefits previously associated with full time employment.  This sees alot of the younger generation of workers unable to afford the costs associated with childbirth as they are uninsured.

So generally, I see the Americans leading the way in the "working poor" Western capitalism trend.  But I caveat that, as these are just personal observations of the people and the families I know there - unsupported by wider statistical analysis.

Thanks Kate for your comments, so in comparison, I wonder what you see here.

Generally we are trending in the same direction - WFF was an attempt by the Clark (and now supported by the Key) government to stave off the "working poor" syndrome.  I see it as an outright subsidy to our employment sector.  Either the market/employer pays a middle income living wage, or the government can contribute via the tax system - the latter being the case with WFF. 

If WFF is removed, provided our health system remains socialised, Kiwi middle earners will still likely be a tad better off than their American counterparts but nutrition, heating and other living standards will suffer - which is likely to lead to higher health costs anyway.... so the government over time won't see a net savings - and then the health system will come under scrutiny - higher user charges (as has occurred in the States) and so on and so forth.

Our elderly are of course much less exposed to the erosion of their savings through illness in later life - at the moment, that is.  Hence all things staying equal in terms of health/elder care one might expect more accumulated capital wealth to be transferred to the younger middle class generation here than in the US.

And, I think NZs middle class is probably better positioned to transition to a greater emphasis on a barter economy - mainly because we are less urbanised than the US.  Our communities are generally smaller and by US standards much safer - our access to open space is closer - and our climate generally more temperate and hence, more productive.

Thanks Kate, a couple of comments without getting into too much detail, generally tax is an all depends situation dependent on your lifestyle and what State you live, there is major variability in state tax systems, deductions and the social support in return they provide.  Generally  they actually pay lower income and sale tax in my experience. What I meant by disposable income is less tax and the vital element of life, shelter, food etc. Economies of scale seem to make their cost of living well less than our ours unless living in a HCOL area.

401K is a small part of the investment mix actually adopted in the US by individuals, in part because it has bad tax consequences for early withdraw so it is not often fully match by many unless on a upper quartile income. So that is only part of that particular picture.

Yes the health system is what I expected you to bring up, the quality vs their cost per GDP is a problem they struggling with it. However there are ways around their private system at a lower cost. Those with professional advice at the outset hardly ever end up in not cover catergory you hear about in the media.

I do not agree with the level of reliance you assume on NZ health care which appears to underpin your logic for New Zealand, it actually is in crisis and has a large effect on people here.

People are blissful unaware until they have to work with the system. Its main strength is emergeny hospital care then its downhill from there.

You hardly hear in the media the waiting lists and the consequential compromise on health from them. A classic example is early treatment for melanoma, very difficult to get treatment on a timely basis, with and without private insurance, yet this will determine your survival rate. I know currently people struggle to afford private consutations and basic operations in this area to try to speed things up. We have a quality and quantity of service provison issues in many areas of medicine.

For good quality of life of the elderly you need surplus funds to pay privately for timely operations i.e hip and knee replacements as examples, the waiting lists are too long and at that age you are vunerable and not robust enough in many cases to wait. Private insurance is cost prohibtive for the elderly

On health care actually I see both systems are a mess and like most things if you are not exposed to it you are unaware.

I can show you dangerous places and poverty in Auckland, Chrsitchurch and then the small towns inbetween run by fringe elements.

I noted patrol guards in a car park in a large east Christchurch business this week to minimise recent violonce and crime.

Love this country but you have get out and see things for what they are, the good and the bad.


Federal income tax in the US is the same no matter what State you live in and all attempts at comparisons I've seen in the past indicate NZ income taxation is less onerous; 

We have a higher GST (sales) tax of course.

Income tax wise things may have altered in the US (since the above 2005 calcs) with the Bush tax cuts and their extension by Obama but I believe these were targeted at upper/ middle income brackets..  A common sense consideration suggests we're not federally funding the war chest combined with corporate subsidies the US is as a percentage of GDP - and this could well be a big part of the difference.  Also bear in mind that local police forces and local education in the US are also separately funded by State and property taxes - something we get from central government taxation.  Therefore the States with low States tax rates tend to have poor school systems (e.g. Texas, Florida) and/or high unsolved/unaddressed local crime.

And I don't disagree with you on NZ moving in the wrong direction as well.  This question is how long will it take us to get to where they are?  My experience is in the past we're usually about a decade behind in terms of social trends.

I know about Fed Tax :-) The point is rates are one part of the equation, level of incomes are another, regional cost of living another...what I know for certain is based on our client base per class/field of endevour and age profile our US clients have retained higher financial resources comparable to New Zealanders.

This does provide them with more options.

Honestly we are a poor  country and taking a sustantial step down after the Christchurch earthquake. I'm starting to see people being made redundant around the country as a result of downstream consequences in Christchurch. Christchurch may only be 12-15% of GDP however it is of a size the rest of the country can not just make up.



Yes, I reckon the Chch impact here will be as serious in terms of (un)employment as the downsizing of the auto industry in the US was.  Lots of small businesses across the US which supplied the auto industry closed down as a consequence.  The flow on effect of Chch's problem I assume are hoped to be countered by the build up in the rebuild - but it looks extremely grim in the near term anyway.

What product are you selling into your US client base?

Hmmm US auto-industry? Now I would see the US auto industry as producing poor quality, over-priced, gas guzzling, obsolete junk that no one in their right mind would buy....and then compare this with Chch?

I wouldnt have said a near comparison myself....I do expect that the impact will be pretty noticable....if ChCh is 15% of our output and I believe its a IT software centre so its exports?  then thats going to hammer us as a fair amount of that will go so less jobs, less spending....I cant see how it cant.......That also impacts our tax base.....but its not like the US car industry that had things like the EV1 and could have developed on that but fought against it. If that and its ilk had been on the road today in quantities the US would be in a considerably better position, they could have been technology and experience leaders very sad.


Well this is one person who agrees with your observations Kate.

401k....pretty sure these have been gutted by the 2008 meltdown, so I have to wonder just how much pension is actually left.

The US healthcare system is a mess, they need a system modelled on ours....all they have done right now is enforced ppl having to pay medical insurance because its was getting crippling and ppl were opting it looks to me like they have created a govn monopoly....a very expensive one.....and not fixed its issues....


Hey Steven - remember my comment on - is it going to be inflation or deflation - no the real issue is starvation?

Check this out; 

Extreme cases but sadly people working in the sector suggest it may not be that extreme anymore.

If you look up how cuba handled the collapse of the soviet union and then over-night no fuel its on youtube.

Is just one example...

Well this I see as NZs hungry, yes....not so sure if NZers will starve (at least in noticable quantity), I expect that many outside NZ will however....

This is a sad case and given our welfare system I dont understand how this comes about....

given our welfare system I dont understand how this comes about.... 

I'm guessing as CYFS rehomed the children, that Mum either smokes, drinks, does drugs, plays the pokies and/or all of the above.  One can't live well on the welfare/DPB but one can provide better than what this case study implies.

All the more reason that we immediately need to move welfare to debit cards for groceries and direct debits of rent and power.  I suspect the liquor industry, the fast food industry and the gambling industry all block such a move through lobbying.  Its an absolute disgrace that these industries would sacrifice our children.

Im on a course with a single mum, she has 5 kids and got off the dpb because she couldnt cope financially....that she couldnt cope concerns shouldnt be easy street but the basics should be covered.

Debit cards for food, I could go with that....

Im not sure on the big khauna, but its the most positive set of ideas ive seen so far....what we have isnt working well enough thats clear. So maybe GM should start his own politicval party....hell I might vote for him....few else are worth my vote.


Steven, this will sound harsh but it is a legitimate question for the likes of this mother and many others like her:

"Who told her to have 5 children?" This type of decision as you know will become untenable as Peak Oil unfolds. We have a human population that is way beyond natural due to the former attitude to an abundance of energy.

Times will only get harsher and having 5 children will just simply be a stupid decision unless your very well off.

Another legitimate question then "Why is she not getting financial support from her former partner(s)"? A case of men running away from their responsibilities maybe, and leaving the taxpayers to make up for it? After all it takes two to make a baby (usually).

Re your last sentence "unless your very well off"...and/or can grow your own food maybe? (yep, having 5 and not feeling overly stupid. Well, no more than usual anyway :) ).

The partner(s) pays the there is no direct support.

Too many ppl in the world, 5 is not sustainable, the world population has to be cut by 2/3rds in at most 50 years, probably 20.


Great, so are you volunteering for the culling?

Seriously, although I agree that the population can't keep growing indefinitely, I'd have thought that NZ was the last country to have to worry about over-population. In fact, most developed countries at present seem worried about their ageing population and low birthrate.

Not sure what you mean about the partner(s) paying the IRD. According to WINZ, a sole parent can only receive the DPB if they "do not have a partner or you have lost the support of your partner". Seems to indicate that said partner(s) has/have run away from their responsibilities.

Culling, nope...

Nature will do that for us though...

When for the last 40 years all we have done is learned to "inject" fossil fuel calories into plants to make food and have doubled the population, then when we are at peak oil growing is finished....the problem is going to be we cant keep the fossil fuel production up....

"Worried" japan commented 2 years ago? that they only produced 36% of the food they needed and had to get that to 43%, I ponder.....why would a developed country say that? Just because they are only worried about a couple of things doesnt mean they are correct, for instance they formed the IEA to warn them of future fuel problems, instead the US neutered the its warnings are muffled....but even their projections for the next decade are essentially flat and when you are on a expotential population growth cruve a flat oil and food output spells one thing to my mind.

NZ, hence why Im here....4million is enough to be a lifeboat, 70million in the UK isnt.

DPB, yes I think you are mostly right....however the IRD does pay child support and docs the father's salary........not sure exactly how that works I admit.





This might make you cry... They don't seem worried about fossil fuels reserves coming to an end (sadly).

Elley - cry indeed. It's the last grasp (or is that gasp?) of a failed ideology.

I think they're doing what Labour did (Chauvel was less than honest on Morning Report) in that they separate 'internal' and 'external' burning of fossil fuels.

You do the clean energy thing here, and export the contentious stuff to China or whatever. This makes lots of money (they think) while off-loading the obligation.

Damian O'Connor was the big pusher behind Pike River, for instance - and Labour gave an 'award' to the loco drivers who worked out a more efficient way to drag the coal over Arthurs Pass, en route to China.......

These people are bankrupt in three senses - moral, physical and fiscal. Doesn't leave much room for an upside.....

Ultimately, of course, time and reality are against them. Energy is required for the overseas buyers to create the wealth to pay for the energy, which is needed to create the wealth......

A Catch-22 involving failed parachutes and your own bootlaces      :)

Pity - we had an opportunity to morph before we hit the wall. Not now.,

Would there be a URL for Chauvel?  out of morbid interest....

In the past my brief discusions with Chauvel showed him up as being either in-competent, and/or a total blinkered idealoug, and less than honest, of course he didnt strike me as dumb so the former, no, (unlike Brownlee who surprises me he can tie his own shoe laces)....

"These people are bankrupt in three senses - moral, physical and fiscal."

Indeed.....neither party or the contents of said are worth a damn IMHO....they are not out there protecting NZ's and NZrs well being.....not unless that involves supporting the status quo which they must know they cannot do.  Given they are not stupid ppl and given that Chauvel etc are  knowledgeable in this area and must have been advised because they are suppsoed to be uh knowledgable in their area to be a spokesperson leads me to agree with you...

Chuvel, Goff etc and Labour are out there promising growth...which isnt going to be there.....ditto JK and BE....recovery, balanced books....yeah right...

Morph...yeah well.....Both Brownlee and Chauvel are big chaps, should bast well....maybe an apple to muffle the noise.....


Elley, you may want to study how the child support system actually works before repeating government propaganda.  I have been on both sides as the payer (non custodian) and the receiver (custodian).

The majority of parents whether they be mothers or fathers want to be financially responsible for their children, unfortunately the system is unjust and inequitible and in most cases is biased toward mothers.

Note the headline of the article refers to "dads" owing billions in unpaid child support but the body of the article refers to "inland revenue is owed more than $1.8 billion by parents who have shirked their financial responsibilities".  Their are no details how this is split between fathers and mothers.  Note that actual child support is only a third of the total with 2 thirds being penalties.  Note also that NZ media will only report mothers difficulties and not get both sides to the story.

Peter Dunne has been "talking" for several years about addressing the problems with the child support system and to date has Dunne nothing.  The penalties are revenue to the government as is the bulk of child support and this is their only focus.  Child support under the current system is actually a child tax.

This is not the place to go into further details but I'd be happy to explain my experiences with you if you wanted to broaden your understanding of the system.

You say "unfortunately the system is unjust and inequitible and in most cases is biased toward mothers." The problem is that although we may feel that the some things in the system are unjust and inequitible, it is a subjective perception/opinion (eg, when I read in the paper that a drink-driver who killed a cyclist is only sentenced to community work I don't think it's just but some people obviously think it is). As citizens we still have to comply with the rules whether we like them or not (unless we want to risk being sent to prison).

I admit that I don't know much about the child support system and hopefully will never need to. I did have a good friend, divorced, who had to pay his ex-wife child support but who had decided not to anymore because he didn't think it was fair under the circumstances. I can't say I agreed with his argument. As for the details about how the payments owed are split between fathers and mothers, I did wonder about this. DPB always seems to be associated with solo mums so I can only assume that it reflects the fact that in most cases the women have custody of the children.

Elley I can't help but wonder if you have been suckered by the media on this one.

Why should anyone be getting paid child support?

You state above that it take two parents to make a child, so why don''t both parents support the children equally with their time and finances? No more messy disputes or expensive administration.

Really think about all facets of this principle.

Because the one who doesn't actually look after the kids day-to-day is free to start a brand-new life, and that includes the ability to work full-time, go on any required work trip, grow in their career etc (not to mention the ability to go out without having to worry about finding and paying a babysitter, having a social life etc).

The one who is left to look after the children alone, especially if there are preschoolers involved, is much more limited as far as work opportunities go and it must make it very hard to support themselves + the kids. They also have to pay for day-to-day expenses for the kids (food, clothes, toys, whatever), expenses which should be shared between the two parents. It takes two to make a baby but in the case of a separation, those two don't get the same deal at all (assuming that there is a "primary carer" who's got the kids nearly full-time and one who only gets them one week-end here and there).

assuming that there is a "primary carer" who's got the kids nearly full-time and one who only gets them one week-end here and there

Turn off any preconceived ideas you have and read my post again. 50:50 means something quite different to what you have replied to:)

Who remembers when the DPB came along. Mid 1970's. Prior to that girls left school and got jobs, worked for a few years then got married and started having children. And struggled. They had to get down on their knees to their low paid husband for money for the necessities of life and a few small luxuries. Especially a new dress. Then the DPB arrived. The Flower-Power period had come and gone. The pill had arrived. Having children became a choice. Girls found that if they had a child they could have their own flat, their own independence, boyfriends, luxuries. They didnt have to answer  to anyone any more. It was their money. They just needed to have a child and get on the DPB and obtain rental assistance. Adoption agencies disappeared. This was the last wave of the BBs and the first wave of GenX. One well known case study was of a girl who left school, got a job as a para-legal in a solicitors office. All her girlfriends went the DPB route, having a ball, and a lot better off financially than her. The para-legal girl tossed her job in at the end of her second year and got pregnant. By choice.

Sure there are such cases.......

If it means a few game the system and have to be paid in order to ensure all children in the system are OK, so be it.



I have no idea of the history of the situation....and its not something I'd detail here if I did. Really as an individual its of no real conaquence, and yes it sounds harsh, but you do tend to be.....I mean,

How many ppl know about and understand the possible consquences of Peak Oil?  I really only "discovered" it in 2006, but by then I had had children but I didnt have any more.....and its taken some years to research to the point I think I have some idea, from that to make some logical decisions, Im from what I can see one of few........

WFF, this I dont like for this very reason, its clearly social engineering but misguided on the Peak Oil aspect let alone anything else....I would assume HC and the like are well educated enough and bright enough to understand Peak oil....yet clearly they dont understand or are ignoring it, which you just cant do.  Chavale is or was their energy spokesman and is a lawyer and useless on energy he simply does nto understand and obviously is too thick skined to try to (typical Pollie)....however at least he appears bright unlike Brownlee who's IQ is it appears is dismal........

Hmm lots of kids....well thats a lot of muscle power.....however the world can clearly support no more than 2 billion and probably less living to the std of the OECD the future sounds uh messy....

I would be very happy if ppl could show me (the world) a way out of fossil fuel dependancy because I cant see one and Ive not seen, read or heard of anyone that does.


I read an entirely different (tho not inconsistent) explanation a while ago, I think in The Economist.  It suggested that 120 years ago, the rich went around in a personal horseless carriage driven by a servant, and right to the door.  They didn't have to cook for themselves, and could afford the best entertainment. 

The poor walked or biked or took unpleasant public transport at best.  Cooking was a real drudge & consumed a huge part of the budget; entertainment was a public hanging at best. 

Fast forward to 2011.  The rich drive themselves to their destination in air-conditioned comfort with a stereo sound system and moulded seats.  They get their food from restaurants, and go to the best theatre.

The poor drive themselves to their destination in air-conditioned comfort with a stereo sound system and moulded seats.  They get their food from fast-food restaurants, and get the best films on their flat screen TV.

So on the face of it, the poor can get very much the same benefits from life as the rich, just with a certain qualitative difference.  It could be argued that the freeing up of credit by the plutocracy has been partly to enable this, while of course enriching themselves at the same time. 

Cheers to all, a very worthwhile debate

PS, this issue is all patently clear to all of us, & has been for ages.  I would be interested to also discuss what the hoi polloi can actively do to change the corrupt system.  At present, we are of course the broad base that props the whole dysfunctional and corrupt system up. 

Isn't NZ government's role a purely redistributive one.
Just sharing what's left.

Aren't we really just 'under administration'.

More colony than sovereignty?

Concepts like plutocracy, socialism, neo-conservatism etc. all seem a bit big - dishonest/delusional when applied to NZ.

So.........who's voting in this years elections?

Who for and why?. Should be interesting

I'm still waiting for The Big Kahuna Party to launch!


Well a better option that tweedle dee or tweedle dumb.


I intend to vote, its just I dont know who for, I know it almost certianly wont be Labour, ACT.....or Whinny Peters...or PD....

The choices left....ho hum......



A vote for any Party other than National and the Maori Party (what will be remaining0, in effect will be a vote for the Greens who will be vitally needed to support any non-National government.

The Greens have some good environmental policies, pity that they also have a strong politics of envy mentality .  So it's reluctantly a vote for National.

Les Rudd said something cryptic about a new mob , ..... The All Night Party I think it was . They sound like fun . Meebee a vote for them .

........ Where's Mark ( Tribeless ) Hubbard and his Libertarianz lot got to ?

Dude, Party-On, that's us!!!!

Bring a bottle, or 4, and some snarlers.

Hey, Rog it's Sunday - why so serious?

Cheers (and I mean that sincerely) Les.

Why vote for rotten eggs in a basket ?

Why do we not vote just for capable politicians in stead of parties ?

Over time we would have a far better parliament.

I agree Kunst

Me too , Knuts .

Which "good environmental policies" is why I have voted for Greens in the past and was a member, but yes they are also pretty left which is why I left.  Glad Sue Bradford didnt get the Green leader job, she isnt green.....

(Green) Looking at how MMP works, yes I think you are effect a multiplier for your one vote....

I dont agree with the "envy mentality" statement btw.....I certianly dont envy others with more than I have and I actually dont know any moderate [left] person who does....what I want is an society of safety and equal opportunity....that measn some income re-distribution....and a progressive tax system....

Ive voted green in the past because I want a green tinge to a Govn, not because I want a green govn, and Sue Bradford and her ilk was the main reason I left the party....I might re-join...if I can see they are noe green...nt much chance

Yes, the vote is National (which would be very reluctant for me) or Green...if National didnt go or threaten to go off to the right in their second term and if they actually had real concern for the environment instead of going with "rape it at every opportunity Browlee" I'd vote National for sure....mainly because National is being very careful with the purse strings, which is what is needed right now....however instead of roads we shuold be spending $ on dams, and biofuel plants....Really its voting for  the lesser of many incompetents/inadequates......naff really.



Muzza - then you're voting for nothing.

Which I'd suspected from your comments.

You miss the point - if the 'growth' philosophy is fatally flawed (and it is) and you know it (and most of them do) then why would you be envious of its adherents?

Seems to me you're an adherent, and would like to be envied.

Nonetheless - those who rip and rape our descendants legacy, should indeed be in the gun. And remembered, named and shamed.

Well Muzza, you are right, National is the best of a bad lot, so long as they don't get the urge to adopt ACT policies in their second term. Powerdown, your comments are  stupid, without managed growth there is the collapse of the welfare state

me - no. you're the one with the stupid comment.

I don't give a flying - - - - whether it's 'managed' or not - growth is impossible withing a finite sphere of operations, no exceptions. Usually, it's exponential, and expressed in terms of 'doubling time'. I guess you could 'manage' a linear growth, much as you can quote pi to a few hundred places, but it (similarly) won't give you any meaningful change.

I have always expected the 'welfare state' as we know it, to 'collapse' from the top of the Gaussian curve onwards - the energy one, of course. It underwrites all others, you do understand that, don't you?

Left and right, they were all about fighting over the cake - I'm about the fact that the cake is finite, and that we're essentially half-way through it.

Here's the best appraisal of the math:

You have to target sustainability - an equillibrium.  Within that, you can (I do it all the time) do good things for others, but there are a few provisos - not the least of which is that populations have to be curtailed. Too many 'others' and you're b--------ed regardless.

Reading your comment  Powerdownkiwi, what a load of nonsense, 'linear growth ' 'Gaussian curve ' etc indeed- you would be fine in the civil service  writing high sounding twaddle  like that, and if you aren't ,then you probably missed your calling

With respect, Muzza, I have to defend PDK here. I think you're being a little unfair.

He understands the fundamental thing -- that underneath economics, there's physics. Ultimately, physics dictates to economics.

Unfortunately, physics isn't very in vogue or sexy at the moment, so his comments may seem a little dry, but he's on to good ideas...

If for sake of argument I accept that without managed growth there is no welfare state (and Cuba seems to be a real life world example of why you are wrong), then indeed the welfare state will collapse,..this however is your opinion and nothing more.

It seems you are having a King Canute moment...what you seem to fail to understand is the direct, proportional link of GDP growth to fossil fuel useage growth (well I guess you must be  stupid).

So, note there is no significant expansion of oil supply going forward from today (and in fact has not been since 2004 when we got onto the Peak oil plateau)....sure it will vary and has varied by a few % for the last 7 years....I dont think it will last another 7 years. In this situation there will be no more significant GDP growth and in fact at some point a contraction as we drop off the plateau.  Reasonable calculations suggest a 5% per annum contraction in crude there will be a corresponding contraction of Global GDP....sure if you have lots of guns and weapons and are prepared to invade soveriegn nations and blow the sh*t out of the locals you can still grow.....though the biggest growth industry will be in body bags....the voting public wont vote for their children to die for long....



Quoting Cuba says it all.  I've been there and it is a very depressing country in an economically depressed state (and a police state).

Muzza - be very clear; this isn't a case of folk like Steven here, or myself, 'wanting' anything to happen.

We - in entirely differen time-frames and in entirely different ways, just came to the conclusion that growth of any kind, is impossible in a finite sphere of operations.

I came at it as an engineer first, then studied physics, and the last few years, have looked at economics, because clearly economics was in trouble.

I reckon that economics, ascurrently  taught, understood and reported, is at about the developmental stage that physics was at, after Newton and before Thermodynamics.

I also suggest that there is nothing - repeat nothing - economic done without underwriting by energy.

The best example of a society coping with powerdown (forget the politics) is Cuba. If you want our descent to be 'better', then now is the time to be getting sorted. The existing reserves of stored, compact energy, have to be used carefully, to achieve the morph.

We ain't doing that.

Heres a very simple, primary-school example of a gaussian curve for you - tonights homework. (The graph can be out by 2 decades, and the gradient can be flattened by half - it still spells the end for the global fiat-levered economy:

note the accompanying commentary:

"A volatile epoch of recurring price shocks and consequential recessions dampening demand and price is now regarded as more likely, with terminal decline setting in and becoming self-evident by about 2010"

So you see, some of us have long been prepared.......


Perhaps it is time for a new political party or movement even.

I don't think any of the parties are fit for the future.

I wonder how much interest there is out there?

100 years of traditional political parties......time for something new methinks. 


I think Labour is as much part of the problem as National is. i think my point is that traditional party politics is no longer serving us. There is no long term vision and no courage in facing some harsh realities.

I actually think Goff should step down now and let Cunliffe have a go. Timescales have changed in our new world of social media. Just look at the Middle East. 6 months is plenty of time to revamp things.

I think change could come from an unlikely space. Time to think right out of the box :-)


Yes, the NZ Greens are wasting an opportunity.  So far, nothing but tweeks and pokes within a broken system.  They need to shake off this party of the poor pinching Labour voters approach/image.  A nation needs wealth to be environmentally conscientious/green.  They need to think on that and target the industrialists, whilst denouncing the monetarist/capitalists.

Raf, sometime ago you posted a link to a paper on a new approach to monetary policy and taxation.  I read it - meant to comment and then got diverted.

I liked the Big Kahuna better.  Here's why - it's focus was on breaking welfare dependency as it got rid of the disincentives to work which our present system promotes.   And, it didn't make adjustments to the GMI based on family size.  Whereas if I recall the proposal you linked to went to great pains to try and provide more based on the number of dependents in a family unit.  Of course, there will be a generation of large family units that might need some additional assistance to the GMI, but that might be better administered as a Food Stamps programme, such as in the US.  In other words, the extra buys nothing but food.  Additional clothing needs should be able to be provided via existing charities and school uniforms should be fuly paid for by the government. 

Iain, I think the entire public need to be educated or at least informed, not just the grassroots Labour supporters. 

Given that our political parties lean either left or right what does the NZ public have to choose from though? 

I appreciate that Iain, but I think the first priority has to be to get NZers back working/productive - to get government/bureaucracy downsized - and to get a greater percentage of the total tax take being paid on accumulated capital/wealth.  There is no sense in any money (be it public money or private money) being created into existance to sustain an unsustainable welfare state.

So, I think there is little sense in monetary reform unless there is first in place tax/welfare system reform.   We have to prove ourselves as a nation fiscally mature enough to tackle these big issues before we have enough credibility as a nation to take that next step.  Industry and the general populus has to believe their government is capable and credible before they would buy in to such a bold approach.  That is not to say your maths is wrong (becuase it isn't).    

Very good article. You certainly hit the nail on the head with one of the main things wrong with the US.
Run away capitalism, where it's money that decides issues, is actually pretty far from democracy.
Which is the thing the people often try to dress up capitalism as being synonymous with.
When the person with the most money, who can make the most noise, has the most say, that's as far away from democracy as it gets.
America is obviously moving further and further away from actually being a democracy.

We should not only vote for performing, capable politicians and stead of parties, we also should know more about them – what they are standing for etc.. The way politicians are interviewed is not professional - just ridiculous in this country.

..and now in difficult times we should have more programs about the deep crises, debating issues during prime time on TV for one hour plus, then the nation be "fed" with bloody crime programs - that's a bit much !

Wow what a juicy thread..!!!! full of spats n such...and not a P.I. in sight well done now your getting it.

Any hoo what was the question....are Western democracies becom......oh yeah thats right..

Ahem I shall be brief unlike some of some of the cyber gluttons posting here...three in a row if you know who I mean...


Crikey Neville catch up mate...the building blocks have been in the ground since the seventies is only now the self assuredness  of the transformation is so smugly arrogantly...displayed that the only thing missing is a 100ft high central city sign saying ......

"Plutocracy what are YOU gonna do about it hippie" 


I'm barefoot.

Without the Thompson.          :)

nice work my man are in the wrong game....sod the planet comedy. 

comedy?  come the day. 

I'm frying more important fish.

Although I could end up hard of herring.

Well, but when was it ever not the case that wealth could buy power and influence?

This is not to argue that since it's always been this way, it must be right and proper for it to remain so. I am, however, questioning the notion that it's a recent phenomenon or that it's getting worse now than it has been in the past. It seems to me that if we are more aware of wealth buying influence, it may equally be because there is more transparency about what's going on, rather than because there's more going on.