Our country was not “forever changed” on 15 March. Jacinda Ardern’s assured skill, instincts and empathy kept the nation on course.
But can she generate the innovative policy that will be necessary to keep that nation intact through the turbulent 2020s. Or is she a pivot between two eras, not the architect of a new era – as Norman Kirk was a pivot between the 1940s-60s orthodoxies and the revolutionary 1980s?
The economy is about to crash, “business” is telling us. The Institute of Economic Research, by contrast, forecasts just-under-3% growth through the next five years.
Business wants National back in charge in 2020. That is a tribal reality. Simon Bridges would make business growth No 1 priority.
But will business’s negativity be self-fulfilling and take us back to the depths of the global financial crisis, as the ANZ Bank business confidence poll suggests?
Is it time to join the cabinet panic about the poll, evidenced in Jacinda Ardern’s “flashing great neon sign” pitch to big business last week?
There is Trump, China, oil prices, steeply rising global debt, overpriced sharemarkets and political-meltdown Australia. But not yet precise signposts to imminent disaster.
Is business is missing the point?
The Australian newspaper — which helped oust Malcolm Turnbull — last week headlined “news” from the Harvard Business Review that “workplaces benefit when employees feel that their efforts are being appreciated by their managers”.
This decades-old rubric might be news to ANZ poll respondents, Harvard and The Australian. But it is not to (future National MP?) Christopher Luxon, Air New Zealand boss and chief of Jacinda Ardern’s new business advisory council.
Luxon and the E Tu Union have a deal involving workers in some management decisions. Result: less aggro and higher productivity. Grant Robertson featured it in his 2016 “future of work” conferences.
Shane Jones trumpets a different view of Luxon. New Zealand First needs provincial anger at Air New Zealand to help it clear 5% in 2020. Hence another blunt Jones challenge to his Prime Minister — not a signpost to a second term.
For Jones it often seems to come down to: “The show must go on.”
But what exactly is the show? Dollars?
Yes, say Bridges’ press releases. He is touring grumpy small business.
Not many people would say no to more dollars — no matter how many they have, behavioural sociologists say.
But there are other things they want more of, too, or at least a fair crack at. Dollars don’t guarantee a good life. They are an aid not an end.
Which is the point of Robertson’s push for “wellbeing budgets”.
The 2019 budget, he says, will be more a change of form than the endproduct. He hopes for more for 2020.
The Treasury — short of capability, along with a number of agencies — won’t be able to get enough credible numbers by budget 2019 to fill out its living standards framework and flesh that into the “wellbeing economics” it has been exploring from early 2015.
Treasury’s exploration has a way to go yet, maybe way past 2020. It is still producing background papers, most recently on financial and physical capital, culture, the United Nations sustainable development goals and resilience in the face of risk.
Still, Robertson’s show goes on. Tomorrow he opens the third international wellbeing conference in Wellington.
Victoria University (VUW) and the Treasury are sponsoring this three-day affair. VUW urban geography professor Philip Morrison, who studies subjective wellbeing, is one of the original organisers of this conference series and heads this one’s organising committee.
Former Reserve Bank chair Arthur Grimes, now VUW professor of wellbeing and public policy, is on the organising committee.
Offshore keynoters include Edward Diener, an Illinois University psychology professor who advises pollster Gallup on measuring psychological wellbeing, Martijn Burger, director of the Rotterdam Erasmus Happiness Economics Research Organisation, Carrie Exton, head of wellbeing monitoring at the Organisation for Economic Development, and Jan-Emmanuel de Neve, an Oxford University behavioural economist.
Onetime National MP Marilyn Waring, world famous for her work on unpaid work, will inject some scepticism. Lincoln University’s Paul Dalziel, quoted in the 2015 Treasury “wellbeing economics” work, will update his take. Carla Houkama will inject a Maori perspective.
A Bridges government from 2020 would likely back away from this guffy stuff. Most business would cheer.
But hard-dollar capitalism has been its own enemy in recent decades, helping breed burgeoning populist politics in northern democracies.
A rigorous — emphasise rigorous — injection of wider “wellbeing “into economic discourse and practice could lift public confidence in capitalism.
To make it work the government needs to reorganise the way it thinks and acts. “Wellbeing” goes far beyond National’s simple 2011-17 “targets”, to complex “outcomes” which make real change in people’s lives. That requires government agencies to collaborate.
And that requires major state sector reform. Chris Hipkins is due to issue a discussion paper today. An aside: the paper is said to back a three-person state services commission in place of the current single commissioner, Peter Hughes.
Hipkins and Robertson see their reforms as interlocked.
Can business catch up? Or is grumping what it does best?
The world is in a disorderly phase. This is driven in part by geopolitical and geo-economic events, including the mass movement of people, and in part by disruptive technological change which is fragmenting and dispersing power, eroding the sovereignty of individual nation-states and beginning to turn us from citizens of nations into global citizens. This multi-generational transition is likely over time to require a range of informal and semi-formal supranational governance arrangements. A role for New Zealand, as a disinterested global country-citizen, could be to suggest prototypes of such arrangements, starting in the South Pacific.
The world order has given way to a world in disorder. Where does New Zealand fit? Where do New Zealanders fit? Those questions have poignancy as, 100 years from getting entangled in a bungled intervention in the Middle East amid the disorder of the first world war, our troops are there again amid disorder contributing to another stumbling “western” intervention. A difference is that in 1915 there was public enthusiasm and now there is not.
For four decades after 1950 geopolitics were regulated by a standoff between the United States and the Soviet Union, two nuclear-armed superpowers with a reciprocal interest in not starting “mutually assured destruction”. With the United States were European and Anglo-offshoot allies and assorted client autocracies. With the Soviet Union were its subject-territories, communist allies and autocracies, though over time China’s communism acquired a divergent quasi-Confucianist dimension. This was in essence a bipolar world.
There was one near-flashpoint, in 1962 over Russian missiles on Cuba, which recent analysis [Schwartz 2013] suggests the United States overplayed to the point of heightening the risk of conflict, but it passed. However, there was much skirmishing on the peripheries of the two spheres as both sides sought to draw into or keep in their orbits other countries, including those newly independent of colonial rule. There were conflicts where the two sides or their proxies butted against each other on the ground. One was the Korean war from 1950-53. Another was the eventually successful two-decade-long bid for national self-determination in Vietnam led by nationalist communists, first against the French colonial administration and then against the United States’ attempt to preserve a Korea-style north-south divide.
People, countries and governments knew where they stood. The superpowers knew where they stood. When New Zealand opted out of the mutually assured destruction framework with a nuclear-free policy in 1984, superpower United States treated us as an outcast. That, too, was an overreaction, with eerie overtones of the Cuba missile episode.
When the Soviet empire collapsed, the United States was left as the only true superpower. This was a unipolar world. Some, notably Francis Fukuyama, mused that this might portend the “end of history”, that is, the triumph of liberal democracy and market capitalism.
Within 15 years the unipolar superpower was mired in unwinnable wars in Afghanistan and Iraq. Just being very big and armed with the high-technology weapons and unlimited funds was no longer enough. A British army officer, Emile Simpson, wrote [Simpson 2012] that in Afghanistan war was not as Clausewitz had stated it, an interstate activity that is polarised, decisive and finite. It was, he wrote, near-impossible to distinguish between enemies and friends: one local commander who was notionally on the side of the Afghan government in Kabul “rented” out some of his forces to the local Taliban because they had agreed to pay for them. There were not two sides. Everyone was on his/her own side.
Meanwhile, China had concentrated from 1978 on building its economy. Economic power usually delivers political power. China unsurprisingly has been asserting its claim to what it regards as its national territory, including islands and marine areas on its east coast and stretching far to its south between Vietnam and the Philippines. Last month it reaffirmed that offshore claim in a defence white paper. [Murdoch 2015] The United States has been harrumphing about that and has been reforging its alliances with South Korea and Japan. Expert commentary on China’s assertiveness – or is it aggressiveness? – ranges from the reassuring to the scarifying. [Dobell, 2015, Heinrichs 2015, Miller 2015, Wong 2015]
But China’s rise, which also includes expanding investment abroad to secure raw materials, building and strengthening transport, political and trade links with countries to its west and building infrastructure projects in South America and Africa to cement good relations, has not resulted – at least, not yet – in the construction of a new bipolar standoff between the incumbent superpower and a rising power on the way to becoming a superpower (if it is not one already). There doesn’t appear (yet?) to be the tight parallel some, such as Robert Kagan, see between China-United States in the 2010s and Germany-Britain in the 1900s decade which led to the first world war. [Kagan 2008]
Why not? First, there are some big players who don’t fit on either side.
India, big and slowly improving economically, has also been harrumphing a bit about China and joined the United States in January in some strong words about China’s island building in the South China sea and bullying of the Philippines and Vietnam. India is wooing Japan as a mutual counterweight to China. But India is also trying to understand and deal with China and China has shown interest in investing in India. Narendra Modi and Xi Jinping are still early in their expected decade-long rule. How they get on will have implications for world order. Brook Barrington could usefully do some work on this and then tell us his conclusions.
To India’s north, Russia has also set out to regain territory by backing rebels in Ukraine and annexing Crimea and by exerting pressure on and offering inducements to other neighbouring countries to join its economic sphere of influence. It has sought to rebuild relations with China. It has explicitly tried to bend back the tentacles the European Union was extending to the former Russian empire countries to the EU’s east. The tsars were not tsars of Russia: they were tsars of all the Russias.
Turn south from Russia to the Middle East sectarian cauldron.
Excitable “end-of-history” types called the 2011 uprisings the “Arab spring”, presaging a golden summer of democracy and market-economics. For myself, I thought it much more like 1848 in Europe, when regimes were toppled in the name of freedom and justice, only to be restored within a short period in much the same condition, mostly with different figureheads. The positive pointer for Arabs from that post-1848 trajectory is that the social change underlying the 1848 revolts or revolutions continued and over time – in some cases a century or more – did result in liberal democratic regimes and market economies. That might be what is going on right now under the surface in Egypt, where President Sisi has imposed a vicious autocracy, and elsewhere, including in the Saudi Arabian and Gulf States monarchies. But if so, it will likely be a generation or two before we know. History does not run along tight parallel tracks.
For now, the Middle East is fighting a loose equivalent of Europe’s 30 years war in the early seventeenth century, sect versus sect, tribe versus tribe. Wahhabist Sunni Saudi Arabia has spawned Al Qaeda and the Islamic State which now threatens stability at home. Sunni Saudi Arabia is backing Sisi’s crackdown on the Qatar-backed Sunni Muslim Brotherhood in Egypt. Shia Iran and Sunni Saudi Arabia are sort-of fighting each other in a sort-of-but-not-quite proxy war in Yemen where the Shia Houthi, known as Zaidis, are in some respects, for example, jurisprudence, close to Sunni. Different Sunni insurgents, including the Wahhabi-descended Islamic State, are contesting what used to be Syria. The United States is backing Shiite Iraq – or, rather, what used to be Iraq – against the Sunni Islamic State (and Sunni Iraqi allies who don’t like the Shias in power in Baghdad) and is doing that awkwardly alongside troops and commanders from Shiite Iran, which the United States used to label as part of the “axis of evil” and with which it has initialled a sort of deal not to develop nuclear weapons.
We have sent troops into this cauldron. Call back to mind Emile Simpson, whom I mentioned earlier. If our troops can work out who are enemies and who are friends, they will deserve honorary doctorates from Simpson’s old university, Cambridge.
Nobody can fix a sectarian contest but the sectarians. Only Muslims can fix Islam. When extracts out of context from a holy writ are used as god-given instructions to kill children, there is no place for liberal-democratic rationality – and cannot be correct by an outside of force of the sort only the Chinese People’s Liberation Army, with its millions of available “boots on the ground”, could deliver. It needs Muslim leaders to lead, to accept that the killers and rapists are Muslims who justify their actions on scripture, to step back from their own particular tight readings of scripture which set them apart from each other and seek common, humanitarian, readings as the basis for collaboration.
New Zealand troops in one corner of this chaos to aid one player in it will not make a jot of difference to the region’s security. The only plausible reason for our involvement is to please the United States, Britain and Australia, to pay our dues to the “club” or be part of the “family”. John Key is an Americanophile and a royalist. The risk is a dent in our reputation for disinterested concern and help where help can be useful. Murray McCully’s grandiose offer to fix Palestine may be tarnished by familial Key’s clubbing.
Go west: Europe is also not the orderly place it was in 2007. Greece still hovers on the edge of ejection or rejection. Britain is to vote – yet again – on whether to stay in the European Union and that comes after Scotland came close to voting to leave Britain. In most countries there are populist parties of various colours from far left to far right to autonomy-seeking or secessionist. These parties are challenging the past six decades of dominance by core parties – those of the centre-left and centre right. The latest to disrupt the core-party order is Pandemos in Spain. Some voters believe the message of those upstart parties; most who swell their vote do so not in support of the ideology but because they see the upstart parties as standing against the established elites who have caused, or at least not fixed, what they, the voters, believe caused their stress. We had a localised dose of that in Northland in March.
Go farther west: the United States political system is not in good order. The Tea Party is pure – and half-mad – populism, yet exerts influence on the Republicans. The Democrats have no compass. The Congress is a place of discord and standoff and the administration’s agencies are constrained from functioning effectively and efficiently. Fukuyama describes the United States as a “vetocracy”. [Fukuyama 2014]
Roam afield. Brazil? South Africa? Thailand? Work your way through a long list of barely stable or distorted political systems.
This is not the basis for solidity, stability and order, where everyone knows their place.
In short, the world is in disorder. According to Richard Haass’ [Haass 2014] reading of Hedley Bull [Bull 1977], there is a “perennial tension in the world between forces of order and forces of disorder, with the details of the balance between them defining each era’s particular character”. Robert Ayson of Victoria University, Bull’s biographer, cautions against seeing this as a sort of seesaw, swinging up into order and down into disorder and back again. [Ayson 2014]
So don’t assume this period of disorder is an interregnum until some power or powers re-establish order. There is another powerful disorderly force at work: disruptive technological change.
Digital connectedness facilitated the early Arab uprisings and the many post-2008 “Occupy” movements. The Islamic state has used new media to shock and recruit. A company can find itself suddenly shamed, at significant cost, as Fonterra knows. Obscure nobodies can acquire sudden fame. Most of this is transitory. Some of it sticks.
Add in big data, advertisers’ ability to feed off your internet searches to target ads at you for Whanganui or Napier hotels even when you are reading the New York Times. That is more insidious and intrusive than the hoover-everything spying you voted for last year.
Add in everyday folks’ ability to buy things without tax. Why pay GST on a book or a dress to Bill English for Steven Joyce to shovel it out to the sublimely rich like Peter Jackson?
Why pay a telecoms company to talk to someone in Delhi or Cape Town when Skype gets you there without paying. Why pay a full taxi fare when Uber will customise your ride for a customised price? Why go to a movie theatre when you can download the movie in a minute or two and play it on your own wide screen with a glass of your best wine, or Speights, in your hand. Why go to the TAB when you can get better, and tax-free, odds on a site domiciled in the ether? Why settle for your lecturer’s limited knowledge or pedestrian communication when you can get the world’s best?
If you are a customer of some public service, won’t you have the same expectations of that service fitting your need, not some bureaucratic frame?
And if you are on the supply side, you can find funders and customers around the world for your niche item. You can set up in production with a 3D printer with a fraction of the capital standard manufacturing needs.
Add all that together and pile it on top of the globalisation of finance, capital, production and people of the past three decades, all of which are, if anything, intensifying.
That all adds up to the fragmentation and dispersal of power. That fragmentation and dispersal is not just of states’ power over their territories and citizens. It is also of monolithic companies which used to rule markets. It is of unions and churches. And armies: Simpson charts the tendency in his redefinition of war.
Moises Naim has brought this together in a breathless book. He overstates his case but he is recording a tendency others have been writing about in various ways for the past 10 years and particularly the past five. [Naim 2013]
What this amounts to, I think, is the early stages of the erosion of the Westphalian nation-state, the product of the Treaty of Westphalia at the end of the 30 years war which affirmed the sovereignty of national governments, particularly in religious matters.
The nation-state has a lot of life in it yet, as climate change negotiations tell us. But I think we are seeing the early stages of a transition from people being citizens of a country to being global citizens. [Note]
When Jane Austen talked in her books in the early nineteenth century of “the country” she meant the immediate surrounding area. There was a “nation”, which raised taxes and fought wars. An elite resided there. But for most the country was where they lived plus some nearby places. They lived in that neighbourly “country”, which happened to be in the nation.
By the time of the first world war “the country” had come to mean “the nation”. People lived in the nation and happened to live in a particular place in that nation. So there were New Zealanders who happened to live in Gore. They were eastern Southlanders, to be sure, and fully conscious of it, but, bigger than that, they were New Zealanders.
This transition paralleled, or was driven by, the economic transformation the industrial revolution brought about. Large factories produced goods which were transported across the nation by revolutionised transport. Local economies were absorbed into a national economy. There was still much that was local – retail stores, doctors, mechanics and the like. But they were in a system that was national. National governments expanded their authority to regulate it.
This century’s hyperglobalisation, as Dani Rodrik [Rodrik 2011] called it in 2011, coming on top of the globalisation of the last two decades of the twentieth century, has been driving a similar transformation, this time from national economies to a global economy. There are many facets to this, including long and complex supply or value chains, world markets for makers of niche services and products, “work” spread around the globe, additive manufacturing, doctors’ access to global symptoms databanks to provide you with an accurate diagnosis after the robot has done a first run through with you. And much, much more.
The real international economic issues now are behind the borders, as the Trans-Pacific Partnership (TPP) and the Trans-Atlantic Trade and Investment Partnership (TTIP) negotiations demonstrate. Such deals breach and puncture national borders – and national sovereignty. For some decades the International Civil Aviation Organisation has set the rules for air transport: if you don’t conform, your planes don’t fly to other countries. The World Trade Organisation has binding mechanisms to settle trade disputes among signatories. A widening range of bilateral treaties include mechanisms to settle firms’ disputes with other states. A web of rules is being woven as treaties are signed. Sovereign nations are being required to give up slices of sovereignty if they want to be part of the hyperglobal game.
Then there is climate change. That is an inescapably global matter to which there is only a global solution. Climate change renders everyday people global.
Moreover, digital technology enables everyday people increasingly to go global. No longer is that the preserve of the rich and intellectual elites. We older-fogeys watch and worry and sometimes partake. If you are 20 you are likely to assume you roam the digital world for work, purchases and entertainment, games, friends and much more. Customer choice and customisation are taking on new meanings. Public servants, watch out. Banks, too. And doctors and lawyers.
And as everyday people go global, they resent interference with their digital travel.
We are beginning to head down the path to being global dwellers, people who live in the world and happen to live in New Zealand and, within New Zealand, happen to live in Gore.
There is also a physical dimension: the much greater movement of people: some 300 million live outside the country they were born in. The stream of humanitarian refugees is turning into a torrent. These migrants bring into nation-states a transnational dimension, diversifying once homogeneous societies and disturbing settled national narratives.
Then note that big cities (which Auckland might one day be) are becoming distinct elements of national cultures and economies – in a sense, extra-national. [Daalder 2015, McKinsey 2012]
So in 2065 we might be global dwellers who happen to live in New Zealand or, if we are Aucklanders, happen to live in Auckland. Of course we will be very much New Zealanders or Aucklanders in that global sphere but we will likely have a wider view of ourselves and our identities.
There will likely be many, often erratic, blowbacks from national governments asserting what sovereignty they still have or think they have. But I do think we are on the way towards being global dwellers and from that to eventually being global citizens a generation or two on. If I am right, it will have profound global and national consequences.
Where can New Zealand fit? Where will it fit?
First, these are early days. In Austen’s day, local could still believe local would endure as the reference point for identity. In our day we can believe national will endure. And it will for a long while yet.
But that does not mean we can comfortably secure ourselves behind our borders. If there is a global economy and if people increasingly operate globally there will be an increasing need and demand for global regulation. Meantime, there is disorder.
And for at least some, maybe many decades, there is no prospect of global government to do in this transition what national governments did as economies and societies transited from local to national. The European Union’s travails are instructive. Tiny New Zealand may have to navigate some choppy waters, perhaps in changing alliances with bigger nation-states.
But go back to Hedley Bull. He argued that informal arrangements could work to manage the tensions between the two superpowers of the 1960s. And they did. So it is possible informal or semi-formal “global governance” arrangements could develop, as they have for some interactions, such as sport, and for some activities, such as aviation, and as has been argued since the ebola episode for pandemics. If they don’t, I think global dwellers over the next two to five generations will increasingly expect them, in order to have some form of oversight or dispute resolution as they become increasingly active globally, both in the digital sphere and as they roam physically. It is far too early to guess the forms these might that be but the bottom-up-top-down approach now applied to climate change negotiations is perhaps one clue as to how sovereign states may begin to edge towards meeting their globalising citizens’ growing global interests.
New Zealand is a small, non-threatening nation safely parked at the bottom of the world, no threat. We could argue for informal and semi-formal supra-state arrangements, think up prototypes and propose them, starting with our time on the United Nations Security Council, especially our presidency in July. We could test drive them with our South Pacific island neighbours.
That would give a different, new meaning to New Zealand being a good global country-citizen, as we often promote ourselves (some would argue unjustifiably).
And it might help facilitate a tiny bit of order in a disordered world. Which a small country needs more than a big country.
Note: The word citizen can be taken to mean a full member of a state, recognised by the government of that state. On that reading there could not be global citizens until there is a global government. But there is a less formal reading, as presented by Kennedy Graham in “Global Citizenship”, a draft chapter for a forthcoming book: “A person could, however, be a member of a society without being a citizen of that society’s non-existent polity. Thus a person could be a member of an existing ‘global society’ without necessarily being a citizen of a ‘global polity’. So the contemporary definition of a citizen needs to be relaxed if the concept ‘global citizenship’ is to have meaning.”
References
Ayson 2014: Ayson, Robert, Hedley Bull and the Accommodation of Power (Palgrave Macmillan, 2012).
Bull 1977: Bull, Hedley, The Anarchical Society: A Study of Order in World Politics (Macmillan, London, 1977).
Daalder 2015: Daalder, Ivo, “A new global order of cities”, Financial Times, 26 May 2015.
Dobell, 2015: Dobell, Graeme, The Strategist, Australian Strategic Policy Institute, 4 June 2015, http://www.aspistrategist.org.au/china-rises-china-acts
Fukuyama 2014: Fukuyama, Francis, Political Order and Political Decay: From the Industrial Revolution to the Globalisation of Democracy (Profile Books, London 2014), pp488ff.
Haass 2014: Haass, Richard, “The Unravelling. How to Respond to a Disordered World”, Foreign Affairs, November-December 2014.
Heinrichs 2015: Heinrichs, Raoul, “China’s defence white paper is historic for Australia, and not in a good way”, The Interpreter, Lowy Institute, 4 June 2015, http://www.lowyinterpreter.org/post/2015/06/03/Chinas-defence-white-paper-is-historic-for-Australia-and-not-in-a-good-way.aspx?p=true
Kagan 2008: Kagan, Robert, The Return of History and the End of Dreams (Atlantic and Alfred A Knopf, 2008).
McKinsey 2012: McKinsey Global Institute, Urban world: Cities and the rise of the consuming class, June 2012.
Miller 2015: Miller, Geoff, “Australia should not follow the US into an ill-considered adventure in the South China Sea”, The Interpreter, Lowy Institute, 2 June 2015, http://www.lowyinterpreter.org/post/2015/06/02/South-China-Sea-Australia-should-not-follow-US-into-ill-considered-adventure.aspx?
Murdoch 2015: Murdoch, Scott, “China warns of Spratly Islands counter-attack on ‘meddling’ rivals”, The Australian, 27 May 2015 http://www.theaustralian.com.au/news/world/china-warns-of-spratly-islands-counter-attack-on-meddling-rivals/story-e6frg6so-1227370349216
Naim 2013: Naim, Moisés, The End of Power (Basic Books, New York, 2013).
Simpson 2012: Simpson, Emile, War From the Ground Up: Twenty-first Century Combat as Politics (Oxford University Press, 2012). See, as a short introduction: John Thornhill, “Lunch with the FT: Emile Simpson”, Financial Times, 9 August 2013.
Rodrik 2011: Rodrik, Dani, The Globalisation Paradox. Why Global Markets, States and Democracy Can’t Coexist (Oxford University Press, Oxford 2011).
Schwartz 2013: Schwartz, Benjamin, “The Real Cuban Missile Crisis”, Atlantic Monthly January-February 2013 p78
Wong 2015: Wong, Edward, “China Says it Could Set Up Air Defence Zone in South China Sea”, New York Times, 31 May 2015, http://www.nytimes.com/2015/06/01/world/asia/china-says-it-could-set-up-air-defense-zone-in-south-china-sea.html?_r=0