Getting rid of poverty in New Zealand: Impossible?

Andrew D Atkin

It's all about supply!

---------------------------------------------------------

Our likable Prime Minister, John Key, does not need to concern himself with the cost of living.
---------------------------------------------------------

The issue of greed and poverty seems to be becoming a topic of interest in New Zealand, and certainly the rest of the industrialised world. It's being pushed by working class heroes like Gareth Morgan, and others. But they all seem to promote the same simple (and questionable) solution: Tax the rich and give to the poor - the "Robin Hood" solution.

In my Explaining New Zealands Property Disaster I made the point that one of the most sure-fire ways to create a poverty class is to facilitate an under-supply of what is essential. Our core essentials are of course housing and food. My point is that you can also achieve the opposite (anti-poverty) by facilitating an over-supply of what is essential.

By definition people do not compromise on what is essential. This is why prices for essentials are so vulnerable to severe hikes resulting from under-supplies. An under-supply of houses or food tends to bid up the price to whatever the market can afford, as buyers must aggressively compete amongst each other to avoid being the guy who misses out. But when you facilitate a mild glut then the opposite can occur, as sellers must compete amongst themselves to avoid being the guy who can't sell (or rent out) their property. And so, with an over-supply, the price is essentially driven down to what the bottom of the market can afford. A form of egalitarianism? Sure!

Likewise, if the bottom of the market can only afford to pay, say, $100pw rent for their home, then generally that is what the rent for simple houses will fall to; because, again, in the context of a glut it's the seller who is struggling to not miss out, and they will always prefer to rent their property out for something rather than nothing.

Now look at the New Zealand Green party. Their leader, Metiria Turei, recently stated that the most important issue for New Zealand right now is housing affordability. Wonderful! I could not agree more with her on that. But their party currently promotes the idea of increasing the minimum wage, while at the same time they promote the idea of forced urban intensification (commonly termed: Smart Growth); that latter of which is, bluntly, housing under-supply policy.
So what would the effect be of these combined policies?

The increased minimum wage will simply translate to higher rents - 'Robin Hood' style wage hikes will bounce back to where they don't belong. In New Zealand we have a serious under-supply of houses so rents are set to whatever the market can afford. If renters come to afford more via a minimum wage hike, then it will be the landlord's who finally get the booty.

So what is the best policy for getting rid of poverty in New Zealand? Well, policy that works to ensure an adequate supply of the essentials is not just a method, it is a PREREQUISITE. Until these working class heroes start talking about abundant housing and food supply they are wasting their time. The supply issue must come before anything else.

There are many things you can do to ensure an abundance of good food and housing to drive the base cost of living down. And doing this is intrinsically easy in a country like New Zealand because it is industrialised and very well endowed with basic resources. However, I don't want to focus on those details here. I want to ask the question of why it's not actually happening.

---------------------------------------------------------

Resistance to change: What would happen if good food and housing were cheap?

This is an interesting question, and here we can see some of the incentives to not let it happen. That is, the incentives to deliberately keep people struggling to make ends meet. My focus on this issue will be for housing because this is the 'killer' living cost for New Zealand right now.

Firstly, we need to model what would happen if houses fell back to their "real" non-inflated value of about $200k a unit, rather than $450k+ per unit.

The Banks:

These guys would have a heart attack. All those mortgages held by people who will not be in the black for many years. How many of those mortgage holders would just declare bankruptcy and hand their toxic liability back to the banks? Maybe thousands?

And then if a given bank ultimately fails then maybe they would somehow infiltrate government and force a bailout by getting everyone to believe that an isolated bank failure will lead to the implosion of the entire financial system (as in the USA show)? Regardless, insofar as bank power translates to political power (and I'm not sure if or how much they can/do), we can see that there would be no "political" incentive for a correction in the property market, and instead staunch resistance to it.

What's more the banks of course want to sell the largest mortgages they can, so naturally they want people in debt up to their eyeballs - that's their business. And that requires costly homes and therefore artificially inflated land prices.

Government:

These guys would freak out too, insofar as they care about winning another political term.

Remember that before people can pay down their mortgage they have to earn money that they get taxed on, and when the cost of living is high so must your income be high. If houses and food were cheap then people wouldn't have to work so many hours, and that means (potentially) a major reduction in the tax base.

The only solution to this "problem" is a reduction in services and government bureaucracy. Government must shrink. And when you already have a huge public sector in a finely balanced democracy (New Zealand's current situation) your mass public-sector job cuts will almost certainly ruin your chances of winning the next election.

Also, New Zealand has a rapidly growing national debt. This debt needs to be serviced, so that is another concern relating to a shrinking tax base.

Business status quo:

Though start-ups that are not dependant on local markets (exporters) are generally repelling by costly industrial/commercial land and a high cost of living, business status quo will generally like it.

Business with land assets will want their land value to maintain its inflated status. Extra costs, in all forms, will ultimately be passed on to the consumer. So these guys would understandably lobby government to keep land inflated. This especially applies to landlords. Indeed, I would imagine that the Auckland council, which is currently pushing a high-density (land-restricting) "vision" onto Aucklanders, will probably get most of their submissions in support of their plans from landlords.

Another fundamental is that as people don't have to work so hard there will be a net reduction of economic activity alround, as people trade work/consumption for more spare time as they can redefine their work-life balance. This dynamic alone can lead to effective oversupplies which can ruin the profitability of business status quo, up until they and/or their competitors recede to the adjusted demand. This adjustment scenario is great for consumers, but not business status quo.

Note: I should also point out that if you had a major reduction in economic activity then you will of course have many job losses. This can be devastating for people who are mortgaged up to the limit. Hence, we get more political pressure to keep the property market inflated. With this property disaster we have created for ourselves things have become difficult and precarious.

---------------------------------------------------------

Conclusion:

It's quite simple. By making the base cost of living low you take the New Zealand economy, and New Zealand in general, back to the 1950's - a time when we had small government, only Dad had to work, minimal personal and nearly no national debt, as many kids as you would sanely want, and no need for a massive welfare system; and also less people getting [materially worthless] degrees only because they're desperate for an income that might buy them a home. Only it would be a better and more efficient New Zealand due to the virtues of modern systems and technologies.

As you can see Reader, you are a tax slave and a debt slave. You function to serve the interests of the status quo, and no doubt you will continue to do so because you're just too busy trying to survive to learn about who's pulling one over on you and why. Your ability to 'escape' has been reduced by the assault on the base cost of living that has been going on for decades now. This especially applies to generation-Y and onwards. Alas, it's just so easy to screw-over the naive.

....But then if you are young, you're not thinking of having too many of those expensive kids, are you? I mean you can barely even afford the rent! (The ultimate objective behind it all may be population control, as I have periodically suggested on this blog). And if you do have kids then the government will be bringing them up; because they're off to a daycare centre because your wife has to go out to work. I wonder what your little Johnny will achieve there... No doubt they will grow up to work even harder than you have to - full of "aspiration" and work "ethic". They will sure as hell need to be!

---------------------------------------------------------

Addition: 19-11-11:

I wish to include David Willmott's excellent statement relating to housing affordability in Auckland, also included in my Explaining New Zealand's property disaster.

It's sad, but New Zealander's are so drunk on misinformation and trite from the mainstream media that the majority of Aucklander's will never come to understand what is killing their city. And so they will keep voting for well supported but hapless fools like Len Brown instead.

*****Are you a New Zealander? If so then I urge to you to forward David's talk to your friends and contacts - Hey it's just a couple of clicks! He says it so well and it's just so important.

Do schools bribe people out of their minds?

Andrew D Atkin:

Here is a clear example. Take someone who has developed great drawing skill. They can take whatever picture they have in their mind and almost perfectly reproduce it on paper. For an artist this skill must of course exist to a given degree, but it's only one half of the story. There is also the ability to conceive of an image that has aesthetic interest in the first place.

My point is that the ability to draw accurately, though an essential skill in itself, is ultimately secondary. It's like a developed limb to the mind, but not the mind itself. The more "primary" mind is the mind that conceives of what image to produce in the first place. That's the mind that designs - not just reproduces.

So crudely speaking, you can see the artist as having three layers to function: the physical control over their hand, the secondary mental skill of being able to articulate their imagined image, and the primary mental skill of being able to design the image in the first place.

My ultimate point from this model is that we can see these three 'layers' operating everywhere, with everything we do.

Schools:

So what is it that schools teach, relating to my model? Well, from my observation they are incredibly secondary-level thinking heavy. They basically exist to create people who can articulate an image (as my example), yet they do not facilitate the ability to conceive of an image in the first place*.

But schools don't get us to look at it this way. This is because they are overwhelmingly designed to create technicians - not "minds". Schools teach what can be taught and you cannot teach the "designing" (or primary, as I put it) mind.

The development of the designing mind has nothing to do with educational programmes as we know them, because primary thinking simply can't be taught. It always develops from its own intrinsic curiosity/nature - from just mucking around, if you like. It's a development that is (and must be) too autonomous for prescriptive educational programmes to reach.

Note: Can I stress that design-type thinking is not just 'talent' that we are born with. No mental faculty appears out of nothing. It must always developmentally evolve.

The bribe:

All kids love to develop their primary mind, and I would say that they do so because it's the most important level of the intellect (historically!). So, schools have to contradict natural law and buck around 4 billion years of evolution so as to force young people to near-exclusively concentrate on secondary-level thinking; and they do. They do it with bribery and threats.

Schools create programmes which dictate that the child removes themselves from their intrinsic thought processes. If they don't do it they will be humiliated with a label like ADHD or be directly punished; and if they don't do it well enough they will be socially degraded as neither they nor their peers understand that their performance (or lack of it) is not an intelligence test. (Though maybe an IQ test?).

Most parents reinforce the pressure too. They weep with joy when they see their little Johnny create an image which looks more like a photograph than a scribble. They too have been "brainwashed" by a culture of schooling designed to hyper-concentrate the development of secondary-level thinking skills.

As the child gets older the direct emotional bribes/threats retract as they realise (or believe) that their future prosperity will be governed by their academic (secondary) skills, as opposed to the development of their mind. And in this institutionalised world we have created for ourselves their investment might now be rational. Corptopia, as I call it, demands intellectual servitude.

Conclusion:

You can never forget that a child (and adult) is operating a 'mental economy'. The kid that does so well at school has given their mind to what will make them do well, and whether or not this is the best place for them to be is subjective, because there will always be a cost. Where ever your mind is also indicates where it isn't -- forcing a child into one zone also means forcing them out of another. And if you think your kid is going to become some kind of a genius for getting straight A's then think again. The so-called greatest minds throughout history have tended to come from people who never took their schoolwork so seriously.

John Taylor Gatto, probably the most famous educational historian today, believes that genius is as common as dirt...if you simply get the programmes out of young children's minds. Maybe he's right? But I would say that the most important aspect of allowing your 'primary' mind to develop is that you can more directly take control of your life. Enslaving your mind to technician-only status is surely not a good place to be if you want to write your own script.

One of my favourite sayings: The most important skill is not the ability to think, but the ability to recognise what you should be thinking about in the first place. The latter comes from the "mind behind the mind", as I put it, which is the primary mind telling the secondary mind what to do. And as I believe, when the primary mind doesn't develop properly empty faith and assumptions come in to take its place. Like intellectual servants operating on faith that their masters know best.

*Schools focus on secondary thinking skills at best. More so they are about psycho-behavioral adjustment to an institutional work environment.

------------------------------------------------------------

Addition: 23-10-11:

The following video is the first part of 3-part series joined into one clip. The first part in the series I liked in particular. They made some very good insights, and I certainly agree with their [essential] assertion that allowing a child to develop effectively means letting them run with their intrinsic interest. Whether they realise it or not, they are promoting what is described as the "unschooling" method of educational development.

Agenda politics: How real is it?

Andrew D Atkin:

In politics, nothing happens by accident. If it happens, you can bet it was planned that way.

Franklin D. Roosevelt.

-------------------------------------------------------

The non-politicised academic world knows exactly what policies do and don't work, and they know exactly how market economies work and where their problems are, and how to deal with them. They know how to achieve real economic development and with egalitarian effect (no poverty). We've done it all before and the dynamics of recent histories are not ambiguous. So what's really going on? Why do we willfully insist on destructive policies? Are we being played for fools?

-------------------------------------------------------

If we were cool-headed people wanting to develop public policy, then our starting point for any given policy would simply be the objective. As scientifically minded people we would have (or should have) made no religion out of any given ideological method. We would have been trained into looking at all public policy from a boringly matter of fact position, whereby our conclusions are derived from best research and reason, and not empty impressionistic opinions.

So, if our objective was, say, affordable housing, then we would study relevant histories to see what policy works best for that given objective, while also developing a critical understanding of why those given policies had worked well so we can then know how to apply them, or not, or modify them for our specific context. You know...boring, sensible, reasonable policy development. No bull**t. Just reason and realism. No childish debates. Just intelligent discussions.

Now shouldn't it be obvious to everyone that this is how policy development should work? Making love to ideologies without a willingness to test or reconsider them is for nit-wits. Right? Of course.

Even still, we seem to have created this political culture where everyone is conditioned into having a "team-A versus Team-B" relationship with public policy, and entire political parties for that matter. We link our ideas to our ego's and expect others to do likewise, when really we should be demanding intelligence. We also have the media feeding this relationship with an Oprah Winfrey style presentation of issues, where they could otherwise have provided a format for real understanding.

None of this is conducive to a culture of scientifically derived public policy.

What the conspiracy theorists and some analysts say:

Agenda politics is supported by what I would describe as scientific policy development. That is, the agenda (or objective) is the focus - not an ideological belief in any given policy method for its own sake. When the agenda is the strict focus policies would be predictably developed from an intelligent and matter of fact position, like I argued they should be in the beginning of this post.

Now the conspiracy theorists (and I don't know if that's a fair or exclusive definition for the club I'm referring to) have been saying that the entire world is run by agenda politics, and the 'agenda people' do indeed develop their policies scientifically, and with the same kind of direct objectivity that you would expect from the military. And they will tell you that the ideology show presented to the public is nothing more than a massive perception-management exercise with the purpose of providing to the public ideological rationalisations for policy that is, in truth, scientifically derived. The idea is that those false rationalisations are necessary so as to ensure people do not come to understand how and why they are being manipulated/managed, as that would naturally contradict top-down control. Especially of course if people don't agree with where they're being led.

Crazy idea? But why should it be. How many people in the political world cannot understand the obvious importance and desirability of developing policy from a scientific position? And why on earth would the UN (and the UN is a powerful driver for public policy, world over) recommend policies to nations that have not first been exhaustively long-term modelled? Don't tell me they can't afford it and it can't be done. Nobody just guesses about policy when they don't need to. (That's the point!).

Behind our politicians must be a force that represents agenda politics. This is the most reasonable assumption I believe we can make. If money rules the world (yes it does) then I cannot see how money would tolerate the petty world of opinionated politics. The money people will have an agenda, be what it may, and that agenda would surely employ people to find the right policies that have the right effects to reach the specific objectives in service of the people who have the most power (money).

So again, the idea that the real world of politics is driven by mindless ideology ahead of science is to me a bit far-fetched. Not enough people are that stupid. Demanding objective research is the most obvious and simple thing we can do, so surely it would be done?*

The curious Alan Watt has asserted that someone somewhere high in the United Nations (I can't remember the quoted name) once openly stated that there was both an official and real reason for every given policy that the UN pushes. He has also claimed that the people who really control national governments are the politicians advisor's, not the politicians themselves, and it is the advisor's who know what's really going on and what the real objectives behind the implemented policies are.

This could make sense, because if politicians are the frontline of a (supposed) propaganda machine then they would obviously be most effective (and reliable) in their role if they were to believe in their own nonsense. But regardless, with the effective compartmentalisation of power (like in the military) only a minimal level of propaganda would be required to achieve a political world of penetrating and scientifically directed top-down control. If people inside the system simply don't know enough to challenge a given policy position, then generally they won't. They will just take it on faith that the ordered changes are the right thing to do, as they do.

Maybe the best question the public can ask politicians, or whoever is advising or controlling them, is simply: "How did you derive this policy position? Where is the research and long-term modelling behind it of which I expect you to have done?"

But then, finally, if we are operating on Agenda politics, then that means we are being directed. And if so then where, exactly, are we being taken to?

-------------------------------------------------------

*Note: Real research is not to be confused with political research. What I mean by political research is the scenario where vested interests pay a research body to "prove" a pre-desired conclusion, as opposed to just seeking the truth. That is, where researchers operate like lawyers trying to prove their case, rather than judges trying to objectively determine the truth. I believe that the IPCC is clear example of political (propaganda) research.

-Relating to my affordable housing scenario, Phil McDermott provides an excellent example of real research.

-------------------------------------------------------

Addition: 27-4-2012: Ancient Agenda?

There is the argument that the world is being run by an "ancient" agenda, where we have locked-in foundations driving the world to an essentially predetermined script, utilising vast resources to that end, and backed by old institutional/monetary powers - be what they may. I have no idea if this is actually true (that is, a static agenda), but to me it is the scariest of thoughts.

Personally I can accept and respect the idea/need for some agenda politics ruling the world, but what I cannot accept is the idea that the central agenda is not living. If we are to be run by agenda politics then that agenda, be what it may, should be open to philosophical challenge and development.

Easy stability via dogmatic adherence to an in-stone agenda should not be tolerated by anyone, because a "stoneified" global agenda is madness. It reduces every human being to the status of a goon, no matter how high up the power-hierarchy they might be. We become worshipers of what is basically a machine. The human mind, obviously, should always be at the top.

I write in relation to this concern here.

-------------------------------------------------------

Some other posts relating to this insight:

Time to put away your faith: The government is not your friend.

Agenda22: A personal wishlist for human-social evolution.

Operation population control?

Confessions of a political dominatrix wannabe.

A kind of WW3: Human management Versus individual liberty.