Day: December 11, 2018

Human rights, Helen Clark, and the PRC

Michael Reddell China, NZ politics

Yesterday was, apparently, the 70th anniversary of the adoption of the United Nations Universal Declaration of Human Rights.   Our former Prime Minister, former senior UN official, beloved of the Labour Party faithful, Helen Clark tells us so.

I can’t claim to be much of a fan of the United Nations, am not entirely convinced by the concept of “human rights”, and certainly don’t believe that any such rights flow from declarations of governments.  I’m not convinced some items in the declaration belong there.  But Helen Clark probably sees things differently.  She seems to be champion of all such things, worthy and not so much.   She’s a private citizen now, but it was only a year or so ago that our governments were championing her campaign to be Secretary-General of the United Nations and I’m told MFAT still uses her promote New Zealand foreign policy.

And what was our former Prime Minister actually doing yesterday on Human Rights Day?  Well, her Twitter feed says she was in the People’s Republic of China, attending something called the Imperial Springs Forum.

Is this some dissident forum, bravely championing the rights and freedom of the Chinese Communist Party’s subjects?   Silly, no of course not.     This was an event opened by the PRC’s Vice-President (open the report of the speech in Chrome and you’ll get a translation –  or Google a shorter version in English).  Here’s some of what he had to say

Wang Qishan said that the interests of all countries are deeply integrated and shared. China adheres to the path of peaceful development and advocates building a new type of international relations of mutual respect, fairness, justice, cooperation and win-win, and promoting the building of a community of human destiny that lasts for a peaceful and common prosperity. China will unswervingly follow its own path, do things in a down-to-earth manner, continue to learn from each other with sincerity and open mind, learn from each other, deepen cooperation, and always be a builder of world peace and global development. Contributors, defenders of the international order.

Doesn’t all that just describe so well the way in which the PRC operates?   Well, I guess “unswervingly follow its own [evil] path” might qualify.

Is the Imperial Springs Forum some quasi-independent body (if such an idea were even conceivable in today’s PRC? No, of course not.   Here is how one China watcher summarised it

All part of the same United Front work programme.  One of the leading figures behind it is apparently an Australian citizen Chau Chak Wing, of whom there are many rather gruesome stories to read (eg here), including some involving possible shadty dealings around the United Nations.   It seems to be a convenient –  for the PRC –  forum at which to gather prominent people from all over the world who will be polite and deferential, and treat the Party and the PRC as some sort of normal decent people –  not a bunch of brutal tyrants –  as a bunch somehow genuinely committed to open trade and free human development.   You can see the sponsors on the website here (and incidentially can see that our other former Prime Minister –  heavily involved in all things pandering to the PRC, including the New Zealand China Council –  Jenny Shipley was at last year’s event).

But what really struck me wasn’t what the PRC regime does.  We take them as evil and opportunistic –  they’ll use self-important people who make themselves available to be used.  It was more a case of what Helen Clark chose not to do.    There were quite a few tweets from her yesterday, including the one above about the Universal Declaration –  a document that China was a party to at its launch, and which the People’s Republic has made itself party to in 46 years in the United Nations.   Twitter is blocked in the PRC itself, but presumably there was some sort of VPN allowing the eminent former politicians and other attendees to carry on tweeting.

But there was not a word –  not even a subtle hint –  about the utter incongruity between the actions and expressed values of Helen Clark’s hosts –  the regime and its acolytes –  and the UN Universal Declaration of Human Rights.   On Human Rights Day.  You can read the whole declaration here but how about

Article 9.

No one shall be subjected to arbitrary arrest, detention or exile.

The million of so Uighurs anyone?

Article 10.

Everyone is entitled in full equality to a fair and public hearing by an independent and impartial tribunal, in the determination of his rights and obligations and of any criminal charge against him.

As applied, say, to the PRC former head of Interpol?   Or

Article 12.

No one shall be subjected to arbitrary interference with his privacy, family, home or correspondence, nor to attacks upon his honour and reputation. Everyone has the right to the protection of the law against such interference or attacks.

That would include those not-yet imprisioned Uighurs who’ve had PRC government spies forced into their homes?

Article 5.

No one shall be subjected to torture or to cruel, inhuman or degrading treatment or punishment.

Forced organ donations?

Article 19.

Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers.

Where to start on what PRC subjects can’t do?

And then there was the article which really prompted me to turn to the keyboard today

Article 18.

Everyone has the right to freedom of thought, conscience and religion; this right includes freedom to change his religion or belief, and freedom, either alone or in community with others and in public or private, to manifest his religion or belief in teaching, practice, worship and observance.

The mass internment of Uighurs seems to be substantially about their Muslim religion. Serious religious commitment involves an alternative and higher form of loyalty than that to the Party.   That’s a threat –  as it was to the Nazis, or the Communist rulers of the Soviet Union.  As it is, and ever has been, to the CCP and to Xi Jinping.  And it isn’t just the Muslims.  This happened in Chengdu over the weekend  –  where the New Zealand consulate had been wining and dining Beijing’s Confucius Institute people from New Zealand a few days previously.

(Great book by the way, on all manner of religious traditions in China.)

It is not exactly secret.  I’m sure Helen Clark –  and the consulate in Chengdu, broadcasting news of its latest meeting with the local CCP/PRC powers than be –  will have been aware of it.   Not a word, of course, from our authorities, and that isn’t surprising.  But not a word either from a former Prime Minister, former senior official of the United Nations in the PRC on Human Rights Day itself.

Does the fine rhetoric, the official declarations, mean anything at all, or is it all just for show, some sort of Potemkin village, just enough to keep the conference invites coming, but not to be taken seriously, at least as regards any country that offers enough hospitality?

Had Helen Clark said something –  whether about the Early Rain church (it being in the headlines), about the Uighurs, or about any other of the myriad breaches – what was the PRC going to do?  They were hardly going to toss her in prison were they?  At worst, she’d have been ignored by her hosts, and not invited back.  But so what?   She can hardly need the money, and the PRC is hardly going to reform because some international toadies turn up to meetings with them.  With the UN stint behind her she is the sort of person who could effectively speak up and speak out for “human rights” and freedom in the PRC  (and against its aggression and interference abroad, including in New Zealand, against its effort to intimidate ethnic Chinese New Zealanders or Anne-Marie Brady –  who, at least as suggested by her writing seems to be personally of the left.)

If she cared, if it meant anything.

Instead she joins the pantheon of the prominent, determined never ever to say a word upsetting to Beijing –  Don McKinnon, Jenny Shipley, John Key, Bill English, (Todd McClay, Simon Bridges, Jacinda Ardern) and…..that champion of human rights, Helen Clark.

(For anyone more interested in the Wang Yi case specifically there is some useful, inspiring, material linked to by Ian Johnson, the New York Times journalist and author of that book on religion in the PRC.)

 

The superannuation sky is not falling

Michael Reddell Superannuation

When there isn’t much, if any, political or community impetus to do anything about a looming issue, it can still be useful to be told that the sky isn’t falling –  at least if that analysis is correct – but it probably isn’t an approach likely to attract too many readers.

The New Zealand Initiative last week released just such a report on New Zealand Superannuation, under the (slightly laboured) title Embracing a Super Model: The superannuation sky is not falling. (I was among those who provided comments on an earlier draft of the report.)

There are lots of interesting charts, even if perhaps most are familiar to anyone who has been reading in this area.  And there are helpful reminders of the (very) good features of our NZS system

There is a lot to like about the NZS model:

  • Low poverty rates: The material hardship rate for the elderly is low compared to other groups in New Zealand and is one of the lowest compared with European countries. The standard hardship rate for superannuitants is 3%, compared with 11% for the whole population and 18% for households with children.
  • Relatively affordable: NZS is more affordable than public pension schemes in many OECD countries, both today and in 2050. At around 8% of GDP, the projected public expenditure on NZS in 2050 is still lower than what many OECD countries are spending today. These include oft-acclaimed systems like in Denmark, Finland, Norway and Sweden.
  • Simple and efficient: NZS does not distort incentives for employment and savings as much as means-tested systems. When an NZS surcharge was introduced from 1985 to 1998, people went to great lengths to avoid paying it by hiding their assets. The simplicity of a universal benefit also lowers administrative costs.

(although, as I noted in a post a few months ago some OECD data appear to raise questions about those relative poverty rates.)

Our system has the further merit, at least in my view, that it explicitly focuses on providing a modest level of income support, leaving the responsibility for any higher material standard of living in old age a matter for individuals and families.  (Having said that, the tax system we have had in place since 1988/89 –  taxing income on savings made out of after-tax income at least as heavily as income from labour –  is quite out of step with that particular vision.)

When it comes to recommendations for change, the New Zealand Initiative report is curiously bloodless.  I agree with some of their recommendations, disagree with others, and noticed an important omission.  But with no sense of any fiscal urgency, the author seems a little at sea.  For my tastes, there was a missing moral dimension – a sense of right and wrong.  Debates about how we care for our elderly seem almost inescapably moral in nature.  Of course, economists have little or nothing distinctive to add in that area, but the Initiative seems reluctant to even attempt to make a case.

Their first recommendation is one I’d agree with

Recommendation 1: Link the pension age to health expectancy

Doing so would save some money –  potentially quite a lot of money over time.  But to me, the stronger argument isn’t about saving money per se, but about a sense of right and wrong.    In an age when most people aged 65 are perfectly capable of working –  thanks to the changing nature of jobs and the improvements in the health status of people –  what possible case can there be for paying a near-universal living allowance, raised by taxes with all their deadweight costs, to everyone of that age?   No one argues –  the Initiative certainly doesn’t –  that people who are physically unable to work should have to, but that is true of people at any age (it is why, for example, we have the Invalids Benefit).   I also don’t have a problem with society agreeing that it doesn’t expect people past a certain age to provide for themselves (or within families), unless they particularly want to work.  But given the health status of most people aged 65 how can 65 possibly be the appropriate age now?   As a chart in the report illustrates, more than 50 per cent of men aged 65-69 are still in the labour force.

I’m much less convinced by the second recommendation

Recommendation 2: Index NZS to CPI only rather than both CPI and wages

• NZS is indexed to both inflation and the average ordinary time wage. Decoupling NZS from rises in wages is a way of ensuring productivity gains reduce the costs of NZS. The real purchasing power of NZS should remain the same while the real purchasing power of wages would increase.

Although it isn’t quite stated this way, this recommendation is an assertion that the relative living standards of a large chunk of elderly New Zealanders are too high (for the bottom four deciles of the over-65s, NZS makes up almost their income).  It is to guarantee a material increase in the relative poverty rate of older New Zealanders, substantially so over, say, a 20 or 30 year horizon. In fact, what would be likely to happen is that a whole raft of means-tested forms of assistance would be added to the system, detracting from one of the great strengths (see above) of the current system.  Also, even if the analysts recommending CPI indexation rather than wage indexation are willing to live with the full ramifications of such a system  –  in principle, 100 years from now the real value of NZS would be the same as now, even though real wages might be several multiples of what they are now –  the political system just won’t do so.   Break the link to wages now, and it is likely to be back a decade from now.

(One plausible compromise recommendation might be to lock in the real purchasing power of NZS at the point a person first receives it –  eg you might get 65 per cent of the average wage as it was when you turned 65 (or 68) –  and the person turning 65 (or 68) five years hence would get 65 per cent of average wages then.  Both would only be CPI-indexed from there forward, but future old people would get to share in the productivity gains the community manages to secure.  This approach would parallel how private defined benefit pension schemes work.)

What of the third recommendation?

Recommendation 3: Contributions to NZ Super Fund should not be at the expense of paying down debt

The Super Fund should not be relied on to reduce the future costs of NZS (it cannot do that), and contributions to the Fund should not come at the expense of paying down debt.

I get the impression that the New Zealand Initiative isn’t very keen on the New Zealand Superannuation Fund, but is reluctant to call a spade a spade and call for its disestablishment.  There is an analytical point to be made-  NZSF doesn’t materially affect the future affordability of NZS –  but there is an at least equally important debate to be had about whether runnning a highly-leveraged (wholly leveraged) investment fund trading world markets –  and making politically convenient plays whether around climate change, light rail, or whatever – is any sort of natural or appropriate role for government.   I don’t think so, and I doubt the Initiative does either, but they seem strangely unwilling to say it (I guess they want to keep on good terms with the government).  Note that the existence or not of the NZSF is a different issue from the question of whether governments running a welfare system, especially for old people, should also run much lower levels of net debt (even net assets) than some stylised government doing only law and order and infrastructure might. I think they should.

And what of the fourth recommendation

Recommendation 4: Productivity growth will make NZS – and everything else – more affordable

Faster rates of productivity growth relative to increases in the real interest cost of government borrowing can allow increased government spending without falling into a public debt spiral. Raising productivity growth is a way of making NZS (and everything else) more affordable, and gives future governments more options and flexibility to adjust to changing economic and political circumstances.

Well, of course, although on the narrow NZS point this is a less-strong argument than it appears.  When net debt is near-zero, debt servicing costs aren’t a particularly important consideration.  The Initiative argues for CPI-indexing partly so that productivity gains will improve the fiscal position, although that seems to me to put the emphasis in the wrong place.  Faster productivity growth –  and recall that ours has been lamentable for decades –  offers the prospects of better material living standards for almost everyone  including, as they note, flexibility about support for the elderly.

But in practice, this isn’t so much a New Zealand Initiative recommendation as an aspiration.   We’d all prefer that productivity growth had been, and would be in future, faster. But wishing it doesn’t make it so, and the Initiative hasn’t been particularly strong on identifying the key factors, or policy issues, that might explain that failing and offer credible New Zealand-focused pathways out of it.

Finally, turning back to NZS itself, it was striking that –  as far as I could see –  there was no discussion in the report of the rather weird aspect of our system: that in a country with so many immigrants and emigrants, we offer a universal benefit to anyone who has lived in New Zealand for 10 years after turning 20, including 5 years after turning 50.  It is made worse by the fact that we have Social Security Agreements with various countries, notably Australia and the UK, which mean that residency in those countries counts as residency in New Zealand for NZS purposes.  Is this affordable?  Perhaps so in the same sense the New Zealand Initiative notes that the overall NZS system could be afforded. But is it right?  Well, that seems like a moral question –  informed no doubt by analysis –  and one where I’m pretty clear what the answer should be. It is simply wrong.

Welfare systems should be about “looking after our own”, and if you went to Australia at 20 and spent your entire working life there, I don’t see any good reason for New Zealand taxpayers to support you back here in retirement (of course, we don’t know how material these numbers might be).  Or if you happened to come to New Zealand first at 55.    A graduated system, in which NZS payments are proportional to the time spent in New Zealand between 20 and 65, seems both fair and fiscally prudent.   Take the 10 year residency (real residency) as a starting point at which you might get, say, a third of the standard NZS at 65, and scale it up so that after say 30 years you get the full benefit.  (Will there be a few hard cases? No doubt, but that is where charity and family support should be expected to fill the gaps.)

It will be interesting to see what, if any, NZS policy the opposition National Party comes out with.  The previous government, at the very end of its term, and having changed leaders, did promise to phase in –  very very slowly – an increase in the NZS eligibility age to 67.  But only if they were re-elected, which they wern’t.  And doing nothing about other features of the system –  dealing with any life or health indexation (in full or in part) –  or the very short residency requirements.  With Labour and New Zealand First seemingly fully committed to the current parameters of the system, it would be a brave Opposition to campaign for change, especially from a party with little obvious sense of an ability to engage on matters of right and wrong.   One should probably never wish for a recession –  especially now given the limited capacity of the authorities in so many countries to respond –  but perhaps it will take a recession to get our leaders to more seriously address the NZS issue.  That was, after all, what it took in 1989 and then 1991 when Labour started, and National greatly accelerated, the move back to 65.