A couple of weeks ago the Sunday Star Times had a full page article – in a Money supplement, self-described as offering “Intelligent Money News, Tips and Insight – by Jade Kake headed Debt as we know it is a colonial construct (the online version runs under the title “Maori have colonisers to blame for concept of individual debt”.) The column ends even more starkly: “Debt is a colonial construct”, observing that “the implications of which continue to be felt in the colonies”.
As it happens, Ms Kake herself could probably be described – without animus – as something of a “colonial construct”. When I looked her up it turned out she was Australian (born, bred, and educated), of parents who themselves had been born in New Zealand and the Netherlands respectively. Lots to celebrate there one might have thought, and certainly it would have been inconceivable – impossible really – prior to, say, 1769. These islands and the descendants of their first settlers had been almost entirely cut off from the rest of the world- whether people-to-people movements, trade or technologies. And one of those missing “technologies” was credit – or debt.
There doesn’t seem to be any real debate about that. Ms Kake states it herself, and when I looked up some books on the pre-contact Maori economy they all made more or less the same point. There was some gift-exchange elements, but nothing at all resembling credit/debt as it had been known for some time – rather a long time in some places – in much of the rest of the world. A few years ago there was a book by the American sociologist David Graeber called Debt: The First 5000 Years. and I’ve written here about debt jubilees from thousands of years ago But that innovation, and evolution, had completely passed this part of the world by. Consistent with the absence of so many technologies and trade here, material living standards were very low.
“Colonial” is one those ill-defined words. Sometimes it means lots of permanent settlers from abroad, and sometimes just a period of control and government by a foreign power. In New Zealand, of course, it involved both, although the control by the foreign power was very short-lived. But, as people sometimes point out, even if these islands had never fallen to any foreign power, or if there had been little or no foreign settlement, many of the technologies would still have found their way here. Credit/debt is surely one of those sets of technologies. And that is a good thing.
Ms Kake is, of course, less sure (to put it mildly). But even she doesn’t really seem able to make up her mind. On the one hand she laments the arrival of the first bank in New Zealand (an ANZ forerunner) – but interestingly doesn’t mention our first very early quasi central bank, the Colonial Bank of Issue – but by the end of her column she is lamenting what she sees as evidence that it can be a bit harder to get credit if you are “visibly Maori”. If the latter is true it is, of course, unfortunate, but then we are left thinking that really credit/debt isn’t so bad after all. It depends – on what is used for, the reasons it is taken on, the conditions applied etc etc. Hitler’s regime borrowed in World War Two, but so did our side to defeat him. But when private parties take on debt, and do so not under duress, it is generally enabling and empowering.
Could one envisage a modern technologically-advanced world without debt? One could (and I briefly did here, in a debate a couple of decades ago with a visiting monetary reformer), but they’ve tended to go hand in hand. And no doubt Ms Kake would tar arms-length equity investment – also unknown here in centuries gone by – as another “colonial construct”. One might – as I do – wish there was much less household debt (because governments fixed the land supply regulatory disaster and got house/land prices a long way down), without having any particular qualms at all about young couples being able to borrow to buy a first house (rather than, say, generally wait until they were 50+ to buy a house outright). Much the same goes for business credit. Credit/debt is a sophisticated device enabling risk-taking, enabling smoothing of consumption, and so on. Financial development tends to go hand in hand with more intensive economic development and much higher material standards of living – not necessarily causally, although there are probably causal aspects (long-distance trade tends to rely on credit, on trust).
It is simply silly to say the debt is a “colonial construct” – it was simply one of the many things (institutions, cultures, technologies) that residents of these islands got access to when these remote islands finally opened, so late, to the wider world. There was – and is – nothing particular British – or even Dutch or northern European – about debt, technology itself transferred to, refined in etc, those parts of the world from elsewhere well before anyone settled here.
There has been a bit of debate over the weekend about the legacy of colonisation in New Zealand, prompted by some remarks by National’s education spokesman suggesting that in his view colonisation had, “on balance” been beneficial for Maori. One might debate aspects of his framing, and I don’t want to launch into an extensive debate here (a couple of pieces of mine that might be relevant are here and here). But, equally, the state of economic development and material living standards tend to speak for themselves about at least some aspects of such a question.
There is a big academic literature on the influence on imperial government, colonial settlement etc on the level of (say) real GDP per capita of different countries, and I’m not going to attempt to summarise it here. My own take is that the effects of imperial rule are not that large, but those associated with colonial settlement often have been. British settlers to (say) New Zealand and Australia in the 19th century brought with them many of the aspects – legal systems, culture, education or whatever – that had then made Britain the country with the most advanced economy and highest incomes.
Here is the IMF’s estimates of real GDP per capita this year for a variety of Pacific countries.
All of these lands were governed for a time in the 19th or 20th centuries by countries from outside. Two had large scale settlement – complete with the attendant, often embodied, “institutions” broadly defined – from places that were among the very richest and most productive on earth. It shouldn’t really be a surprise that the inhabitants of those two countries now – and not just the descendants of the settlers but the descendants of the earlier inhabitants (categories now often quite mixed) – have by far the highest material living standards of any of the countries in this region (all of which had previously been largely cut-off from the technologies of the rest of the world). Of the other countries on the chart it probably isn’t a coincidence that Palau and Fiji had the largest degree of settlement of peoples from outside the region. (As far as I can see the French territories – French Polynesia and New Caledonia – would come between Palau and New Zealand on the chart, but their stories are complicated by the ongoing ties to – and subsidies from – France.)
My best guess is that if, somehow, these islands had not been settled by outsiders but had simply been governed from outside for 100 years or so – as with most of these other Pacific states – real GDP per capita here might be similar to that in Samoa. They have computers, they have phones, they have credit. But they do not have an advanced economy offering high material living standards for their people (many of whom prefer to migrate to New Zealand). There might be reasons to debate this view, but even if these islands somehow generated per capita incomes twice those of Samoa they’d still be very low by advanced country (or modern New Zealand/Australia) standards.
Material living standards aren’t everything by any means. But they do seem to count for quite a lot.
croaking cassandra 
Did not read the article but maybe is should have been written in the Maori language as the use of English surely is itself a ‘colonial construct’. I just wonder how she would have found sufficient and adequate wording to make her argument.
I hope I am just seen to be joking.
LikeLiked by 3 people
The Treaty of Waitangi is also a Colonial Construct and I agree should be relegated to the dusty archives of the National Museum of a bygone era.
LikeLike
Ms Kake’s ramblings are yet another example of the increasingly common passive-aggressive syndrome of “Woke Supremacism”, in which one seeks the superior status of racial victimhood on the basis of that portion of one’s DNA which is “indigenous” and therefore oppressed by the “colonial” legacy. Sad.
LikeLiked by 3 people
You might disagree with Goldsmith, think him unwise to express his views thus, but where does the r-word come from? Seems emptied of all content too often.
On the thought experiment/parallel you pose – which I’m not sure is the right description of the NZ situation in important respects – on reflection, I’d probably end up being ok with the “deal” you mention (at least after some initial harrumphing,), perhaps more so if one of my kids ended up marrying one of your kids.
One can mount an argument that, in NZ’s case at least, the people who really ended up doing worst out of colonisation were the descendants of the colonists – NZ now being poorer and often lower wages/salaries than the UK, for the first time in prob 170 years.
LikeLike
Somehow I accidentally deleted this comment:
kaikatea commented on Colonial constructs
A couple of weeks ago the Sunday Star Times had a full page article – in a Money supplement, self-described as offering …
When will National Party people stop making these kind of racist comments? If you don’t see how it’s racist, consider this. I’ll arrive at your house tomorrow Michael and put a proposition to you. I’ll bulldoze your house and in it’s place I’ll put up an apartment building capable of housing 100 people. I’ll bring all my family, and I’m also running a very lucrative business out the the apartment. I’ll give you some of the smaller rooms in the apartment building, and as long as you continue to live in your assigned rooms and work in my business, I’ll pay you 10x what you were earning before. Regardless of whether you agree or not I’ll go ahead and do it, because actually I can find a remote cousin of yours who agreed it was a good idea, given the bulldozer was already on your property and had started the destruction.
I have access to capital, foreign technology and a different moral outlook that will make this all possible.
Now I think reasonable people can agree that this should not happen by without your full consent. And the person who gets to determine if you are better off after the fact surely is you, not my family?
If a lot of Maori are complaining about colonization, perhaps, just maybe, it shows that it wasn’t as good for Maori as we assume.
MHR response: I’m not sure I think the parable is quite right (in important respects) for the NZ story, altho on reflection I think I might have ended up reasonably content, even after some initial harrumphing – and perhaps especially if one of my kids then met and happily married one of yours. Hard to know. I’m certainly not running a story that all was done well or justly (nor, as far as I know, was Goldsmith.
LikeLike
I think if I were Maori, even if I was a bit better off I would be peeved to see some people getting rich here, That’s human nature “human’s are status obsessed” JP. But who are we talking about and at what period?, My Great Grandparents arrived with the gold rushes and eventually lead a simple Shetland Island carry over existence at Church Bay on Lyttleton Harbour. In those early days the settlers chose the prime spots (Hay’s Bay etc). What is more Maori intermarried. My Grandfather hated the Gardners of Purau Bay. The owners of the large estates could kick the small “cocky” around.
On New Discourses podcast James says Critical Theories aim is to deconstruct (by eternal criticism) .. The way to deal with that is ask for detail – “which land was stolen?”; “who was killed?’; “who was raped?”. I did that on twitter and she accused me of playing games and said she was ending the conversation.
LikeLike
I must admit as a migrant who arrived 34 years ago with only $50 in my pocket and a suitcase, NZ has been a land of milk and honey allowing me to now own $11 million in property and a regular $200k wage plus rental income from 11 properties.
LikeLike
GGS
Years ago I went to a Dolf de Roos seminar at the Chch Town Hall. People were walking around with glazed eyes. I understood how it all worked but I lacked the get up and go. I felt if I owned properties they would be like children and I would never stop improving them.
This era has been fueled by migration and it sickens me the way it has made it possible to transfer wealth from one lot to the other lot.
As Kurt Richenbauer [?] said: asset inflation isn’t wealth creation; it simply creates a charge elsewhere in the economy.
NZ today is a disaster. As a society everything we are allowed to think/express has to go through the eye of the media. You have a slim chance of getting a letter in the paper; you don’t have the resources to do the analyses that show up media bias or run polls; you can’t stick a poster on a poll; we are smothered by PR people. The bureacrats have a well oiled machine that has pitted New New Zealand against old.
Hopefully the wheels will fall off as people realize the national voice is insane (Maoist). RNZ and it’s te reo/ te ao Maori (perhaps) or maybe awareness will grow of post-modernism/Critical theory and human nature.
John Campbell implied that Peter Brown’s attack on Asian immigration was inappropriate because Winston was Minister of Foreign Affairs, but there is no evidence Asian attitudes expect us to be unusually open:
Eg
Ha-Joon Chang South Korean Development Economist writes (in 23 Things they don’t tell you about capitalism)
Countries have the right to decide how many immigrants they accept and in which parts of the labour market. All societies have limited capabilities to absorb immigrants, who often have very different cultural backgrounds, and it would be wrong to demand that a country goes over that limit. Too rapid an inflow of immigrants will not only lead to a sudden increase in competition for jobs but also stretch the physical and social infrastructures, such as housing and healthcare, and create tensions with the resident population. As important, if not as easily quantifiable, is the issue of national identity. It is a myth — a necessary myth, but a myth nonetheless — that nations have immutable national identities that cannot be, and should not be, changed. However, if there are too many immigrants coming in at the same time, the receiving society will have problems creating a new national identity, without which it may find it difficult to maintain social cohesion.
Social Cohesion is now an extreme form of message domination.
LikeLike
Here’s some more data for you to adjust your assumptions.
https://economics.mit.edu/files/4123
Cheers,
Eric
LikeLiked by 1 person
It gets rather heavy but I liked the introduction: “”What are the fundamental causes of the large differences in income per capita across countries? Although there is still little consensus on the answer to his question, differences in institutions and property rights have received considerable attention in recent years. Countries with better institutions, more secure property rights, and less distortionary policies will invest more in physical and human capital, and will use these factors more efficiently to achieve a greater level of income.””
The conclusion is too long and too qualified to quote but includes “In this paper we argued that differences in colonial experience could be a source of exogenous differences in institutions”. My reading is that the great gift to the success of NZ was British Common Law.
LikeLiked by 1 person
You will find the same great gift to success in China is also and continue to be so, the adoption of British Common Law when China started opening up to the rest of the world 40 years ago.
LikeLike
A few years ago, the mayor of Taipei gave a speech where he acknowledged these positive effects on culture and institutions, saying something along the lines of ‘Singapore is better than Hong Kong and Hong Kong is better than Taiwan and Taiwan is better than mainland China’ precisely because of colonial rule. Heresy, I know.
LikeLike
It seems they were much smarter way back before the colonials came. even went to Antarctica by canoe.
I kidd you not.
That description talked of: “the rocks that grow out of the sea, in the space beyond Rapa; the monstrous seas; the female that dwells in those mountainous waves, whose tresses wave about in the waters and on the surface of the sea; and the frozen sea of pia, with the deceitful animal of that sea who dives to great depths–a foggy, misty, and dark place not seen by the sun. Other things are like rocks, whose summits pierce the skies, they are completely bare and without any vegetation on them”.
Maori links to Antarctica from seventh-century Polynesian explorer who ventured far south
https://www.stuff.co.nz/pou-tiaki/125375015/maori-links-to-antarctica-from-seventhcentury-polynesian-explorer-who-ventured-far-south
LikeLiked by 1 person
Recent associations of Maori with Antarctica
In 1840, New Zealander Te Atu (who later changed his name to John Sacs), whose father was Pakeha and mother Maori, travelled to Antarctica on the American ship the Vincennes (Norris, pers comm.). The Vincennes was one of six ships used in the first United States exploring expedition under the control of
Lt. Charles Wilkes, who discovered the Shakleton Ice shelf and surveyed 1600 miles of coastline.
https://ir.canterbury.ac.nz/handle/10092/14205
Guyon Espiner gave oral history a soft rub on the belly on Morning Report.
LikeLike
Regarding the graph, I expect Australia and NZ have far more land & natural resources per capita too? Over time the surplus would have compounded.
LikeLike
Note that PNG has more land than NZ.
More generally, remember that in pre Industrial Revolution times Malthusian principles tended to operate, with the population adjusting (whether thru reproduction, famine or whatever) to the carrying capacity of the land, generally keeping living stds pretty near subsistence. Most of what we might now count as natural resources weren’t any use in a pre contact pre technology world (in the extreme Aus – and PNG – have LNG, which is valuable now but meant nothing 200 years ago).
Of course now – without settlement or imperial rule – those resources would have value, but real questions about how they’d have been utilised without the “institutions”. I’ve worked in both PNG and Zambia, and both abound in natural resources – at independence Zambia had GDP pc similar to Korea or Taiwan – and yet they lag very badly in material living standards.
LikeLiked by 1 person
NZ has some of the largest territorial oceans in the world being reclassified recently as a continent. 98% of NZ land is therefore underwater. But because we have banned offshore oil and gas exploration we are also productivity poor with that ban on mining our natural resources. NZ is poor by the choice of this Jacinda Ardern government and the people love her. You have to admire the Jacinda Ardern propaganda machinery.
LikeLike
NZ is not smaller than PNG. The size of NZ is equal to Australia in terms of land mass except that 98% of NZ is underwater. We just have to rethink our production underwater rather than above water.
LikeLike
Ms Kake should investigate PNG before claiming debt is a colonial construct. Traditional culture is full of debt – it is used to help hold their society together. This is lifted from Wikipedia “” In the Moka exchange system of Papua New Guinea, where gift givers become political ‘big men’, those who are in their debt and unable to repay with ‘interest’ are referred to as ‘rubbish men’ “”.
European trade with Asia [leading to colonialism] was so high risk that they developed the Joint Stock Company which is the forerunner of modern corporations.
I wonder how Arab traders financed their trade along the East coast of Africa which they have done for far longer than the 400 years when European nations dominated world trade. Since interest is reputedly illegal in Muslim societies how did they gather the capital required to send ships over the Indian ocean?
Did the word ‘debt’ have such a bad reputation before they invented ‘student debt’?
LikeLiked by 1 person
In fairness. I think the PNG system to gift-exchange was similar to what operated among Maori (which she recognises). Part of her point seems to be about individual debt (or individual firms) as opposed to collective arrangements within tribal groups.
LikeLike
Gift exchange does sound much nicer than the mortgage I arranged with a large bank last month. Frequently it is much nicer – community and friendship and family ties. But not always; indebtedness can be dangerous.
LikeLike
She’d have been better off, but not by much, by calling it a Western rather than Colonial construct. ‘Indigenous’ Maori came to NZ the same way everyone else did, on a boat. They just got here a bit earlier.
LikeLike
It could have been a wholly NZ Republic construct if not for Maori inviting the British Crown to come into NZ to dismantle, disband and to jail members of the new NZ Republic government. The First raising of the NZ Republic flag was gunned down by the British Crown on behalf of Maori.
LikeLike
“All of these lands were governed for a time in the 19th or 20th centuries by outside countries from outside.”
Not strictly correct for Tonga, which was merely a British protectorate from about 1900, but which effectively remained an indigenous kingdom throughout.
Additional nit-picky point: The two “outsides” could also be usefully edited down!
LikeLike
Thanks Simon. One outside now deleted.
Yes, you are right about Tonga. Of course, it is a problem with quite a lot of the “colonial” variables in studies – the extent of outside controlled varied a lot (even with what we now think of as single countries – eg the princely states in India vs the directly controlled/administered bits). Even in the Pacific, geography mattered – bits of PNG were barely explored even 20 years before Independence and the impact of Australian govt in those places was often very light.
LikeLike
When dealing with the Woke—that is, devotees of the ideology outlined in Critical Social Justice Theory—one assumption (among many) that is an almost sure bet to make about their claims is that some trick of language is being played. What’s needed to expose the vacuity of the Woke position, then, is not necessarily the ability to bring facts to bear on the matter or even to argue better than they can (as they’ll deconstruct your position and leave you looking foolish to anyone slightly sympathetic to their cause). The best thing to do is expose the trick.
Most often, these language games—as Wittgenstein named them, the postmodern theorists then exploited, and the Woke have appropriated—take one of a rather small number of forms. In nearly all cases, it’s some form of a “strategic equivocation,” in which two ideas are being forwarded simultaneously, allowing the Theorist to play both sides of the argument to his own advantage in any given situation.
https://newdiscourses.com/2020/09/no-science-isnt-social-construct/
LikeLiked by 1 person
. Quoting:
An extreme example of this style of strategic equivocation are “Troll’s Truisms,” as Nicholas Shackel had it (“deepities,” as named by Dan Dennett). Troll’s Truisms occur when something is trivially true in a banal sense with no real implications and false in a profound sense with serious implications (Dennett gives the example of “love is just a word”).
……
as in colonisation happened to Maori and even if you lived at Okains Bay and life was tough (teeth worn down in skulls) life may have been enjoyable, iIn the same way, people are atracted to the SAS (perhaps). Edward Thesigurs Arabian Sands is another example (if anyone has read it. Living on the edge is stimulating and the social environment is deeply fulfilling while the outer world is as wide as your imagination.
Then come the Pakeha with farms and fence.
However is Murray Smith (Ngati this and that and greenstone around neck) Accountant one of those?
LikeLike
This madness seems to have no bounds.
“The Slavic community has arrived in this part of the USA facing similar forms of discrimination and exclusion as did the Polish, Irish and Italians many generations ago. These communities struggled with language, employment, education and social exclusion. In much the same way, the Slavic community faces these barriers to parity and to equity. As a result, the Coalition of Communities of Color has formally recognized the Slavic community as a community of color. ”
https://www.portlandoregon.gov/oehr/article/713232
LikeLike
In NZ the Slavic Community would be called “White Privilege”.
LikeLike
Several months ago Bernard Hickey began a new venture called “when the facts change”. His first two interviewees were Kiwibanks Economist Jarrod Herr and Jade Kake. Kake was the first panelist to speak. She had 15 minutes of talk time. It took her 5 minutes to turn the session into a rant about colonialism. A check on her background revealed her to be an Australian Born citizen of quarter Maori Blood-Lines. Her Maori heritage derives from her paternal grandfather. Research on her grandfather didn’t reveal much other than the fact that his name appeared about 15 time in lists of un-located missing owners of Maori Land
LikeLiked by 1 person
Chris Trotter
That’s the nub of the issue. The HRC believes race is a social construct and social constructs are created by those with power over discourse. Trevor Philips (Blairs former Race relations Commissioner) doesn’t agree.
https://www.rnz.co.nz/national/programmes/ninetonoon/audio/201762447/straight-conversations-about-racial-and-religious-differences
So why are we having this discussion when it is about another issue entirely?
LikeLike
Mr Reddell,
Thank you for your always interesting posts.
I know you have addressed the subject of inflation before, but would appreciate another comment now that in the US iinflation appears to be rapidly rising.(4.7%)
I think it may be also similarly getting out of control in NZ?
Perhaps interest rates are about to follow?
Thank you.
Rosecevans
LikeLike
I’m still fairly open-minded on inflation both in the US and here. Here, I suspect the output gap is close to being closed and so the Bank should be stopping the LSAP scheme and looking towards gradual OCR increases. and if they do that then core inflation is likely to remain around or just over 2%. In the US, things are more of a mess. More signs of excess capacity but also higher headine inflation. But the best series for core inflation in the US suggest that, at least at present, core inflation (trmmed mean, weighted median measures etc) are not yet showing very troubling signs. In both countries of course, fiscal deficits are far too large, but central banks have to take those are given and do whatever job is needed to keep inflation in check.
I don’t worry that we are going to see some repeat of the 1970s, but in the end if we do that will have been a political choice, not just a reflection of central banks reading inflation wrongly for a couple of quarters.
LikeLike
The RBNZ in its infinite wisdom need to seriously consider the adverse impact of rapid interest rate rises. History tells us that successive interest rate rises drives inflation upwards especially as a economy dependent on debt(shallow equities market) such as NZ starts to grow. Interest is a cost to a local business and to survive local businesses will be forced by the RBNZ to increase prices to preserve profit margins.
The downward spiral then begins for local businesses as the RBNZ responds with even harsher interest rate rises to curb the very inflation it started as a response to businesses trying to survive by increasing prices. China imports then gain ascendency as our local produces get hammered.
LikeLike
As you say in presenting your counterfactual to colonisation, material living standards aren’t everything. But the fact that large numbers of people voluntarily migrate to NZ from countries that were not settled on a large scale by colonists is surely suggestive that “colonial” societies created something of value for all.
LikeLike
Here is what Michael King had to say
LikeLike
[…] Material living standards aren’t everything by any means. But they do seem to count for quite a lot. – Michael Reddell […]
LikeLike