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In October 2020 businesses had $22,700 million or 24% more in the bank than in October 2019. At that time there were a lot of reports about a high demand for all types of luxuries including luxury homes and expensive holiday homes and there were waiting lists for luxury cars, boats and camper vans.

Businesses voluntarily repaid about $750 million of wage subsidies and over $50 million was requested by the MSD. The vast majority of businesses waited to see whether they would be asked to make repayments but the MSD failed to write to almost all recipients and failed to request verifying evidence and failed to take high profile prosecutions. If the MSD had promptly taken action in the public interest, an estimated $8 to $10 billion covering all wage subsidies could have been repaid and used to deal with the urgent problems facing the country.

The Reserve Bank created $55 billion to support businesses and the economy. About $19.6 billion was used for the wage subsidy but a large proportion was overpaid or wrongly obtained or retained.  This money was used by business owners to buy personal and investment assets, including paying deposits on investment houses. Other handouts were wrongly obtained or retained by businesses but nothing has been done about this.

In contrast, Public Servants allowed employers to cut wages by up to 20% and those on low incomes who had difficulty meeting their commitments borrowed $400 million from the MSD and got high interest loans from other lenders.

The Labour Party said in 2017 that they wanted to make big improvements in the areas of child poverty, inequality, unaffordable housing and climate change but after following the advice of Public Servants they have ended up doing almost the opposite. Treasury and MSD officials were keen to give businesses as much taxpayer money as possible and it is clear that they arranged for this to happen. The Treasury later advised the government to cut spending so this means that some priority social and environmental projects will not be able to go ahead.

It appears that the lobbying of officials and Ministers together with the other activities of business interests resulted in their interests being put ahead of the best intentions of the Prime Minister and Government.

In the two years after the start of the Covid-19 pandemic NZ had the greatest increase in inequality in the world and those who benefited have tried hard to keep this hidden.  It was first exposed by economist and financial journalist, Bernard Hicky, in his subscription newsletter using data from Statistics New Zealand. Later research by Credit Suisse confirmed what he said. There was a $1,000,000,000,000 transfer of wealth to businesses and people who were already well off but those renting or on low incomes went backwards.

All the surplus money from the wage subsidy started an asset price bubble and this combined with easy credit and low interest rates created by the Reserve Bank resulted in inflation. The huge amount of money borrowed to pay the wage subsidy and other business handouts will have to be repaid by taxpayers and this will restrict what can be spent on climate change and other environmental and social problems that need to be dealt with.

House prices went up 43% in 18 months and this destroyed the hopes of renters who wanted to own their own homes. It is probable that the majority of people will in future not be homeowners. Some will  be tempted to move to Australia where incomes are one third higher and house prices far cheaper.

New Zealand once had an egalitarian society but it is now run by a highly paid professional managerial class. They want to make money by giving away taxpayer money but this is done in a way that cannot be classified as corruption. They want high immigration of poorly educated people in order to keep down wages and to provide themselves with low cost services. No account is taken of the impacts of the policies they promote on the average person, the community and future generations.

The following article is by Dr Bryce Edwards of Victoria University.

Political Roundup: How politics got captured by the middle class, and why it’s a problem

One of the world’s leading progressive political thinkers and journalists died last week. Barbara Ehrenreich was 81 years old, had written more than 20 books and was feted as a leading US journalist and chronicler of the plight of the working class and disadvantaged.Ehrenreich’s most important contribution to political theory was her work on what she called the “professional managerial class”. Ehrenreich argued that the new middle classes – highly educated and with white-collar professional skills – had taken over key parts of running society in liberal democracies like New Zealand, including political parties, the media, the education system and the public service. Ehrenreich regarded this as major problem and saw this group as a class that had become increasingly detached, hostile and disparaging towards the working-class majority in society.

The political role of the Professional Managerial Class
This increasingly powerful force in society – the Professional Managerial Class (PMC) – is prone to see the majority of ordinary people as reactionary and culturally backward, racist, sexist and homophobic. The PMC see their political role as dispelling and combatting these views. They often regard change as something to achieve through individual actions – e.g. how we behave or policing how other people behave. This liberal approach is especially concerned with language, and clamping down on “wrong opinions” – which is not that surprising, because their day jobs of such individuals often involve “telling people what to do”.The PMC also push for political reforms that might make New Zealand a more tolerant, diverse, and enlightened place. Many of these top-down reforms are entirely admirable, but aren’t without problem. Ehrenreich, and others who have been influenced by her theories on the PMC, have argued that this enlightened, or “woke” approach, can be very superficial and misses out on making transformative change to improve the lot of the majority of society.Instead, such critics characterise this middle class political agenda as being one of self-interest. After all, the reform programme reinforces their own moral or public standing, while often remunerating them very highly.Critics point to the PMC as being an increasingly cohesive and powerful faction in society. They rise to the top of institutions, whether in business or government agencies, by proving how progressive they are. Much of it amounts to grift – posturing for career advancement.Some critics even argue that these middle class professionals consciously attempt to elevate members of historically oppressed communities – especially in terms of ethnicity, sexuality, and gender – into this more elite group, in the name of “diversity”. Critics allege that in reality this is a version of “cooption”, in which society’s elite becomes more demographically diverse, but the same old structures keeping the working class in their place remain unchanged.The socialist economist Thomas Piketty has been especially interested in the role of the PMC, and he talks about how you can basically differentiate left and rightwing factions of this new middle class – labels that he gives as the brahmin left” and “the merchant right”. Here in New Zealand, Max Rashbrooke has converted this into the labels of the “Kelburn Left” and the “Remuera Right” to denote these influential demographics.

A PMC takeover of the political left

Traditionally the political left and its parties used to orientate entirely towards the working class and poor. Typically, the politicians of these parties were from trade union backgrounds and working class occupations. And, perhaps more importantly, they pursued a working class agenda (not just paying lip service to it like contemporary parties in Parliament). Of course, their voters were historically from the lower socio-economic half of society, and they tended to be less well-educated than voters of the political right.This has all been flipped. Generally, now parties of the left look like the professional middle class, and increasingly they get their support from the highly educated. In contrast, parties of the right now focus much more on winning votes from the less educated and working class.The left is now more liberal and elitist as a result. It’s not focused so much on the historic agenda of reducing economic inequality, or delivering improved housing, education, and so forth, but is more concerned with the interests of the PMC – particularly symbolism and moral panics. They would rather change the names of government agencies, or even the name of the country, than see political change that might endanger their own economic interests.Ehrenreich argued that this represented a kind of death of the political left. Pointing in her own country to the likes of then Democratic presidential candidate Hilary Clinton, Ehrenreich argued Clinton represented a “takeover” of the left by the middle class which concentrates on condemning “deplorables” with their wrong opinions, but who once might have voted for the left instead of the likes of Donald Trump. She worried that the modern left had a strong prejudice against the working class which was counter-productive to its own success.In New Zealand the writer who has most often applied Ehrenreich’s theories is Chris Trotter. He argues that the PMC are a vital asset for the powerful here, because their social liberal approach distracts the public from demanding enduring and significant change and improvements to their lives.Trotter argues that the PMC’s way of operating, and its social liberal reforms, are divisive, and play a key part in keeping the poor and working class from uniting. Writing in December, Trotter said the PMC have a “need to obscure the common interests of working-class Māori and Pakeha; working-class men and women; working-class cis and LGBT. The elevation of identity over class is the critical cultural project at the heart of the social-liberal revolution.”Danyl Mclauchlan’s recent political essays have drawn on the work of Ehrenreich and other critics of contemporary politics. In terms of the PMC, he says: “I don’t think you can understand 21st century politics without them.”Mclauchlan argues the PMC has created a great industry for itself in Wellington especially, becoming something of a political class. They have imitated and appropriated the language of progressive politics, but it is primarily a grift, to procure themselves jobs, wealth, and power – especially from the state. He says, “It’s almost as if the primary role of the administrative state is shifting from serving the people to the redistribution of wealth to the staffers, lawyers, PR companies, managers and consultancy firms that work in them, or for them.”For Mclauchlan, the PMC are somewhat disingenuous in their politics: “Its members occupy privileged positions in a wildly unequal society while presenting themselves as outsiders and critics. But they employ forms of activism or protest that don’t really change anything.” Elsewhere he lampoons the posturing PMC political activists: “It’s nice to be rich but even nicer to be rich while pretending you hate the rich, that you’re a member of the #resistance, bravely fighting against them.”We now have a highly dysfunctional situation according to Mclauchlan, in which the state has been captured by this liberal middle class elite. And because they are more interested in “communication” than delivery of reforms, not much actually gets done under the current government. He complains that Jacinda Ardern’s administration, and its public service is more interested in symbols than their constituents: “Previous Labour governments built schools, hospitals, public transportation networks, entire suburbs. Why can’t they?” To Mclauchlan, they’re just not interested. Their own material interests aren’t about serving the public, but in just building more bureaucracy.Jacinda Ardern’s Government – and even her Parliament – have been rightly feted around the world for reflecting a more modern New Zealand society. For example, 50% of the Parliament is now female.Unfortunately, this increasing demographic diversity does not extend to socioeconomics. Parliament is now almost completely dominated by professionals. Our MPs are firmly drawn from the PMC. For example, lawyers make up the largest occupational background in Parliament. Unsurprisingly, therefore Labour politicians are less focused on progressing traditional leftwing concerns such as poverty, housing, and inequality.

The future of the Professional Managerial Class

Barbara Ehrenreich wasn’t entirely dismissive of the PMC as a progressive political force. She believed there was a chance that professionals might unite with the working class to be a force of real transformation.After all, Ehrenreich herself freely admitted to being a member of the PMC. But that didn’t stop her orientating to the working class in her work. For example, in her most famous book, the best-selling 2001 publication “Nickel and Dimed: On (not) Getting by in Low-wage America”, Ehrenreich went undercover and worked for two years in low-paid jobs to see what life was really like for most Americans.It’s also worth noting that members of the PMC are increasingly being proletarianised in New Zealand – they are having to work for less and less remuneration and worse conditions. Even in places like universities, the pay and conditions are not what they used to be.The point is that much of the professional managerial class in this country chooses to side with the Establishment, and to focus mainly on social liberal concerns that are very compatible with the status quo. They continue to either ignore or work against the interests of the majority of working people.But it doesn’t have to be that way, those in the professions can drop their elitist orientations and culturally-focused politics. There’s no reason why we can’t have a new politics that focuses on fixing things for ordinary people, and genuinely speaking truth to power. The current state of inequality, housing, education, and healthcare demands this.

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