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English-on-line November 17th

English-on-line spent a day or two glued to CNN watching the best of the best a political junkie could ever wish for. Politicians who don’t like elections aren’t really politicians. You see elections reaffirm for us politicians that we do matter after all.

What if Richard Nixon had beaten John Kennedy in 1960. Would man have ever got to the moon, would we have had Watergate sooner, or would we all have gone up in smoke as the Russians made their first strike from Cuba?

Now Gore and Bush are somewhat less millennial characters, but who knows what turn of history hangs on a few votes in Palm Beach. But the vote counting has crowded out the question which will get asked if Bush wins - why did Al Gore come anywhere near losing this election ?

Household incomes had reached an all time high, unemployment an all time low, and violent crime was at the lowest level in decades. A group of American academics have put together models for forecasting election results based on economic indicators. The models are based on every election since 1948, using measures of actual and perceived economic performance. In recent elections, they have beaten the exit polls for accuracy. These models have been forecasting a big Gore win all year.

A finance spokesman gets anxious when it’s not “the economy stupid”. When the economy is so good, why does no-one care, why aren’t they fired up about fiscal balances and growth rates, and voting for more and better?

English-on-line went looking for other apparently more important themes, and he found God.

God hangs over this election in a way that’s unimaginable in New Zealand. The candidates have talked frequently about God and faith and religion. Al Gore talks about his “quiet moments of prayer”. Bush says “sometimes our greatest hope is not found in reform but in redemption”.

One reason God hung over the election is Bill Clinton. Clinton regularly did the sweaty southern preacher bit, clutching his Bible as the cameras followed the shadow of his latest scandal with him into church.

English-on-line theorises Gore did badly because the Republicans drew him into contesting the moral high ground over Clinton’s character. Despite their bafflement at Clinton’s stupidity, time and again the American public took the view that it did not compromise his ability to be a competent President.

Gore could have gone with the common man, but he didn’t. He appeared to accept the view that the Democrats' cause was wounded by Clinton’s behaviour. He proved how worried he was about it when he took on Lieberman as his candidate – upright, principled, openly devout in his religion. He had been the strongest of Clinton’s denouncers among Democrats. It was a transparent attempt to contest the moral high ground, to add unimpeachable integrity to the Gore ticket. Gore spent all his time trying to prove he wasn’t Clinton, instead of talking about Clinton’s achievements as if they were his and America’s achievements.

Gore made Bush look like a more genuine guy, a more sincere believer, and a less ambiguous person. How did Bush get away with lines like “When I act, you will know my reasons, when I speak you will know my heart”?

Gore may yet win of course, but it should have been beyond doubt. Either the conservatives were right and Clinton’s behaviour mattered in the end, or Al Gore misjudged the American public who marked him down because he thought it mattered too much.


Superannuation

Self interest is a marvellous thing. One day as english-on-line sat through another discussion about the tidal wave of aged people set to engulf the country, a light went on. These aged people of the future that everyone is worried about are already here - they’re “us”. The problem isn’t today’s older people. It starts with the baby boomers, a generation with demographic attention deficit disorder, but the cost really bites when retirement gets to “us”, the under 40’s.

Superannuation debate regularly stands in the swamp of a history most people have forgotten or detail they don’t care about. So the Government’s superfund sounds simple.

The proposition is that the government puts $2.0 billion per year from its surpluses into a government fund, so the government can guarantee a pension at 65% of the average wage to everyone for the next 60 to 80 years. This means everyone has certainty and security.

It’s an elegant proposition, but is it realistic? Let’s go back to some basics. Nicholas Barr is a longstanding commentator on pension issues:

Given the deficiencies of storing current production, the only way forward is through claims on future production. What matters, therefore is the level of output after I have retired. The point is central: pensioners are not interested in money (i.e. coloured bits of paper with portraits of national heroes on them), but in consumption – food, clothing, heating, medical services, seats at football matches, and so on. Money is irrelevant unless the production is there for pensioners to buy.
[Ref: IMF Working Paper, Reforming Pensions: Myths, Truths and Policy Choices – Nicholas Barr]

Bad things can happen to money, like inflation. Or the assets bought with savings lose their value because everyone is selling at the same time to finance their pension.

Susan St John, writing in the Independent asks the right questions about the superfund.

Will it create more resources for an ageing population? If not, will it matter a jot that we take the dollars out of the pot called “the fund” instead of the pot called “taxes”? Are we in danger of being seduced by a crude cargo cult mentality?

The scheme smoothes out the rise in costs and superannuation – no more or less. It doesn’t reduce the cost, or provide more resources. Dr Cullen calls it a tax smoothing scheme. The costs of paying everyone over 65 at current rates will still rise from about 4% of GDP now to about 9% in 2050. The superfund means the costs to the taxpayer start rising sooner, and therefore at a slower rate. The planned contributions are about $2 billion a year in the next decade, paid in from surpluses.

The Cullen Scheme represents the single most significant fiscal choice for government in New Zealand for the next generation. We need to know what it is we are trading away.

Treasury put it like this in the Cabinet paper written for Dr Cullen.

In making the contribution to retirement income policy more certain, prefunding would shift fiscal risks onto other spending policies. This would mean that other policies would bear both a greater proportion of the risk of variability in tax revenue and fiscal demands due to economic shocks, and the residual risk arising from the variability in investment returns on the fund. I see this as an essential element of establishing the appropriate priority of a long-term and stable retirement income policy relative to other spending policies.
[Ref: Prefunding New Zealand Superannuation: Funding Arrangements – Hon Dr Michael Cullen, Minister of Finance]

So the Government has made a huge decision with no-one noticing – the top priority for spending for the next 40 years is the superfund, even to the point where there will be less education say, if the returns on our investment in the US share market are lower than Treasury’s guess.

English-on-line is bemused that the people who used to be so interested in where taxpayers’ money went seem to have vacated the debate totally. If the money goes on super it can’t go on other things like the widows’ benefit, schools or hospitals, or alleviating poverty.

The last issue in particular is of interest. The 90’s saw a burst of advocates for the powerless, voices for the voiceless, prophets of social justice. As minister, english-on-line met a good few of them, and was often convinced of their sincerity and integrity.

Now one of their consistent themes was poverty. Income related rents mean that about one in five beneficiaries are a bit better off if they happen to find themselves in a state owned house. Four out of five of New Zealand’s poorest people still wear National’s benefit cuts in 1991. In fact higher food and petrol prices this year are pushing them to the foodbanks in record numbers as Christmas approaches, much to the discomfort of “Soup Kitchen Steve” Maharey.

Those cuts could be restored for a lot less than the $2 billion Labour proposes to put into the superfund. Labour’s policy is to lock in Ruth Richardson’s benefit cuts, and put their spare money into a fund for pensions in 30 years' time. Poverty now apparently has the full support of mainline churches, unions and beneficiary groups, because it’s less important than getting Labour re-elected. Any sightings of comment on injustice and poverty from such should be reported, lest these aspersions are cast undeservedly.

It looks like the principled articulate left has packed it in, but english-on-line believes we can rely on the nurses and teachers to make sure the priorities are debated.

In any case a lot will change in the next 40 years. The experience of ageing will be more positive, not only because so many people will be sharing the experience but also because older people will be needed. English-on-line was struck by a discussion with a 65 year old man he met cleaning hotel rooms in Queenstown. He starts when he likes, takes his time and meets a lot of people. It looks good. Len Bayliss, no longer a spring chicken himself, says there will be a lot of this, and he has advocated a system where the pension payable depends on when you retire. Actuaries tell me that every year of delayed eligibility could push a pension up by 4 or 5%.


The ALL BLACKS in Passchendaele

English-on-line is a more than occasional rugby analyst, and a somewhat inconsistent student of New Zealand’s history. He knows something is going on when he sees on the front page of the paper Jonah Lomu, head bowed respectfully over the graves of New Zealanders in Passchendaele. When the rap generation meets the First World War, something exciting and interesting is developing in our national character. It's hard to put a finger on though.

English-on-line confesses to having to look up the details of the battles at Passchendaele, and then finding it a deeply affecting story. The battlefield is near Ypres in Belgium. It is described as undulating pastureland reclaimed from swamp. The water table was near the surface and shellfire destroyed the drainage system so it was a field of mud. 1179 New Zealanders fell in two battles in 1917. Here are some accounts of what it was like:

“Hun machine gunners, protected in concrete pill boxes during the bombardment, came out with their machine guns after our barrage passed on and shot down our men while still struggling to get through and over the mud and wire.”

“There was a flat muddy bog in front of our trenches and the ground sloped uphill to some pill boxes which completely dominated the position; as our shell fire had not reached these concrete shelters or the barbed wire entanglements, what chance had our infantry to get out of that mud and climb that bare hill against machine gun fire? It was just pure murder.”
[Ref: Glyn Harper, Massacre at Passchendaele p.89, p.83]

The Germans apparently were well aware of all the British plans. They pulled back, enticing the British forward onto the marshland, then arranged their barbed wire to draw the British into killing zones swept by machine guns and targeted by artillery. They also used mustard gas extensively.

The Anzacs were ordered to take Passchendaele in appalling conditions. Half a million lives were lost for a useless strategic victory. 45,000 bodies were never recovered, blown to bits, or drowned in the stinking mud, exhausted or wounded.

We seem always to have been able to talk about Gallipoli, while Passchendaele has been like some horrible rumour in our history. Perhaps that is because it is a story of total annihilation – shooting, shelling, suffocating, burning, drowning.

What we saw with Jonah and Anton Oliver was a bit more than good theatre. It’s a story that induces silence – what do you say when confronted with obliteration? For once the inarticulate New Zealand male response seemed the right one. And it is the New Zealand way to do it in a team.

English-on-line is pleased Anton Oliver and Jonah Lomu didn’t try to talk about it. Beneath the gravestones, and beneath the paddocks lay normal ordinary men who had “died in Hell” as Siegfried Sassoon wrote. A politician’s words wouldn’t work, and our modern gladiators were true representatives.

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