29 June 2006

France 1, NZ 0

According to a World Bank-sponsored survey
of business regulation, New Zealand has among the least restrictive labour laws in the world (despite what employers say). France, by contrast, has relatively rigid labour-market regulations. You may recall recent protests there when the French Government tried to introduce a law that would permit young employees, in the first 2 years into a job, to be dismissed without cause or explanation. This kind of relaxation of regulations is thought to help reduce unemployment (specifically for youth, in this case) by making employment more flexible and cost-effective. The downside is that employment security is reduced.

Current policy dogma is that labour-market deregulation is a good thing. However, it is worth looking at some of the effects of deregulation in the context of international trade. The following example is from a recent article by Alain Supiot. (If you want, you can go to the complete article in NLR 39. Or I can email you the full text in pdf.)

“Contrary to the dogma of the labour-market deregulators, unemployment levels in any given country depend far more on the organization of international trade and on company law than on local labour legislation. The notion that a reform of the labour law will create jobs is an illusion: the complete abrogation of all regulatory norms applicable to wage labour would have scant impact on unemployment. Witness the situation of the self-employed, excluded from wage-labour regulations, but subject to those of international trade. A typical instance of self-employment is the food and agriculture sector, which switched almost overnight from the ‘archaic’ pattern of peasant smallholdings to an ultramodern model, integrated within international production and distribution networks. A part of this sector lives off the Common Agricultural Policy (another neglected aspect of employment law), but other farm businesses receive no subsidy at all. This is the case, for example, with the battery-farming of poultry, which has been intensively developed since the early 1980s. The method is industrial (25 birds per square metre, massive reliance on antibiotics, etc), the product is tasteless, and the pollution is huge (ground-water poisoned by nitrates), but the—apparent—costs are low. The system is organized into networks on the basis of bilateral contracts signed between the food giants that dominate the world market and the breeders whom they control, from one end of the production chain to the other. This is the sort of ‘social paradise’ of which the advocates of labour deregulation dream: no minimum wage, no limit to the working day, no right to strike, no collective agreements.

“The evolution of such a sector offers a concrete example of the impact on employment were labour regulations to be completely abolished. The battery-chicken industry initially underwent a period of vertiginous growth, exporting within Europe and beyond; the number of poultry farmers rose accordingly. Before long, the food corporations moved into developing countries where costs were lower (Brazil, Thailand, China) and began to re-import products from there into Europe, thus exerting pressures for increased productivity and lower margins on the European breeders. In terms of jobs, however, the most destructive effects of the free circulation of frozen chickens were felt in Africa. Here, poultry markets had been shielded from excessive competition by the 1975 Lomé Accords, signed between the eu and the acp countries (Africa, the Caribbean and the Pacific). Thus protected, a small cottage industry of quality poultry, sold live, had begun to flourish.

“These protections were removed in 2000 under the Cotonou Accords, in compliance with WTO rules, opening the floodgates to the mass importation of frozen chicken pieces of the kind scorned by northern consumers (necks, wings, parson’s nose). Sold for next to nothing and in poor sanitary conditions thanks to the rupturing of the ‘cold chain’, these imports were mere surplus profit for the multinationals, whose trade in ‘choice cuts’ for the north yielded huge returns; but their effect was to wipe out the local industry. Ruined poultry farmers swelled the stream of African workers compelled to emigrate by the breakdown of local economies. In Europe, the avalanche of ‘choice cuts’ of frozen chicken from Thailand or Brazil threw Breton poultry farming into crisis, as profit margins shrank and more jobs were lost. Predicated on the excessively low cost of transport—itself a function of the deregulation of maritime labour—the globalization of the poultry circuit also increased the chance of a major health disaster, by ‘globalizing’ the risk of avian flu.”

22 June 2006

144721 Essay 2

Some of you may already have given thought to the document that you might use as a subject for assignment 2. A good place to start looking is the Beehive website, or the websites of policy ministries. I can help you find a specific example if need be, but here are some general guidelines. Clearly it will need to be a document that concerns issues that are of intellectual interest to you personally and that have wide ramifications for an analysis from the perspective of political economy. You will need to read around the subject so that you can form your own analysis. Be careful about choosing policy work in which you may have a personal involvement or responsibility. While you may know a lot about it as an 'insider', sometimes this has the disadvantage of making your analysis too one-sided, or distracting you from the importance of the wider international literature on the topic. Please contact me if you need assistance with this.
As a matter that is perhaps more relevant to 144724, I thought I would invite comments on this question: Should the Minister of Energy have resigned (as called for by the Opposition) over the recent power blackout in Auckland?

15 June 2006

144721 Essays

I have marked most of the 721 essays. There are some very good evidence-based analyses of diverse countries, all which of which were interesting. There seems to be a general lack of engagement with theory and models of political economy (which really is the core of this course!) What I find often puzzling about these courses is that we give you a healthy selection of study-guide readings that the course controller believes are relevant to the assignments, and most students don’t use them in their assignments. If you’re reading this blog and you can think of a reason why this is so, please note that you can leave anonymous comments on here (click on 'comments' below and click the 'anonymous' button), so feedback would not be able to count against you.
Anyway, while the study guide is by no means the definitive collection of works on this subject, and your own library searching and reading are also vital to success, I should also reiterate that, at postgrad level, one does expect to see evidence that you have read and learnt about something from reliable sources (and, as I said earlier, Wikipedia is not all that reliable!). You should also be able to judge just what kind of case can validly be based upon the reading and evidence that you have dredged up. This expectation must be met in future assignments.

08 June 2006


Today is Monetary Policy Statement (MPS) day. The Governor of the Reserve Bank has announced that the official cash rate (OCR) will remain steady at 7.25%. The topic of money and monetary policy will be raised at the next 721 contact course, in case you’re not sure what that means and why it’s so important. In the meantime, you may like to look at the MPS (downloadable from the RBNZ website). It gives a good oversight of the state of the NZ economy.
But there are other sources of such useful national contextual information too. See, for example, the Treasury’s Economic and Financial Overview, or the National Bank’s New Zealand Limited which is written like a corporate annual report, with a balance sheet and performance statements (though the 2005 report is getting out of date now). And in case you think that this is too much emphasis on money and the economy, for social indicators you should look at the Ministry of Social Development’s Social Report. These kinds of documents give you credible contextual statistical information and commentary, usable as evidence. And evidence is good thing.

01 June 2006

The State as arbiter of taste

You may have heard on the news about Creative New Zealand’s recently commissioned report on its support for the ‘et al’ installation as its entry in the Venice Biennale 2005. Creative NZ is the government’s main arts funding body, and this was its 3rd entry to the Biennale. The Venice Biennale is easily the world’s most significant international art exhibition. Et al is an anonymous artist (though it’s now well known who she is) and her installation caused a great deal of controversy. Why should the government have spent $500,000 on this? And is it the best use of scarce arts funding? The report mentioned above generally endorses the involvement of Creative NZ, and the presence of an NZ pavilion, at the Biennale. It does, however, recommend that more be done to proactively manage media and political reaction to the choice of artist. The negative publicity was not helped by ‘et al’ choosing to remain anonymous and hence refusing to talk to the media. Having attended the Biennale 2005 myself and seen the et al installation, I’d have to say that I did not particularly like it, nor did I find it intellectually challenging – though I don’t mind if Creative NZ takes a risk or two. Nonetheless, the whole issue highlights some interesting public policy questions. How do we ‘value’ the arts and their role in social and economic life? How does an agency of the state decide, on behalf of the taxpayer, who is to be shown at an event like the Biennale? Is the state effectively acting as an arbiter of taste on behalf of the rest of us? I am reminded of Pierre Bourdieu’s famous dictum: ‘Taste classifies, and it classifies the classifier’. Perhaps I’ll explain that another time, though.