The Kākā by Bernard Hickey
The Kākā by Bernard Hickey
Matariki special interview: Danyl McLauchlan on our captured state

Matariki special interview: Danyl McLauchlan on our captured state

In which Bernard Hickey talks with Listener columnist and political thinker Danyl McLauchlan about PM Chris Hipkins' decision to rule out a wealth or capital gains tax in his political lifetime too
The government received Treasury advice on wealth taxes and Robertson has been open about seeing merit in a capital gains tax, but Hipkins has now ruled out bringing in them. Photo: Lynn Grieveson / The Kākā

TL;DR: This week’s decision by PM Chris Hipkins to give up on reforming the taxation of capital gains or wealth begged the question for many of: what is the point of politics anymore if you can’t seem to change an obviously wrong policy?

Listener columnist and political thinker Danyl McLauchlan has written extensively about how modern politics has created a type of administrative and captured state where voters don’t get to debate big ideas or enact large change any more, but are instead corralled by a range of forces into choosing political managers of the status quo where the real power is with unelected officials.

Here’s a few lightly edited excerpts in text form for those allergic to the audio thing, or just plain time poor, but the full interview is available for all above as well. I’ve opened this up immediately for the public, given the public interest involved. Thanks again to our paying subscribers. We welcome lots of new ones. ;)

Quotes from the conversation

Danyl McLauchlan being interviewed, in front of a lot of books.

On Hipkins’ decision

My reaction was just one of the sort of standard cynicism that, you know, it's a sort of continuation of Jacinda Ardern's decision. But Ardern was quite constrained at the time. She had New Zealand First as a coalition partner. You could kind of see why she said that. And I think that Hipkins’ situation is quite different.

They have this majority but they haven't really done that much with it. They must be thinking a little bit about that. And if they do lose the election, people will ask this question: what was your government for? And they can kind of say Covid, but it's hard to say. More than that, the wealth tax is reasonably popular.

On where ideas get debated now

David Parker and Grant Robertson could quite reasonably say we're a left wing party, we're a Labour party. It's kind of ridiculous that we're taking more and more tax off labour and none at all off capital. That just seems at odds with everything we stand for.

And so Christopher Hipkins has come along and said, actually, we don't really stand for anything other than being in power, so we're just not gonna do that either. It's kind of interesting to me that these ideological battles are happening within the parties rather than between the parties at this stage.

On the difficulty of taking money from some to give to others

That phenomenon you're talking about is loss aversion. That’s something that comes up a lot in cognitive psychology, that people are really strongly motivated by the idea that they might lose something. And so it messes up our cost benefit calculations.

On what sitting on the cross benches might mean

I imagine that you would say, we're gonna support you on confidence and supply or we're gonna sit down at every budget and make a deal about supporting you and everything else that you want to pass. That's just something that you negotiate with us and you'll give us something. And that would be an incredibly difficult way to govern, especially if you're having to do it with the Greens and Te Pāti Māori at the same time.

That would just be really hard work. can't quite imagine what that government would look like. I suspect Labour would do just about anything to avoid being in that position. Cause you just need to pass so much legislation just on a day-to-day basis to keep the country running.

And if you're having to sit down and hammer something out and give something away every single time, that would just be really difficult.

On bureaucrats and the ‘captured’ state

They do seem to have tremendous power and influence, especially over spending and procurement, the types of things that this government especially is spending money on. This frustrates the government itself. They kind of don't know why allocating money for mental health, for example, is just not going anywhere or doing anything.

The Infrastructure Commission came out with a report recently into why that was and they said it was because the officials driving that just didn't really know what they were doing. So they just kind of wasted lots of money and, and didn't deliver anything, which is amazing.

It's an amazing challenge to the left because if you kind of think, we need state capacity and we just need to tax the wealthy more that will kind of overcome neoliberal austerity and we'll be living in a better society.

The idea that you could do all of that and just still not be delivering anything to the public because the officials in charge of it don’t know what they're doing is quite a big challenge to that project.

Ka kite ano



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The Kākā by Bernard Hickey
The Kākā by Bernard Hickey
Bernard Hickey and friends explore the political economy together.