Pacific Media Watch

Philip Jacobson, an award-winning editor for the non-profit environmental science news outlet Mongabay, has been arrested for an alleged visa violation in Palangkaraya, Central Kalimantan, after being put under city arrest for a month.

Jacobson, 30, was first detained on 17 December 2019 after attending a hearing between the Central Kalimantan parliament and the local chapter of the Indigenous Peoples Alliance of the Archipelago (AMAN), Indonesia’s largest indigenous rights advocacy group.

He had travelled to the city shortly after entering Indonesia on a business visa for a series of meetings.

READ MORE: Mongabay environmental headlines

The day he was due to leave, immigration authorities seized his passport, interrogated him for four hours and ordered him to remain in the city pending their investigation.

On January 21, more than a month later, Jacobson was formally arrested and taken into custody. He was informed that he faces charges of violating the 2011 immigration law and a prison sentence of up to five years.

He is now being held at a prison in Palangkaraya.

“We are supporting Philip in this on-going case and making every effort to comply with Indonesia’s immigration authorities,” said Mongabay founder and CEO Rhett A. Butler.

‘Punitive action’
“I am surprised that immigration officials have taken such punitive action against Philip for what is an administrative matter.”

Jacobson’s arrest comes shortly after Human Rights Watch issued a report documenting rising violence against activists and environmentalists in Indonesia, and amid a growing sense that critical voices are being suppressed.

“Journalists and people employed by journalism organisations should be free to work in Indonesia without fear of arbitrary detention,” said Andreas Harsono of Human Rights Watch, who knows Jacobson and understands his case.

“Philip Jacobson’s treatment is a worrying sign that the government is cracking down on the kind of work that is essential to the health of Indonesian democracy.”

Last month, the Indonesian Alliance of Independent Journalists (AJI) issued a report documenting 53 incidents of abuse against journalists – including five criminal cases – in 2019.

Article by AsiaPacificReport.nz

Pacific Media Watch Newsdesk

Two journalists from Timor-Leste will benefit from the Balibo Five-Roger East Fellowship in 2018, an initiative of the Media, Entertainment and Arts Alliance and Union Aid Abroad-APHEDA.

They were chosen from four outstanding applications assessed by a selection panel in Australia, the MEAA says in a statement.

The next recipients of funding from the fellowship, which aims to nurture the development of journalism in East Timor are:

• Maria Pricilia Fonseca Xavier, a journalist and news broadcaster in Tétum and Portuguese at Timor-Leste Television (TVTL).

• Augusto Sarmento Dos Reis, senior sports journalist and online co-ordinator at the Timor Post daily newspaper and diariutimorpost.tl website.

The Balibo Five-Roger East Fellowship has been established to honour the memory of the six Australian journalists murdered in East Timor in 1975, and to improve the quality and skill of journalism in East Timor.

-Partners-

The applications were assessed by a panel of MEAA communications director Mark Phillips; Union Aid Abroad-APHEDA organiser trade union development and education for Timor-Leste and Indonesia, Samantha Bond; senior lecturer in journalism at Charles Sturt University, Bathurst, Jock Cheetham; and former television journalist and newsreader Mal Walden, who was a colleague of three of the Balibo Five.

Funding for projects
The successful applicants will be provided with funding to assist them with specific journalism projects in Timor. It is anticipated that each will also be offered the opportunity to travel to Australia in 2018 to spend some time observing and working in an Australian newsroom.

MEAA chief executive Paul Murphy said all the applications were again of a high quality and representative of the diversity of journalism in East Timor.

“We are well aware that is not easy to work as a journalist in Timor-Leste, and journalists face many hurdles, including a lack of resources and training, and attacks from the government on press freedom,” he said.

“But we are delighted that the successful applicants represent both print/online and broadcast media, and there is a balance between genders.

“Both Pricilia and Augusto are young journalists with impressive track records and a thirst to succeed in their chosen profession.”

Kate Lee, executive director of Union Aid Abroad-Apheda, said: “We are delighted to again be able to partner with the Media Entertainment and Arts Alliance to support the development of independent journalism in Timor Leste through the Balibo Five-Roger East Fellowship and look forward to seeing some great investigative work from Pricilia and Augusto in 2018”

Funding for the Balibo Five-Roger East Fellowship has come from MEAA, the Fairfax Media More Than Words workplace giving programme, and private donations.

40th anniversary
The fellowship was established on the 40th anniversary of the murders of the Balibo Five in 1975.

Last year, four journalists successfully applied for funding from the fellowship, while separately the fellowship assisted Timorese journalist Raimundos Oki to spend a week with Fairfax Media in Sydney in September.

The fellowship carries the names of six journalists who were murdered by Indonesian forces in East Timor in 1975.

Five young journalists working for Australia’s Seven and Nine networks – reporter Greg Shackleton, camera operator Gary Cunningham, sound recordist Tony Stewart (all from Seven), reporter Malcolm Rennie and camera operator Brian Peters (both from Nine) – were killed in the village of Balibo after witnessing an incursion by Indonesian soldiers on October 16, 1975. Their killers have never been brought to justice.

Freelance reporter Roger East, a stringer for the ABC and AAP who provided the first confirmed accounts of the killing of the Balibo Five, was executed by Indonesian troops on Dili Wharf on December 8. His body fell into the sea and was never recovered.

A media release from MEAA and APHEDA.

Article by AsiaPacificReport.nz

There’s an overlooked aspect of the New Zealand Defence Force’s account of Operation Burnham that when scrutinised suggests a possible breach of international humanitarian law and laws relating to war and armed conflict occurred on August 22, 2010 in the Tirgiran Valley, Baghlan province, Afghanistan.

According to New Zealand Defence Force’s official statements Operation Burnham ‘aimed to detain Taliban insurgent leaders who were threatening the security and stability of Bamyan Province and to disrupt their operational network’. (ref. NZDF rebuttal) We are to understand Operation Burnham’s objective was to identify, capture, or kill (should this be justified under NZDF rules of engagement), those insurgents who were named on a Joint Prioritized Effects List (JPEL) that NZDF intelligence suggested were responsible for the death of NZDF soldier Lieutenant Tim O’Donnell.

When delivering NZDF’s official account of Operation Burnham before media, Lieutenant General Tim Keating said:

“After the attack on the New Zealand Provincial Reconstruction Team (NZPRT), which killed Lieutenant Tim O’Donnell, the NZPRT operating in Bamyan Province did everything it could to reduce the target profile of our people operating up the Shakera Valley and into the north-east of Bamyan Province. “We adjusted our routine, reduced movements to an absolute minimum, maximised night driving, and minimised time on site in threat areas. “The one thing the PRT [NZPRT] couldn’t do was to have an effect on the individuals that attacked Lieutenant O’Donnell’s patrol. For the first time, the insurgents had a major success — and they were well positioned to do so again.”

For the purpose of a counter-strike, intelligence was sought and Lt. General Keating said: “We knew in a matter of days from local and International Security Assistance Force (ISAF) intelligence who had attacked our patrol [where and when Lt. O’Donnell was killed].” The intelligence specified the villages where the alleged insurgents were suspected of coming from and Lt. General Keating said: “This group had previously attacked Afghan Security Forces and elements of the German and Hungarian PRTs.” The New Zealand Government authorised permission for the Kabul-based NZSAS troops to be used in Operation Burnham. “What followed was 14 days of reliable and corroborated intelligence collection that provided confirmation and justification for subsequent actions. Based on the intelligence, deliberate and detailed planning was conducted,” Lt. General Keating said. Revenge, Keating said, was never a motivation. Rather, according to him, the concern was for the security of New Zealand’s reconstruction and security efforts in Bamyan province. As stated above, Operation Burnham’s primary objective was to identify, capture or kill Taliban insurgent leaders named in the intelligence data. We know, from the New Zealand Defence Force’s own account, Operation Burnham failed to achieve that goal.

Analysis of the NZDF Official Account The official account of events that occurred in the early hours of August 22, 2010, describe how Taliban insurgents, realising coalition forces were preparing to raid the area (marked as ‘Operation Burnham Area of Operation’ in a map (slide 3) declasified and released to media on March 27, 2017), formed a tactical maneuver using civilians (women, children and elderly) as a human shield.

Despite the official account placing this group within a building, within a small hamlet, within the area of operation, within Tirgiran Valley, there is no clear definitive official account yet given of what happened to either the civilians or the insurgents.

This appears to be an obvious void in the official record, but one that has failed so far to be scrutinised.

To follow the logic of Lt. General Tim Keating’s account (detailed below), is to discover our defence personnel, who were in charge of the ground and air operation during Operation Burnham, failed to identify what had become of those civilians (women, children, and the elderly), and also importantly the suspected insurgents who Lt. General Keating said during his briefing used the villagers as a human shield.

We know from the Chief of Defence Force’s notes as provided on March 27, 2017, that as Operation Burnham began, NZDF was in command of United States manned aircraft (including helicopters and possibly a AC-130). The aircraft were swarming above the Tirgiran Valley.

From the NZDF account an NZDF joint terminal air controller was in charge of the air attack against those NZDF had defined as insurgents. Lt. General Keating stated the alleged insurgents were armed and a NZDF commander authorised the US manned aircraft to commence firing.

Weapons-fire then began to rain down on the valley from above. Meanwhile NZSAS ground force soldiers prepared to secure their positions and to defend themselves against any potential enemy counter-attack.

Lt. General Keating stated the insurgents responded: “The insurgents, the guerrilla force, the tactic is mixed in with the civilian population, if you like, the term used is a human shield. So they use civilians as a shield.”

He added: “What occurred, is a helicopter was engaging a group of insurgents outside the village, on the outskirts of the village. During that engagement, it was noted by the ground forces there – the SAS ground forces – that some of the rounds [from the US manned aircraft] were falling short, and went into a building where it was believed there were civilians as well as armed insurgents.”

To be clear, from this account, Lt. General Keating stated a group of insurgents were being tracked, targeted, and fired upon by the US manned aircraft and under the command of a New Zealand Defence Force terminal air controller. Meanwhile, according to the NZDF record, one of the airborne helicopter’s weapon’s sights were not calibrated correctly, and, according to Lt. General Keating, 30mm projectiles went into a building where it was believed there were civilians as well as armed insurgents – remember these 30mm projectiles are capable of penetrating the side of a tank.

For accuracy, Lt. General Keating restated his account: “It is noted, the building, there were armed insurgents in there, but it is believed that there may have been civilians in the building.”

He then added: “There’s no confirmation that any casualties occurred, but there may have been.” He restated again: “There were civilians in that building.” Now, this is where the Chief of Defence Force’s account fails to further explain what occurred after that point. To summarise, the official position of the New Zealand Defence Force is:

• There were civilians in a building within the village that was fired upon by an armor piercing aircraft weapon
• That it was believed insurgents were also in that building
• That civilian casualties or deaths “may have been” or occurred inside the building.

At this juncture, we must consider whether the New Zealand Defence Force ground commanders had a responsibility to determine whether there were Taliban insurgents in the building?

And if so, whether they were the individuals listed on the JPEL list, those deemed responsible for the death of Lieutenant Tim O’Donnell?

And what of the ground commanders’ legal requirements, the duty of care with respect to civilians, were NZDF commanders on the ground or back in Kabul compelled by law to confirm the status of the civilians, whether they were injured or killed?

When asked by a journalist at the March 27, 2017 press conference: ‘If there may have been civilian casualties, why not have an inquiry to find out?’ Lt. General Keating replied: “Even if there was, as far as the New Zealand Defence Force has heard, the coalition investigation has, um, said that uh, if there were casualties, the fault of those casualties was a mechanical failure of a piece of equipment.” This reply does not appear to consider the legal requirements under:

• Second Protocol to the Geneva Convention Relating to the Protection of Victims of Non-International Armed Conflicts, Article 7: the obligation to provide medical assistance to all wounded, whether or not they have taken part in the armed conflict
• Second Protocol to the Geneva Convention Relating to the Protection of Victims of Non-International Armed Conflicts, Article 8: the obligation to search for and collect the wounded and to ensure their adequate care
• Second Protocol to the Geneva Convention Relating to the Protection of Victims of Non-International Armed Conflicts, Article 13: the obligation to protect the civilian population against dangers arising from military operations
• Armed Forces Discipline Act 1971, section 102. This section provides that the commanding officer of a person alleged to have committed an offence under that Act must initiate proceedings in the form of a charge or refer the allegation to civil authorities, unless the commanding officer considers the allegation is not well-founded. While little legal guidance is provided, it cannot be accepted that preliminary inquiries to determine whether an allegation is well-founded can be considered adequate where they fail to obtain evidence from the injured parties, determine their identities or even verify that they exist
• Rome Statute of the International Criminal Court, Article 28
• The NZDF Manual of Armed Forces Law provides that there are three types of inquiry in the NZDF: a preliminary inquiry, a court of inquiry and a command investigation. (It appears however the ISAF investigation cited by the Chief of Defence Force was not any of the above forms of inquiry).

Specifically, if you analyse Lt. General Keating’s account, the New Zealand Defence Force commanders failed to identify whether any insurgents were inside the building and whether there were dead or wounded civilians. Why was this the case? It seems reasonable to suggest, this is an abandonment of logic. It does not make sense.

We know from official NZDF documents the soldiers arrived at the scene of Operation Burnham at 0030 hours on August 22, 2010 and left at 0345 hours, that’s the official record. To clarify, the NZSAS commandos were in the area of operation for 3 hours 15 minutes.

Lt. General Keating stated, near the conclusion of the raid: “The ground force commander chose at that time that there was no longer a threat and they were leaving.”

How could that rationally be the case unless the suspected insurgents inside that building had been checked?

Was it not suspected that there were insurgents in that building? Surely the ground force commanders would be compelled to seek and identify the inhabitants of that building to see if they matched the names/descriptions on the JPEL list?

After all, the manhunt for Taliban leadership was the purpose of the raid that night. Also, logic would suggest, the people inside the building were in part civilians including women and probably children – by Lt. Keating’s account the group likely included wounded civilians and probably a dead child.

Also, it is reasonable to suggest, considering the events over those 3 hours 15 minutes, the survivors would have been crying, weeping, even howling, and the wounded would likely have been in agony.

It defies belief that the ground force commanders, and their counterparts back in Kabul, were not aware of this building, that the NZDF account states was housing suspected Taliban, and included a group of civilian victims that had been used as a human shield.

The entire area of operation specific to Operation Burnham is a skewed rectangle approximately 500 metres wide by 1 kilometre long, with an intensified operation plan focusing on two small hamlets, each approximately 50×200 metres in area [based on the scale measures of the NZDF map] – named Objective 1 and Objective 2 in the NZDF released material.

To state it simply, the official silence surrounding the above-mentioned building, and the fate of the people inside, speaks volumes. It leaves one to consider at worst whether a crime was committed by New Zealand Defence Force commanders that night – whether by failing in their duty to care for the injured they were in breach of Articles 8, 9 and 13 of the Second Protocol to the Geneva Conventions.

ADDITIONAL NOTE:
• The Statute of the International Criminal Court defines war crimes as, inter alia, “serious violations of the laws and customs applicable in international armed conflict” and “serious violations of the laws and customs applicable in an armed conflict not of an international character”. (Ref. IHL Definition of war crimes, page 1 (pdf) – ICC Statute, Article 8 (cited in Vol. II, Ch. 44, § 3))
• ‘The Statute defines as within the scope of the law, the “launching an attack without attempting to aim properly at a military target or in such a manner as to hit civilians without any thought or care as to the likely extent of death or injury amounts to an indiscriminate attack”.
• War crimes can consist of acts or omissions. Examples of the latter include failure to provide a fair trial and failure to provide food or necessary medical care to persons in the power of the adversary.’

At best, if NZDF’s official account is to be relied upon, we are to believe the NZSAS ground commanders failed to ensure the Taliban insurgents they sought were not holed up in a building that had sustained damage from coalition force aircraft. If this assumption is incorrect, at what point had the suspected insurgents left the building?

And what had become of the civilians that had been allegedly used as a human shield? Again, the vacuum of information specific to this aspect of the official account needs to be explained, including an explanation as to why NZDF’s account remains vague after six years since Operation Burnham was conducted.

It appears reasonable to assert that this single issue, notwithstanding the irregularities of official NZDF stated ‘facts’, warrants further official and independent investigation. As it is, at this juncture, we are left to consider a series of unanswered questions that to date the New Zealand Chief of Defence Force has failed to satisfy. Here are some of them. Key Unanswered Questions:

• What were the specific definitions of an insurgent that were used by NZDF for the purposes of evaluation during Operation Burnham and for the purpose of post-operation official analysis? For example; was it deemed that anyone who was male and of a fighting age was defined to be an insurgent?
• Were NZDF soldiers fired upon by individuals (villagers or insurgents) located within the confines of the villages or surrounding area during Operation Burnham?
• Was the individual who was killed by a NZSAS soldier or NZDF personnel carrying a weapon at the time of this shooting? If so, had he fired or attempted to fire his weapon in an attempt to kill or wound NZDF personnel?
• How long in minutes were the coalition forces’ helicopters, and any other airborne craft, firing their weapons on the villages and surrounding region during Operation Burnham?
• How long in minutes were NZSAS soldiers involved in securing the operational area from real or potential insurgent attack?
• Did NZDF personnel at anytime seek to identify individuals (and their status, injured, killed, or otherwise) who were located inside or near the building that Lt. General Keating said had suffered damage from an alleged mis-aimed firing from an airborne coalition aircraft?
• Were those who were injured or killed within sight of NZDF personnel before, during, and/or after the alleged mis-aimed firing?
• How many individuals did the NZDF personnel suspect were inside the building?
• How many of these people did the NZDF personnel suspect were civilians?
• How many were suspected of being women?
• How many were suspected of being children?
• Lt. General Keating suggested that one of the individuals that may have been killed during Operation Burnham was a six year-old child. What was the gender of this child?
• Was their any attempt to identify this six year-old victim?
• Was this child Fatima, the three year-old child identified in the Hit & Run [ISBN 978 0 947503 39 0] book? If not, then who was this child?
• What actions did NZDF personnel do to exercise their duty of care obligations to the injured and to civilians?
• What reports, cautions, evaluations were written and/or submitted regarding Operation Burnham to NZDF by the NZDF legal officer who was on the ground during Operation Burnham?

The Twisting Turning Official Account – Is This Smoke and Mirrors? As a consequence of the Hit & Run book [ISBN 978 0 947503 39 0] being published, New Zealand Defence Force’s top ranking soldier, Lt. General Tim Keating admitted civilians “may have been” killed during the operation.

Up until March 27, 2017, for the past six years, New Zealand Defence Force has insisted that no civilians were killed during Operation Burnham on August 22, 2010.

But on Monday, under questioning from the media, at the March 27 press conference, Lt. General Keating stated that the NZDF’s new “official line” regarding civilian deaths was “there may have been”. He then attempted to suggest that NZDF’s previously stated position – that claims of civilian deaths were “unfounded” – was basically the same thing. “I’m not going to get cute here and say it’s a twist on words, it’s the same thing, ‘unfounded’, ‘there may have been’. The official line is that there may have been casualties,” Lt. General Keating said.

A journalist then challenged him further suggesting: “They’re different things, one means they didn’t happen and one mean might’ve done.”

Lt. General Keating then replied: “You’re right…the, the, the official line is that civilian casualties may have occurred, but not corroborated.”

When asked how many insurgents were killed, Lt. General Keating replied: “A significant number of insurgents, identified insurgents, were killed during Operation Burnham.”

When asked again how many were killed, Lt. General Keating stated: “Nine.” When asked if NZDF had the names of the insurgents that were killed, he replied: “No, we do not have names of insurgents.”

This trajectory, inching toward a truth, occurred under tight questioning by a journalist, over just a few minutes.

What further truths will become relevant to understanding what occurred that night in Khak Khuday Dad and Naik villages should a commission of inquiry be established?

The Inconsistencies – A Summary

In evaluation, it is reasonable to assert the official Government inconsistencies observed along a six-year timeline offer the appearance of a military hierarchy that has being dragged, by degrees, (mainly by the work of Jon Stephenson, an investigative journalist specialising in war and conflict reportage) into an arena where the floodlight of public interest ought to shed light on secrets long since filed into a dark place.

However, considering the above, rather than responding openly to the challenge of meeting its responsibilities to the New Zealand Minister of Defence and public, the New Zealand Defence Force appears resistant to its obligations toward open and accurate disclosure of non-classified fact.

In conclusion, if this is true, this conduct exhibited by the officials of New Zealand Defence Force and its Chief Lt. General Tim Keating is hardly a defining benchmark of ‘exemplary’ standards.

Actually, the admissions of relevant information, that is forthcoming only when lanced from the New Zealand Defence Force under questioning, offers the impression of a smoke and mirrors operation – it may appear churlish to suggest, but perhaps the post-Operation Burnham aftermath ought to be referred to as Operation Desert Road (bleak, cold, inhospitable, proceed with caution).

The public deserves to know the whole truth, not spin or part-truths – both the public interest and the national interest depends on it.

By the New Zealand Defence Force’s own account, it appears reasonable to suggest that the commanders overseeing Operation Burnham had legal obligations to civilians; that they were potentially negligent when considered against their stated rules of engagement, rules of conduct, obligations to international human rights law and international humanitarian law – negligent of their obligations to laws covering war and armed conflict, notwithstanding their obligations as representatives of the people and Government of New Zealand to observe the Bill of Rights Act.

It is also reasonable to suggest; there are significant established facts as mentioned above, as put by the New Zealand Defence Force, that require an official investigative response from the New Zealand Government.

It is also reasonable to insist that the matter of an absence of consistent fact emitting from the New Zealand Defence Force upon which a reliable opinion can be draw, adds weight to the burden on the Government to establish an inquiry into this matter.

If the New Zealand Prime Minister Bill English elects not to act then it will likely become a matter of political leadership or lack thereof.

If Bill English does not care to act on his office’s public interest obligations, then, it is reasonable to suggest he consider the empirical facts underlying this matter and the impact the matter has on New Zealand’s national interest. Should he fail to do so, this matter potentially could be argued before the International Criminal Court.

“It seems to me,” Lt. General Tim Keating stressed, “that one of the fundamentals, a start point if you like, of any investigation into a crime is to tie the alleged perpetrators of a crime to the scene. Then we would examine the motive and means, and other scene evidence.” – Lieutenant General Tim Keating, March 27, 2017.

On Monday, March 27, 2017 both the Prime Minister Bill English and the Chief of New Zealand Defence Force Lieutenant General Tim Keating countered details revealed in the book Hit & Run and argued facts stated in the work could not be relied upon because the authors ‘incorrectly’ alleged Operation Burnham took place in Khak Khuday Dad Village and Naik Village deep in the mountainous Baghlan province of Afghanistan – two locations the Defence Force chief insisted his soldiers had never been to. Lt. General Keating asserted that the New Zealand Defence Force had never been to the two villages (Khak Khuday Dad and Naik) and insisted Operation Burnham took place 2.2 kilometres to the south of where the authors Nicky Hager and Jon Stephenson had marked the location of the villages (specifically on a map published in the book Hit & Run).

Lt. General Keating said: “As you will note from the book, the authors have been precise in locating these villages with geo reference points — so I have no doubt they are very accurate in the villages they are taking their allegations from.

“The villages lie in the Tirgiran Valley some 2 kilometres north from Tirgiran Village. In straight distance this is like comparing the distance from Te Papa to Wellington Hospital. However, if you overlay the elevated terrain, you will see we are talking about two very separated, distinct settlements,” Lt. General Keating said.

Beyond the obvious, it was a staggering claim, especially for those aware the New Zealand Defence Force had insisted one week prior, that its official position remained the same as stated in a media release dated April 20, 2011 that: “On 22 August 2010 New Zealand Defence Force (NZDF) elements, operating as part of a Coalition Force in Bamyan province, Afghanistan conducted an operation against an insurgent group.”

NZDF’s earlier position asserted New Zealand soldiers had not been in Baghlan province on or near August 22, 2010 the night of Operation Burnham. Now, the chief of New Zealand’s armed forces was admitting that they had.

At the press conference on Monday March 27, 2017 the Chief of New Zealand Defence Force prepared to stake his claim that the book could not be relied on as a factual reference.Before around 30 journalists, Lt. General Tim Keating pointed to four relevant bullet-points underlying key claims of fact in the book:

• Helicopter landing sites
• Location of houses that were destroyed
• Locations of where civilians were allegedly killed
• Presumed location of an SAS Sniper with evidence presented of SAS ammunition and water bottles which were found at the site.

A relationship was drawn between the Sniper location and the alleged killing of the individual Islamuddin, the School teacher. He acknowledged that the book contained a detailed list of those alleged to have been killed or wounded during a military operation in Khak Khuday Dad and Naik villages and a detailed list of the houses destroyed at the two locations.

Lt. General Keating then drove his point home that: “The underlying premise of the book is that New Zealand’s SAS soldiers conducted an operation on Khak Khuday Dad Village and Naik Village…” “It seems to me,” he stressed, “that one of the fundamentals, a start point if you like, of any investigation into a crime is to tie the alleged perpetrators of a crime to the scene. Then we would examine the motive and means, and other scene evidence.”

Lt. General Keating pivoted. “Let me now talk about the ISAF Operation Burnham in Tirgiran Village.” The premise of the Chief of Defence Force’s position was; the book Hit & Run described events that may or may not have occurred in Khak Khuday Dad and Naik villages, but that these alleged events had nothing to do with New Zealand Defence Force soldiers as they had never been to the two locations as marked in the book.

Likewise, the Prime Minister, Bill English, said the book got it wrong, that the New Zealand Defence Force had never been to either Khak Khuday Dad Village and Naik Village.

The Prime Minister added: “We believe in the integrity of the Defence Force more than a book that picks the wrong villages.”

For some, it appeared the raid that night as described by the authors could have been committed by another force. For others, it seemed the authors had got a major fact wrong so therefore the remaining claims in the book were moot.

By mid-Wednesday morning, the Government and the public found out there was more to it, that the Chief of New Zealand Defence Force was also wrong with regard to his geography.

Unpicking the official line began in earnest late on Tuesday night (March 28, 2017) when the lawyers representing the alleged victims of Operation Burnham contacted their clients back in Afghanistan. The purpose of the contact was to identify the exact location of Khak Khuday Dad Village and Naik Village; to confirm or otherwise disprove the existence of ‘Tirgiran Village’ (the NZDF stated official location of Operation Burnham), and to identify and confirm what village or villages are located at the exact co-ordinates as provided by Lt. General Tim Keating in his briefing to New Zealand media.

The lawyers’ clients, represented by a doctor from the region, stated categorically that ‘Tirgiran Village’ (as stated by Lt. General Keating) does not exist. That the region is known as Tirgiran Valley.

The lawyers evaluated from the new information, that to refer to the location of Operation Burnham as Tirgiran Village is like insisting an operation had occurred in Otago City (obviously Otago is a region and a city of that name does not exist, and as such would fail to offer an exact point of reference on a map).

Importantly, the lawyers confirmed, New Zealand Defence Force’ co-ordinates of where Operation Burnham took place were correct – but that the location was not as the NZDF had stated as ‘Tirgiran Village’ (an incorrect reference to a village that does not exist) but rather marks the geo-locations of where Khak Khuday Dad Village and Naik Village are located.

Specifically, the villagers confirmed the red-rectangle as marked on the NZDF map provided by the Lt. General on Monday March 27, and referred to as the area specific to Operation Burnham, frames the exact positions of where Khak Khuday Dad and Naik villages are located. So simply, the book contained a map that placed Khak Khuday Dad and Naik 2.2 kilometres north of there specific real locations.

And, the NZDF got it wrong by stating that those two villages were located where the book suggested, and that the village at the centre of Operation Burnham was a different village called Tirgiran Village (again, a place-name that does not exist).

So it turns out, according to those that live in the Tirgiran Valley, the Chief of Defence Force’s statement is incorrect or false; that when NZDF stated as a categorical fact that the New Zealand SAS commandos had never been to Khak Khuday Dad Village nor Naik Village, that that information was false.

At this point politically, it’s inescapable that the Prime Minister’s stated position ought to have taken a hit.

Remember back to the Prime Minister’s statement to media on Monday March 27, 2017 where he pitched his rationale: “We believe in the integrity of the Defence Force more than a book that picks the wrong villages.”

Surely, the same measure that was applied to the authors of Hit & Run now ought to be applied in equal measure to the New Zealand Defence Force chief and his officials.

After all, they also got their geography wrong. Since then, there has been stated unease about the whole issue by Internal Affairs Minister Peter Dunne (the minister who would have to sign off and authorise the costs of an inquiry should the Prime Minister order an inquiry be established).

By Thursday March 30, 2017 Dunne, through media, called for an inquiry into the whole affair. (ref. Stuff.co.nz ) Also on Thursday, the Minister of Defence at the time of the raid, Dr Wayne Mapp, wrote of his unease about Operation Burnham in a piece published on the Pundit website. (ref. Pundit ) Dr Mapp argued that the Government’s position, and that of the New Zealand Defence Force, cannot be the end of it. “Part of protecting their [the SAS’] reputation is also finding out what happened, particularly if there is an allegation that civilian casualties may have been accidentally caused. In that way we both honour the soldiers, and also demonstrate to the Afghans that we hold ourselves to the highest ideals of respect of life, even in circumstances of military conflict,” wrote Dr Mapp.

Common Statements Of Fact

The descriptions of Operation Burnham, in both the book, and, as stated by the New Zealand Defence Force, do mirror each account with precision on numerous vital points, including:

• The time of night Operation Burnham took place
• That New Zealand Defence Force was commanding and leading the operation (both on the ground and in the air)
• That the helicopters were manned by United States military personnel under New Zealand’s command
• That the purpose of the operation was to kill or capture those named as having been part of a Taliban insurgent raid that killed Lieutenant Tim O’Donnell
• That buildings were destroyed during the operation
• That people were killed at the villages.

However, anyone who has reasonably assessed the issue can see there is much more information to be revealed.

Conclusion: In concluding this analysis, it is an imperative that due to the highest levels of public and national interest concerning the alleged conduct, the seriousness of allegations, and the variables relating to the official account, that the matter be subjected to an independent commission of inquiry.

“That’s why I am posting the text of this agreement here for you to read and explore. There’s a lot in here, so we’ve put together summaries of each chapter to help you navigate what’s in the agreement and what these new standards will mean for you,” President Obama said.

He added: “I know that if you take a look at what’s actually in the TPP, you will see that this is, in fact, a new type of trade deal that puts American workers first.”

Regarding the TPP, the Obama Administration has placed much of its reputation on the line. And the US President’s push is to convince US workers that this multilateral deal will prevent other countries from becoming more competitive through lower labour costs, standards, wages, regulations and barriers to US imported goods and services.

Last night Obama said: “If you’re an autoworker in Michigan, the cars you build face taxes as high as 70 percent in Vietnam. If you’re a worker in Oregon, you’re forced to compete against workers in other countries that set lower standards and pay lower wages just to cut their costs. If you’re a small business owner in Ohio, you might face customs rules that are confusing, costly, and an unnecessary barrier to selling abroad.

“The Trans-Pacific Partnership will change that.

“It’s the highest standard trade agreement in history. It eliminates 18,000 taxes that various countries put on American goods. That will boost Made-in-America exports abroad while supporting higher-paying jobs right here at home. And that’s going to help our economy grow,” Obama said.

Major Holes and Inequality

Back here in New Zealand, University of Auckland trade law expert Professor Jane Kelsey has evaluated the released Trans Pacific Partnership Agreement texts and states there are “major holes” in the Government’s fact sheets and apparent inequalities between signature states.

Professor Kelsey said an initial review of the most controversial chapters confirms that New Zealand will have to comply with onerous new obligations and lose the future capacity to regulate in ways that an elected government thinks appropriate.

Her evaluation follows:

The investment chapter goes beyond New Zealand’s existing agreements in numerous ways. For example, a foreign investor from a TPP country that is party to a contract for oil exploration, a PPP contract for water, sewage or toll roads, or a mining or forestry concession with central government or an SOE exercising a delegated power, can use the controversial investor-state dispute settlement (ISDS) process if it wants to claim its rights are breached, even if the contract requires them to use NZ courts or some other dispute mechanism. 

Foreign investors, notably from the US and Japan, gain special rights not available to New Zealand investors, which are commonly used to challenge new regulations that adversely affect their business. In New Zealand, where risk-tolerant light handed regulation is the norm, that poses major problems for a future government wanting to regulate in the public interest.

As the government conceded, the categories of investment where the rules can be tightened have been constrained, and existing regulation of various services and investments are locked in so they can’t be made more restrictive in the future.

Some of the so-called protections for environment, health and regulatory objectives in the investment chapter are a nonsense – they allow the government to do what the chapter allows the government to do. The wording of the annex on expropriation, which supposedly restricts the scope of indirect or regulatory expropriation – where regulations are challenged for eroding the value of an investment – is weaker than other New Zealand agreements.

The general exception provision, which provides only weak protection for public health or environment measures at best, does not apply to the investment chapter. Instead, there are highly contestable rights to adopt rules for ‘legitimate public policy’ reasons, but those apply only to some rules and will be interpreted by ad hoc investment arbitrators.

There are some attempts to rein in the ISDS process, but they do not address the major concerns. The arbitrators are still likely to be drawn from a small club (often referred to as the mafia) who are also investment lawyers; there are no conflict of interest rules, merely that they must be developed before the agreement comes into force; there is no appeal; compound interest can still be awarded; and the kinds of damages that be claimed are still extensive.

A further, fundamental problem is that investment tribunals have proved adept at reading down or circumventing attempts to constrain the adventurism of the tribunals, including provisions on which parties to the TPPA claim the right to make binding interpretations that the tribunals must follow. 

The tobacco-specific exception applies only to disputes brought by investors under the investment chapter, where a country opts to exclude it. Unlike the proposed Malaysian carveout for tobacco control measures from the entire agreement, it does not apply to other chapters, such as labelling rules, intellectual property, or the investment chapter itself. (Australia’s plain packaging law is currently facing a dispute over labelling and intellectual property in the WTO).

There is at least some provision for countries to impose capital controls, which does not exist in standard US FTAs. But it is circumscribed by almost impossible conditions. 

There are serious new constraints on financial regulation, including of cross-border financial transactions and data flows, which require further careful study.

The unprecedented State-owned Enterprises chapter has three complex principal rules, which will create major problems for SOEs that provide integrated services both within and outside the country or produce a mixture of goods and services. The procedural requirements are commercially intrusive and provide scope for harassment by other TPPA parties on behalf of their corporations.

The chapter will create particular problems for the creation of new SOEs that require a capital injection and subsidisation or other special treatment or the provision of guarantees – for example, the proposal to establish a new state-owned insurance company.

The intellectual property chapter has already been leaked and analysed. Copyright is extended by 20 years in two tranches; New Zealand is the only country that has to make changes immediately.

The highly sensitive area of biologics is far from secure. New Zealand’s negotiators say they consider our current process satisfies the obligation. But there is a very high risk that the US will demand that we adopt its interpretation of what is required and refuse to ‘certify’ our compliance (a pre-requisite for the agreement to come into force with the US) until we provider a longer effective monopoly on those new generation pharmaceuticals. In addition, the rule comes up for renegotiation in 10 years, by which time biologics will be a much more dominant part of the medicines budget.

The transparency annex that affects Pharmac’s processes will increase its administrative burden and a new review procedure provides Big Pharma with a new opportunity to challenge Pharmac’s decisions.

Professor Kelsey said the above comments confirm the predicted problems in the text. Full analysis of the different chapters will follow, with expert peer reviewed papers being released over the next few weeks.

SOURCE INFO: Late last night the New Zealand Government released the Trans Pacific Partnership texts, which can be accessed in full at www.tpp.mfat.govt.nz/text

Out of Sight, Out of Mind: The US-led Coalition’s Human Rights Record in Iraq 4 August 2015

By Harmeet Sooden.

29 May 2015 – Human Rights Watch issues a news release, stating “Iraqi authorities are preventing thousands of families fleeing the fighting in Ramadi from reaching safer parts of the country.” Some of the displaced are said to have died as a result.

‘The “final” ministerial meeting on the Trans-Pacific Partnership Agreement (TPPA) in Maui has failed. Not opting to stay another day shows the gridlock is serious and potentially intractable’, according to University of Auckland law professor Jane Kelsey.

‘Everyone is blaming each other in Maui’, Kelsey said. ‘But the underlying reason for the gridlock is the domestic opposition in almost all the TPPA countries.’

‘People simply don’t believe a deal that raises the price of medicines and handcuffs the right of governments to regulate is in their national interests’.

‘Despite erecting a shroud of secrecy around the negotiations, politicians know they can’t sign a final deal that they can’t sell at home.’

Professor Kelsey notes that Minister Groser’s sales job got much harder this week.

After years of denial, he and the Prime Minister have now confessed that medicines will indeed cost more, that the TPPA will prevent tighter restrictions foreign investments, and that foreign investors might indeed sue New Zealand and win under the TPPA.

‘Those confessions raised the political price of the TPPA and meant the Minister couldn’t accept a cosmetic deal. Despite downgrading his ambitions from the initial “full liberalisation” to something “commercially meaningful” for dairy, even that was not achievable.’

Time has now almost run out.The US Fast Track law sets out a complicated process the US must follow. US consumer organisation Public Citizen calculates the absolute minimum amount of time is about 3 months.[1] 

Under the more likely timeframe, if negotiations do not conclude until September the earliest Congress would vote on the TPP is January 2016, when the path to passage will be more politically fraught. That is US election year. The last thing Hilary Clinton, other Democrats and many Republicans want is a vote on a politically toxic deal mid-campaign.

‘Hopefully the groundswell of media coverage and discussion in New Zealand this week, along with a stronger position from Labour and the Waitangi Tribunal claim, have created enough pressure on the government to cut its losses and walk away’, Kelsey said.

‘At the very least, before the negotiations resume we need to see the text and the options clearly laid out, and have an independent and comprehensive cost benefit analysis that can be debated in an open and democratic way’.

‘I and others will seek to advance that openness with the judicial review proceedings of the Minister’s refusal to release documents under the Official Information Act, to be filed early next week’.

[1] http://www.citizen.org/documents/TPP-vote-calendar.pdf

• Acne & its proper care: growing pains & magical cures
• Who calls the shots? Acne & Isotretinoin II – Big Pharma & research
• Special Investigation: Containing the impacts in NZ: Acne and isotretinoin III

The [TPP leaked] draft would make linkage mandatory, as it is in the US, allowing drug companies to fend off generics by claiming patent infringements, the website reported. It cited Heather Bresch, chief executive of generic drug maker Mylan, as saying mandatory patent linkage would amount to “a recipe for indefinite evergreening of pharmaceutical monopolies.”

Bresch has said that “ the current deal was a way for the brand-name drug industry to “maximize its monopolies.”

In response to my Money, Flow and Debt (Daily Blog and Evening Report, 25 July 2015) one reader responded to my comments about money hoarding and compensatory debt thus:

“Keith – the [river-causeway] metaphor did not help my understanding unfortunately – which is pretty basic already. So please explain simply. I assume greed is the motive behind the $ hoarders – how do you change that? The few wealthy people I have met, can’t help themselves – they have to continue increasing their wealth well past providing for their needs – it is like an obsession that I can’t get my head around. And this greed is behind the banks that are only too pleased there are hoarders (being hoarders themselves personally). So they have a system where they can create money out of nothing (book entry debt), but don’t create the interest required – which of course eventually creates winners and losers – and of course the hoarders are in like wolves to increase their hoard from the losers = increasing obscene inequality. Oh well, say the banks, lets create some additional money (out of thin air) to help the losers pay back their loans and interest (still not creating enough for the additional interest) ie so economic growth can continue – but the only people who believe in continued economic growth on a finite planet are madmen – and economists. So what is at the end of your causeway?”

These are pertinent questions, and I think my answer did them justice.’

“‘Greed’ is a term that means different things to different people. It is two of the seven deadly sins; ‘avarice’ and ‘gluttony’. Gluttony, or conspicuous consumption, is probably not relevant here. Indeed, by not spending their money, people may be averting this particular sin, thinking that their ‘frugality’ (actually miserliness) is virtuous. Google this: ’15 Celebs Who Lead Frugal Lives’. Avarice (refer dictionary.com) on the other hand is an ambiguous term that includes both the “insatiable greed for riches” and the “miserly desire to gain and hoard wealth”. In the distant historical context of the seven sins, avarice was probably understood as miserliness. In a capitalist context it probably also means something like ‘upward social mobility’. Thus the early merchant and industrial capitalists were trying to buy their way into the landed gentry.

“For some, their money mountains are a result of miserly greed. For others, the mountains of money are simply a measure of success in doing what they do best; with the market rewarding them through a kind of ‘winner takes all’ formula. However, even for these, the accumulation of money/success tends to be intoxicating, and they find it difficult to let go of the money, either through genuine investment (which is a form of spending) or through philanthropy. Further, even many in this second group of rich tend to resist paying taxes. The mere possession of lots of money can corrupt otherwise good people.

“The matter of interest, as in your comment, is something of a red herring. It’s simply a price, normally paid by borrowers to lenders (plus a markup for financial intermediaries such as banks), but which (when negative) can be paid by lenders to borrowers. When unspent money is abundant and bankable borrowers are scarce, then, in a free market, deposit interest rates should be negative.

“Money is created ‘out of thin air’. That’s the nature of money; it’s a technology, not a commodity. But it’s created in a context, not out of caprice. Money that’s withdrawn from circulation no longer functions as money. So the financial system – through private or public initiatives, or a mix of both – must create new money to compensate for the money withdrawn from circulation. Note that I said “banks can, with lesser or greater difficulty [emphasis added here], offset the dampening effect of the money hoarders”. We see that, when financial crises are imminent, when the accumulated unspent hoards become too great, then banks (often through other financial institutions) must adopt predatory lending practices in order to perform this money-cycling function.

“On the question of economic growth, I intimated that there is a green solution. The essential idea is that we do not need to maximise output in normal times, though productivity growth should always be seen as a good thing. The system of income distribution needs to work in a way that allows ordinary people to choose to work less (rather than to earn more) as an option for an improved living standard. The solution here is through the recognition of public equity as the basis for a publicly-sourced income stream that complements private earnings. Once public equity is recognised and supported, economic growth ceases to be the only way to reduce inequality.

“My causeway need have no end this millennium, so long as we adopt sustainable income distribution practices. My fear is that, by the year 2100, we will have entered a new dark age, following a rapid Malthusian collapse. My optimism however, is that the people (especially the young people) in places like Greece and Spain and Detroit may be getting to grips with the issues – including the well-heralded internet issues of the ‘free economy’ (as in ‘free services’ rather than ‘free-markets’) – and are creating parallel social technologies that substitute in part for the monetary system we have come to know but not understand.”

—

Since March 2009, subsidy has been available [for isotretinoin] on Special Authority application by dermatologists and vocationally registered general practitioners.

Patient has had an adequate trial on other available treatments and has received an inadequate response from these treatments or these are contraindiated

2 Applicant is a vocationally registered dermatologist, vocationally registered general practitioner, or nurse practitioner working in a relevant scope of practice; and 3 Applicant has an up to date knowledge of the treatment options for acne and is aware of the safety issues around isotretinoin and is competent to prescribe isotretinoin; …

An assessment of the safety of a medicine cannot be made using only the information contained in SMARS. Medsafe advises patients not to make any changes to their medicine treatment based on information contained in SMARS. Changes to treatment should only be made following consultation with a healthcare professional. As you are aware the data from SMARS does not summarise the complete known safety profile of a medicine. The data available comes from spontaneous adverse reaction reports and only represent suspected adverse reactions. This does not necessarily mean that the medicine did cause the reaction. Not all reports submitted to CARM are included in SMARS due to the reasons stated in the disclaimer.

—

OPINION: The Hager V Attorney General case exposes inadequacies in the Evidence Act 2006 and its 2011 amendment (ref. Legislation.govt.nz).

Irrespective of the outcome of the Hager case, the current law places media organisations, journalists, their sources, and the expression of public interest journalism, in jeopardy.

Put simply, the legal definitions of what is journalism, who is a journalist, and whether the identity of sources can be kept confidential, are vague. In June 2014, the High Court defined blogger Cameron Slater as a journalist.

The finding outraged some journalists who considered the title ought to be applied only to those who subscribe to the journalistic code of ethics and not bloggers who exhibit work contrary to elements within the code (ref. NZHerald).

Also in June 2014, a High Court judge ruled that a book written by David Fisher (a well-renowned and awarded New Zealand Herald journalist) about internet tycoon Kim Dotcom was not “news activity” and was not eligible for special legal protections (ref. NZHerald).

While the privilege of confidentiality is addressed in law the question of what is journalism, who can claim to be a journalist, and who can assume this privilege, is too vague. The current Act, and case law, presents as loose and ambiguous.

The absence of tight legal definitions causes an effect where the determinations of journalists to assert privilege are rendered unsound. As such, sources are left vulnerable, and serving the public interest through fourth estate endeavours is corroded.

In the High Court at Wellington last week, we heard submissionsthat allege abuses, that if accepted, would compel us to consider whether operational authorities of government (the Police) have operated contrary to the spirit of the Evidence Act, the Bill of Rights and the Search and Surveillance Act.

With respect to the Evidence Act, the judiciary is charged to consider ad-hoc arguments put to it through expensive legal submissions. In the meantime, the practice of public interest journalism in New Zealand is placed in limbo. For the record, the Evidence Act 2006 and its 2011 amendment define sources (informants), journalists, and news medium as:

Furthermore, the Act defines the conditions upon which anonymity may be, but not necessarily, relied upon:

As you can see, the Act does not specify or define a difference between a person who may work as a journalist for a media company, a freelancer, or an independent investigative journalist. And, it blurs the lines between professional journalists and bloggers, those who occupy a space outside of the journalist code of ethics.

In fact, the code is not referred to at all even though it is the foundation upon which journalists work. Indeed, the law remains vague on defining what a journalist is. Most concerning, it is unclear on whether a journalist and her or his source should confidently assume the privilege of confidentiality.

Irrespective of the outcome of the Hager V Attorney General case, this enduring situation will certainly cause sources to disengage from public interest disclosures through fears of being identified and exposed to retribution, victimisation, and ridicule. In the absence of reliable definitions a vacuum exists. The situation is far from satisfactory, and in my view, it is time legislation was amended to:

• define what exactly is journalism
• define what exactly is a journalist
• establish a criteria upon which journalists may apply to the New Zealand Press Council, Broadcast Standards Authority, or a News Media Standards Authority, to be accepted as members
• assume that on acceptance such members be recognised in law as able to assert the privilege of confidentiality as it applies to journalists and sources (informants) where the exchange of information is defined within law to be in the public interest.

The criteria, I argue, ought to be inclusive rather than exclusive and would consider a journalist applicant’s qualifications and/or experience of public interest journalism, and require adherence to the journalistic code of ethics, and, professional standards.

As journalists, media organisations, politicians and sources will testify, the privilege of confidentiality is vital when journalists are investigating issues of public interest, when engaging with sources and contacts who require confidentiality – especially where journalists are receiving information from sources who have exhausted official avenues (or where this is impossible) in their endeavours to hold the powerful to account, and especially where sources and journalists are motivated by a will to stamp out incompetence and/or corruption.

This issue isn’t just about journalists and their sources, it is about the health and function of New Zealand’s democracy, an issue that impacts on us all. I urge those who have an interest in investigative public interest journalism, fourth estate liberties, and our democracy to check out Jon Stephenson’s and Emily Menkes’ robust reportage of the Hager V Attorney General, Police, Manukau District Court case on EveningReport.nz. And also, please do digest another example of essential reading: Giovanni Tiso’s piece titled The Life and Death of the Political Author on The Pantograph Punch website. —

What would economic historians 50 years’ hence think of the Auckland housing market in the 2010s? Possibly not much; there may be bigger issues to investigate. But how would they deal with the lack of official data about property ownership? They would do what they always do, look for proxy data, and useful markers in the information that is available, and try to make inferences from that data.

For example, as proxies, the heights of prisoners and soldiers in the 18th century have been used to estimate countries’ GDP. The theory is that nutrition is a major determinant of height and of living standards in general, and that GDP per capita is highly correlated with other measures of living standards.

Examples of markers include particular genes, especially mutations, which can be used to trace a population’s history. Other important markers are languages, through words like “waka”, traced back through words such as “vaka” and “va’a”.

Another marker is surnames. I have traced my paternal family history to Banffshire in the northeastern lowlands of Scotland, as far back as the late 18th century. To get a sense of family history further back, I entered the name ‘Rankin’ in the birth records for 1855, contained in the Scotland’s People website. (1855 was the first year of official records.) Most of the entries were not from the northeast; they were from the Highlands or from Glasgow, which is much more closely associated with the Highlands than, say, Edinburgh.

In the absence of official information about who is buying real estate in Auckland, the use of markers such as surnames is an entirely appropriate way of using statistical information; data which may support or contradict the anecdotal sources. Indeed, through the use of scientific reasoning, this information can be used to reject or support hypotheses.

The Labour Party has a ‘research hypothesis’ that non-resident buyers of residential land in Auckland are, through foreign-sourced finance, contributing substantially and significantly to house price inflation in Auckland. This is the ‘foreign speculation’ hypothesis. Theirs is an interesting research question, though not in my view the most important question about the Auckland housing market. The hypothesis recognises the likely fact that, if it is valid, then a substantial proportion of this fuelling of house prices originates in China. This reasoning has nothing to do with race, but may have something to do with culture. Most of all it has to do with China’s rapid economic growth since the 1990s, China’s position in this time as possibly the world’s largest creditor nation, and the strengthening economic relationship that exists between China and New Zealand. New Zealand is on China’s radar in a way that it is not on, say, Russia’s investment radar.

It is only right that, if a representative data source that can throw light on Chinese ‘investment’ as a proxy for ‘foreign investment’ is publicly available, then that data source should be made use of to address this research question. The leaked sales data from Barfoot and Thomson has become such a data source.

Before further investigating Labour’s hypothesis, we might also note that the National Party has its own ‘supply’ hypothesis, which is that too much land within the Auckland super-city does not have a house sitting on it. A shortage of actual houses is, they say, the sole significant cause of accelerating real estate inflation in Auckland. We might also note that the concerns are most about rising prices of family houses. The National Party story supposes that Auckland’s rising population of around 2% per year this decade represents a substantial and accelerating increase in the numbers of families coming to Auckland. Yet the increase in the numbers of children (to June 2014) is only around 0.7% per year and the rate of increase in 40-65 year-olds in Auckland is dropping. Auckland’s recent influx is due to 15-39 year-olds, who are the prime demanders of rental accommodation. Yet Auckland rents are rising much less quickly than the prices of all dwellings, let alone family homes. The National hypothesis looks very weak.

The analysis of the Barfoot and Thomson data shows, from February to April, that 39.5% of residential real estate purchases were made by people with Chinese family names. This is accurate information that suggests that more than 40% of purchasers were of some Chinese ethnicity. The name ‘Yang’ is as Chinese as the name Rankin is Scottish. (Due to marriage and anglicisation – eg ‘Young’ – there will be many more people of some Chinese ethnicity without Chinese names, than there will be people with Chinese names and no trace of Chinese ethnicity. While many Maori have Scottish names, few Scots have Maori names.)

So, what can we conclude from this data? First, it does lend weight to Labour’s ‘foreign speculator’ argument, but it my no means proves that hypothesis. (Actually, in the scientific method of reasoning, hypotheses cannot be proven, only ruled out.) We must reiterate here that Labour’s hypothesis is about ‘foreign’ speculation, not Chinese speculation. Chinese are a useful proxy, given that if foreign speculation is a problem then, for reasons already given, some of those speculators will be Chinese.

Before continuing, we should note that information about the ethnicity of our population is widely seen, today, as very important. It is important in the Household Labour Force Survey, for example, and is an important variable in the statistics of educational achievement. We understand that we collect information about ethnicity today for quite different reasons from those that motivated our curiosity about ‘race’ 100 years ago. Though knowledge is unambiguously good, it can be used in intentionally deceptive ways.

My sense is that we have to divide the Chinese house-buying population into three sub-groups. The first is those who are unambiguously New Zealand residents. The second is those who have interests in both New Zealand and China (and maybe other countries as well).  The third is those who are unambiguously Chinese residents. Most of the commentators are conflating the first and second-mentioned groups. If anything, the second group has more in common with the third.

As someone who’s lived in at least my share of rented properties in Auckland, my experience of ethnic Chinese landlords has been more than favourable. Indeed it is widely understood that property ownership is an important part of Chinese culture, and this cultural propensity is certainly and unsurprisingly present in Auckland’s Chinese community. Indeed this is shown by the overrepresentation of local Chinese in the real estate profession. I would not be at all surprised if half (or more) of the 40% house sales to people with Chinese names were to professional or semi-professional landlords in the local community; people who supply the rental properties that Auckland needs, and who, for the most part, are good landlords and who neither evade nor avoid their taxes.

In the end, it’s what use the properties are put to that matters. Through hiring reputable property managers, many foreign-resident ‘investors’ may be better landlords than home-grown land-bankers.

We need every house to become somebody’s home. Family houses should be family homes. Whether they are owner-occupied or tenanted homes is secondary. The principal harm that most likely exists – and for which data remains hopelessly inadequate – is the extent of withdrawal of houses from their prime function as homes. Politicians know that this happens, because they say things like “if we have warrants of fitness for rental housing then such properties may be withdrawn from the market”, presumably to sit empty. (It would hardly be a problem if rental houses were sold to family owner occupiers.)

What seems likely is that perhaps 15% of the Barfoot and Thomson sales were to people of Chinese ethnicity who are either principally foreign-resident, some who may be using purchases of real estate in New Zealand (‘as if’ it was investment; refer Gordon Campbell) as a means of supporting their applications for permanent residence. This may suggest that maybe 25% of all sales in Auckland are to people of many ethnicities (including Asian and European) whose principal residence is not New Zealand.

When raised, the issue of increasing numbers of empty houses in Auckland is rarely refuted. The tactic of the National politicians and the spokespeople for the real estate industry is to divert the discussion. On TVNZ’s Q+A (19 July) Josie Pagani twice tried to raise the topic of speculators buying properties and leaving them empty. But the interviewer and other panellists would not (or at least did not) pick up that issue.

The least costly way of increasing the supply of homes may be to find policies that restore empty and underoccupied properties into family homes and apartments where residents of all shades may live, rented or owner-occupied. We should work with our Chinese-resident community – a number of whom are professional landlords or real estate agents who will tell us stuff if we ask the right questions – to find solutions to this problem.

—

He started his lecture talking about his parents and grandparents. Describing their lives of incredible hardship in a society that had no safety net to catch people who had fallen on hard times, which in that day and age were the poor. He told of his grandfather dying at home of cancer with only his daughter (Bryan’s mother) to care for him, and that his mother would be haunted by the screams of her father for many years after his death.

a person could earn enough money from their weekly paycheck, that they could put some of it into savings and within 5 years they could have enough for a deposit on their own home, which was exactly what Bryan’s parents were able to do.

Keynesian economics had dominated Western economic thinking from the end of the Second World War and championed a collective society and the welfare state, but gave way to the current Neo-Liberalist economic thought which promotes individual enterprise and free-market policy.

From rising inequality and ballooning household debt to a global financial crisis and fiscal austerity, the neoliberal ‘orthodoxy’ has brought instability and empowered the few. Yet it remains remarkably resilient, even resurgent, in New Zealand and abroad.

… economic policies that give FIRE industries tax, regulatory, and monetary policy advantages over productive industries. The other economy is the Productive Economy that is comprised of businesses that produce value-added goods and services. The Productive Economy grows based on profits from sales of goods and services produced by adding intellectual property and other human value inputs. The FIRE Economy operates by extracting economic rents, such as interest on debt, from the rest of the economy.

I have to admit that I was flummoxed by the political developments in Greece this week. After winning a referendum based on rejecting the Troika’s terms, Tsipras capitulated to those same terms—if anything, to somewhat harsher terms—less than a week later.

“We now have one of the most uncaring, uncompromising and out of touch governments that the UK has seen since Thatcher,” she says, after telling the heartbreaking story of a man she befriended while working for a charity that provided food for the poor. “Food banks are not a part of the welfare state, they are a symbol that the welfare state is failing.”

Will Labour become characterised as “the racist party”? That’s the risk that Andrew Little and Phil Twyford are taking in their current housing campaign based on Chinese-sounding names – that their party could become associated with nasty, racist populism.

Labour is onto a winner. Its brazen foray into racial populism is winning it plenty of attention, and will possibly help lift the party out of the electoral doldrums. But in undertaking such a deliberately cynical campaign it risks losing credibility and opens itself up to fair questions about racism and xenophobia. But worst of all, by feeding into fears about Asians and foreigners it potentially creates a dangerous mood of prejudice and bigotry in society.

In his Herald column, John Armstrong confirms the cleverness of Labour’s latest dog whistle strategy, saying “Labour has to get people thinking and talking about the party. Last weekend’s real estate expose is just what the doctor ordered” – see: Little happy to tread on toes if it starts talk. Yet Armstrong also warns that Labour could alienate its ethnic minority vote. 

The danger is actually bigger than that. Labour has brought upon itself accusations of racism, which are coming from all areas of the political spectrum. Therefore Labour is in danger of becoming seen as “the racist party”. This can be seen in Hamish Rutherford’s column: Could the Chinese-sounding names stunt be Labour’s Orewa? Rutherford draws attention to the similarities between Labour’s campaign and that of Don Brash in 2004. He says “the consequence could be long term damage to the party’s credibility”. Similarly, see the Ruminator’s blog post, Orewa 3: The Orewa-ing. 

What has been particularly surprising is the level of condemnation coming from the political left, and from Labour supporters themselves. Many of them have warned of the dangers for race relations and the safety of ethnic minorities when such “race-baiting” techniques are used by politicians. 

Protests against Labour from the left

Some of the harshest critiques of Labour’s racial politics campaign are coming from former party staffers. Phil Quin, who has been a party activist for three decades and formerly worked for Labour, yesterday blogged his Resignation letter. His disgust is clear: “In light of Labour’s calculated decision over the weekend to deploy racial profiling as a political tactic, I resign my membership of the party.  I am stunned that Labour, as a matter of conscious political strategy, would trawl through a dubiously­acquired list of property buyers to identify Chinese­sounding names”. He adds, “I cannot, however, belong to an organization that considers racial profiling fair sport”.

In an earlier blog post, Quin states, “the use of an algorithm to assess degrees of foreignness is hamfisted, embarrassingly amateurish and staggeringly racist.  I joined the Labour Party in large part due to its principled stand against Apartheid. Racial profiling of any kind was anathema to me thirty years ago, and remains so today.  The party should admit its mistake, apologise, and move on” – see: Labour should apologise for racial profiling. 

Another Labour Party activist, Stephen Judd, has also registered his disgust: “I just wrote and cancelled my regular donation to the party with the message that it can restart when we have three clear months without race-baiting or hippy punching.  As someone who belongs to another ethnic minority where people stereotype about money and leap to conclusions based on names, this shit makes my skin crawl”.

Other former party staffers are also publicly dissenting. Keith Ng, who worked for the party when Helen Clark was PM, delivered one of the first devastating blows to Labour’s racial campaign in his must-read blog post, Twyford’s offshore buyer claims made up. Ng suggested that the housing problems are very serious and require serious solutions, “which any half-competent political party ought to be able to communicate, without using the Yellow Peril as the boogeyman.  This is cynical, reckless dogwhistling. Like Winston Peters, just without the smirk”.

Former staffer, Lamia Imam, also called foul against her former employer, questioning the strategy: “we have resorted to racially profiling buyers to explain why Kiwis are unable to buy their own homes? This is particularly heinous, given other surveys show that British and American buyers also make a chunk of the foreign purchase of Kiwi homes” – see: Housing Crisis: Targeting Chinese people isn’t what Olivia Pope would do. She says “A policy that uses data analysis of people’s ethnic last name is an inherently racist policy and should be rejected”.

In another blog post, Imam complains that Labour could have focused on real solutions instead of scaremongering – see: These aren’t the xenophobes you are looking for. 

There are plenty of other voices of the left registering their disgust with Labour. Blogger No Right Turn says that “Labour unveiled its new political direction: racism” – see: Sounds like racism. He says it’s a deliberate strategy to turn the housing issue into a racial one for voter gain: “they’ve decided that Winston really is heading for the exit, and are trying to position themselves to grab his 200,000 dead white racist voters”.

A feminist blogger at the Hand Mirror website labels the campaign as “vicious racist dog whistling” that deflects from real problems with housing affordability – see: If you’re saying the same kinds of things as Paul Henry, you should probably stop talking.

Socialist John Moore argues that “Labour’s descent into xenophobic and racist politics comes from the party being completely devoid of big ideas that can tackle serious problems such as those concerned with housing”, as it’s much easier to “blame the foreigners” and “blame the greedy Asians” – see: Labour’s Asian-bashing shows a party devoid of ideas.

Left-green blogger John Palethorpe says the problem with Labour’s approach is that “it feeds a particularly virulent xenophobic and racist trope regarding racial and cultural groups” – see: Labour descent. 

Danyl Mclauchlan has labelled the strategy as “race-baiting”, and reminded us of the racial context in which Labour has lobbed it’s bomb: “This is a country in which people were confiscating car keys off Asian drivers just a few months ago with the media and police cheering them on” – see: What we talk about when we talk about Chinese people. According to Mclauchlan, Labour actually want to be called “racist”, because this creates sympathy for the accused.

Unsurprisingly, Labour is being strongly supported by New Zealand First. But it’s other common ally, the Greens, have come out strongly against the campaign. Co-leader Metiria Turei has accused Labour of “making some racist assumptions” and making the housing issue about race – see Hamish Rutherford’s Greens accuse Labour of ‘crude racial profiling’ on housing sales. 

Protest from the political right

The strongest analysis of Labour’s campaign from the political right comes from National Party-aligned blogger Liam Hehir, who puts forward four reasons that Labour supporters should be troubled by the racial campaign – see his newspaper column, Labour’s ‘expose’ on Chinese investors poor form. Hehir argues that “It will assist National to expand its own electoral coalition – National has for several years been working hard to bring immigrants and ethnic minority communities into its constituency”.

Plenty of those in National are making some interesting arguments against Labour’s stance. Housing Minister Nick Smith has condemned it and pointed out that “The National Government in the 1980s made not dissimilar comments about the Pacific Island community. And it took us 20 years to rebuild trust with Pacific Islanders” – see Claire Trevett’s Little backs home-buyer stats. 

Steven Joyce also says “Now, if the National Party had done that at any time in the last 20 years, the liberal intelligentsia would be tearing the house down” – see Radio New Zealand’s Labour: House sales data crude but useful.

Similarly, David Farrar says: “John Key demoted Lockwood Smith for his comments on Asians. Will Little continue to defend Twyford?  Imagine if for example a Don Brash led National Party had come out with a shonky analysis like this, and used the language Twyford did? Every Labour and Green MP in Parliament would have been calling Brash racist. Instead, we have silence” – see: Rutherford on Labour’s surname policy. 

Criticism from statisticians, economist and journalists

Not only is Labour being hammered from all political sides, but also by numerous experts and commentators. The political journalist with the strongest condemnation and analysis is Rob Hosking, who has emphasised that Labour’s policy is a cynical exercise in racial populism, saying that “By emphasising the racial aspect of the matter, Labour has deliberately embarked on a move calculated to raise racial tensions” – see: Labour’s anti-Chinese ploy will probably work – but then what? (paywalled). 

According to Hosking, the motives behind Twyford’s ethnic strategy are twofold: 1) Labour winning New Zealand First votes, and 2) Twyford becoming deputy leader. Hosking himself condemns it: “This is really nasty stuff. Anyone with a passing acquaintance with some of the more bloody racial conflicts of the 20th Century will feel a chill that the Labour Party is doing this”. Nonetheless, such an unprincipled manoeuvre will be successful, according to Hosking: “The question is not so much whether this ploy will work.  It probably will.  The question is what the consequences will be. By basing this move on racial issues, Labour has forfeited its natural home, which is the moral high ground on such matters”.

The Race Relations Commissioner has also spoken out. Susan Devoy has accused Labour of scapegoating an ethnic group for the problems caused by larger forces – see Isaac Davison’s Chinese buyers deserve better than being blamed for Auckland’s high house prices: Devoy. 

University of Auckland statistician Professor Thomas Lumley isn’t impressed with how Labour have used the data, telling them: “you’re doing it wrong, and in a way that has a long and reprehensible political history” – see Thomas Lumley’s What’s in a name?

Economist Shamubeel Eaqub – someone with plenty of recent experience analysing the problems in the Auckland housing market, has reacted strongly to Labour, saying “It draws this line across race and ethnicity, which is very damaging for a multi-cultural, welcoming place like New Zealand” – see Laura Walters’ Labour’s ‘half-baked’ property data turns Chinese buyers into ‘scapegoats’. 

Another economist, Geoff Simmons, challenges Labour’s proposals, and doubts they’ll be effective – see: Labour – focusing on the ‘Wong’ things. 

In practical terms, Labour’s policy against foreigners buying houses has been revealed to be discriminatory – in that Labour will allow Australian to buy houses here, but not buyers from other countries such as China. So it’s not a level playing field for all nationalities – see Richard Harman’s Labour would exempt Australians from its foreign buyer ban. 

Ethnic minorities under attack

The personal stories of those who feel under attack from Labour have provided a special perspective on the issue. For example, statistician and blogger, Andrew Chen has been upfront about how the campaign has made him feel: “The entire analysis is based on shoddy assumptions (even if the analysis of it is good), but the statistics and conclusions drawn will make people feel more secure in their prejudices and make them feel more justified when they say “yeah, those Chinese are buying too many homes”.  Most importantly, it makes me feel like I do not belong. It makes me feel like a drain on society, that I am somehow contributing to a problem when I have done my best for a country that I love” – see: A Chen by any other name. 

Other excellent accounts from Asian New Zealanders are Tze Ming Mok’s Identification strategy: Now it’s personal, Jem Yoshioka’s New Zealand has a racism problem and Bevan Chuang’s Hey mom, just popping down the road to buy a house!

A further interesting insight is provided by Raybon Kan in his Herald opinion piece, ‘If Chinese buy houses and pay you too much – you don’t like it’. 

It is in this context of racism experienced by Asians in New Zealand that Labour’s campaign needs to be understood. This is essentially the point made by Danyl Mclauchlan in his latest must-read blog post: The racist style in New Zealand politics. He argues that we need to pay special attention to how ethnic minorities feel in judging whether or not Labour is being racist. 

Of course if we take Labour’s “ethnic name guessing game” to its logical conclusion, we could end up with some empty stereotypes, without useful facts. This is Michele A’Court’s point in her column today – see: Don’t let facts sully a good race row.

My own opinions are similar. Context is crucial for judging Labour’s racial campaign. As I said, last time Labour sought to scaremonger in this way over housing, “the policy cannot be viewed in isolation from the political climate it’s being used in – and that’s a climate in which there is obvious xenophobia and racism about immigrants and foreign investors” – see: Debating Labour’s ‘racist’ housing policy. My views are also reported today in Dene Mackenzie’s article Housing stand seen as ‘cynical policy’.

In defence of Labour

There have been plenty of people defending Labour’s controversial stance. By far the best account is Tim Watkin’s blog post, What’s in a name… and a number? In this he puts the case in favour of having a debate about the evidence rather than resorting to “just throwing the ‘racist’ label around”.  And for a more amusing defence of Labour’s line, see Scott Yorke’s Labour’s race war? 

The originator of Labour’s ethnic housing data is party spin-doctor Rob Salmond – and you can see his explanation here: How Labour estimated ethnicity from surnames and House-buying patterns in Auckland. 

Chris Trotter says “Labour’s Chinese whispers have nothing to do with racism. They’re about national sovereignty and the people’s will” – see: China has expectations of New Zealand. 

This is essentially an “economic nationalist” line. And it’s put even more strongly by John Minto, who says, National playing the reverse race card on housing.

Of course much of the support Labour will receive will relate to the very real problems being experienced in the housing market in Auckland – see Peter Calder’s opinion piece, House rage – we’re right to be angry. 

Finally, much of the reaction against Labour’s racial populism has been online, especially in the Twittersphere – see my blog post, Top tweets opposing Labour’s racial housing strategy. 

—

Two weeks ago I wrote about the way that most people who have money understand money (Money ‘As If’ it was Magic, 27 June). And last week (Creating a Future: The Adjacent Possible, 3 July) I wrote about why the intellectual leap to an understanding of money and wealth, as they actually are, is so difficult. The necessary concepts are not adjacent to the concepts that dominate today’s finance-based belief system.

In addition to the predominant belief-system about money, there are a number of monetary reformers who know that money does not work as most of us assume it works. They know that money is not an appreciating commodity that, even when stored for decades, can assuredly be converted (spent) at any time into something else through an instant cargo-cult-like process called ‘shopping’. Some of these reformers would like money to be like this, grounded in some perpetually scarce commodity. So they see the technologies of money – double-entry bookkeeping and fractional banking – as being problems rather than as historical solutions.

In the history of money, both credit-money and commodity-money have played their roles. (A great recent book to read is Money: The Unauthorised Biography, by Felix Martin.) The intellectual conundrum came to a head in the United Kingdom in the 1690s, following the ‘Glorious Revolution’ of 1688. The Bank of England became in effect a central bank, through its acquisition of the Crown’s debt. The newly fledged central bankers gained a good working understanding of money as a circulating promise without intrinsic value. Thus coins in circulation could be understood as promises of the sovereign, by virtue of his or her head being imprinted on them. And the new-fangled banknotes represented promises by the signatory banks, whose corporate signatures appeared on them.

The problem at this time, however, was that the intellectual rock stars of the time – John Locke and Isaac Newton – understood money as a commodity. Thus the value of a coin, they thought, was the amount of gold or silver or copper in that coin. They might have observed (but did not) that debased and clipped coins circulated quite happily as money, of equal value in exchange as the unclipped ones. What mattered, in practice, is that there was enough money in circulation. Even the counterfeiters who Newton hanged were actually (though not intentionally) doing society’s economy a favour when these coins augmented the money supply when that money supply was inadequate.

Because the eminent men with the wrong understanding of money were regarded so highly, albeit for reasons outside of finance, their beliefs about money prevailed over the knowledge of the few emergent bankers who understood the social technology of money as a circulating medium. Today we are more than ever in the thrall of John Locke’s mistake. We think of money ‘as if’ it were a magic yeast-infused organic resin. (Newton, the alchemist and natural philosopher, set his sights higher. He was in thrall of gold and God; refer to the 2009 book Newton and the Counterfeiter, by Thomas Levenson.)

Money is a three-faceted Technology. The two most important developments that made it possible for the modern age to displace the medieval middle ages were developments in Europe around the fifteenth century: double-entry bookkeeping and fractional banking. For the former, the most accessible work is the 2012 book Double Entry: How the Merchants of Venice Created Modern Finance, by Jane Gleeson-White. On the origins of modern banking, itself dependent on double-entry bookkeeping, Felix Martin (cited above) gives a good account.

Most economic textbooks give a short stylised account of how banks create money. While to students the process seems extremely dodgy, we must be grateful to the early accountants and goldsmiths who made it possible for us to create money without having to plunder the Americas. (Europeans still plundered the Americas, anyway, especially in the sixteenth century. Misunderstandings about money have been around since the time of King Midas, who wished even his food would turn to gold.)

Fractional Banking

We may think of a rich man in the year 1500 placing a bag of gold coins (that he regarded as his wealth) with a goldsmith for safekeeping. Now, as today, such rich men were a core part of the economic problem of their time. They held onto their money, rather than spending and circulating it.

Anyway, the goldsmith realises that the rich man was into accumulating money rather than spending it. So the goldsmith lends the bag of money to someone else who he knows will spent it. The borrower is content to be given a signed receipt for the gold (and to give the goldsmith an IOU that includes interest), and uses the goldsmith’s receipt to pay for goods from some merchant.

There are now two owners of the one bag of gold; the rich man and the merchant. The actual gold continues to sit untouched in the goldsmith’s safe, as the goldsmith’s reserve. (The interest implicit in the borrower’s IOU, plus the rich depositor’s service fee represent the goldsmith’s profit.)  So the goldsmith issues further receipts (promises) on that gold (seen by the goldsmith as a ‘lazy asset’), knowing that most likely none of the eventual holders of these receipts will ever want to withdraw this gold ‘reserve’. (Perhaps 10 people now ‘own’ this gold.) Further, if some of the gold coins in the bag are withdrawn by either of these 10 people, then the goldsmith will be reasonably sure that the coins will end up in the safe of a fellow goldsmith. Further, through balancing swings and roundabouts, on any given day there is a good chance that gold withdrawn from a competitor goldsmith will end up in our goldsmith’s safe.

Of course, the more receipts the goldsmith issues against one bag of gold, the more likely he is, on a bad day, to not have enough gold to honour his receipts. (Thus, the most important asset of an early goldsmith-banker was a very fast horse, which might take him far from the soon-to-be-maddened crowd!)

Banking works by having many more receipts in circulation than reserves to back those receipts. Thus, the supply of money is very ‘elastic’ in practice; we can always have as much or as little money as we need to facilitate our transacting needs.

Nevertheless, the problem that the rich man poses to society (or even the man or woman of modest middle-class means) remains. For the most part, rich men will not exercise their saved entitlements to goods and services; a statistical reality. This rich-man problem is the problem of the non-spender; the problem was resolved by the emergent banks issuing replica receipts (as debt) to actual spenders.

Japan, Revealing the Third Facet of Money as a Social Technology

The problem that we face today is too many rich men and too few credible private borrower-spenders. Japan was the first country in the developed world to go through (in the 1990s) a twenty-first century financial crisis. Japanese banks now rely on the Japanese government as borrower-in-chief. In fact what is happening is that the government of Japan has become a spending (rather than a lending) bank.

Japanese savers – of whom there are very many – effectively lodge their unspent money with their own government. They receive IOUs from the government, receiving minimal if any interest. Unlike the bank however, the government spends (ie circulates) the money that the savers do not wish to spend. The money, once spent, is received by more Japanese who don’t themselves want to spend it, so their receipts are lodged once again with the government.

The process means that the government has issued IOUs to the Japanese bourgeoisie many times more than it can pay from its own financial reserves. But, because the number of Japanese who, at any one time wish to cash in their IOUs is very small, the government can issue IOUs worth many multiples of the government’s own reserves.

Japanese public finance works on Ponzi principles, which sound dodgy. But everyone understands that, in order to remain afloat, the government must spend what the citizenry will not spend. For the Japanese creditors of their government, their precautionary savings are really just a form of insurance premium. So long as most creditors never cash in their IOUs, the few that do can always be paid out from government reserves.

This is the global future of public finance. Governments function as a spending and giving bank, rather than as a lending bank. It is fractional banking taken to the next level. It means that government debt can be many-hundred percent of GDP. And, so long as governments keep buying goods and services to the value of those that the citizenry are entitled to buy but choosing not to buy (or giving to persons or organisations who will spend their publicly-recycled money), then the saver citizens will continue selling and therefore earning, and never needing to draw on their accumulating savings. Further, the saver citizens know that, if too many wish to spend the savings they have lodged with their government, then the government simply raises taxes. So they don’t spend their savings, except when ‘rainy day’ events occur in their private lives.

Fractional public finance is a simple extension of the fractional banking principle. It’s a way of ensuring that all output is purchased, and it creates a level of social security that allows people to produce less yet still live comfortable debt-free private lives. They exchange private debt for public debt, and it’s really only a bookkeeping exercise. (There is no moral imperative to ‘pay back the debt’; that would be a disaster.) Further, the Japanese government need not spend in such ways that control the private lives of Japanese citizens. Rather it recycles its public debt money back to those non-bourgeois citizens (or community organisations formed around such citizens) who will spend what they receive. It is this non-bourgeois spending that further enriches the saver bourgeoisie, who redeposit their unspent earnings with their government. In reality the monetary reserves simply stays in the government coffers, as bookkeeping entries, while government IOUs, also bookkeeping entries, expand relative to reserves.

Twenty-First Century Public Finance

In these last few years I have been investigating trends in private and public sector financial balances. The largely unseen trend is for others to follow what Japan started in the 1990s. Many Japanese do not yet understand this at an intellectual level; but they do understand that it works. Further, few see anything happening in Japan today as a contributor to global financial uncertainty, despite Japan having a much higher per capita public debt than Greece does. It’s to China and Europe that we look to with foreboding; and the Republican Party in the USA for that matter. These countries are following in Japan’s footsteps, albeit like an unseen herd of clumsy elephants. In the Euro Area, as a whole, the governments owe almost the entire annual GDP of the Euro Area, to the people of the Euro Area. For the United States, government debt exceeds its annual GDP. For the most part, the creditors are the American people.

Public debt is the solution, not the problem. We can discover this the easy way or the hard way; most likely the latter. Public debt is the third component of the social technology of money. It works because to the in-need-of-placating rich it is much more acceptable than taxation; yet it works in practice ‘as if’ it was taxation.