Bruce Bisset: People before profit every time

By Bruce Bisset


Seems to me the fundamental flaw in reasoning that "the market" should decide things is that the market is solely about money - and as long as we put money above people we can never achieve our potential.

Even accepting the benefits of market capitalism do eventually flow to people, they are the privileged few, not the struggling many.

The "trickle down" theory is a myth, because money trickles up, not down; the rich grow fat on the sweat of the poor, not vice versa.

The almost-exponential widening of the rich-poor divide over the past generation shows that "globalisation" is about finding new ways to suck up more money into fewer hands.

They are now very few hands indeed. A recent study tracing financial linkages between some 37 million businesses found that at root 80 per cent of the world's entire wealth was controlled by 737 companies - with 147 owning half that.

Worse, a study of that study deduced just four of those companies effectively controlled the rest.

Why? Because they're ratings and indexing agencies - setting the benchmarks for credit and performance, deciding who is a risk and who isn't; which in turn decides who gets funds and at what price.

For the record, those four are: McGraw-Hill (owns Standard & Poors), Northwestern Mutual (Russell Investments), CME Group (Dow Jones), and Barclays Plc, the dominant world bond fund index; the classic trans-Atlantic clique.

So much for a "free" market, eh? Yep, another myth.

We play a part in this global tussle with the privatisation of public power utilities.

Now, our electricity generators have been gouging consumers for the past 20 years because National "reformed" the industry to work to a spot-price on-demand model.

This has resulted in most consumers being charged around 10 times the cost of the majority of generation: hydro, costing under 1c per kilowatt hour, is charged out at around 9c because that's what the most expensive fossil-fuel generation costs. They've been allowed to get away with this purely because 93 per cent of generation, and 95 per cent of retail, is public-owned; the extortionate profits (about $700 million a year) are actually a back-door tax, flowing into Government coffers.

So ordinary citizens have gritted their teeth and excused it. Privatise the assets (and the resultant dividends) and that excuse disappears.

Which is why the Green-Labour joint initiative to establish a central buying agency to stop this rort is the best news for home-owners, and businesses, in two decades.

Simply, bulk electricity will be bought at cost, not at "market price", and then onsold to consumers for little more, saving an average household around $300 per year. The Greens want to go further and build-in a monthly allowance at lowest-cost.

Interestingly, apart from the Nats-in-drag outfits, this proposal has garnered widespread support - perhaps unsurprising given much of the developed world operates similar centralised models.

Moreover it should not result in any loss of value for New Zealand overall: yes, revenues may be down but with the assets sold they'd be halved anyway, and on the flip side $700 million released into the general economy can be spent on other things - like job creation.

So what if it devalues the companies? We don't want (or need) them sold.

One big positive is if Labour has realised "going green" is the only robust way forward; this linkage with the Greens could be the first of many. But best is that this policy puts people before profit. Which is, of course, how it should be.

That's the right of it.

Bruce Bisset is a freelance writer and poet.

- Hawkes Bay Today

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