Reforming our Regional Economy – III: Never be a Colony

The South Island West Coast of New Zealand is a colony of its eastern neighbour Canterbury.  Think of all the gold, the beautiful timber, the coal, the fish.  Think of the tourism dollars flowing from that extraordinary raised coastal road from Westport to Greymouth, and then the lakes, forests, glaciers and mountains – and spectacular mountain passes – and ask yourself: why isn’t the West Coast as rich as Croesus?

Where does all the money go?  Why isn’t it going around from hand to hand and multiplying in that particular place?  Why are all the benefits of multiplying value happening away from the primary source of that wealth?  It has nothing to do with merit. It comes down to relative commercial and political power, and to ownership.

It wasn’t just Marx that understood power and the transfer of wealth from the weak to the strong.  Adam Smith wrote against the role of both corporations and aristocrats, especially merchants being anywhere near policy.

Cecil Rhodes certainly understood:

“We must find new lands from which we can easily obtain raw materials and at the same time exploit the cheap slave labor that is available from the natives of the colonies. The colonies would also provide a dumping ground for the surplus goods produced in our factories.”

Imagine being on the weaker side of that ‘bargain’.  Well, we were.  Take the cheap resources and watch the profits flow out with them, including further processing, and – best of all – leave most of the social and environmental problems behind with the ‘natives’.

Colonisers justify their abuse of power by claiming ‘direct investment’ and ‘jobs’.  The fact is that the colonial approach is very good news for the ‘investor’ and very bad news for the local community and its lands.  The history of the abuse of colonial power by Britain, who de-industrialised India for the benefit of the English Midlands, is a classic case study of what to think about, and what to avoid.  The current economics religion is blind to these political realities, focused as they are on the mathematics of a myth of powerlessness.

That propaganda of investment and jobs is all part of the dealmaking injustice.  We know this in our hearts, as demonstrated by the
widespread disgust at the gifting of our premium quality Hawke’s Bay water to an outsider, justified by the same empty clichés and the smiles of avaricious men.

This concentration of wealth, privatisation of gain and socialisation of costs is a phenomenon as old as man.  The tribal war for slaves and land.  The classical empires growing fat on the wealth of the conquered.  The conquests by self-appointed feudal ‘lords’ who then ensure that no surpluses trickle down to the land-bound serfs.  The enclosures and clearance of commons so the Lairds can grow fat.  European colonisation of our very own country.  Today the agents are powerful nation states supporting their mega-corporates.  The same corporates that (I will never say ‘who’ – they are not people) fund their politicians so the game of taking where and when they can, keeps working for them.

The current economist priesthood still apparently alive and kicking in Treasury presumes none of this historic reality.  In their models, we all live in a tiny village of equal opportunity, equal powerlessness and meritocracy.  That is complete and utter bunkum.

The West Coast is an extreme example of a local colony within a colony.  It is made worse by being a classic ‘extractive economy’, a contrast to ‘creative economies’ that thrive on a base of human ingenuity and enterprise.  Extractive economies only last while the ‘resources’ being mined are economic to extract – including those slow-cycling natural systems like forests, fisheries, soil and water.

Extractive economies are doomed, like Nauru.  Where are the people of Nauru now?  Where are the fishing villages that used to fish the Grand Banks cod?  Where are the fishers of Somalia, who resorted to pirating because their seas were ravaged by outsiders?

What does this mean for our local provincial economy?  Do not be fooled by extractive commerce, no matter the empty clichés.  Who owns matters.  Where that ownership resides matters.  The relative political and commercial power of that ownership matters. How money locally flows and grows matters.  If an economist doesn’t recognise those issues, then don’t listen to them.

The first imperative is avoid being a colony.  Retain value in our region. Avoid the loud sucking sound as profits, expenditure, interest and lost opportunity for local value chains drains away.  If there is any sucking sound to be had, make it in our direction.

Given our own colonial past you’d think our governors would be mindful – like the Chinese, Indians and Brazilians certainly are – of strategically avoiding any sort of repeat of the colonial process.  For almost 40 years we’ve heard nothing of these political realities from Treasury.

The second imperative is to build a creative economy and avoid an extractive one. Extractive economies attract the worst of ‘investors’; those who want things – labour or resource – cheap or free.  They follow the creed of the coloniser Cecil Rhodes – cheap resources and labour, and never mind the slag heaps left behind.  Those on the look out for cheap Orcs and the land of Mordor.  Those who do not care about community or place.

A creative economy relies on social capital – trust, participation, social engagement with others, and local ownership.  These are the institutions of a just society.  Justice matters because hope is vital to creativity.

The third imperative is to multiply that value locally with long value chains.  You can harvest some bounty of the earth and make it sing; put your soul into it with love and gratitude.  Multiply its value and meaning.  Or you can simply take it, and sell it for a penny to the man; send it to some huge continuous throughput mill in Hawera for not even the song.

The forth is to distribute value by paying people well, because a local economy thrives when people spend locally.  Build John Kenneth Galbraith’s ‘thick’ economy where the commonwealth is not a thin stick with all the money at the top, but spread.  His Affluent Society.  Treasury and right-wing politicians don’t understand this either, convinced as they are that money flows to where it is deserved.

Lastly, create an environment, townships and a society that attracts the community-minded and creative, those who treasure our land and waterscapes as we do.  Redesign our streets and towns and landscapes to put people and good feelings at the centre of things.

We live in a province, often bombarded by the rhetoric of those who would do the very opposite of Retain, Create, Multiply, Distribute and Attract. They argue for making our home an extractive economy, owned by outsiders, populated by poorly paid people in a crumbling environment.  That suits them, not us.

It should be our choice whether we want Hawke’s Bay to be the Shire or Mordor.  A choice that is obvious.

Chris Perley
Thoughtscapes

Chris Perley is an affiliated researcher at Otago University’s Centre for Sustainability with a governance, research, management and policy background in provincial economies, rural sociology and land use strategy. 

Edited version published in Hawke’s Bay Today 16th Jan 2017