The world’s next big welfare state

President Obama’s convincing win is widely attributed to his smart targeting of voting groups that are easily upset by a conservative candidate.

Specifically these were: single women (abortion rights), the socially liberal (gay marriage), various racial minorities (immigration policy), students (education fees), government workers and unionists (employment entitlements).

It was then just a matter of boosting these so-called identity issues and demonising the rival candidate – usually in the form of what the media call a “gaffe.”

Mitt Romney provided the biggest one by mentioning, in his quiet chat to some wealthy campaign donors, the fact that 47% of voters were on government payments and transfers of some sort, and therefore were not likely to support a candidate preaching fiscal responsibility and maintaining lower taxes for the rich.

The polls vindicated the Obama strategy and some commentators picked up on the demographic changes that favoured the Democrats – the Latino and African American vote exceeding that of European-origin Americans, for example.

Of course, these minorities are not always going to be poor or hurt by immigration limits, and the Republicans can count on their votes in future as they prosper.

Non-conservative commentators also noted Americans were also becoming more secular and favouring social freedom (as opposed to being more individually responsible). 

As a result, and this is not emphasised by commentators, the US has become more of a welfare state and less of an entrepreneurial one.

One of the biggest election issues for Americans was the extent to which the government should pay for healthcare – an issue that is viewed as irrelevant to foreigners, even though public funding of healthcare is fast becoming unsustainable everywhere in the developed world.

In fact, I would suggest the US economy is more likely to head in the direction of Europe’s, rather than Asia’s, due to the growing number who now get their income from the state. Politicians love welfare states and deficits as they guarantee voter dependence and know that most people take little notice of “fiscal cliffs” and the like if they are not paying much or any income tax.

The Obama campaign has its parallels here, too, with Labour, the Greens, Maori parties and New Zealand First all heavily dependent on Mr Romney’s “47 percenters.” In fact, when the number crunchers tried to rebut Mr Romney, they found evidence that figure should be higher, depending on what is included.

Embedding the safety message
It goes without saying that every major industrial disaster needs an independent full-scale inquiry, such as a royal commission.

In the case of the Pike River coalmine tragedy, the commission rightly put blame everywhere, though the knee-jerk reactions focused only on corporate culpability and the reduction in government regulation.

Critics of business generally were given a big stick to drum their cause, though the commission included in its criticism the fact that safety rules were being flouted right up to those at the coalface.

The best outcome might be an independent health and safety commission, though another government agency is unlikely to prevent future occurrences.

Before that occurs, business should be given credit for what is already being done through the Business Leaders’ Health & Safety Forum, whose members do not put profit ahead of safety factors, as the ill-informed critics like to say.

As a result, many hazardous industries have an admirable safety record – just because this doesn’t make the news doesn’t mean it isn’t happening.

Few, for example, would know that thousands of shipping movements and several decades of oil and gas production and refining have occurred without any major incidents.

Yet if you believe the Greens and the media, “fracking” and deepsea drilling are about to deliver disaster. The scare tactics have even persuaded the Parliamentary Commissioner for the Environment to get involved in a non-existent problem.

Todd Energy

weighed in this week with a submission that goes well beyond the specific issue to a history of the entire industry and its record.

Unlike some, such as Pattrick Smellie, I wouldn’t attempt to summarise a 177-page report that covers all the bases. It deserves to be read in full and it can be downloaded from the link mentioned or, better still, ask Todd for a copy.

By the way, I’m told fracking is also useful for tapping artesian water by combing aquifers, reducing the need for drilling and enabling the resource to be better measured and managed.

Where jobs really come from
The rise in unemployment figures also brought out the government’s critics and heaps more uninformed comment on how jobs are created.

It is not the government’s role to create jobs. But it should do its best to create an environment where people can invest their capital, start businesses and nurture a climate where the economy can flourish.

Economic Development Minister Steven Joyce, defending the government’s record, has mentioned there are “hundreds” of initiatives that are doing this – though no one’s interested in listening.

It seems even the government has given up trying to persuade anyone that this is how the world works. An initiative I can mention is one of Mr Joyce’s as minister for science and innovation.

In Auckland this week, he opened a two-day forum of six small advanced economies (the others were Denmark, Finland, Ireland, Israel and Singapore) on commercialising R&D. Each country sent experts from their chief scientist offices.

I spoke to representatives from Israel, which has a 40-year record of encouraging startup businesses and has the world’s largest venture capital industry outside the US.

Irit Ben-Abba, of the ministry of foreign affairs, says Israel is now focused on adapting technology that developing countries can afford rather than selling more high-tech stuff to Europe and North America.

This includes advances in agriculture (drip-feed irrigation), water management, energy (solar power), healthcare and food security.

“We want to work with countries such as China and India to develop affordable technology,” she said, giving the example of Canada’s Grand Challenges project, which is pioneering healthcare innovation as an aid programme.

Chief science adviser Sir Peter Gluckman is to be congratulated for the Small Advanced Economies initiative and one can only hope it will lead to New Zealand doing better in venture capital.

It was mentioned at the briefing that one immediate step could be lifting the restriction that all New Zealand government R&D funding be spent here. By expanding it to other countries, such as those in the six-nation forum, the amount would soon be dwarfed by reciprocal funding from offshore.