Wednesday, February 11, 2009

Maori Ecopolitics in a Recession (if we're lucky) or a Depression (if we're still dead unlucky)

Ex-Alliance peep Laile Harré said an interesting thing on Nat Rad February 9th in response to Mathew Hooton’s comment that it was Prime Minister John Key who had to raise the issue of Maori unemployment when he recently met with Maori iwi leaders. For Laile this was “Damn depressing and a worry about where the civil society leadership of Maori heads’ are at.” I too have been waiting for a pronouncement from Maori leaders on a) how they perceive the current economic situation, and b) what they consider Maori collective options to be. Scan the editorials in the Maori media at the end of last year reveals a comparative lack of concern which for me tests claims of a true 'Maori economy'.

The TPK briefing to the incoming Minister notes “the extent of the future impact of tightening global economic conditions has yet to be fully understood. Mäori may be disproportionately vulnerable to economic shocks, particularly given the employment profile, the recent growth in the entrepreneurial sector and the high level of exposure of the Mäori commercial asset base to world markets1 along with the forecast falls in export demand commodity prices. Care will need to be taken to manage the impacts of changes in the economic circumstances of Mäori on other aspects of their wellbeing.”

As a footnote we have some numbers: “The Mäori commercial asset base is particularly vulnerable, with some 60% exposed to international trade, compared to 31% of the wider economy facing this exposure.” On a tangent, Te Tau Ihu iwi have just announced a massive settlement, with the media predictably focusing on the IP of the 'national' haka, Ka Mate (the one the All Blacks used to always do...).

Maori Minister Pita Sharples held a Maori Economic Forum in which he noted Maori vulnerability in economic downturns, our employment levels are generally double that of the national average, meaning current Maori unemployment levels are 9% compared to 4.5% for the NZ population as a whole. Sharples noted that in 1992, the proportion of Māori families marked as low income was a 42%, compared to the average of just 26%.

Ostensibly, the Maori economy has a holistic foundation (akin to Western concepts of socio-ecological resilience) and a longer itergenrational timeline. Of course it could be said that empirical evidence of these concepts are under contruction. Ngai Tahu presents aspects of this intergenerational timeline. But if Maori employment is going to hit 12, 15 or even 20%, what role do these iwi juggernauts have to play? On the one hand, Maori as citizens of NZ have all the rights to social welfare and other support. On the other hand, we all know how little difference that has made to our resilience in the past.

For a useful primer on the current economic crisis see Donald McKenzie's article in the London Review of Books. McKenzie notes the ‘collapse of the public fact’ which underlies this crisis and also notes the similarities and differences between physics and finance. “There is a generic resemblance between much of modern finance theory and mathematical physics. The Black-Scholes-Merton pricing equation is a form of what is known in physics as the heat or diffusion equation, which describes phenomena such as the flow of heat. The random walk model of share price changes appears in physics as Brownian motion, the movement of particles subject to minute, random collisions. Yet there is a crucial difference: finance inhabits the world of what the sociologist Barry Barnes calls ‘social-kind’ terms, not natural-kind terms. We do not ordinarily imagine that the flow of heat along a metal bar is affected by our beliefs about that flow. In finance, however, we cannot make the same presumption. Finance theory describes a world of human institutions, human beliefs and human actions. To the extent to which that theory is believed and acted on, it becomes part of the world it describes.”

He goes on to say “This (scarcely novel) observation is usually taken as a criticism of finance theory, but it is nothing of the kind. Its implication is not that the assumptions of that theory are false, but that their truth is a historical, context-dependent matter.”

Despite the current vogue for knocking neo-classical economics, I agree with McKenzie when he says "Mathematical finance is part of the infrastructure of the modern world...Yet we must also remember that finance theory describes not a state of nature but a world of human activity, of beliefs and of institutions. Markets, despite their thing-like character, their global reach and their huge volumes, remain social constructs and the feedback loops that constitute them are intricate, knotted and far from completely understood.“

This interpretation is similar to George Soros’ ‘reflexivity’ concept and is surely not antithetical to the holistic interpretation of the world Indigenous peoples continue to adhere to.

Another tangent...Donald McKenzie also reviewed a fascinating account by Caitlin Zaloom of the coal face of neoliberalism, the trading floor of a modern stock exchange. Click on to ‘Zero is a clenched fist’.

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