The Post: National’s compulsory turn leaves the left with a bigger question

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This week has seen National emerge in a new guise: as the party of heavy-handed state compulsion. Christopher Luxon’s decision to push mandatory KiwiSaver tells us a lot about the current state of the political right – but also lays down a challenge the left has barely begun to grasp.

The compulsory tilt, first and foremost, reveals the absolute intellectual bankruptcy of modern libertarianism. Far from just letting individuals go their own way, National now wants to effectively force everyone to save up to 12% of their income.

One model is obviously Australia, which has long had compulsory savings; another is Singapore. There, workers must place a striking 21% of their wages into personal savings accounts; employers contribute a further 16%. Workers then use those accounts to pay for their pensions and healthcare, among other things.

It’s an individualised way to pay for public services, but a highly authoritarian one. Indeed, Singapore is less a democracy and more a one-party state that violates individual rights in ways that should shock right-wingers.

But then modern libertarianism has failed to offer anything better than the bizarre idea of setting up autonomous “seasteading” settlements in the middle of the ocean, freed from the state’s supposedly intolerable burdens. Incredibly enough, no-one seems keen. So all the right is left with (pun intended) is Singapore.

Compulsory KiwiSaver, however, is far from being an unadulterated gift to left-wingers. For one thing, it challenges the continued existence of New Zealand Super, a public policy that – as of a few years ago – ensured just 4% of pensioners were living in hardship, one of the lowest rates in the world.

It also raises even thornier issues about control over the economy. The centuries-long battles between left and right – between socialism, social democracy, hyper-capitalism and other ideologies – have often centred on questions of economic ownership.

The core of capitalism is in the name: the control of capital, in the sense of the key decisions about where to invest the economy’s resources, lies in the hands of the select few who own companies.

The paradox of capitalism, in the words of the American writer Jeff Gates, is that it produces so few capitalists – so few people, that is, with meaningful amounts of capital to deploy. The smarter or more compassionate conservatives have long recognised this weakness, and sought to foster a “property-owning democracy”, a phrase National referenced in its KiwiSaver policy launch.

In New Zealand, this has generally meant property in the most basic sense: home ownership. And until recently, landlording was a big part of that vision.

Now, though, both sides of politics are starting to realise that our obsession with property investment is holding us back. Compulsory KiwiSaver represents a different tack: widespread ownership of shares.

That’s certainly an improvement on the investment property obsession. But it brings its own challenges, especially for the left.

Conservatives like stock markets because they represent free individual choices while leaving capitalists’ power largely untouched – but also because they entwine those individuals’ fortunes with corporate profits. That, in turn, makes it harder for left-wing governments to regulate and tax those corporates, lest they be seen as harming the retirement savings of the average person.

Befitting its broader politics, the left’s conception of ownership has tended to be more collective. It traditionally encompassed public ownership of state assets, albeit we have precious few of those left.

Faced with the rise of stock markets – a trend turbocharged by new platforms that make investing easier than ever before – the intellectual left has now become very interested in sovereign wealth funds.

Such funds are, in essence, state investment vehicles. The government, often operating through an arm’s-length agency, takes stakes in publicly listed companies, ensuring that some of the economy’s riches flow directly into a collective coffer. That wealth can be used to pay for public services or doled out in an annual dividend, as Alaska’s Permanent Fund (built on oil money) has done for decades.

Commentators are increasingly drawn to such funds. Even the heads of AI companies – not generally known for having a collectivist outlook or, indeed, a social conscience – have proposed sovereign wealth funds that would ensure everyone shares in the profits from AI’s job-cutting effects (assuming the latter materialise).

Elsewhere, Norway’s sovereign wealth fund (again built on oil money) is huge and highly successful. So too, perhaps unsurprisingly, is Singapore’s own version, known as Temasek.

Some local commentators – and, notably, parties like New Zealand First – would love us to emulate Temasek. The big problem is that such funds are typically established with the proceeds from resource booms, the sale of profitable state assets, or government surpluses, and New Zealand currently has none of those. (With the possible exception of the gentailers.)

That makes the sovereign wealth fund dream much harder to attain. But the right-wing story about ownership of the economy is coming into sharper focus. The challenge for the left is that theirs is not.