The Economics of Decolonisation
“The authority directing all economic activity would not merely control the part of our lives which is concerned with inferior things; it would control the allocation of the limited means for all our ends. And whoever controls the means for all our ends and must therefore decide which are to be satisfied and which are not. This really is the crux of the matter. Economic control is not merely control of a sector of human life which can be separated from the rest. It is the control of the means for all our ends.” — Friedrich Hayek
Abstract:
This article explores solutions to the inequitable impact of colonial economic power structures imposed on Māori. The motivation for this paper is to help Indigenous Peoples regain economic sovereignty over their time, land, and resources as the current economic status quo perpetuates classist inequality and inherent racism from our colonial past.
The article encompasses four segments that explore the impact of colonial structures on Indigenous People:
- Highlighting the problem
- Identifying and explaining the issue
- What is needed moving forward
- Conclusion
Definitions:
A definition of colonialism is the settlement of a new country where a group of settlers create a new community. (Loomba, 2015)
Colonialism is not simply defined as above or in the dictionary, (Kohan et al., 2017) states that colonialism has strong ties to imperialism; both were forms of conquest, with one goal in mind: economic growth. This is achieved through the exploitation of newly conquered lands and the natural resources they possess.
Decolonisation is the process of deconstructing colonial ideologies of the superiority and privilege of Western thought and approaches. Decolonisation involves dismantling economic structures that perpetuate the status quo and addressing unbalanced power dynamics, which includes rejecting dominant biases that have negative impacts on Indigenous ways of knowing and being.
Colonisation is countered by valuing, revitalising and investing in Indigenous knowledge systems and approaches. For non-Indigenous people, decolonisation is the process of examining personal assumptions and beliefs about Indigenous Peoples and reconstructing a world view not based on ethnicity. It is also the ability to identify the role white privilege plays in economic advantage.
Highlighting the problem:
“If some peoples pretend that history or geography gives them the right to subjugate other races, nations, or peoples, there can be no peace.” — Ludwig von Mises
Fenbed (2009) has identified four common global phases of colonisation inflicted on Indigenous People as per below, the scope of this article will orientate around the second phase.
1) Physical trauma through murder and disease.
2) Economic violation of indigenous stewardship of land and forced removal from ancestral lands.
3) Cultural domination through outlawing Indigenous language and belief systems, replaced by Christianity.
4) Social disruption through displacement of indigenous peoples tribal systems during colonial expansion which results in decimation of Indigenous cultural values; fragmented and damaged Indigenous communities.
Below are some graphs which highlight the statistical repercussions of colonialism, the contrast in socioeconomic conditions, and the flow on effects that stem from it.
In the last Census (2018) New Zealand had a population of 4,669,755, of which there is an Indigenous Māori population of only 16.5% and European population of 70.2% [1]
“It’s rooted and or anchored in our history under colonisation. Which as we know is ongoing. It didn’t begin and end in 1769 when Cook landed here. And so we have intergenerational trauma, we have very traumatic histories that are now beginning to surface.” — Dr Te Aho
“Suicide rates are highest for young Maori and Pacific Islander men, the Unicef report found New Zealand’s youth suicide rate — teenagers between 15 and 19 — to be the highest of a long list of 41 OECD and EU countries.
According to the data of 2014, the suicide rate among Maori men across all age groups is around 1.4 times that of the non-Maori.
Since the 2014 study, the statistics have worsened. The 2018 report saw an increase of 12% from the prior year.”[2, 3]
‘This shows us there are also issues around cultural identity and the impact of colonisation, It is alarming to see — and perhaps it is an indicator of the level of institutional and cultural racism in our society,’ says Dr Stone.”
“Māori have experienced poverty since colonisation. Legislation forced Māori into poverty in order to acquire land. So the taking of land from Māori can be directly linked to the poverty that is creating today’s high prison rate.” — Marama Fox
The continuation of these horrifying statistics portray disconnect from a system which does not take Indigenous beliefs, wants and needs into consideration.
We have seen breakfast presenter Hayley Holt break down in tears reacting to the “powerful report of police mistreatment which showed the contrast between Māori and non-Māori — without prior conviction, Māori are 1.8 times more likely to be taken to a police station and 7 times more likely to be prosecuted once there”.[4]
“It follows from what we know about the impacts of the recession in terms of job losses impacting disproportionately on those on low incomes, and as we know Māori are unfortunately disproportionately represented in those on lower incomes,” — Berl economist Ganesh Nana
Socioeconomic indicators show how successfully colonisation has diminished the well being of Indigenous Peoples globally. Over representation in suicide and incarceration statistics are symptomatic of being in the lowest socio-economic class. [5,6,7,8]
Explaining the issue:
“If you look back, even hundreds of years, you see any system tends to work for those who control the system”- Ray Dalio
“In contemporary society, we are burdened to live with the environmental and economic consequences left to us by those who came before us, just as future generations will likely be burdened with what we leave behind if nothing changes. European colonisation has left its footprint on the world.” Ash Carter
As a slap in the face to commemorate 100 years since Te Tiriti o Waitangi (The Treaty of Waitangi), the bank notes which had the face of King Tāwhio the second (Māori King) were replaced with Captain Cook, who is famous for ‘discovering’ Aotearoa New Zealand [10]
To show how money was used to conquer and destroy Indigenous sovereignty I will share a story from Dr Kelton, in an attempt to draw parallels on how we got here economically and what is systematically at play moving forward.[11]
“Mr. Mosler had a beautiful beachfront property and all the luxuries of life anyone could hope to enjoy. He also had a family that included two teenagers, who resisted doing household chores. Mr. Mosler wanted the yard mowed, the beds made, the dishes done, the cars washed and so on. To encourage them to help out, he promised to compensate them by paying for their labor with his business cards. Nothing much got done.
‘Why would we work for your business cards? They’re not worth anything!’ they told him. So Mr. Mosler changed tactics. Instead of offering to compensate them for volunteering to pitch in around the house, he demanded a payment of 30 of his business cards, each month, with some chores worth more than others. Failure to pay would result in a loss of privileges: no more TV, use of the swimming pool or shopping trips to the mall.
Mr. Mosler had essentially imposed a tax that could be paid only with his own monogrammed paper. And he was prepared to enforce it. Now the cards were worth something. Before long, the kids were scurrying around, tidying up their bedrooms, the kitchen and the yard, working to maintain the lifestyle they wanted.
This, broadly speaking, is how our monetary system works. It is true that the dollars in your pocket are, in a physical sense, just pieces of paper. It’s the state’s ability to make and enforce its tax laws that sustains a demand for them, which in turn makes those dollars valuable. It’s also how the British Empire and others before it were able to effectively rule: conquer, erase the legitimacy of a given people’s original currency, impose British currency on the colonized, then watch how the entire local economy begins to revolve around British currency, interests and power. Taxes exist for many reasons, but they exist mainly to give value to a state’s otherwise worthless tokens.”
The story shared above illustrates how colonial power structures take economic control by imposing their currency and economic framework. The contrast between Māori and European families to hand down intergenerational wealth led to different opportunities and living conditions, now a classist inequity is also a cultural one.
Slave labour — Creating value, but for whom? The labor from slaves created capital for the Europeans which was handed down through generations. [12]
Land dispossession — Even after land was forcefully taken in the land wars and slavery was abolished (1840), Māori were forced into a foreign economy that didn’t share their cultural values in an attempt to “earn” that land and sovereignty back.[13, 14, 15]
“Māori had no real choice: ‘economic interaction became economic gridlock, and in these circumstances resistance was almost impossible”[16].
To highlight the importance of how this initial wealth disparity has concentrated and compounded we can look to Jeff Booth’s monopoly analogy. [17]
1) In the game Monopoly, once enough properties are owned by a single player, renters can’t afford to pay rents and are therefore forced into bankruptcy — and the game ends.
2) For those who have played, you will notice how systems work. ie — Once you have an early advantage, the game becomes easier (because you have the rents) to acquire more properties, add more houses/hotels. A “positive feedback loop” is created — concentrating wealth.
3) You might also notice that the wealth in the game “might” be due to luck — landing on the right squares early in the game gives you a massive advantage. Right place, right time.
4) Conversely, missing out on acquiring those assets early creates a “negative feedback loop” which also reinforces on itself. The poor become poorer until they become insolvent as they move around the board paying higher and higher rents.
5) Fortunately — it is just a game. The game ends! Someone gets bragging rights — and all are given a fresh chance to “win” when the game begins anew with everyone being equal.
6) BUT- What would happen if the same positive and negative feedback loops happened in life? With the “winners” acquiring ever more because they had the assets first- concentrating their wealth, and enjoying privileged access to the best education, medical, and other services.
7) And for the sake of argument, Let’s “imagine” in this life game that there was a giant force — Let’s call it a “Central Bank”, that would not let asset prices fall, which only concentrated wealth faster and wouldn’t allow a reset of the “game” where new players had a chance.
8) How long would the “losers” of the game keep playing the game when they realised that the game was rigged against them. What if they couldn’t pay their rents, medical bills, education…with the “game” continuing to get worse. What if the game wouldn’t end for them?
9) What would they do? More importantly — If you were them, what would you do.
10) You might: 1) Listen and elect leaders who tell you they will give you free money (without asking where that money comes from) or 2) Rise up against the “winners” and burn the game to the ground (revolutions) or 3) Play a new game where you had a chance (Bitcoin/Gold)
11) The societal consequences of changing the “rules of the game” to stop the natural clearing function of markets (and lock new game players out) is making the world ever more dangerous. The consequences are very predictable.
12) And the crazy thing is: The same thing Central Banks are fighting against — Prices falling because of exponentially advancing technology — might be the best “game” we ever played.
This analogy highlights the importance of these feedback loops and how wealth compounds gradually which leads to different opportunities or as a socialist blog spot likes to frame it:
“Sound money is money that gains in value slightly over time, meaning that holding onto it is likely to offer an increase in purchasing power.
Unsound money, being controlled by central banks whose express mission is to keep inflation positive, will offer little incentive for holders to keep it.”- Saifedean Ammous.
To truly break it down though, is to understand money itself and considering the USD is the global reserve currency there will be parallels drawn although the process varies in New Zealand — New Zealand’s central bank (RBNZ) is owned by the government whereas the federal reserve is a quasi-public organisation.
We are still affected by inflation of NZD and USD though as we have national foreign liabilities which means we keep a balance of foreign currency.
Money has historically been chosen based on its attributes; they include divisibility, durability, fungibility, portability, scarcity, and the ability to verify authenticity.
Money would start as a collectible based on its scarcity and ability to verify authenticity before becoming a known store of value, then as it becomes widely accepted as a stored value and based on other attributes it starts being used as a medium of exchange and finally a measuring unit of account. The process is gradual and a zero sum game where people would converge to the most saleable money.
“The fact that central banks continue to hold onto their gold, and have even started increasing their reserves, testifies to the confidence they have in their own currencies in the long term.” Saifedean Amous
Fiat, by definition, is an arbitrary order or decree. Meaning it is forcefully imposed by the state, not founded by market consensus like gold or bitcoin. If fiat is better money, why do we enforce government legal tender laws while central banks hold on to gold? Historically individuals and societies chose market monies due to their ideal attributes to carry out the functions of money, today monies are decreed into existence and enforced by law
The U.S would never have had to sign executive order 6102 to confiscate large quantities of gold from citizens trying to store their wealth, if fiat were a good money.
People store value for security, to ensure their current and future basic needs are met. Since the USD decoupled from gold, fiat money supplies have expanded enormously as unlike gold, fiat has no bound of scarcity as an attribute and it’s future purchasing power severely diminishes through inflation.
“Continually increasing a currency’s total supply is a hidden form of taxation and is a systematic devaluation of that currency. It redistributes the wealth from the savers to those who print the currency and those who are the first to receive it. This is known as the Cantillon Effect.”[18]
Those closest to the new supply get richer. Read that again.
Those powerful people, who are closest to the newly created money, have the most incentive for keeping the status quo.
In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value.- Alan Greenspan
Credit and debt are two sides of the same coin, so when we discuss credit expansion we are simultaneously discussing debt expansion. The current system is predicated on perpetual growth which is not sustainable and some have called it a pyramid scheme or scam.[19, 20]
Due to money not being a risk-free asset, our stored value with traditional banking is now inextricably tied and held ransom by the markets as they endure their boom and bust cycles, only we stopped letting them bust.
The ability to print fiat led governments and central banks to artificially prop up the markets in an attempt to keep citizens’ savings perpetually growing. Debasing the currency and redistributing citizens’ savings in an attempt to stop their savings from failing in the first place is the biggest catch twenty two.
We can see the correlation between the money supply and the S&P 500 as the Federal Reserve began to buy junk bonds and equities.
“It’s easier to get a gold medal in the olympics than it is to compete in the markets, it’s a zero sum game”- Ray Dalio
Most people are not taught how to invest at school or even early adulthood. If we try ourselves, our portfolios are competing against advanced algorithms, Ivy league graduates and the advantage banks have investing with new credit before the market can account for inflation.
Essentially, we allow the banks to invest on our behalf or we are in direct competition in an attempt to store value. This is a conflict of interest, savings and speculative investments should be mutually exclusive yet due to the nature of fiat’s scarcity, they are not.
In Aotearoa New Zealand there are currently 26 registered banks, the four largest are Australian-owned banks (ANZ, ASB, BNZ, and Westpac) and are responsible for 86% of bank lending. The five New Zealand-owned banks account for 8% of bank lending.[21]
We have the most profitable banks in the developed world and the profits made from New Zealanders get siphoned abroad as dividends/ bonuses for Australian CEO’s and shareholders, this means the profit made from lending credit to us, does not trickle down in our economy.
As an example look at the smallest of the four big banks, Westpac’s net profit attributable to the owners of the banking group [22,23]:
How much trust do we have in foreign banks dictating our investments? ‘The Australian-owned banks operating in New Zealand are separately governed and regulated under New Zealand law’.[24]
‘The Hayne Royal Commission exposed a catalogue of systemic bad behaviour motivated by hunger for profits by Australia’s big banks, superannuation and finance companies. [25] The report condemned:
- Financial advisers misled customers and recommended speculative investments, which resulted in them losing hundreds of millions of dollars.
- Allegedly rigged the bank bill swap rate, one of the key interest rates in the economy (which provides a benchmark for setting personal and commercial loan rates).
- Slugging their customers $AU178 million ($NZ186 million) in financial advice which was never provided.’
Banking royal commissioner Mr Hayne said on the matter:
“Too often, the answer seems to be greed — the pursuit of short-term profit at the expense of basic standards of honesty,”
“How else is charging continuing advice fees to the dead to be explained?”
“Selling became their focus of attention. Too often it became the sole focus of attention,”
“Products and services multiplied. Banks searched for their ‘share of the customer’s wallet’.”
“Much more often than not, the conduct now condemned was contrary to law.”
“Passing some new law to say, again, ‘Do not do that’, would add an extra layer of legal complexity to an already complex regulatory regime. What would that gain?”
“When misconduct was revealed, it either went unpunished or the consequences did not meet the seriousness of what had been done”
Considering the Australian owned banks role in the economy, inflation and deflation, the financial sector being the most profitable, trickle down economics and the Cantillon effect, I decided to interview an economist from one of the big four banks. We spoke about what I’ve mentioned above and I asked him “What Māori economists or bank shareholders do you know or know of?” to which he replied “NONE!”
This leads me to the question that gets asked by Māori every time financial collapse looms or occurs, where are the options for a Māori bank or central bank?[26]
What is needed moving forward:
“I don’t believe we shall ever have good money again before we take the thing out of the hands of government, that is, we can’t take them violently out of the hands of government, all we can do is by some sly roundabout way introduce something they can’t stop.” — Friedrich Hayek
There has been a significant effort to rectify our colonial history — education grants and help with health care but it’s not about handouts while the same system continually perpetuates inequitable feedback loops.
It’s about realising the nature of the economic structure, how it operates and who it favours.
Do Māori want to be sovereign? Whatever that vision entails, economic sovereignty is a prerequisite.
“The Treaty of Waitangi, regarded as New Zealand’s founding document, has been a source of much debate and controversy. While it underpins much of our history, for some, particularly non-Māori, it is viewed as a distraction or even as irrelevant to modern New Zealand. It is regarded as something that divides ‘us’ as a nation. Others see dealing with the many breaches that followed its signing in 1840 as critical to not only understanding our history but building our future as a nation.” [27]
Even the content from a government website above alludes to uncertainty of Māori sovereignty pertaining to the treaty, yet in 2014 they set the record straight that Māori did not cede sovereignty. After six years I think it’s time to rectify the literature. [28, 29, 30]
“What will the Crown do now? They need to talk with our future generations to change the way this country is managed and controlled.” — Pita Tipene
“It’s not about settlement but a process that ensures that Te Tiriti o Waitangi is the enduring document envisaged as part of the partnership. Until then nothing will ever be full and final,” — Erima Henare
Moana Jackson’s Matike Mai report in 2016 was regarding constitutional reform yet the crown’s response to Moana was in his words, “basically, get stuffed”.
In 2017 the reconciliation ceremony was held in Parihaka, so it seems reform and healing is slowly occurring, hence this article to open up dialogue about what it takes (monetarily and economically speaking) to become sovereign again. [31, 32]
We need to think about how future commerce will be conducted after decolonisation, when sovereignty has been restored. How will the economy interoperate both nationally and internationally? There is no ability to revert back to bartering methodology during the digital age nor can we continue operating under the oppressive colonial structure.
Indigenous Peoples need a sovereign currency and operating system that reflects our ideals or is apolitical to ensure we have a seat at the table regarding decisions for our time, land, and resources.
Here is where this article will become controversial for most readers but bear with me and try to ignore any preconceived negative stigma that surrounds what I’m about to propose.
We have the ability to go outside of the colonial economic structure for our commerce and for storing our wealth, peacefully. As Hayek alludes to in the quote above, we now have that sly roundabout way.
Let’s highlight the benefits and examine what a sovereign currency could look like:
- It would have a fixed supply, savings would increase in purchasing power over time and no longer be susceptible in the artificially inflated markets (housing, stocks etc) Governments could no longer consume now and hand down debt to future generations.
- Governments would have to justify taxation, this ensures public representation in the government sector.
- Banks would no longer be an integral part of the system, it would be replaced by a trust-less decentralised and localised network which means payments can not be stopped, funds can not be seized and lending would operate in a more peer to peer system. This rewards citizens with the profits from loans, rather than the foreign CEOs and shareholders.
- Our time preference would slow down, fiat’s lack of scarcity and need for perpetual growth is systemic to our consumerist and materialistic society. Long term sustainable focus on inter-generational wealth and wellbeing would be incentivised.
- Able to be your own bank. Aligning everyone’s interest to ensure the security of the network. Decentralised and open source means you no longer have to trust and pay third parties for transferring value while still being secure.
- Easy to verify ledger to ensure there is no counterfeit. Enabling citizens to keep their financial history private whilst simultaneously allowing the public sector to show their spending in a more transparent manner.
We need to understand common ideology and unite from the bottom up. Rather than dissect the issues in a way that encourages the blame game between socialism, capitalism, communism and all the alternatives in between, let’s focus on what matters; centralised monopolies, technology and what options we have.
One of the main responses to this crisis and the shortcomings of existing systems, will be to print more money to build. The question is what are we building? Is it a better system? What’s the opportunity cost? Who benefits the most?
We have all heard of bitcoin, generally it is negatively portrayed in the mainstream media as either nerd, criminal, or drug money. Ironically, that is more reflective of the current system to the contrary. I’ve mentioned some of the benefits above but others have written more eloquently on the general value proposition, I’m attempting to open dialogue and draw parallels to how Indigenous People’s could utilise it to regain economic sovereignty and benefit financially.
Some say it obsolete’s all other forms of money, it’s a 0–1 technological innovation that highlighted the relationship between money’s masters and slaves. It is a revolution akin to the internet or the number zero, a peaceful revolution and a way to opt out of the current system to join a entirely new declaration of monetary independence. Some get excited about it’s stock to flow ratio while others believe they have missed the boat and it was only the early years that saw a considerable gain.
There are multiple calculators that show returns, 2015 $100 in a Btc focused 401k would return $3,560 as of writing. To look at the future potential gains there are some great articles such as the bullish case, Paul Tudor Jones (Wall St) saying it’s a hedge against quantitative easing and inflation. Even Iran committed $7 million dollars to secure 3% of the network’s hash power, Vennezuela accepts it for passports and it’s already legal tender in New Zealand which is the first country to do so.
Everyone benefits from aligned incentives in a decentralised structure and the transparency of open source software. Being decentralised means there is no head of the snake to be manipulated, it also means there is no established marketing team or narrative. Each user sees it as a solution to an issue that affects them and markets their take on it’s importance and relevance.
Conclusion:
“Who controls the food supply controls the people; who controls the energy can control whole continents; who controls money can control the world” — Henry Kissinger
“Time preference refers to the ratio at which individuals value the present compared to the future, an enormously important and widely neglected aspect of individual decision making
Sound money is a prime factor in determining individual time preference, the better the money is at holding its value, the more it incentivises people to delay consumption and instead dedicate resources for production in the future which leads to capital accumulation and improvement of living standards.
Money is a zero sum game and converges to the most saleable, that is, the one with the best properties becomes widely adopted. Civilisations prosper under a sound monetary system, but disintegrate when their monetary systems are debased, as was the case with the Romans, the Byzantines, and modern European societies.”[33]
ANZ Chief Economist Richard Yetsenga stated “we’re already in MMT” [1] but “one of the most ludicrous concepts that pervades Keynesian economic thought is the idea that the national debt ‘does not matter, since we owe it to ourselves”, this fallacy is covered well in this article but unfortunately MMT is no longer a minority view, as ANZ’s chief economist states “it explains our system as it functions now”. [34, 35, 36, 37]
If you need perpetual growth in a system, products and services are never optimised, they’re made to be constantly upgraded. E.g Apple and Samsung being fined for deliberately slowing down older phones.[38]
It’s clear the current dynamic punishes the lowest socioeconomic class globally, which tends to be colonised indigenous. When more money is created, the total supply of money increases and therefore your wealth and purchasing power reduces, however the amount of hours you worked remains the same.
Your wealth (W) can be calculated by your net worth measured in the dollars (X) over total supply (S):
W = X / S
If S =∞ then W tends to 0.
Recently the central banks globally have stated that they can print infinite amounts of money, this means your wealth equation as above is X / ∞.
So if there’s infinite cash, why do we pay any taxes? Why don’t they just print what they need? How can we begin to calculate our wealth if there’s an endless amount of credit creation?
“We spend too much, we borrow too much, and we distort the markets. The bigger the distortions have lasted, the bigger the bust will be.”- Ron Paul
Due to me being Māori (Waitaha, Ngāti Rārua) and Pākehā, I can see both perspectives. But the more I learn of our colonial past, the more I see the need for Indigenous People to have their own sovereignty which requires their own sovereign money and decentralised network. I write this, not with a hand out wanting anything but as a Māori / Pākehā citizen representing both cultures wanting to uphold the treaty and do what is right, it will help with our Pākehā identity too.
‘For Māori, profit at any cost is not the main objective. Kaitiakitanga (environmental sustainability), Māoritanga (cultural security), Manaakitanga (social wellbeing), and broader intergenerational outcomes are key considerations.’[39] This doesn’t seem to be possible to coincide within a colonial structure predicated on perpetual growth.
I present to you this discussion in hopes of collaboration in looking for an economic solution, an Indigenous sovereignty — will you help?
Extra excerpt:
“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” — Henry Ford
Recently, Cory talked about an intransigent minority, a concept from Nassim Taleb’s book. Essentially, if there is a minority who stubbornly refuses something, for whatever reason, then society will accommodate for their needs as long as it has little/ better trade offs for society.
I want the majority of bitcoin’s intransigent minority to be Indigenous Peoples, so they can seize their own reparation by being early adopters. By adopting early, Māori can utilise our sovereign land to build businesses that are decentralised and come under common law. Reclaiming sovereignty can’t be done without sovereign currency. Reclaiming individual sovereignty requires acknowledging the past while taking responsibility for your future. Everything has trade-offs, for every decision there is an opportunity cost.
Thank you all for reading. Engage with me on twitter and facebook for more!