This Unreasonable Government.

Losing The Room: One can only speculate about what has persuaded the Coalition Government that it will pay no electoral price for unreasonably pushing ahead with policies that are so clearly against the national interest. They seem quite oblivious to the risk that by doing so they will convince an increasing number of voters that they are extremists.

ONE OF THE MOST PERPLEXING ASPECTS of the National-Act-NZ First coalition government is its perverse unreasonableness. Perverse, because in almost every instance the unreasonable nature of the Coalition’s policies generate reactions that can only be politically counterproductive to its chances of re-election.

Politicians can be radical, or reactionary, it matters little, just so long as they can a make a reasonable case for their intended course of action. A reasonable policy not only stands a good chance of being implemented, it is also likely to be well received by the electorate. If, over the course of its three year term, a government’s actions strike most voters as consistently unreasonable, then its chances of being re-elected will lessen considerably.

What makes a policy reasonable in the eyes of the ordinary voter? Principally, it is the quality of the evidence presented in its favour. If a policy is endorsed by persons with a reasonable claim to being experts, or, at the very least, by people with a long history of being right about the subject under discussion, then its chances of being accepted are high. The more questionable the credentials of those making the government’s case, however, the less faith the public is likely to place in its policies.

Public faith in government policy will dissipate even more rapidly if the only people or organisations to speak up in its favour are those with a clear vested interest in seeing it implemented. The moment the “evidence” of any given policy’s supporters provokes the ordinary voter to respond “Well, they would say that, wouldn’t they?”, then the policy is in serious trouble.

But being in trouble is not the same as being rejected. A government absolutely determined to forge ahead has the power to implement policies that are unsupported by scientific evidence, expert opinion, common sense, or even a majority of the electorate. By doing so, however, the parties responsible not only expose themselves as being unreasonable, but they may also come across as potentially dangerous.

They remind voters of the intoxicated individual who, in the face of abundant evidence to the contrary, insists that s/he is sober enough to drive home. It’s not just the drunk people worry about, but the possibility that, if s/he gets behind the wheel, then a perfectly innocent person, or persons, may be seriously injured or killed. Unfortunately it’s not as easy to take the keys away from a government as it is to take the keys away from a drunk. Voters may be forced to wait three years, or more, before they can get a government intoxicated by its own unchallengeable authority off the road.

On the subject of roads: car-lovers and the Coalition would appear to be locked in what more and more New Zealanders perceive to be a particularly worrying example of political folie à deux. The Transport Minister, Simeon Brown, unmoved by scientific evidence, expert opinion, common sense, and what is fast approaching a majority of the electorate, is prioritising the construction of more and more “highways of national significance”. His decisions, by favouring road users (and the road haulage lobby) at the expense of New Zealand’s rail network, can only further impede New Zealand’s efforts to meet its Climate Change commitments.

One can only speculate about what it is that persuades the three coalition parties that they will pay no electoral price for unreasonably pushing ahead with policies that are so clearly against the national interest. They seem quite oblivious to the risk that by doing so they will convince an increasing number of voters that they are extremists.

Only extremists are so convinced of the rightness of their cause that no argument, no matter how rational and well-supported by evidence, is permitted to prevail against it.

Only extremists would consider passing a law that allows one of three Ministers of the Crown to over-rule the previous judgements of the courts, the recommendations of expert witnesses, the advice of his/her own carefully chosen advisory panel, and the clearly expressed wishes of affected locals, if they run counter to the Ministers’ preferred solutions.

The last time a right-wing government passed such a law, the author and some comrades, under cover of darkness, chained together and padlocked the doors of the Dunedin Law Courts, on the grounds that Rob Muldoon’s “Clutha Development (Clyde Dam) Empowerment Act” (1982) had just made them irrelevant to the conduct of public affairs.

That same Rob Muldoon would spend the next two years over-ruling virtually every institution dedicated to advising the government of the day on the state of the New Zealand economy, and how best it might be served by the decisions of its ministers. By mid-1984, unable to bring together a budget that added-up, Muldoon called a snap-election. New Zealand would never be the same.

Forty years later, another Finance Minister, against the advice of just about every reputable economist and responsible interest-group in the country, is proceeding with the Coalition’s promise to cut personal income tax. The consequences of this Muldoonesque intransigence are already apparent in public sector lay-offs, health sector cut-backs, and social-welfare sanctions. Not even the latest report from the OECD, which not only recommends against tax-cuts, but actually advocates for a Capital Gains Tax, carries sufficient weight to persuade Finance Minister Nicola Willis to see sense and act reasonably.

An unwillingness to be advised. Turning a deaf ear to ideas that challenge one’s prejudices. Insisting upon following a course of action that is more likely than not to result in unnecessary and avoidable harm to people, animals, and/or the natural environment. Starting down a road that seems to be leading to disaster, but refusing to turn back. These are not the actions of reasonable human-beings. On the contrary, they are the actions of the individuals, parties, and even the nation states, that have dragged humanity into it worst catastrophes.

Barely six months into its three-year term, the Coalition Government of Christopher Luxon cannot avoid the charge that it is manifesting all the self-destructive behaviour listed above. In circumstances where good ideas, no matter their provenance, should be given a fair hearing. Where concessions and compromises aimed at achieving consensus are more than ever necessary to steer the New Zealand ship-of-state through what Leonard Cohen called “the reefs of greed”, and “the squalls of hate”, we are given only the jutting chins of men and women who will not be told.

This essay was originally posted on The Democracy Project Substack site on Monday, 13 May 2024.

Fighting Inflation – What Would A Democratic-Socialist Government Do?

Think Big: A democratic-socialist government could remove GST from basic food items. It could re-nationalise and centralise the generation and distribution of electric power, and then retail it to citizens at an affordable price. A democratic-socialist government could nationalise the public transportation system and make it free for everyone. A democratic-socialist government could even impose a “Carbon Footprint Tax” on imports. Only among neoliberals are “subsidy”, “tax”, and “tariff” dirty words.

CONFRONTED WITH THE CHALLENGE of a worsening cost-of-living crisis, what would a democratic-socialist government do? Right now, answering that question coherently and believably is the Left’s most important assignment.

The Right’s response to this challenge is relatively clear: throw the economy into recession, maintain strong downward pressure on aggregate demand; reduce public spending. The Centre-Left’s approach to the crisis differs in no serious respect from the Right’s. It hopes to achieve the same goals, using the same methods, but in such a way that their inherent social violence is masked by the rhetoric of “kindness”.

Unfortunately for Jacinda Ardern and her Cabinet, there is no “kind” way of bringing inflation under control while remaining within the ideological parameters of neoliberalism. The classical definition of inflation: too much money chasing too few goods; more or less writes the neoliberal government’s policy for it.

The first and most important objective is to reduce the amount of money in circulation. Neoliberals achieve this key goal by raising the cost of borrowing money. Those with mortgages are required to pay more, leaving households with less to spend. The price of capital also rises, applying the brakes to business expansion and investment. In the face of these developments the labour market contracts: raising the level of unemployment, increasing workers’ fear of “the sack”, and setting off a steady decline in real wages.

In short order, the problem of too much money in too many people’s pockets simply disappears – along with their cash and credit. But wait, there’s more. If a farmer cannot make a dollar by supplying the market with one cabbage, then he will supply it with two. There will be more cabbages to buy, and at a lower price.

And there you have it! The cost of living falls. The inflationary tide recedes. The problems confronting neoliberal economists and politicians are solved.

All well and good for the neoliberal economists and politicians, but not in any way good for the human-beings on the receiving end of their decisions. The great virtue of these macroeconomic measures, from the neoliberals’ perspective, is that they save them from having to deal with the devastating micro effects of their policies.

They don’t have to witness the expression on workers’ faces when they’re told that their employer is “letting them go”. They don’t hear the sobs of the young couple leaving the house they struggled so hard to buy, but whose mortgage they can no longer afford. The small businessman who cannot make the numbers add-up, no matter how hard he tries, suffers alone – a casualty of capitalism’s “creative destruction”. The real-world effects of a neoliberal government’s economic policies occur in places where the politicians who set them in motion seldom visit.

In the long run, though, everyone is better-off for having helped to beat inflation and bring the cost-of-living under control. Such is the refrain of the neoliberal decision-makers. It is a bleak sort of consolation, akin to that of the General who praises the sacrifice of thousands of conscript soldiers – all of them killed by the murderous ineptitude of his military tactics. There are ways to win battles that do not necessitate slaughter. There are ways to beat inflation that do not depend on simultaneously beating-up the nation’s poorest and most vulnerable citizens.

But, what are these ways? How can inflation be beaten without inflicting economic pain on the weakest members of society?

For democratic-socialists, the answer lies in using the enormous power of the state to regulate the economy. Exactly the same power that neoliberalism currently uses to entrench the power and privilege of the capitalist elites.

Because the power of the state does not have to be used to keep the private sector profitable. The power of the state could just as easily be used to freeze mortgage rates, cap the prices of necessities, and control rents; to raise appreciably more revenue from its wealthiest citizens; and to levy “windfall” taxes on all those corporations guilty of racking-up excessive profits during the Covid-19 pandemic. (Even Boris Johnson’s Conservatives did that!)

At the same time, a democratic-socialist government could remove GST from basic food items. It could re-nationalise and centralise the generation and distribution of electric power, and then retail it to citizens at an affordable price. A democratic-socialist government could nationalise the public transportation system and make it free for everyone. A democratic-socialist government could even impose a “Carbon Footprint Tax” on imports. Only among neoliberals are “subsidy” “tax” and “tariff” dirty words.

To be fair to Jacinda and her Finance Minister, Grant Robertson, they have made a modest effort towards subsidising petroleum and public transport. They have also provided many New Zealanders with a “Winter Energy Payment”. These are good moves, but they are nowhere near enough.

Sadly, the full mobilisation of the state’s powers to bring down the cost-of-living, tax excess profit and  wealth out of circulation, and reconfigure the ownership of what are, in truth, “social” industries for the benefit of the many, not the few, is still beyond the range of this Government’s political imagination. Nearly 40 years of neoliberalism has robbed Labour of the courage and creativity that, in the 1930s and 40s, made New Zealand a model democratic-socialist state.

Conservatives reading this post will shriek “Muldoonism!” And, they will be right. But there is another way to look at Rob Muldoon’s economic management, apart from using it as shorthand for everything that was wrong with New Zealand in the 1970s and 80s.

It is possible to recast Muldoon’s policies as proof of how deeply ingrained the determination to look after the interests of ordinary people had become in the New Zealand political system. Muldoon subsidised and regulated and controlled because the alternative – letting “market forces” rip – would leave far too many casualties in its wake. When Rob Muldoon promised “New Zealand the way YOU want it” – he meant it.

That the Labour Party was willing to inflict those casualties; that to keep the good opinion of Treasury and The Business Roundtable it was willing to abandon its democratic-socialist principles; and that, to this very day, its political creativity remains stunted by the neoliberal dogma it cannot seem to abandon; strikes me as a far greater crime than any Rob Muldoon may have committed. In the end, even the Springbok Tour made New Zealand a stronger country.

But, neoliberalism has not made New Zealand a stronger country, it has made it weaker. When the instinct of both its major parties is to use the nation’s weakest citizens as economic cannon-fodder, then surely it is time New Zealanders made “neoliberalism” a dirty word? Imposing cruelty in the name of kindness has only ever left humanity with more that is cruel, and less that is kind. It is not what democratic-socialists do.

This essay was originally posted on The Daily Blog of Friday, 22 July 2022.

The Recession New Zealand Has To Have?

Going Down? Governments also suffer in recessions and depressions – just like their citizens. Slowing economic activity means fewer companies making profits, fewer people in paid employment, fewer dollars being spent, and much less revenue being collected. With its own “income” shrinking, the instinct of most government’s is to sharply reduce spending. 

CONVENTIONAL ECONOMIC WISDOM insists that the only effective cure for rising inflationary expectations is a short, sharp recession. Easy to say, but much, much harder to accomplish – especially if you are at least nominally a party of the Left. The ghost of John Maynard Keynes is forever whispering in the ears of Labour parties – even those which long ago embraced the precepts of Neoliberalism – and his message is always the same: Spend, spend, spend.

The problem with spending in an inflationary environment is that it does nothing to discourage the notion that the price of basic items in six months’ time will be appreciably higher than they are now. In such circumstances, simple logic dictates that it is better to make a substantial purchase today, than tomorrow. They also encourage the idee fixe that one’s income must be increased to match, at the very least, the rate of inflation. Understanding this expectation, employers budget to recover the cost of increased wages and salaries by increasing the price of their goods and services.

Once stimulated, inflationary expectations, and the upward spiral in wages and prices they set in motion, are very difficult to suppress.

Essentially, a government is required to make it a lot more expensive for people to borrow money. At the macro level, sharply rising interest rates have the effect of slowing economic growth. At the micro level, employers stop hiring and start firing. Those forced onto the dole face a dramatic loss of income and all discretionary spending ceases abruptly. The rest of the workforce, fearful of losing their jobs, stop demanding wage and salary increases. They also stop spending on non-essentials and start saving. Retailers now have the strongest of incentives to keep their prices stable.

Pretty soon, economic growth stalls, and then shifts into reverse. Pessimism reigns supreme. Inflationary expectations, along with inflation itself, come to a shuddering halt.

The trick, of course, is in knowing how long to keep the interest rates going up, when to hold them steady, and when to let them drop. Keep them high for too long and the economy risks transitioning from recession to depression. Those with money, ill disposed to risk it, satisfy themselves with government-guaranteed returns. Unable to borrow, or meet their higher interest payments, businesspeople go bust, and property-owners with mortgages lose their homes. Unemployment rises, spending decreases still further, and retailers are forced to contemplate lowering their prices.

What the economists most fear now is not of inflation but deflation. The prospect of the economy not simply grinding to a halt – but shrinking.

At this point, all eyes turn to the government. Something must be done! But governments also suffer in recessions and depressions – just like their citizens. Slowing economic activity means fewer companies making profits, fewer people in paid employment, fewer dollars being spent, and much less revenue being collected. With its own “income” shrinking, the instinct of most government’s is to sharply reduce spending. Now it is the turn of those businesses, organisations and institutions dependent on government money to feel the pinch. Exactly the same contractionary spiral that wound down the private sector, now grips the state and its hangers-on.

But the trials and tribulations of the state do not stop there. The huge number of unemployed and otherwise impoverished people have nowhere else to turn for assistance but their government. Meeting that need from a dwindling treasury, however, is the stuff of political nightmares. Just keeping the education, health and transportation systems functioning is a huge drain on the state’s resources, feeding and housing the hungry and homeless threatens to render it insolvent.

But you can’t just let people starve – can you? The hungry and the homeless themselves are likely to answer that question, as they did in New Zealand’s hungry winter of 1932, when riots tore the main streets of Auckland, Wellington and Dunedin apart. Terrified, the conservative coalition government postponed the 1934 general election by 12 months and passed the draconian Public Safety Conservation Act. Not that it did them much good. On Tuesday, 26 November 1935, New Zealanders elected their first Labour Government.

And what did that government do? It spent, spent, spent.

So, what should Jacinda and Grant do? Continue to spend, spend, spend? Or allow Reserve Bank Governor, Adrian Orr, to push up the Official Cash Rate (OCR) to 5 percent and watch economic activity nosedive?

From a left-social-democratic perspective, at least part of the answer would be to embark on a massive political education campaign. Explain to Labour’s voters the havoc inflation wreaks upon the lives of ordinary people, and why it must be driven out of the New Zealand economy. Tell them defeating inflationary expectations will require the full co-operation of the whole population. Then announce a two-year wage, price and rent freeze. Further announce the state subsidisation of basic foodstuffs and energy supplies, to be paid for by higher taxes on the wealthy, the restoration of Death Duties and a Capital Gains Tax.

A return to the bad old days of Muldoonism? Damn straight! It certainly beats asking the poorest and most vulnerable New Zealanders to carry the full burden of eliminating inflation. Few people appreciate that the whole purpose of destroying Muldoonism – which was simply an eccentric form of Keynesianism – was to free the wealthy from their obligation to contribute their fair share towards the maintenance of a decent society. That was all Rogernomics and Ruthanasia were ever about: making the poor pay more so the rich didn’t have to.

Not that Jacinda and Grant are at all likely to adopt a left-social-democratic economic agenda to deal with the impending crisis. They will make the poor pay, pretend they’re not, fool nobody, and be bundled out of office in 2023.

Ironically, their policy choices may end up decisively reducing inflationary expectations. To the limited degree permitted by Neoliberal economics, the economy will recover, and the National Party will kick-off another nine year term on a thoroughly sunny note. Who knows, by the time the next election rolls around in 2026 they might even be in the mood to: Spend, spend, spend.

This essay was originally posted on The Daily Blog of Friday, 10 June 2022.

Insufficiently Qualified To Object: Why Labour Ministers Can Be Lied To With Impunity.

Qualified To Give - And Take - Advice: Most Labour MPs are self-conscious members of the meritocracy, meaning they have succeeded where the vast majority of their fellow citizens have failed. The primary political obligation, understood by all members of the First Labour Government, was to listen to the people. Eighty years on, the direction of that obligation has reversed. Now it is the duty of the people to listen to – and heed – the instructions of political leaders better qualified than themselves. 

DAILY BLOG EDITOR, Martyn Bradbury, has lambasted the state bureaucracy for its failure to tell its political “masters” the truth. While entirely justified, his criticism does not go far enough. There’s an old saying: “Fool me once, shame on you. Fool me twice, shame on me.” When, as has happened on multiple occasions since 2017, public servants have been caught out lying to their ministers, why haven’t the individuals responsible (and their superiors) been sacked? What is it that prevents Labour politicians from taking steps to ensure both the transparency and accountability of the public service? A coherent answer to this question would not only explain much, it would allow even more to be improved.

The most obvious answer to these questions lies in the deliberate legislative separation of the political from the operational. The State Sector Act (1988) restricted politicians to the formulation of policy. The implementation of that policy was the responsibility of the CEO of the relevant ministry or department. Hiring and firing, and holding his or her underlings accountable for their mistakes – was the CEO’s job – not the Minister’s. Politicians had no role to play in “operational matters”.

That this arrangement constituted a drastic reduction in the power of government ministers to “make things happen” was (and remains) entirely deliberate. That it also profoundly disempowers the people’s representatives, working through the Executive, to give practical expression to the people’s will is, likewise, completely intentional. The neoliberal revolution has always been about limiting the effectiveness of democratic institutions. The State Sector Act fulfils this revolutionary function admirably. (Astonishingly, the SSA’s replacement legislation, of which the current government is the ostensible author, shifts even more power from elected MPs and ministers to unelected state bureaucrats!)

The arguments in favour of this legislation, like just about all the other laws associated with “Rogernomics”, go back to the era of the National Party prime minister, Rob Muldoon. By combining the powers of the Prime Minister and the Finance Minister in his own person, and using the enormous powers available to him under the Economic Stabilisation Act (1948) Muldoon amassed sufficient authority to both overawe his bureaucratic advisers and execute a series of constitutionally dubious end-runs around Parliament itself.

This was the “unbridled power” that the former law professor, Geoffrey Palmer, then Labour’s deputy-leader, railed against in the run-up to the 1984 general election. He and his colleagues in the Labour caucus were not only determined to put an end to “Muldoonism”, they were equally determined to put a bridle on all future “Muldoonist” politicians – lest they make a similar bid for political and economic omnipotence.

Palmer’s constitutional lawyer’s outrage at Muldoonism was skilfully interwoven with the neoliberal programme of the Fourth Labour Government’s economic string-pullers – sorry, “advisers” – at Treasury and the Reserve Bank. What began as a perfectly reasonable effort to prevent the rise of another Muldoonist “economic dictator”, ended with more and more economic and administrative decisions being removed from the hands of elected politicians and placed in the hands of appointed officials. New Zealand had escaped from the clutches of a democratically elected (and unelected, let’s not forget) economic dictator, only to find itself, four years later, in the hands of a clutch of non-elected neoliberal administrators – with quasi-dictatorial powers.

Labour MPs at the time – and ever since – have found it almost impossible to conceptualise the profound redistribution of power and influence that Rogernomics made possible. They still see the period as one of shaking-off shackles and opening up New Zealand to the bracing winds of free markets and free trade. They simply cannot place themselves in a drama which has at its heart a deadly attack at the democratic right of the people to shape not only their political future, but their economic and social futures as well. They came to view the economic controls imposed upon capitalism by the likes of Michael Joseph Savage, Peter Fraser, Walter Nash and Norman Kirk as well-meaning, but wrong. They believed that Muldoon’s over-regulated society was where even “good” countries like New Zealand ended up when politicians were permitted to lead them down what the neoliberal guru Friedrich von Hayek (1899-1992) called “the road to serfdom”.

It’s not quite enough, though, is it? What remains to be explained is why Labour leader after Labour leader – from David Lange to Helen Clark to Jacinda Ardern – has been unable to see neoliberalism for what it so self-evidently is – an ideological excuse for transferring more-and-more power from the poor to the rich. Ironically, the answer has everything to do with the astonishing success of Labour, and social-democratic parties like it, in the years following the Great Depression of the 1930s.

The success of the economic and social reforms of the post-war period transformed society into what its citizens were encouraged to believe was a “meritocracy”. Public health systems brought a large measure of physical equality, while, for the first time in human history, public education made equality of opportunity possible. Welfare states, it was argued, brought everyone up to the same line: after that, how far you went was a matter of individual merit.

This wasn’t just political rhetoric, either. By the 1960s and 70s, thousands of working-class children, whose working-class parents had voted the welfare state into existence, were becoming the first person in their family’s history to study at a university. They emerged from the experience much changed. Not only did they possess a brand new professional qualification, but also a brand new way of looking at themselves and the society they lived in.

In the past people had been respected for reasons over which they exercised little or no control. Who their parents were. The colour of their skin. Their religion. Where they had come from. How much wealth their family possessed. Now it was different. What mattered more than anything else in the new meritocracies was what you were qualified to do. Crucially, a qualification was something achieved individually, through personal talent and hard work. Professional qualifications conferred status and enhanced earning power, but they also conferred something else: the right to offer advice; the right to be consulted; the right to be heeded.

It was one of the distinguishing features of the Fourth Labour Government – how many of its MPs possessed professional qualifications. They were successful members of the meritocracy, which meant they had succeeded where the vast majority of their fellow citizens had failed. The primary political obligation, understood by all members of the First Labour Government, was to listen to the people. Fifty years on, however, the direction of that obligation was reversed. Now it was the duty of the people to listen to – and heed – the instructions of political leaders better qualified than themselves. Moreover, what was good for “the punters out in punterland” was also good for the politicians.

Advised by impressively credentialled and highly experienced public servants, today’s Labour MPs feel obliged – by the meritocratic principles central to their personal identities – to do exactly what they’re told. And if they discover subsequently their advisers have lied to them, well, they must have had a very good reason for doing so. A reason they simply aren’t qualified to understand – or challenge. Not when the only alternative is allowing the people to decide. Because, seriously, what do they know?

This essay was originally posted on The Daily Blog of Tuesday, 6 April 2021.

Has Labour Embraced "Muldoonism"?

The Spectre Haunting The New Zealand Initiative: “The worst of Muldoonism is back in New Zealand politics. It is a morass of ad hoc interventions and spiralling public debt. We know how that ended last time.” The New Zealand Initiative – like the Business Roundtable, from whose forehead it burst fully-formed in 2012 – is marching as to war in defence of Neoliberal orthodoxy, determined to strike down what it clearly regards as this Labour Government's economic and political heresy.

“WITH NO PUBLIC CONSULTATION, a truncated Parliamentary process – and, as it turns out, without much consideration of Treasury and Inland Revenue’s advice.” These three, rather terse observations, offered by the New Zealand Initiative’s Executive Director, Dr Oliver Hartwich, on Friday, 26 March 2021, make it clear that he is not a happy-chappie. Commenting further on the mechanics of the Labour Government’s Housing Package release, Hartwich noted, drily: “This is not how OECD countries are usually run.”

A short sentence, but one freighted with political significance. For many years New Zealand has been held up as the shining example of how an OECD country should be run. Orthodox in its economic thinking; predictable in its politics: when it comes to welcoming business investment, New Zealand has long been feted as one of the world’s most hospitable countries. That same world will, accordingly, raise a metaphorical eyebrow when a body representative of New Zealand’s largest businesses comes out swinging.

“The worst of Muldoonism is back in New Zealand politics. It is a morass of ad hoc interventions and spiralling public debt. We know how that ended last time.” These are hardly words of conciliation! The New Zealand Initiative – like the Business Roundtable, from whose forehead it burst fully-formed in 2012 – is marching as to war in defence of Neoliberal orthodoxy, determined to strike down what it clearly regards as economic and political heresy.

Significantly, the wrath of the New Zealand Initiative echoes the reported anger and confusion of senior government officials struggling to come to terms with the Labour Government’s intentions in the days immediately preceding the Housing Package’s public release. With a firm resolve, unprecedented in decades, Labour politicians were insisting that their bureaucratic advisers implement their policies. Not advise them as to whether their policies can, or should, be implemented, but simply do as they were bid.

Small wonder Hartwich felt compelled to invoke the spectre of Sir Robert Muldoon. In New Zealand neoliberal mythology, “Muldoonism” has come to represent everything that was wrong with the “old” New Zealand. The New Zealand where a jumped-up accountant, advised by God-knows-what sorts of friends and cronies, felt entitled to over-rule the advice of experts who could buy and sell him intellectually before breakfast. The New Zealand where colossal debts were incurred in pursuit of “Think Big” projects whose primary purpose was to secure a handful of electorally vital “marginal seats”. The New Zealand that Labour’s Roger Douglas put to the sword in 1984. The New Zealand that people like Hartwich, Dr Eric Crampton, and that veteran of the free-market revolution of the 1980s, Dr Bryce Wilkinson, thought was dead and buried.

The discomfort, bordering on panic, among the government’s official advisers in the days leading up to the Housing Package’s release is, therefore, understandable. Most of us would struggle to remain calm if the dead started coming back to life, and then began pounding on the doors of the Beehive’s fifth floor!

Fear. You can read it between every line of this paragraph from a New Zealand Initiative “Policy Point” entitled “A Risky Place To Do Business”, released by Drs Crampton and Wilkinson on 26 March:

The normal routes for assessing such issues are being circumvented through haste. The bureaus have been unable to provide advice, and those outside of Parliament who might normally work through the implications of complex legislation have thus far been shut out entirely. We can hope that the eventual legislation will not be passed under urgency, but even a normal select committee process will have difficulty grappling with this issue.

While the detail of the Labour Government’s Housing Package has been sufficient to unleash the very worst impulses of New Zealand’s landlord class – whose screams of rage and wild threats of social vengeance have pretty much confirmed the rest of New Zealand society’s worst fears concerning “property investors” – it is the rank insubordination of the nation’s elected leaders which most rankles Neoliberalism’s true believers.

The level of official paranoia was admirably reflected in Jack Tame’s dogged insistence that Grant Robertson disclose the identity of his advisers. Tame, perhaps revealing the views of the “experts” briefing him, seemed convinced that the Cabinet had somehow latched on to an alternate (and worryingly heterodox) set of advisers, who were now driving Government policy. The notion that, as Robertson rather testily pointed out, he and his colleagues were democratically elected to lead the country, appeared to cut little ice with the Q+A host.

Had Tame bothered to register the large portrait of Prime Minister Peter Fraser hanging on the wall of Robertson’s office, he might have had less difficulty in believing that a Cabinet made up of MPs elected to drive through transformational change have always possessed the latent executive power to do exactly that.

Those who are now quaking in their shiny leather shoes at the spectacle of a cabinet flexing muscles made weak through years of underuse, should be grateful that this Labour Government did not take advantage of the Covid-19 emergency to do what Peter Fraser did to ensure his government had the powers necessary to manage New Zealand’s fragile post-war economy. The Economic Stabilisation Act 1948 gave Cabinet the power to control wages, prices and rents by means of Parliament-circumventing Orders-in-Council. Without it, “Muldoonism” would not have been possible. The repeal of the Act in 1987 thus constituted one of the neoliberal revolutionaries’ most symbolic victories.

What the boys and girls at the New Zealand Initiative have failed to understand, however, is that the world of 2021 is a very different place from the world of 1984. A country grown impatient with Rob Muldoon’s idiosyncratic and high-handed management of the New Zealand economy was more than ready for a few years of bridled executive power. Three decades on, however, swapping politicians subject to a triennial electors’ veto, for “market forces” seemingly answerable to nobody, no longer has the feel of a game-winning substitution.

The worldwide populist surge suggests that strong executive powers, harnessed in the people’s interest, are no longer regarded as unequivocal evils. Only the most hardened veterans of the Rogernomics Revolution continue to insist that New Zealanders should trust “the market” to resolve a housing crisis ripping apart their country’s weakest and most vulnerable communities. With the polling resources at their disposable, it is inconceivable that the Labour Party and the Labour Cabinet have not detected a sizeable groundswell of voter opinion that “something must be done” about housing. And, if what we have witnessed over the past week is any guide, they are going to do it.

Dr Hartwich and his colleagues need to think very carefully about their response to this tectonic political shift. Sending out signals to international investors that New Zealand has become “a risky place to do business” is unlikely to be interpreted by many Kiwis as the action of a patriotic group of capitalists. On the contrary, it may speedily give rise to calls for those businesses no longer willing to identify themselves as loyal members of the Team of Five Million, to be given a taste of what life is like outside it.

This essay was originally posted on the Interest.co.nz website on Monday, 29 March 2021.

The Long March From The Bottom To The Top.

Revolution From Below: The original “Long March” was, of course, undertaken by Mao Zedong and what was left of his communist military forces. They did not, however, head off for the nearest school or university, government office or medical clinic. Their goal was not to infiltrate the institutions of capitalism, but to overthrow them.

THE POLITICAL ENGINEERING required to transform social-democratic New Zealand into a global poster-child for the free-market was considerable. Most New Zealanders under 50 years of age have accepted a description of the process which is four-fifths propaganda and one-fifth half-truths. The late Bruce Jesson, one of this country’s most astute political writers, characterised the events of 1984-1990 as a “bureaucratic coup d’état”.

Jesson’s description was, however, very far from being the general understanding of “Rogernomics” at the time of its introduction. Most New Zealanders greeted the economic transformation unleashed by the Fourth Labour Government as a welcome liberation from “Muldoonism”. More than three decades after its fall, “Muldoonism” continues to be the preferred shorthand for all the evils David Lange and his Labour Government were obliged to confront.

Muldoonism – and all its wicked works – served an ideological purpose over-and-above providing a never-ending series of anecdotes about the inefficiency and ineffectiveness of the state-dominated economy which the National Party leader and Prime Minister, Rob Muldoon, worked so hard to prop-up and protect. His regime was presented as being so practically and morally dysfunctional that the extraordinary measures employed to bring it down were entirely justified.

Lange, Roger Douglas, and all the other key “Rogernomes”, were presented to the New Zealand public as patriotic heroes – something akin to the Roman senators who assassinated Julius Caesar. Drastic illnesses, ran the argument of the bureaucratic “experts” guiding the Labour leadership, require drastic remedies. Sometimes the people have to be protected from the consequences of saying “No.” Sometimes the best thing you can do is not give them the chance.

Of all the many malign legacies of Rogernomics, this rejection of the democratic mandate – the principle that major changes to the status-quo should not be enacted without first obtaining the explicit consent of the electorate – is unquestionably the most pernicious. It is rendered even more dangerous by the need of its advocates to manufacture a political environment in which the setting aside of democratic norms can be presented as both reasonable and necessary.

The massive devaluation of the New Zealand Dollar of July 1984, followed a few months later by the crucial government decision to abandon the fixed exchange-rate policies of the previous thirty years, only became politically feasible in the context of a run on the New Zealand dollar – a crisis engineered by the very same people who now insisted that no viable alternatives to their preferred policies existed.

That this manufactured financial crisis led directly (and predictably) to a constitutional crisis, from which Muldoon emerged with his reputation even more blackened, bears testimony to the extraordinary skill of the string-pullers behind the scenes. Years later, when one of the Treasury officials most deeply involved in these events was asked whether or not the New Zealand business community of the time possessed either the talent or the will to have initiated the Rogernomics Revolution, he replied: “If we’d waited for them to do it, we’d be waiting still.”

It is hardly surprising that the men and women involved in what might best be described as the “heroic phase” of the neoliberal transformation of New Zealand, allowed their experiences to go to their heads. A small band of highly educated and (by their own lights) highly principled individuals had, through a judicious mixture of intelligence, audacity and raw courage, set an entire country on a radically different course.

They did not permit the near certainty that a clear majority of the population did not favour their new course slow them down for a second. As far as they were concerned, ordinary voters had no understanding of the profound issues confronting their country and were, therefore, undeserving of the veto power accorded them by classical democratic theory. The bureaucratic and political clique responsible for the revolutionary changes of Rogernomics were neoliberal Leninists who, like Lenin himself, had no intention of letting democracy get in the way of what had to be done.

As an effective method of securing radical change, “revolution from above” had much to commend it. That the Right embraced the new way of getting things done was hardly surprising, given its historical disdain for the dangerous distempers of democracy. For the Left, however, the embrace of elitism requires a more fulsome explanation. The most obvious being that elitism offered it a way out of the conundrum of an exploited working-class that consistently refused to abandon its reactionary social views and was altogether more receptive to the siren-song of radical nationalism than radical socialism.

When the Marxist student radical of the 1960s, Rudi Dutschke, came up with the idea of “a long march through the institutions”, it is difficult to avoid the conclusion that, consciously or unconsciously, he was substituting the acquisition of institutional power within capitalism for the creation of a mass working-class movement capable of confronting capitalism? His vision was of thousands of secret revolutionaries embedded in the professions, the civil service and the universities; all of them just waiting for the moment to transform capitalism’s institutions from within – so that capitalist society could be dissolved from above.

But, this optimistic vision reckoned without the power of capitalism’s institutional cultures to subvert the principles of even the most dedicated revolutionary. Dutschke failed to anticipate the risk that his Long Marchers might end up in a place where their radical social and cultural reforms, imposed on the masses from above, would end up strengthening capitalism rather than bringing it down.

Old-time revolutionaries might, themselves, have wondered about the apparent contradiction in Dutschke’s slogan. The original “Long March” was, of course, undertaken by Mao Zedong and what was left of his communist military forces. They did not, however, head off for the nearest school or university, government office or medical clinic. Their destination was the Chinese interior where they planned to regroup and refill their depleted ranks. Mao’s goal, at least until he was safely ensconced in power, was revolution from below – not above. That came later, in the form of the catastrophic “Great Proletarian Cultural Revolution”.

How then should the “Left” respond to the radical programme of social and cultural reforms about to be imposed upon the population from above by institutions of the New Zealand state? It is at least arguable that the changes planned by the Human Rights Commission and the Ministry of Education are analogous to the economic reforms formulated by Treasury and Reserve Bank officials in the early-1980s. As with those measures, there is next to no evidence of ordinary voters clamouring for the changes proposed. In 2021, those calling for restrictions on free speech, or compulsory “Unmake Racism” courses for schoolchildren, are as few and far between as working-class voters calling on Labour to embrace Thatcherism in 1984.

Real left-wingers, today, emulating the real left-wingers of the 1980s, would require those advocating top-down revolution to first obtain a bottom-up mandate.

This essay was originally posted on The Daily Blog of Tuesday, 2 March 2021.

What Is "Rogerpolitics"?

Hand In Hand: "Rogerpolitics" is the term coined by the New Zealand political scientist, Richard Mulgan, to describe the form of politics required to make sure that Rogernomics “took” in a country which, on the face of it, should have rejected neoliberalism out of hand. Had Rogerpolitics not been so successfully embedded in the key organs of the New Zealand state, then Rogernomics would not have lasted.

“ROGERNOMICS” is political shorthand for the neoliberal economic policies introduced by Labour’s finance minister, Roger Douglas between 1984 and 1988. While most New Zealanders have heard of Rogernomics, nowhere near as many have heard of its inseparable companion, “Rogerpolitics”.

The term was coined by the New Zealand political scientist, Richard Mulgan, to describe the form of politics required to make sure that Rogernomics “took” in a country which, on the face of it, should have rejected neoliberalism out of hand. Had Rogerpolitics not been so successfully embedded in the key organs of the New Zealand state, then Rogernomics would not have lasted.

Critical to the success of Rogerpolitics was the widespread public disillusionment with the style of politics that preceded it. In New Zealand’s case, the principal target of the public’s hostility was the National Party Prime Minister, Rob Muldoon, and his highly interventionist economic policies – “Muldoonism”. An additional factor in the public’s antipathy towards Muldoon was his facilitation of the extremely divisive Springbok Tour of 1981. In the eyes of younger New Zealanders, “The Tour” was proof of their elders’ unfitness to rule. The people referred to by the then prominent political journalist, Colin James, as the “RSA Generation” had, in the eyes of the “Vietnam Generation”, been confronted with a straightforward moral test – and they had failed.

Without Muldoon and Muldoonism; without the Springbok Tour; the hunger for a new way of managing the economy and running the country would not have been so acute. The proponents of neoliberalism, or “free market forces” (as the ideology was more commonly referred to thirty-five years ago) were pushing against an open door.

It was the same all over the advanced capitalist world. The interventionist economic policies that had played such a crucial role in generating the unparalleled prosperity of the post-war period had finally run up against the buffers of the capitalist system. Every attempt to reduce the rising levels of unemployment and inflation that were the primary manifestations of the system’s failure only ended up pushing them higher. Margaret Thatcher’s Conservative Party captured the growing sense of unease with its 1979 slogan: “Labour isn’t working.” The following year, in the USA, the Republican candidate for President, Ronald Reagan, summed-up the popular mood when he declared: “In this present crisis, government is not the solution to our problem, government IS the problem.”

In its essence, this is what Rogerpolitics is all about: getting government out of the way. If politicians, by interfering in the economy, only made things worse, then the obvious solution is simply to prevent them from interfering.

Accordingly, the Economic Stabilisation Act, which had since the Second World War allowed the Cabinet to more-or-less run the New Zealand economy by decree, was repealed. The Reserve Bank of New Zealand was freed from political interference. The State Sector Act, by introducing market disciplines to government departments and agencies, fundamentally reshaped the structure and purpose of the New Zealand civil service. Whenever possible, state-owned enterprises were sold into private hands.

At both the national and the local level the effect of these economic and political reforms was to significantly disempower the country’s politicians. Regulation, where it couldn’t be avoided altogether, was to be “light-handed”. The day-to-day running of things was to be left to the market’s “invisible hand” or, in those places where “free market forces” had yet to make their presence felt, to the new order’s administrative proxies – the CEOs of the new government ministries and local government bureaucracies.

With remarkable alacrity, the ideological and practical political infrastructure required to support the new economic regime was cemented into place. In the nation’s schools and universities; in it’s publicly and privately owned news media; in its local and national institutions, Rogerpolitics became the new orthodoxy. For the next thirty years it would not only inspire the design of the mechanisms by which political power is exercised, but also the moral justifications for their use.

Those New Zealanders born after 1984 – New Zealand neoliberalism’s “Year Zero” – have absorbed the “free market” catechism practically without thinking.

The market organises human activity much more efficiently and effectively than the state.

The freer the market, the better the organisation.

Private ownership generates much better outcomes than public ownership.

Capitalism works best when Money, Goods and Labour are all permitted to move freely around the globe.

Free trade promotes peace, prosperity and global understanding.

Protectionism is an outgrowth of nationalism – both of which are very bad things.

Trade unions distort the signals of the labour market – which makes them very bad things also.

Capitalism celebrates individual freedom and embraces human diversity – racism, sexism and all other forms of discrimination have no place in a properly functioning capitalist society.

In summary, the only sort of politics which it is ethical (and advisable) to practice in the New Zealand created by Rogernomics is the politics which exerts the least influence over the smooth operation of the free markets it brought into being. Rogerpolitics both asserts and insists that the best politician any New Zealander can be is the politician whose actions produce the least effect on the operation of the nation’s economy. The very worst politician a New Zealander can be is the politician who mobilises the envy of the many who have failed in the marketplace against the few who have succeeded.

Rogerpolitics does not believe that democracy is a market friendly form of government, and all Rogerpoliticians are expected to act accordingly.

This essay was originally posted on The Daily Blog of Thursday, 15 November 2018.