Thursday 16 May 2024

More Harm Than Good.

How Labour’s and National’s failure to move beyond neoliberalism has brought New Zealand to the brink of economic and cultural chaos.

TO START LOSING, so soon after you won, requires a special kind of political incompetence. At the heart of this Coalition Government’s failure to retain, and build upon, the public support that won it the 2023 General Election are two fundamental errors: one tactical, the other strategic. Tactically, it is a huge mistake to tolerate concentrations of opposition dedicated to thwarting your government’s policy. Strategically, it is fatal to pursue goals that cannot be realised without doing more harm than good. A government committed to radical change must, therefore, be satisfied that its key objectives are both desirable and obtainable, and then be ready to remove all serious obstacles to their fulfilment. So far, the National-Act-NZ First coalition government has failed to do any of these things. That’s why it’s losing.

National and Act (the jury’s still out on NZ First) are both incapable of grasping the central fact of the last forty-five years: that the neoliberal dream of a world governed exclusively by market forces is not only unrealisable, but would be utterly intolerable. Human-beings are complex and contradictory creatures, not cooly rational utility maximisers. In attempting to transform humanity into beings that could survive and thrive in their free-market utopia, neoliberals would first have to inflict immense and unceasing suffering upon the unconvinced majority. Such misery could not be sustained for very long in a democratic context. Thus, only two scenarios confront the serious neoliberal regime: either it will be voted out of office; or it will transform itself into a ferocious tyranny.

That National and Act don’t get this is truly astonishing. Recent New Zealand history offers plenty of lessons concerning what happens to governments who attempt to push the neoliberal project too forcefully. They are defeated electorally. National’s refusal to be guided by the fate of the Fourth Labour Government produced the salutary lesson of MMP – New Zealand’s Brexit – which instantly rendered the neoliberal project even more illusory. National’s and Act’s problem was that they couldn’t come up with anything better.

The abiding tragedy of New Zealand politics is that Labour and the Greens have proved equally incapable of abandoning the neoliberal project. No doubt there are many in both parties who would like to, but the obvious building blocks of an alternative economic and social project – re-nationalisation, re-regulation, workplace democracy – tend to be dismissed out of hand as either an impossible return to the “failed policies of the past”, or, even worse, “communism”. The restraining hands of those who have accepted, however sadly, the claim that “there is no alternative” to neoliberalism, are forever reaching out to prevent the re-creation of the Left. While, on the Right, the promise is always that “just one more big push” will usher in the neoliberal nirvana.

This colossal failure of courage and imagination has brought New Zealand to the brink of economic and cultural chaos. It wasn’t an easy country to break – a truly outstandingly bi-partisan effort was required to wreak such ruin.

Helen Clark and Michael Cullen had the smarts, and their Alliance coalition partner even had the policies, but both of them lacked the faith that anything lay beyond the neoliberal consensus but an arid conceptual desert and electoral death.

John Key knew the neoliberal model was broken – he was sworn in as prime minister as the Global Financial Crisis was breaking it. But, reconstituting a responsible conservatism simply wasn’t in him, and so he smiled and waved for nine years, while everything that mattered in New Zealand rotted away beneath his feet.

Jacinda Ardern and Grant Robertson had the hearts, but not the heads, for transformation. Then Covid-19 granted them their wish – but not in a kind way.

There was so much that could – and should – have been done. Labour could have done it fast – and with flair. National could have done it at a slower pace – but with more consideration. As things turned out, however, neither were ready to give up on the market. Why would they? Neoliberalism’s success as an ideology is mostly attributable to its core message: leave the economy alone and everything will turn out for the best, interfering with market forces only makes everything worse. It is seldom necessary to tell a politician to do nothing twice.

But, if people are prevented from being useful, then they’ll very quickly learn to be stupid. With the road to a more just economy blocked, leftists opted to re-define human-beings and change their cultures. If you can’t stop the oil companies from cooking the planet, then drive people crazy by demanding that they sort their rubbish into three different bins. If you can’t give working people simple human dignity, then give them some new pronouns. If the neoliberals won’t allow left-wing governments to build homeless Māori houses, then keep them warm with offers of “decolonisation” and “indigenisation”. Let them live under a 184-year-old piece of rat-eaten parchment, instead.

Such was the stupidity that National was elected to stop. But, really, they didn’t have a clue how to go about it. When Roger Douglas and Richard Prebble swallowed the Treasury’s neoliberal Kool-Aid, they were careful to make sure that every economic and administrative institution that mattered in New Zealand swallowed the same brew. Those that tried to fight back, like the Ministry of Works, were simply abolished. The rest were sold. The state sector was required to behave like the private sector. The Nazis called this getting with the programme process Gleichschaltung – co-ordination.

What the Coalition Government doesn’t realise is that, although the Left was prevented from co-ordinating the economy by Rogernomics and Ruthanasia, that didn’t mean that they weren’t left free to co-ordinate just about everything else: the judiciary, the universities, the news media, the arts. If they are serious about rolling-back the Left’s stupidity, then the Coalition Government will have to engage in a little Gleichschaltung of their own. All those concentrations of opposition dedicated to thwarting government policy will have to be dispersed.

Not easy in a democracy, and impossible when the neoliberal dream this government is pursuing has long been exposed as a waking nightmare. If National, Act and NZ First are to fulfil the mandate handed to them by the electorate – to take back their country from the wealthy and the woke – then they will need more than a philosophy that reassures its followers that “greed is good” and that giving humanity’s worst impulses free rein – laissez-faire – is the answer to every problem.

Abandoning the promised tax cuts would be a good beginning.

This essay was originally posted on The Democracy Project Substack site on Friday, 10 May 2024.


greywarbler said...

No comments - fair enough you have said it all Chris T. Thank goodness somebody has - good on ya' mate!

Wayne Mapp said...

A plethora of items to comment on. I have chosen this one because of the bogeyman of neo-liberalism, now a 40 year so called experiment.

What is it really? Basically neo-liberalism has as its hallmark a relatively open economy. One where most things that have a competitive market relationship are delivered by the private sector. Prior to 1984 a lot of this was delivered by the public sector (retail banking, electric power, telecoms, airlines, etc). But no longer.

What is the prospect of this being reversed? In my view, just about zero, even under a left leaning government.

I think a better way to look at the Left/Right divide is the conception of the size of government. For the Right, that means no more than 30%, in fact in 2017 it got down to 27%. But that was one of the reasons why Winston chose Labour. National was not prepared to boost the size of the state, even to 30%. At 30% a lot of the health and housing issues would have been solvable.

The last Labour government increased the size of the state to 34%, though without the tax revenue to support that. Labour increased heath and education salaries so they were not much lower than Australia, as well as increasing the size of their respective workforces. They also built 13,000 Kianga Ora houses, which was a pretty decent effort. But a lot of the increase in government spending was wasted with not enough to show for it.

National still seems to have an aspiration to get down to 27 or 28%, an excessive aspiration in my view. It means cutting too deeply, and in fact can sharpen a recession. Thirty percent would be a much safer target, to be achieved over 6 years. The cuts would then be much more moderate. No mass sackings, just a restricted hire policy for a while. I note Grant Robertson, in his valedictory, referred to 30% as the appropriate minimum size of the state.

The nub of this is the optimal size of the state, and thus, what the state is capable of doing. For me 30% seems about right. The state is capable enough to do a lot, but is not socking it to middle income earners.

Obviously for the Left, it is higher, most recently 34%. That would be tolerable if there was more obvious benefits from that spending, and also if there was a commitment to fund it with the appropriate tax base.

My concern is that the next Left iteration (Labour/Greens/Te Pati Maori) will see 34% as a starting point, and that given their collective aspirations, maybe significantly higher than that, perhaps as high as 40%.

At numbers approaching 40%, that would be a very different New Zealand. Public housing could be 20% of all housing stock, up rom around 7% now. The whole public sector would be much larger and more lavishly funded. Taxes would need to be much higher, around 25% more across the board, including wealth taxes.

Would this be politically sustainable? I think not. It would mean sharp, perhaps even dangerous swings, between each iteration of Left and Right governments.

The alternative is some level of agreed consensus on the size of the state. Swings between 27% and 35+% are way too abrupt. It leads to the sort of politics we have now. Obviously there will always be a difference between Left and Right, but for the health of our democracy the difference between the two cannot be too sharp.

Jonzie said...

May I suggest one more sentence at the end to finish your so it reads...

Abandoning the promised tax cuts would be a good beginning. If it wasn't for the fact that 77% of people recently surveyed want tax cuts, and a good govt does what the people want, not what the opposition wants.

John Hurley said...

Back in the 1980's the radicals were the spoiled middleclass brats with higher education. They thought the workers "had it too good".*
That laid the ground for Rogernomics and (ten times more importantly) "a truly multi-racial society", whereby Stonewood-Key can pig out on mass-migration and someone from the left will bob up and say: "why is it only people from those countries you object to?"
Ans = because they aren't us. No, really! (at least not until the public see them as an addition to the improvements of us rather than a replacement).
*Bruce Jesson

The Barron said...

Always interesting Wayne, but completely devoid of the relationship of the government's relationship with the people, especially the vulnerable. For me, that is a distinguishing factor of the Three Body Problem coalition.

We are about to have the British report into the tainted blood scandal. This will be a stark example of successive governments 'kicking the can down the road', resulting in incalculable death and suffering and a compensation bill that has continued to grow. Thatcher is most responsible for choosing cover-up over either dealing with it or prevention. But it has been 40 years of Governments of both political leanings that have left the issue and the people for succeeding administrations. The largest government investigation will report Monday. Not only has there been death and disablement, but compensation may be 11 - 22 Billion pounds.

I relate this because increase in state spending and the administrative infrastructure has a direct relationship to failures of previous governments. This government is cutting civil servants while population growth, largely through immigration, is sky rocketing. Projects that are to long term, such as the ferry terminals, are kicked down the road. Projects such as Three Waters has been pushed back to the Councils, whose lack of service delivery caused the problems. This is simply redirecting the cost and administration.

I have seen the eradication of the state sector as completely ideological, primarily from the far right small government ACT policies. There has been no public debate or scrutiny as to what services require cutting or trimming, what impact this would have on the delivery of services to people and what is planning for the replacement of essential services and provision of infrastructure. The latter, there is no transparency as to the use of contractors or public - private agreements. This goes not only to the transfer of cost, but the effect this may have on long term public control of delivery and infrastructure.

Not only has there been no public consultation on this significant impact on the people, but it is setting up for a manufactured crisis. Cutting the ability to provide for the needs of the people, will be followed by "we cannot afford it""(blame previous government) and "we have to find alternative ways" (contractors, PPP and privatization). An irreversible path that kicks the can to the next administration to have to spend more to reclaim the traditional status quo.

Meantime, those dependent on state support are left to endure suffering. While the tainted blood scandal is the ultimate example. The government was told clearly by 1983 that blood tainted with HIV was being transferred to hemophiliacs and others, but the cheap plasma from Americans [in the US blood is not donated, but paid for meaning addicts and prisoners provided the plasma] was a cost saving and the Thatcher government decided the sick and disabled lives were less important than following evidence. Similarly, the same government denied 'mad cow' disease (with the Secretary of Health posing with his grandchild forced to eat a pie, (thankfully the gamble made on people's lives with Creutzfeldt-Jakob disease being less spread than warnings had allowed an escape form potential crisis).

The ideology of this government will not only adversely effect the lives of the vulnerable, but undoubtedly leave it unable to cope with any major crisis (be it natural disaster, pandemic or geo-political). Small government is less able to respond, and leads to small response.

new view said...

Neoliberal is just a dumb buzz word used by the socialist minded to describe the opposing smaller leaner government that happens to administer fewer socially beneficial policies than they do. The problem we have is that neither left or right have worked out that a successful administration has to have the correct balance of socially responsible policies to compliment a responsible fiscal policy. Code for don't live beyond your means and encourage and nurture economic growth, as well as look after our most unfortunate. National knew this year was going to be tough and won't be popular because of it, however the tax adjustments were perfectly timed because firstly the tax brackets had been out of balance for years and needed realigning, and the majority of working NZrs will get some benefit from it when they most need it. IMO those who don't believe the tax adjustment is necessary are out of touch, as jonzie suggests. The other consideration to make from the tax adjustments is that unless they are indexed to inflation they start to be neutralised by inflation from day one, so in effect are temporary. The Budget will give an indication of how neoliberal this government is and how uncaring the left portray them. The national coalition will be planning for the medicine to be followed by the recovery and the people may like the coalition better when that starts, maybe sometime next year. Until then there will be much screaming and gnashing of teeth.

SDT said...

I reckon the reason 77% of people want the tax cuts is because the recent memory is of increased taxes under Ardern, but all the service paid for by tax has deteriorated. Therefore, people want to keep more of their earned coin.

John Hurley said...

How many people write about the passing of New Zealand?
It is mostly felt by those who feel it but cannot express it.
In that sense New Zealand was a living space. It never was perfect, but it had space and it had community, and the community existed within an exclusionary nation.
Because to New Zealanders, Asia, was like a crowded hen house and thank goodness they are over there and we are over here.
But were weren't totally exclusionary.
RNZ A Slice of Heaven related how Roseanne's father was welcomed into a house in Christchurch as he hovered admiring the garden (he thought he was going to be chased off, like a dog); Allies father was a doctor from Pakistan and "nothing will get them out of that place". They are perplexed, though when Winston invents dissent (out of thin air), because the real plan was to "ethnicise" society. "Xenophobia is so last century" opines an erudite journalist.
NZ as a living space can be seen in.
1. House and garden. Sunlight and privacy.
2. Distance to work and amenities
3. Distance to countryside; beach; walks.
4. Parking at work.
5. A locker.
6. Somewhere to escape. You used to be able to live cheaply in beach side places.
It was only nation (a social construct) which protected the lifestyles of societies bottom tier.
Middleclass puritans destroyed that for us; now (also), the tradie with his big boat in tow and architect who build things that are monuments to his class (the public hate them; but that's the point).
Low population used to be green. Eugenie Sage wrote about it in Forest & Bird. The article showed the Pancake Rocks crowded with people (and that was decades ago).
Clearly that is how Ranginui Walker felt and Maori (but not the grifter IWi and Frankenstien - university creation).
This country is all about tightly controlling it's public square, for the elite. How can journalism be taken seriously when they are 99% middleclass Puritans (and or working for the advertiser - Bob the Builder).