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.

Defending Free Tertiary Education: Chris Trotter Responds To Dr Oliver Hartwich’s Praise For The User-Pays University.

Ungrateful Son: In spite of the German taxpayers funding his entire education - from primary school to university - Dr Oliver Hartwich chose to devote his life to fighting against the principle of universal social entitlement. Labour's re-commitment to that principle prompted an immediate response from the Chief Executive of the New Zealand Initiative - successor to the Business Roundtable.

 

WHEN DR OLIVER HARTWICH departed his native Germany for the Anglo-Saxon lands it was in high dudgeon. In spite of the fact that German taxpayers had paid for his entire education – from primary school to university – there wasn’t much evidence of gratitude. Meeting the cost of young Germans’ education out of the public purse was, in the newly-minted economist’s opinion, a dangerous policy relic of Germany’s social-democratic past. The British and the Americans had long since dispensed with the notion of  publicly-provided tertiary education. It was, therefore, to the English-speaking world that this eager young neoliberal foot-soldier took his publicly-funded doctorate.

 

New Zealand is, of course, very much a part of that world. Hartwich arrived here via England and Australia, where he was a major force at the Sydney-based Centre for Independent Studies (an extreme right-wing think tank). When the notorious Business Roundtable joined forces with the NZ Institute in 2012, Hartwich was the corporate bosses’ pick for Executive Director.

 

Moved to contribute an opinion piece to Interest.co.nz on Labour’s re-commitment to the principle of universal social entitlement in tertiary education, Hartwich has usefully rehearsed all the familiar neoliberal excuses for making young people pay for their education.

 

“The first thing I would say about free education is that it suffers from a basic flaw:” writes Hartwich, “If something does not cost anything, it is not valued much either.”

 

This observation, Hartwich tells us, is born of his “personal reflections of free tertiary education”, and is not to be confused with rigorous policy analysis.

 

That being the case, let me respond in kind by declaring that my own experience of free tertiary education threw up not one case of a recipient who did not value their opportunity to explore the life of the mind in their late teens and early twenties. Quite the reverse, actually.

 

University was a magical place, insulated from the charges of the workaday world, and collectively dedicated to the expansion, communication and acquisition of knowledge. If a vocation was one’s sole purpose for attending, then those skills were available. But of infinitely greater value to students than a mere “meal ticket” was the access that university afforded to the signal achievements of their culture. Young people emerged from tertiary study as both engaged and enlarged human beings.

 

Hartwich deplores this aspect of tertiary life:

 

“What it means in practice is that when university courses are free, students will think about them differently. Some students may begin their studies without much commitment because, well, it does not cost anything. They might also then take a more relaxed approach to studying since, again, it does not cost them anything (other than opportunity costs which are harder to notice). With this attitude, these students may not even bring their studies to a conclusion.”

 

It is clearly Hartwich’s view that the pieces of paper doled out at the end of its courses are the be-all and end-all of university life. This instrumental view of tertiary education lends itself to the notion that: “as the recipient of something free, you are not in the best position to demand better service. As a paying customer, suppliers need to treat you better if they do not want to lose you. If customers are not paying, they may well be regarded as a nuisance.”

 

It gets worse. “For a university to be run like any good service provider,” says Hartwich, “it should think about its students as clients. And for students to take their studies seriously, they should be paying for them. Of course, for students who cannot afford to pay the fees, there need to be financing options. But university education as such should not be free.”

 

Nothing here about the pernicious consequences for both academic rigor and student achievement of turning tertiary education into a commodity. Fully enmeshed in the market economy, university “providers” cannot afford to risk alienating their fee-paying “clients” by holding them to the sort of rigorous academic standards that characterised my tertiary education. If it comes to a choice between jettisoning standards or jettisoning students, the commercially-driven university will sacrifice its standards every time.

 

Of course no neoliberal paean to user-pays tertiary education would be complete without the ritual condemnation of publicly-provided tertiary education’s allegedly socially regressive character.

 

“Finally, as someone who has successfully completed a master’s and a doctorate, of course I have a much greater ability to generate income than someone without such qualifications. So the question is, why would I expect that other person to subsidise me? What right do I have to demand people with poor skills in low-wage jobs to pay for my university education that would yield me a much higher income than they would ever have? Isn’t this grossly unfair for them?”

 

I am always astounded at the neoliberal’s confidence that the above argument should be regarded as the clincher – against which no rational or ethical response is possible. It is only possible to make this case, however, if the concepts of citizenship and social reciprocity are first eliminated from the equation.

 

Access to tertiary education is every citizen’s right, and so it is also every citizen’s responsibility. The low-wage worker contributes to the cost of a wealthy person’s children’s university degrees because the wealthy person contributes to the cost of the worker’s kids’ post-school education. For the low-wage worker, this is a huge step forward, comparable in its life-enhancing effects to the provision of universal health care.

 

But the very notion of “middle-class welfare”, or, as Hartwich puts it, “the reverse of income redistribution” only makes sense in a neoliberal society which no longer subjects its wealthier citizens to the rigors of progressive taxation.

 

Of course the graduates of Law and Medical School will earn more than workers “with poor skills in a low-wage job”, but in a decent, social-democratic society, the lawyer and the doctor will also pay much higher taxes. It’s all about your fellow citizens paying you forward, and you then paying them back.

 

This was the socio-political environment from which Dr Oliver Hartwich fled and is ideologically committed to destroying. It is also the socio-political environment in which I was raised, and which allowed me to attend university without incurring massive debt. That Labour is pledged to restoring this environment is extremely heartening. Not only because it will make this a more just and equal country to live in, but also because any such restoration of social-democratic values in New Zealand will, almost certainly, see Dr Hartwich high-tail it for more congenial jurisdictions.

 

This essay was posted on The Daily Blog and Bowalley Road on Saturday, 13 February 2016.