The Dead-End Options Of Political Decay.

Dark Times: Denied the state’s leadership and resources, New Zealand’s economy has been hollowed out and taken over. More importantly, so has its democracy.

WHAT’S WRONG WITH NATIONAL? New Zealand’s “natural party of government” (since its formation in 1936 the National Party has won 17 out of 28 general elections) has long been recognised as a moderate and pragmatic political force. Not only that, but when hardline individuals and factions have taken control of the party, it has demonstrated an admirable willingness to step away from its extremists and re-engage with the political mainstream. From Sid Holland to Keith Holyoake, Ruth Richardson to Bill English, Don Brash to John Key, National has never been slow to recognise an ideological losing streak – and do something about it.

What happened?

Given the party’s mainstream status, it should come as no surprise that what happened to National bears close comparison to what happened to Labour. By embracing the essentially anti-political objectives of the “more market” reforms of the late-1980s and early-1990s, both major parties gave away most of the New Zealand state’s hitherto extensive powers of economic intervention. In doing so they reduced significantly the role and purpose of New Zealand’s elected leadership. National and Labour politicians are still working out what that means, not only for themselves, but also for the parties they represent. 

New Zealand has always suffered from the disadvantages associated with a small population and the large distances separating the country from its principal markets. To offset these disadvantages, the New Zealand state was forced to play a central role in funding the sort of infrastructure which, in other countries, was paid for by the private sector. It’s not that New Zealand lacked capitalists, it’s just that the repeated failure of their undercapitalised private enterprises very swiftly reconciled them to the inescapable fact of their economic lives. That, when it came to laying down the building blocks of a working national economy: banks, insurance companies, railways, roads and bridges, schools and hospitals; the state was the only player with anything like deep enough pockets.

The economic necessity of state intervention catapulted New Zealand’s politicians into what can only be described as an heroic role. Where Great Britain had its Isambard Kingdom Brunel, New Zealand had Julius Vogel. Against the Empire’s Cecil Rhodes, New Zealand set its own Richard ‘King Dick’ Seddon.

The burgeoning wealth of the United States may have been created by its capitalist ‘bobber barons’, but the generally comfortable condition of most New Zealanders at the turn of the Nineteenth Century was the legacy of their hero politicians and their activist state. Not for nothing was this tiny country hailed as “the social laboratory of the world”.

As the Great Depression of the 1930s sent New Zealanders reeling economically, their political response was entirely consistent with the history of “God’s own country”. Almost instinctively, the victims of the worldwide economic catastrophe turned to the state – not only for short-term relief, but also for reassurance that, in the long term, they and their children would have a future worth living in. The First Labour Government’s success in meeting both of these expectations transformed its leader, Michael Joseph Savage, into something considerably more than a hero. It made him a saint.

A tough act to follow. Forced to watch the Left’s steady expansion of state power, and alarmed by the growing power of the compulsorily unionised working-class which, for 13 long years, had kept Labour in government and National cooling its heels on the Opposition Benches, Sid Holland became National’s first prime minister with one over-riding purpose: to make New Zealand safe for farmers and businessmen, and their wives, by turfing out the trade unionists and public servants who had somehow contrived to park their impertinent posteriors in the big leather chairs. Smashing the bolshie wharfies’ union and its allies certainly hastened this restoration of the ‘right people’, and their interests. National would never lose its aura as the country’s prime defender of law and order.

The 1951 Waterfront Dispute was not, however, the first step towards breaking the New Zealand state’s grip on the New Zealand economy. Subsidies and import licences survived the angry eight year reign of Sid Holland and his cronies. His successor, Keith Holyoake, tended the “stabilised”, state-guided, New Zealand economy with the same care that he tended his beloved roses. Unconvinced of the need for major change, “Kiwi Keith” stretched National’s political dominance over the entire 1960s with all the smug propriety of a pampered family cat.

This was the achievement that Rob Muldoon spent the whole nine years of his prime ministership attempting to replicate. Though presented to young New Zealanders as a cross between Darth Vader and Voldemort, National’s fourth prime minister’s boast that he was the last finance minister to truly understand the New Zealand economy was by no means a vain one.

One has only to survey his “Think Big” programme of state-sponsored growth, to see how thoroughly he had absorbed the central truth of New Zealand’s economic history. That, stripped of the state’s resources, the nation’s economy would, in short order, be hollowed out and taken over. More importantly, so would its democracy. New Zealand’s politicians would cease to be heroes, and become villains.

Mastering the complicated alchemy of turning villains into heroes pretty much describes the politics of the last 40 years. After burning down Labour’s inclusive economy with the ‘Rogernomics’ flame-thrower; after promising voters the ‘Decent Society’, and delivering the ‘Mother of All Budgets’; where were the politicians charged with protecting Neoliberalism’s low-tax, deregulated and privatised economy supposed to go? How can a party convince voters that it will do something, when it knows full well that, since 1984, New Zealand governments aren’t allowed to do anything?

The answer devised by Labour’s Helen Clark and Michael Cullen, and perfected by National’s John Key and Bill English, was to smile and wave and hope that their political careers came to an end before the nation’s infrastructure collapsed. Between them, National and Labour kept up this charade for 18 years. The obvious weakness of the strategy, that it would only work for as long as the infrastructure remained upright, left the next generation of Labour and National leaders facing something bearing a frightening resemblance to the Gotterdammerung.

Small wonder, then, that having been returned to the Opposition benches, first Labour’s and then National’s caucuses, went bonkers. Electing and/or ejecting a leader every other year becomes inevitable when the people are crying out for effective policy, and all the major political parties are able to offer them are ineffective personalities.

Jacinda Ardern’s and Grant Robertson’s accidental 2017 victory, plagued by indecision and ineptitude, received, unaccountably, the dubious benediction of the Covid Pandemic which, at least temporarily, allowed the state to resume its old role of New Zealand’s prime defender. How devastating it must have been for Labour to once again be required to surrender the state’s interventionist powers to their Treasury and the Reserve Bank jailers.

With nothing useful left to offer New Zealand economically, Labour’s lurch towards cultural revolution was entirely predictable. Where else do left-wing middle-class Gen-Xers go when all other roads are blocked – except to the road leading them back to the student union?

By the same token, where does the National Party go when the nation’s infrastructure is visibly crumbling, and the cost of fixing it cannot be met (without incurring the wrath of the neoliberal priesthood) by raising taxes, or taking advantage of the state’s ability to borrow capital more cheaply than the private sector? The answer would appear to be that it either starts venturing down the dark alleys of crony capitalism, or hanging-out with the counter-revolutionary culture-warriors of the Weirdo Right. Or both.

This essay was originally posted on the Interest.co.nz website on Monday, 16 September 2024.

Getting Labour "Off The Couch" To Break Unemployment's Vicious Circles.

Avuncular Intervention: Regional Economic Development Minister, Shane Jones, tells TVNZ's Q+A programme that he is determined to introduce measures which will ensure that his "ne'er-do-well nephews" get "off the couch" and into work. Historically, breaking the vicious circles of unemployment has required the state to become the employer of last resort.

YOU’VE GOT TO hand it to Shane Jones – he sure knows how to seize control of the political agenda! Ever since his provocative performance on last Sunday’s Q+A, his name has seldom been out of the headlines. More impressive still, his ideas are being debated everywhere.

Sparking a genuine national conversation on anything other than sport and celebrity sex isn’t an easy thing to do. Generally speaking, it’s evidence of somebody, somewhere, striking a nerve. In Jones’ case, the phrase that caused so many Kiwis’ knees to jerk was the one prompted by his determination to get his ne’er do well nephews “off the couch” and into work.

In many ways, Jones’ arguments for unemployed youngsters to be forced into the world of work are classic Labour. Traditional working-class New Zealanders have little patience with slackers and bludgers. Decent men and women measure their worth by the hours they put in. Neither are they fussy about the jobs they put their energies into. The main thing is to be busy; to contribute; and be seen to be doing everything possible to stand on their own feet and pay their own way.

The problem (if problem is the right word) with this “can-do” attitude, is that it’s, almost always, a reflection of the “virtuous circles” in which its exemplars have been raised. Families in which the virtues of hard work, and the need to “better oneself”, have been drummed into children from birth tend, strangely enough, to produce hard workers who better themselves. Success is thus rendered intergenerational: fixing the family’s upward social trajectory; and ultimately carrying them out of their class altogether. No matter how high such families may rise, however, the values that drove their success, providing they continue to be inculcated, prevent them from falling.

But, what about the much less fortunate inhabitants of “vicious circles”? Families broken by massive economic dislocation and enforced idleness. Families in which hope curdles and faith in the future withers. Households where all sense of self-worth is undermined by repeated knock-backs and rejections; where, even when work is secured, it is precarious, wretchedly-paid, and subject to conditions that only further erase any semblance of personal dignity. In these circumstances, the wonder is not that such vicissitudes precipitate addiction, desertion, violence and abuse; but that so many men and women struggle to resist the vicious downward spiral into indifference and despair.

The puzzle which Shane Jones has set himself, and (through sheer chutzpah!) the coalition government, to solve is: how to rescue those trapped in these vicious circles; and how to then install them in virtuous circumstances of sufficient permanence for that virtue to become self-sustaining?

Significantly, Jones is reaching back into New Zealand history for answers. Because, of course, this country has broken vicious circles before. To secure a decent life for the social casualties of economic depression and world war, the First Labour Government expanded dramatically the employment opportunities offered by the state. Tens-of-thousands of workers who might otherwise have subsisted from odd-job to odd-job, found permanent employment, with union-negotiated wage-rates and conditions, in the state-owned railways, postal and telegraphic services, and infrastructure projects. They may not have been the world’s most productive workers, but these state-provided jobs allowed them to establish homes and families, and to raise children untroubled by the viciousness of the downward spiral.

That Jones is experiencing resistance from his former Labour colleagues is one of history’s little ironies. Or, maybe not. Because it was the Fourth Labour Government who made such an issue out of the alleged “inefficiency” of New Zealand’s “feather-bedded” government departments. The much-vaunted process of “corporatisation”, out of which emerged the significantly-titled “State Owned Enterprises”, saw thousands of workers lose not only their jobs, but the economic and social security that came with them. Virtuous circles of fifty years duration were broken, and the vicious circles, which have become such a feature of the free-market era, began sucking thousands of New Zealanders into their whirlpools of dysfunction.

Shane Jones, and his boss, Winston Peters, both know that short bursts of employment, even for the minimum wage, cannot cure the effects of structural unemployment. They’re aware that the vicious circles of dysfunction can only be broken by the state-subsidisation of permanent employment.

And that will require the Labour-led Government to “get off the couch”.

This essay was originally published in The Waikato Times, The Taranaki Daily News, The Timaru Herald, The Otago Daily Times and The Greymouth Star of Friday, 8 December 2017.

Is "Social Investment" Bill English's "Think Big"?

Think Big Data: In many ways Muldoon’s Think Big and Bill English’s Social Investment policies are alike. Both feature ideas more associated with the left than the right, and both, if sensibly implemented, could be of immense benefit to New Zealand. Unfortunately for Muldoon and, almost certainly, for English, the essentially left-wing character of the programmes they are advocating makes it practically impossible for the National Party to implement them in a sensible fashion.

 

“SOCIAL INVESTMENT”, as promoted by Prime Minister, Bill English, is one of those policies that can make or break political parties. “Social Security”, for example, was the policy principally responsible for lifting the Labour Party’s share of the popular vote from 46.1 percent in 1935 to 55.8 percent in 1938. The “Cradle to Grave” welfare state it established kept Labour in office until 1949 and remained the foundation of New Zealand social policy for the next 50 years.

 

By contrast, National’s “Think Big” economic development programme of the late-1970s and early-1980s, very rapidly turned into an albatross around the neck of Rob Muldoon’s government. By the mid-1980s, the very expression, “Think Big”, had become political shorthand for the unwisdom of large-scale state intervention.

 

It was in the context of Muldoon’s increasingly costly and strike-plagued Think Big projects that the Leader of the Labour Opposition, David Lange, delivered his devastating put-down: “You can’t run a country like a Polish shipyard!”

 

With the benefit of hindsight, however, Muldoon’s alleged political folly looks more and more like economic and environmental prescience. Conceived as a means of escaping New Zealand’s dependence on foreign oil (which had skyrocketed in price during the 1970s) and of substituting domestically produced agricultural and industrial inputs (such as electricity, fertiliser and steel) to improve New Zealand’s precarious balance of payments, Think Big bore a startling resemblance to the industrial development programme pitched to Walter Nash’s Labour Party in the late-1950s by the left-wing New Zealand economist, W.B. Sutch.

 

The electrification of the North Island main trunk railway line, for example, was one of Muldoon’s Think Big projects. Had it been completed we would not now be witnessing the environmentally retrograde replacement of KiwiRail’s fleet of electric locomotives with carbon-dioxide-belching diesels. Indeed, a mischievous commentator might predict that if the Greens ever come up with a comprehensive industrial development programme, it will look more than a little like Think Big!

 

In many ways Muldoon’s Think Big and Bill English’s Social Investment policies are alike. Both feature ideas more associated with the left than the right, and both, if sensibly implemented, could be of immense benefit to New Zealand. Unfortunately for Muldoon and, almost certainly, for English, the essentially left-wing character of the programmes they are advocating makes it practically impossible for the National Party to implement them in a sensible fashion.

 

One of the reasons Think Big became such a gift to National’s opponents was the Economic Development Minister, Bill Birch’s, unwillingness to assign the job of building the energy and industrial projects solely to the New Zealand State. Rather than expand the public sector’s capacity, Birch entered into a succession of largely secret contract negotiations with an assortment of multinational construction firms. Not only did this substantially increase the projects’ costs, but it supplied the Government’s opponents with a smorgasbord of extremely tasty political meals.

 

English’s Social Investment policy will very likely suffer the same fate as Think Big.

 

On its face, the idea of using the government’s dramatically improved capacity to gather and cross-match critical data streams from the Social Development, Vulnerable Children, Justice, Corrections, Health and Education ministries, in order to improve the targeting of public services to those individuals and families most in need, is a good one. If additional resources and assistance can be channelled to these vulnerable citizens before they become the state’s permanent, eye-wateringly expensive and essentially intractable “clients”, then Bill English’s claim that Social Investment, introduced now, will save the taxpayers billions of dollars, later, is entirely justified.

 

English’s problem is that the implementation of Social Investment policies will require a substantial increase in spending on the people National most loves to hate: the poor, the brown, and the “welfare-dependent” working-class. The only way English will be able to “sell” his Social Investment policy to the National caucus, therefore, is by showering resources on the tiny number of people fingered by the State’s data-crunching algorithms, while simultaneously reducing assistance to all the other beneficiaries on its books.

 

English’s problem is Labour’s problem, too. Ever since David Shearer waxed eloquent about his (apparently apocryphal) “beneficiary on the roof”, it’s been clear that most Labour MPs are extremely wary of identifying their party too closely with the despised “underclass”. So, rather than embracing the principles of Social Investment, Andrew Little and his colleagues, like the Lange-led Labour Party, will focus public attention on the inevitable stuff-ups associated with the application of the prime minister’s pet project.

 

Social Investment: a policy offering potentially huge improvements in the delivery and effectiveness of social services; will thus go the way of Think Big. A good idea undermined by the ideological hostility of those responsible for its implementation and politically demonised by a Labour Opposition much more interested in breaking the right than in making its policies work.

 

This essay was originally published in The Press of Tuesday, 17 January 2017.