The Dim-Post

October 4, 2009

Revolution

Filed under: Politics — danylmc @ 7:44 am

I’ve been watching Revolution, the four part documentary about the neoliberal reforms of the 80s (hat tip DPF). It is excellent. A couple of thoughts came to mind while watching it:

  • The anti-MMP, pro-FTP crusaders seem to have the late 80’s in mind when they argue that we should change electoral systems, presumably because they liked it when the public had a choice between a Labour Party dominated by Douglas, Prebble and Bassett, or a National Party dominated by Birch and Richardson. But if you iterate back a few elections you find yourself in the mid-1970s when the public only had a choice between a socialist National Party and a socialist Labour Party. Neo-liberalism is in its death throes so I think we’re unlikely to see either party influenced by it, let alone both – but it’s not impossible to imagine the rise of a conservative, nationalist, isolationist politician in the mold of Winston Peters dominating the Nats, mirrored by a resurgence of  authoritarian unionism in Labour.
  • It is weirdly ironic that during the early 80s we were close allies with the US and Great Britain – governed by Thatcher and Reagan – but we were an Eastern European style socialist economy. After we became the most deregulated free market economy in the world the relationship deteriorated so badly our former allies refused to condemn the Rainbow Warrior bombing.
  • The more I learn about Lange the less impressed I am. Sure, he had wit and charm but it’s hard to watch the footage of him declaring that economic change under his government will be ‘socially just’ or boast that he’s not an economist but that he ‘knows how to use economists’ without the gorge rising in your throat. I think he was a man of straw, out of the country or playing with racing cars for most of his tenure with Roger Douglas running his government.
  • In 1987 Judith Tizard almost won Remuera!
  • In many ways the documentary is a case study in the dangers of unhinged ideology. During the financial crisis of the early 80s Muldoon’s answer to every problem is to borrow more money and increase regulation of the economy. After the market crash in 1987 Roger Douglas decided that the country needed furthur deregulation of the financial sector. Hard to say which of them caused more damage to the economy.
  • I wonder to what extent Douglas was the architect of Rogernomics. Before the 1980s he was a standard Labour style socialist, in the 90s and beyond he’s a crackpot. It’s only during his tenure as Finance Minister there is an intellectual framework and ideological coherence to his policies. But during the documentary in both the interviews and archival footage he only speaks about economic issues in very broad terms – the need for change, the need for it to be ‘bold and radical’ and the need for extraordinary speed. I suspect the real architects were his advisors from Treasury and the Reserve Bank (many of whom began the 80s as civil servants and ended the decade as multi-millionaires running the companies they helped Douglas privitise).
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45 Comments »

  1. Hard to say which of them caused more damage to the economy.

    Muldoon still wins that one. Everything hinged on the foreign exchange crisis that he brought about; the asset sales, the SOEs, the devaluation that made a heap of speculators rich. If in doubt, use the example of the Clyde Dam, an asset that was more a liability and AFAIK has yet to make a decent return on investment.

    Comment by Will de Cleene — October 4, 2009 @ 8:39 am

  2. A lot of what went on from the 60s was driven by our fall from 2nd in the (now) OECD to 22nd today.. even in the bounteous 60s NZ secretly borrowed money off Australia.

    Muldoon was hardly driven by ideology but by pragmatism derived from a failure to take the big decisions. As Colin James has mentioned the so called conservative govts of the period fought on a battlefield seemingly tilted permanently to the left… so a farmer politician of the time could rail about union power whilst collecting his farm subsidies and SMPs without seeing the irony of his position.

    Douglas and Richardson might have ended up as ideologues but initially their stances were a response to our poorly performing economy.

    And we’ve had your potential future in the past thanks.. we’ve had the authoritarian Muldoon and Clark; both resisted structural change, both demonised groups, both used money for political advantage, both had their pet theories in Think Big and Climate Change and neither had any real vision.

    JC

    Comment by JC — October 4, 2009 @ 10:10 am

  3. In 1987 Judith Tizard almost won Remuera!
    Labour almost won Remuera – and probably would have if they hadn’t stood an empty bottle as a candidate,
    The sight of the largely Pacific Island crowd at Lange’s Mangere HQ on election night, cheering the possible victory, was something to see. Retail therapy for the people!

    Comment by joew — October 4, 2009 @ 10:41 am

  4. “authoritarian unionism”? You have no idea how unions really work do you? They’re a lot more democratic and inclusive than political parties, or than most other NGOs. I get very tired of the liberal “left” regurgitating the empty memes of the right like this.

    Comment by IrishBill — October 4, 2009 @ 11:19 am

  5. “They’re a lot more democratic and inclusive than political parties, or than most other NGOs.”

    Excellent. You and the unions will be strong supporters of voluntary unionism then.

    JC

    Comment by JC — October 4, 2009 @ 1:58 pm

  6. The supply-side economics of Roger and Richardson was asset-stripping cronyism, dressed up to look like it was for our own good. Some people still think that it’s a good idea.

    Comment by Adhominem — October 4, 2009 @ 2:25 pm

  7. You have no idea how unions really work do you?

    Oh chill out. I’m very much in favor of organised labour, but historically there was a strong streak of authoritarianism in the New Zealand union movement. Membership was compulosry, unions set salaries, promotion was based on union senority and prices and production quotas were set by the unions and not by the market.

    Comment by danylmc — October 4, 2009 @ 2:29 pm

  8. It is interesting to watch it to see how the parallels with today, in fact some of the same people are still involved. And they are completely blinded by monetarist economic thought. Hearing Alan Gibbs smuggly talk about reducing employment by 60% to increase ‘efficiency’ is truly scary.

    Comment by jumpingonabandwagon — October 4, 2009 @ 2:48 pm

  9. Hey Will,

    If it wasant for the Clyde Dam, our power shortages that happened in the past few years would have been a lot worse…..

    Muldoon may not have been perfect, but leaving it up to the market is something no stomachable, especially if we end up having blackout after blackout…

    Anyway, its about time we started moving on from ‘1984 and all that’.

    Comment by millsy — October 4, 2009 @ 3:50 pm

  10. “about time we started moving on from ‘1984 and all that’.”

    Do you mean towards “a conservative, nationalist, isolationist politician in the mold of Winston Peters”

    I miss Winston. Imagine the hay who would have made with English.
    Couldn’t he be given a permanent, honorary seat in the opposition or something?

    Comment by Adhominem — October 4, 2009 @ 4:49 pm

  11. Excellent. You and the unions will be strong supporters of voluntary unionism then.

    Well there’s no way they’d ever say they weren’t…student unions are another matter though, aren’t they.

    Comment by StephenR — October 4, 2009 @ 6:33 pm

  12. “Do you mean towards “a conservative, nationalist, isolationist politician in the mold of Winston Peters””

    No I mean the continued argument about whether it was ‘right’ or ‘wrong’, or the fact that pre 1984 NZ is potrayed as either a hell hole or a utopia (when it was probably somewhere in between).

    Whether we like it all not, it happened. Perhaps if Allan Hewson had missed that penalty in 1981, then things might have happened a bit differently, but it did happen, and we might as well make peace with Rogernomics and move on, because it is holding us back as a nation.

    Comment by millsy — October 4, 2009 @ 10:10 pm

  13. You and the unions will be strong supporters of voluntary unionism then.
    ugh. if you’re referring to that transparent proposal about the student unions…

    There is nothing about freedom of choice in taking away the union’s right to choose (via it’s students) whether to be compulsory or voluntary.
    Or, incidentally, in using that to remove student union funding.

    Comment by Flynn — October 5, 2009 @ 12:56 am

  14. Lange is way over-rated. His main strength was that he wasn’t Muldoon.

    Comment by Michael Stevens — October 5, 2009 @ 8:35 am

  15. There is nothing about freedom of choice in taking away the union’s right to choose (via it’s students) whether to be compulsory or voluntary.

    Your logic is flawless. Should we give the army the right to choose whether or not service should be compulsory or voluntary? If we deny them that right aren’t we taking away their freedom?

    Comment by danylmc — October 5, 2009 @ 8:51 am

  16. Funnily enough, I am slowly beginning to think compulsory unionism might – with safeguards – actually be a good idea. Why? Because:

    1/ I can’t think of a better way to close the wage gap with Australia.

    and

    2/ There is a dangerous concentration of power in New Zealand in a hard right right business elite and an equally hard right Treasury (as an aside, whenever I hear Treasury officials talk I laugh at the idea that we have politically neutral civil service) with no equally powerful counterbalancing political movement to oppose to their extremist views. A strong trade union movement would be an ideal counterbalance and an important alternative source of ideas that would overall help make our decision making better informed.

    Comment by Tom Semmens — October 5, 2009 @ 10:02 am

  17. Our right to free association is far more important than any wage gap with Australia. I’d probably go and live in Australia if a New Zealand government forced me to join and pay for a political organisation I didn’t want to belong to.

    Comment by danylmc — October 5, 2009 @ 10:17 am

  18. Ah yes, to talk of rights is a fine thing when your belly is full and you have 42″ LCD TV. But your precious “right” to free association doesn’t put bread on the table of minimum wage families, and to my mind that trumps your high-falutin’ concern over free association.

    Comment by Tom Semmens — October 5, 2009 @ 10:34 am

  19. …that trumps your high-falutin’ concern over free association.

    This concept that basic human rights should be trumped by political directives aimed at improving society was experimented with a number of times last century by both left and right, and given the results it’s difficult to grasp why anyone would still imagine it might be a good idea.

    Comment by Psycho Milt — October 5, 2009 @ 10:41 am

  20. But your precious “right” to free association doesn’t put bread on the table of minimum wage families

    Whereas forcing them to pay union fees whether they want to or not is actively taking bread OFF the table of those families.

    Comment by danylmc — October 5, 2009 @ 10:52 am

  21. I miss Winston. … Couldn’t he be given a permanent, honorary seat in the opposition or something?

    As long as the seat is in a cage suspended over molten lava, I’ll be fine with that.

    Comment by Ataahua — October 5, 2009 @ 11:12 am

  22. “the idea that we have politically neutral civil service”

    The civil service should be politically neutral in the sense that they should always lean towards the political views of the government of the time, as oposed to having a political view in and of themselves.

    The electorate indicate through election what they think are impotant (by electing a specific government) and should expect the civil service to follow that direction.

    Comment by cj_nza — October 5, 2009 @ 11:44 am

  23. cj_nza: I am of the view that our civil service is politicised, in that many of its senior managers are Brashite acolytes. I think it is time to end the charade that our senior civil service is not political, and make certain top civil service roles at the discretion of the cabinet. Others could do with being directly elected. For example, I think it is highly undemocratic that the unelected bureaucrat who runs the reserve bank gets to have such a big say in the economy of the country, and therefore I think that position should be made an elected one.

    Comment by Tom Semmens — October 5, 2009 @ 12:19 pm

  24. danyl and psycho_milt: Suffice to say i find your opinions on compulsory unionism an utterly predictable middle class response. But we are obviously not to agree on this one, so I’ll leave it there.

    Comment by Tom Semmens — October 5, 2009 @ 12:21 pm

  25. I wonder to what extent Douglas was the architect of Rogernomics. Before the 1980s he was a standard Labour style socialist, in the 90s and beyond he’s a crackpot. It’s only during his tenure as Finance Minister there is an intellectual framework and ideological coherence to his policies… I suspect the real architects were his advisors from Treasury and the Reserve Bank

    Absolutely. Treasury provided the blueprint in its 1984 Briefing to the Incoming Minister, Economic Management and its 1987 successor Government Management. Both are online here. If they read as if they were written by fruitcakes like Roger Kerr, its because they were – he co-write the first one, before being sent off to the BRT by his mate Rod Deane (who was busy gutting the public sector at the SSC), while the second one was written by people of the same mindset under Graham Scott (you know, the failed ACT candidate who Bill English just bought back as a “purchase advisor”).

    Comment by Idiot/Savant — October 5, 2009 @ 1:03 pm

  26. I’d probably go and live in Australia if a New Zealand government forced me to join and pay for a political organisation I didn’t want to belong to.

    You wanted to belong to VUWSA?

    =)

    Universal Declaration of Human Rights

    Article 20
    1. Everyone has the right to freedom of peaceful assembly and association.
    2. No one may be compelled to belong to an association.

    Comment by Graeme Edgeler — October 5, 2009 @ 1:32 pm

  27. I think it’s safe to assume that pretty much any incoming Finance Minister would have devalued the currency, ended agricultural subsidies etc given the dire circumstances they found themselves in; if Douglas was a ‘great’ finance Minister he should have been able to end farm subsidies without wiping out half of the country’s farmers, deregulated finance without precipitating a $21 billion dollar sharemarket crash and privatised inefficient government departments without bankrupting most of the provinces and manufacturing towns.

    Comment by danylmc — October 5, 2009 @ 1:51 pm

  28. Provinces and towns went bankrupt?

    We have provinces (for anything other than rugby)?

    Comment by Graeme Edgeler — October 5, 2009 @ 1:58 pm

  29. We have provinces (for anything other than rugby)?

    Apparently some people live in that space on the map between Auckland and Wellington.

    I can’t imagine why.

    Comment by Idiot/Savant — October 5, 2009 @ 1:59 pm

  30. And those people went bankrupt?

    Comment by Graeme Edgeler — October 5, 2009 @ 2:21 pm

  31. And those people went bankrupt?

    More ‘sweated at the eyeballs’ than bankrupt, from memory, until the farmers altered their approach to farm management to fit the new financial environment.

    Comment by Ataahua — October 5, 2009 @ 2:49 pm

  32. Though in the process the provincial towns were hollowed out as their major employers went bust or restructured. A lot of people went through a lot of pain, which Graeme’s legal pedantry seeks to mask.

    Comment by Idiot/Savant — October 5, 2009 @ 3:03 pm

  33. Edge, I think I need a name for your style of argument – focussing on minor, though accurate, points while avoiding engagement with the main point.

    As you know very well, service towns from Southland to Northland were seriously harmed by the reduction in farmers, and farmer $, to spend in said towns. The economies of such towns heavily relied, and continue to rely on, that $.

    Comment by Eddie Clark — October 5, 2009 @ 3:09 pm

  34. A large number of farmers literally went bankrupt. There were also a lot of industry towns focused on the rail and forestry service that went from full employment to close to 100% unemployment overnight with no warning. (On the contrary, Lange toured those towns and assured them all their jobs were safe). People abandoned their impossible to sell houses and moved to the cities (generally South Auckland) or stayed where they were and became long-term beneficiaries. I guess that few of them were technically bankrupt so you’ve got me there.

    Comment by danylmc — October 5, 2009 @ 3:20 pm

  35. I guess that few of them were technically bankrupt so you’ve got me there.

    And so clearly the Revolution didn’t cause any suffering at all.

    Comment by Idiot/Savant — October 5, 2009 @ 3:49 pm

  36. If you must bring us provincial types into the argument and wail about how badly Douglas treated us, please remember that all the rural provinces went blue at the last election and Roger’s legacy of no subsidies and a vastly freed up economy is still gospel.

    Basically, Douglas and Treasury got the strategy right.. and the rural electorates knew it, and before you decry that it was Treasury alone.. remember the book “There’s Got to Be A Better Way”. Douglas had done the planning years earlier than 1984.

    JC

    Comment by JC — October 5, 2009 @ 3:59 pm

  37. “…Provinces and towns went bankrupt?

    We have provinces (for anything other than rugby)?…”

    I grew up in Hawke’s Bay. Once, it was a rich and prosperous place to grow up. The province has never recovered from the sudden closing of the Whakatu freezing works in 1986 with the loss of 2000 jobs there alone (not counting the downstream effect on retailing etc), followed by the loss of Tomoana in 1994 with another 1000 odd jobs eight years later. Unemployment devasted the Maori working class in particular but the whole province was very hard hit. The reforms may have been necessary, but the way they were implemented in a totally incompetent, unmanaged, callous and brutal way destroyed the lives of a generation of working class New Zealanders, as well as ripping the fabric of provincial society apart.

    Unemployment was eventually more or less solved in the decade of Labour government, but even then the typically high paying freezing works jobs were replaced by low paid jobs in the tourism, service and viticulture sectors. The upshot is Hawke’s Bay is now structurally a third world economy, where a two-bit provincial oligarchy of landowners, land speculators and fast money men lord it over the mass of low paid and/or unskilled workers.

    You talk about rugby. Perhaps that is an ideal barometer for Hawke’s Bay and other provinces, because lets face it – money normally buys success. Hawkes Bay was a great team in the halcyon days of pastoral prosperity in the 1950-60’s when they could even buy in players like Kel Tremain to ‘work” for a stock and station agent. The team fell to a nadir during the long provincial depression from 1984-1999 and recovered under the initial patronage of a dodgy merchant banker, one of the new Hawke’s Bay oligarchs mentioned above.

    I suppose the likes of Douglas and Kerr and Deane and Scott don’t really care about what they did to places like Hawke’s Bay. they can dip in and enjoy the pockets of elite luxury amongst the hard scrabble workforce and then disappear out again. Hell, I even think it how they planned New Zealand to end up all along.

    Comment by Tom Semmens — October 5, 2009 @ 4:11 pm

  38. JC: You say the provinces went totally bue last election. I can’t speak for other parts of the land, but I can tell you why a place like Napier went from solid labour to National. First of all, the working class was demoralised, marginalised and then rendered powerless debt serfs by Rogernomics. Along with that, the sources of information for the provincial population was rationalised, centralised, commodified and atomised. When I was a boy the local ZB station interviwed the local mayors and MP’s regularly, and two locally owned papers (The Napier Daily Telegraph and the Hastings Hawkes Bay Herald-Tribune) provided alternative voices, often adopting differing stands on issues. Radio is now centralised and atomised. There is now but one “newspaper” (it hardly warrants the name these days) the Hawkes Bay Today, whose editors are screaming right wing religious fundamentalists who adopted a relentless and vicious anti-Labour line throughout the last ten years, where stories were of two flavours – the nasty homosexual cabal of socialists are coming to destroy our way of life/Hawkes Bay is a fantastic plucky little place held back by the wasteful parasites in Wellington. Like the working class supporters of the Republicans, when the population is kept desperate on the edge of poverty and fed on a constant stream of anti-intellectualism (an implicit dogwhistle in the attack on the “PC nanny state”), culture wars and nasty wedge politics, and where local news and information comes from a single source, they do indeed become right wing.

    Comment by Tom Semmens — October 5, 2009 @ 4:38 pm

  39. Tom,

    Hawkes Bay is a fantastic plucky little place held back by the wasteful parasites in Wellington.

    This describes practically every community newspaper in the country — including some of Wellington’s. It’s not a media conspiracy; it’s a part of how the country sees itself, and predates the political changes you describe.

    L

    Comment by Lew — October 5, 2009 @ 6:46 pm

  40. Bedamned haitchteeemell. Imagine a closed italic after Tom’s quote. Sorry.

    L

    Comment by Lew — October 5, 2009 @ 6:47 pm

  41. Lew,

    “This describes practically every community newspaper in the country — including some of Wellington’s.”

    Yup, and the general GDP figures show that NZ regions have less variability and extremes than either Australia or the US.

    http://www.med.govt.nz/templates/MultipageDocumentPage____2320.aspx#P141_29657

    Tom,

    The rot started in 1967 for Hawkes Bay. The freezing works were in trouble and a 1000 men were being run up to the forests for work in the off season. That happened from East Cape to Wairarapa and would be a feature of employment/unemployment over the next 20 years. These provinces were simply too dependent on farming and fruit.

    In the 90s I was at a country wedding in Pahiatua and I remarked on the number of new vehicles.. I was told that lamb prices had hit $38!
    In 2002 a local East Coast farmer wanted to buy a forest I was managing.. the reason was simply.. lamb prices had hit $114.

    In short, the rot started in the 60s, was exacerbated by Britains entry into the Common Market. The Douglas reforms were terribly hard but by the mid 90s were turning farms around and in the noughties lamb prices really took off.. politics had bugger all to do with it.. apart from the Douglas reform benefits.

    Hawkes Bay remains wedded to pastoral farming and viticulture and will continue to suffer being an average performer until it diversifies more and stops being so damned insular.

    JC

    Comment by JC — October 5, 2009 @ 8:00 pm

  42. if Douglas was a ‘great’ finance Minister he should have been able to …[have] deregulated finance without precipitating a $21 billion dollar sharemarket crash

    Douglas is hardly responsible for a global stockmarket crash in 87 that started in Hong Kong, and travelled around the rest of the world before getting to us some 20 hours later…

    Comment by Phil (not Goff) — October 6, 2009 @ 10:44 am

  43. The crash hit New Zealand harder than any other country on the planet. It seems to me that a ‘great’ finance minister would have built an economy that was more robust in the event of a market crash, not one that failed catastrophically.

    Comment by danylmc — October 6, 2009 @ 11:44 am

  44. The crash hit New Zealand harder than any other country on the planet. It seems to me that a ‘great’ finance minister would have built an economy that was more robust in the event of a market crash, not one that failed catastrophically.

    Comment by danylmc — October 6, 2009 @ 11:44 am

    2 issues:

    1. Given the lag time between initiating policy changes and their impact on the broader economy, one could make an argument that the 80’s reforms did build an economy that was more robust in the event of a market crash. That crash being the 2008 crash.

    2. law of small numbers – your pointing to a single event (1987) what about all the events that were avoided, i.e. NZ being declared bankrupt, the crash’s 1985 and 1986 that never happened.

    This is not to defend Roger, Ruth, Birch or Cullen – just a pull up to say, stop throwing anecdote or single events as the basis for your economic policy. Doing so will make your arguments more robust.

    If you use the benchmark of Ministers of Finance that avoided major disruptions, then in the last 25 years (1984 – 2009), possibly only Ruth classifys as successful, given NZ largely avoided the early 1990’s currency speculation events (Black wednesday in 1992 – with the run on the pound).

    (Roger – 1987 crash, Birch – asian financial crisis, Cullen 2008 crisis)

    So does this then mean that Ruth is the ‘great’ finance minister?

    Comment by What would Hayek say — October 6, 2009 @ 2:05 pm

  45. I’m not well-connected rural-wise, but farmers daughters I’ve spoken to, blamed the sky-high interest rates (and perhaps dollar?) rather than the withdrawl of SMPs. They all seem realistic about the loss of SMP, just as I wouldn’t cry if my 20-free ECE was withdrawn. I was only a wee boy then, so can anyone else confirm or deny?

    Comment by Clunking Fist — October 7, 2009 @ 12:23 pm


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