The Dim-Post

July 15, 2016

Neoliberalism redux

Filed under: Uncategorized — danylmc @ 8:31 am

Dame Anne Salmond writes:

The rise and spread of neo-liberalism since the 1980s has been a remarkable phenomenon. At its heart, it is based on a simple, utterly amoral idea ” that of the cost-benefit calculating individual. Life is understood as a competitive struggle among individuals. Each seeks to minimise their costs and maximise their benefits.

I have a more generous view of the neoliberal project: as something that genuinely must have seemed like a good idea at the time. By the 1980s the failure of socialist, centrally planned economies – both in the Soviet bloc, and in places like the UK and New Zealand – seemed very evident. Free market economies obviously generated more wealth and more prosperity than socialist ones and there seemed, as Keynes put it, to be a fundamental link between free markets and individual freedom. So why not do the opposite of the Soviet bloc: minimise the state and maximise the free market? Won’t that give you just heaps of prosperity and freedom?

I find Robert Reich’s answer to the failure of neoliberalism the most compelling. He points out that the state creates the free market. It creates money and regulates its supply, it creates the legal system through which contracts are enforced. It guarantees the solvency of the financial sector, it protects property rights and guards against catastrophic market failure (or, at least, is supposed to). You can’t take the state out of the free market because it creates the free market and regulates almost every aspect of its existence. So what you get under the deregulated, neoliberal model are the wealthy using the political system to set the parameters of the market to privilege the already privileged. Labour is taxed but capital is not; benefit fraud is investigated and punished but financial crimes (mostly) are not, profits are privitised but costs are socialised, and so on. And all of these things are defended as ‘what the market wants’.

The result is less growth and less prosperity because capital can maximise profits through gaming the political system rather than creating new products and businesses and jobs. The economy is based on rent-seeking rather than wealth creation; the hypertrophied, wildly profitable, politically powerful but completely unproductive finance sectors characteristic of neoliberal economies functioning as exhibit A. Neoliberalism hasn’t failed as awfully as no-holds-barred socialism, but it has failed, not because it was amoral, or evil or ruthless – the intentions were good – but just because it simply didn’t work.

90 Comments »

  1. neither theory (soc or neo lib) is really evil – they are just ideas. Its all to do with those pesky humans who use them

    Comment by framu — July 15, 2016 @ 9:01 am

  2. It can both inefficient and immoral. The two are not mutually exclusive.

    Comment by Bill Bennett — July 15, 2016 @ 9:01 am

  3. I note she properly used the word amoral. Not immoral.

    The state should be less about creating the model (it is correctly said the planned models are seriously flawed), than using morals to determine the right levers to mitigate effects. Just like the common law evolved to moderate feudal excesses, then into our modern society.

    Comment by Ross — July 15, 2016 @ 9:44 am

  4. So what you get under the deregulated, neoliberal model are the wealthy using the political system to set the parameters of the market to privilege the already privileged.

    And what you get under a regulated, socially responsive model are the powerful using the political system to set the parameters of the society to privilege the already privileged.

    Same shit different channel.

    Comment by unaha-closp — July 15, 2016 @ 10:10 am

  5. Well put, Danyl. Appreciate your succinctness.

    Comment by Brent — July 15, 2016 @ 10:24 am

  6. Tracking back from my above comment: it is not shit, it is just complicated.

    Neoliberalism and socialism are both valid solutions to varying problems, sometimes one will work, sometimes the other, sometimes something different. They are both flawed and completely useless as genuinely pervasive solutions, but each can have merit at differing times.

    Comment by unaha-closp — July 15, 2016 @ 10:30 am

  7. You can’t really argue that the neo-liberal system is created by and dependent on the state, but then say that it is justified because it is “what the market wants”. The state is democratic, and to the extent that we have had 30 years of neo-liberal economic policy, it is arguable that this has occurred with the overall consent of the electorate. This hasn’t been imposed on us by force of arms and we have had many opportunities to elect parties which would make fundamental reforms. Some people object to it very strongly but they have proven to be utterly incapable of organising in sufficient numbers to have any real effect on Government. I guess a Marxist would call this false consciousness or something. But we have seen a period of economic growth and rising standards of living, although the benefits of that have not been equally shared. In the absence of any evidence of a substantial rise in support for parties advocating real change, can you really argue that neo-liberalism has “failed”?

    Comment by Nick R — July 15, 2016 @ 11:08 am

  8. “…can you really argue that neo-liberalism has “failed”?”

    Other family informed people can: http://www.imf.org/external/pubs/ft/fandd/2016/06/ostry.htm

    The neoliberal agenda … rests on two main planks. The first is increased competition—achieved through deregulation and the opening up of domestic markets, including financial markets, to foreign competition. The second is a smaller role for the state, achieved through privatization and limits on the ability of governments to run fiscal deficits and accumulate debt.­

    •The benefits in terms of increased growth seem fairly difficult to establish when looking at a broad group of countries.­
    •The costs in terms of increased inequality are prominent. Such costs epitomize the trade-off between the growth and equity effects of some aspects of the neoliberal agenda.­
    •Increased inequality in turn hurts the level and sustainability of growth. Even if growth is the sole or main purpose of the neoliberal agenda, advocates of that agenda still need to pay attention to the distributional effects.­

    Comment by Patrick — July 15, 2016 @ 11:28 am

  9. *fairly informed

    Comment by Patrick — July 15, 2016 @ 11:28 am

  10. Patrick – that’s all fine, but the acid test is whether a party advocating (say) a Muldoonist programme of economic regulation combined with substantial income redistribution is going to romp home at the general election next year. I’m pretty confident I can predict the answer to that one.

    Comment by Nick R — July 15, 2016 @ 11:35 am

  11. Nick R — July 15.
    How about we try Democracy, instead of Ism’s.

    In fact, the majority are voting for parties that have democratic socialism at their core principles. Labour, Greens, New Zealand first.

    It seems, only a small number of , damaging, but influential, swing voters, like tax cuts no matter how much damage it does.

    Even National have had to swallow dead rats and keep or introduce redistributive policy such as “working for families (really a subsidy to employers) and State housing. Otherwise they know they would lose the next election.

    We all know that the best performing economies have always had relatively high levels of tax, redistribution and state participation, aligned with laws which allow for a reasonable amount of competition combined with regulation of monopolies and harmful speculation.

    Comment by KJT — July 15, 2016 @ 11:59 am

  12. unaha-closp: “Tracking back from my above comment: it is not shit, it is just complicated.”

    I’m pleased you did that; I was about to call out your comment as bollocks!

    The rational maximiser model, upon which orthodox economics and neoliberal ideas have traditionally been based, gives a partial picture only of the range of human behaviour. Thus neoliberalism – which assumes that we’re all rational maximisers all the time – falls over in a heap when confronted with the messy realities of society.

    We’re all capable of individualism and collectivism to varying degrees at different times. The solipsism encouraged by neoliberalism, and now very evident in contemporary NZ society, takes no account of the extent to which we are interdependent; nor does it cut human frailty any slack. None of us is perfect, and there but for the grace of God goes any of us, is what we should be thinking, when we hear about the desperate struggles of the poor and underprivileged.

    “They are both flawed and completely useless as genuinely pervasive solutions, but each can have merit at differing times.”

    Exactly. As the philosophers say, there are no sufficient conditions. Neoliberalist theories were developed for economies much larger than ours. The rise of Trump and Sanders in the US and the British vote Leave are the most recent indicators that neoliberalism hasn’t worked for many people, even in those large economies. Surely it isn’t beyond us to develop an economic model that incorporates elements of both individualism and collectivism. Some of us who are old enough to remember the pre-Rogernomics days might well be of the view that what prevailed before 1984 was closer to a mixed model. Certainly not perfect, especially after Muldoon’s attempts to counter the effects of Murphy’s Law. But Rogernomics differentially punished a large sector of the populace, from which much of it never recovered. We’re now seeing the long-term effects.

    Comment by D'Esterre — July 15, 2016 @ 12:01 pm

  13. nick r – doesnt your argument rely on the electorate being up to speed on not just policy details, but underlying ideologies, and then also economic theories? Are we even there yet?

    (not calling anyone stupid here Its really only the political junkies that would even be able to describe neo-liberalism in any significant way)

    Comment by framu — July 15, 2016 @ 12:11 pm

  14. framu – You have found me out! Let the sheeple awake from their slumber!

    Comment by Nick R — July 15, 2016 @ 12:20 pm

  15. nick – cant tell if your making a joke or not there🙂

    was hoping the point could have gone across without resorting to the sheeple routine

    Comment by framu — July 15, 2016 @ 12:25 pm

  16. I guess the best local working model of the wiser and more interventionist state managed by compassionate centre leftists is the city of Auckland. Its role in regulating the housing market these last few years doesn’t seem to be having an entirely positive impact, no? The builders are ready to rumble, there is no problem with financing because of very low interest rates, and there is a hell of a lot of demand.. Instead we have the wise interventionist state in the form of the RMA and local body planning placing restrictions on the ability of the market to respond to the wishes of consumers.

    Dame Anne has pretty good credentials as an academic but as a social and economic theorist not so much.

    Comment by Tinakori — July 15, 2016 @ 12:39 pm

  17. I find Robert Reich’s answer to the failure of neoliberalism the most compelling. He points out that the state creates the free market. It creates money and regulates its supply, it creates the legal system through which contracts are enforced. It guarantees the solvency of the financial sector, it protects property rights and guards against catastrophic market failure (or, at least, is supposed to). You can’t take the state out of the free market because it creates the free market and regulates almost every aspect of its existence.

    This is a point that legal realists were making in the 1930s. There is no “private” law without “public” power. If only economists listened to us lawyers more often … .

    Comment by Andrew Geddis — July 15, 2016 @ 12:47 pm

  18. Funny how Citizens and Ratepayers controlled Auckland for – what, sixty years? – Rodney Hide got to set up the super city, and after a couple years of a left-wing mayor, everything in the city is now the left’s fault.

    Comment by danylmc — July 15, 2016 @ 12:50 pm

  19. It’s not over yet. Monolithic socialism collapsed after 75 years. We’re only 40 years into the neo-liberal nightmare and the residual wealth of the parents of the baby boomers is all that’s keeping many families afloat. When that’s gone…… Failure may very much resemble the collapse of communism.

    Comment by truthseekernz — July 15, 2016 @ 12:55 pm

  20. This is a point that legal realists were making in the 1930s. There is no “private” law without “public” power. If only economists listened to us lawyers more often … .

    I’m sure most serious economists have had the experience of trying to get a straight answer out of a lawyer.

    Comment by Robert Singers — July 15, 2016 @ 1:18 pm

  21. I don’t recall the political makeup of all the local bodies that came together to form the Auckland Council but I don’t think the Manukau (Len Brown), Waitakere (Bob Harvey and his deputy Penny Hulse), and North Shore (that crazy guy who even Winston couldn’t stand) mayors prior to amalgamation were exactly neoliberal. And only one of the last 5 mayors of Auckland City – Les Mills – could be even vaguely described as neoliberal. The others – John Banks (authoritarian interventionist right), Dick Hubbard (wishy washy non politician), Christine Fletcher (why can’t we all just get along), and Cath Tizard (staunch Labour) – were anything but.

    Comment by Tinakori — July 15, 2016 @ 1:31 pm

  22. “Neoliberalism hasn’t failed as awfully as no-holds-barred socialism”

    We have seen examples of state capitalism, but none of genuine socialism that I’m aware of. European communism certainly doesn’t count.

    Comment by Sacha — July 15, 2016 @ 1:32 pm

  23. “the RMA and local body planning placing restrictions on the ability of the market to respond to the wishes of consumers.”

    Ignoring the influence of tax and financial arrangements that councils have no control of just exemplifies the one-eyedness we’ve had three decades of.

    Comment by Sacha — July 15, 2016 @ 1:35 pm

  24. Councils are shaped by the factions that their councillors form, not by their single-vote Mayor as folk imagine. Mayors and councillors had to negotiate across blocs and with both businerss and community interests to get support for initiatives both before and after amalgamation. C&R in Auckland was mainly run by shadowy operators like David Hay who were quite happy for ego-driven fools like Banks to cut all the ceremonial ribbons.

    Comment by Sacha — July 15, 2016 @ 1:40 pm

  25. I prefer Market Socialism. A free market with government ownership of the infrastructure, workers co-operatives owning the large corporations and capitalists have the small enterprises with medium enterprises splitting the difference between capitalists and workers.

    Comment by James Green — July 15, 2016 @ 3:32 pm

  26. New Zealand was a socialist country once? When was that? Don’t tell John A Lee!! Yet again Danyl swallows the received wisdom of the dominant narrative.

    It is not a coincidence that the rise of neoliberalism parallels the ascendence of the baby boomers to power. Culturally, it was a rejection of the ordered society created by the post war welfare state consensus in favour of basically borrowing to have a generational party. When people talk about a “Polish shipyard economy” the imagery is as much about the supposed drab conformity of NZ society as it is about economic inefficiency. The fact is a lot of New Zealanders WANTED more inequality, WANTED the rise of celebrity culture. But they really had no idea of what they were creating, or rather what they were destroying. NZ is probably less wealthy in 2016 as a result of the neoliberal reforms that in might have been had we not thrown the baby out with the bathwater from 1984 on. The fundamental increases in poverty and economic and social insecurity is masked by the uneven distribution of wealth and a celebrity culture, which creates a façade of wealth that is propped up by debt and inequality.

    The biggest cost of neoliberalism has been the destruction of economic security and community. It’s promotion of an atomised society and an immoral worship of money has destroyed links of family, community and culture and replaced them with hyper-individualism, materialism and the worship of work. And New Zealand is a much, much unhappier place because of it.

    Comment by Sanctuary — July 15, 2016 @ 5:36 pm

  27. Funny how Citizens and Ratepayers controlled Auckland for – what, sixty years? – Rodney Hide got to set up the super city, and after a couple years of a left-wing mayor, everything in the city is now the left’s fault.

    If a political movement is out of power for a long time they tend to do significant stuff when they get into power. Does anyone recall the 4th Labour government?

    The left in Auckland has instituted some major land supply reforms and results have occurred.

    Comment by unaha-closp — July 15, 2016 @ 5:59 pm

  28. “The result is less growth and less prosperity because capital can maximise profits through gaming the political system rather than creating new products and businesses and jobs. The economy is based on rent-seeking rather than wealth creation; the hypertrophied, wildly profitable, politically powerful but completely unproductive finance sectors characteristic of neoliberal economies functioning as exhibit A. Neoliberalism hasn’t failed as awfully as no-holds-barred socialism, but it has failed, not because it was amoral, or evil or ruthless – the intentions were good – but just because it simply didn’t work.”

    Too bloody right. Generation Rentier hasn’t learned much from the 1987 sharemarket crash.

    Comment by Kumara Republic (@kumararepublic) — July 15, 2016 @ 6:26 pm

  29. Danyl, are you going to write something witty about how the victims of the Nice terrorist attack had it coming, like you did with the cartoonists after the Charlie Hebdo massacre?

    Comment by Jimmy — July 15, 2016 @ 6:27 pm

  30. Dont be a dick Jimmy.

    Comment by Sanctuary — July 15, 2016 @ 6:29 pm

  31. Tinakori: “Instead we have the wise interventionist state in the form of the RMA and local body planning placing restrictions on the ability of the market to respond to the wishes of consumers.”

    The bloc that includes Dick Quax, Cameron Brewer, Denise Krum, George Wood, and David Seymour (who’s in Parliament instead of local government) is the one most resistant to relaxing Auckland’s building height limits. And it’s certainly not a Left bloc. Rentiers speak the language of von Mises and von Hayek, but they’re quite happy to use the very same ‘big government’ they keep dissing when it’s their own wealth and political support at risk of creative disruption.

    Comment by Kumara Republic (@kumararepublic) — July 15, 2016 @ 6:34 pm

  32. “New Zealand was a socialist country once? When was that? Don’t tell John A Lee!!”

    The irony is that the idea that everything left of a certain point (a point located well within the sphere of economically liberal, if not necessarily neo-liberal, economics) is “socialism” is one of the accepted tropes of liberal poli-talk.

    Danyl’s views on the pre-Rogernomics consensus are hard to pin down. He’s said that he wants to go back to it and that it was superior to what we have now, but he is opposed to certain institutions that were absolutely key to its functioning (unions, large scale state ownership), and he defines it as “socialist” while being opposed to “socialism”.

    Comment by Ortvin Sarapuu — July 15, 2016 @ 8:32 pm

  33. Danyl, exactly what were the failures of the (alleged) socialist centralised economies in the 1980s?
    The economies of the soviet empire and nz are not really comparable.

    You really do start your topics with some very debateable premises.

    You sound like an apologist for john key and bill english. I am sure Michelle Boag wpuld love you.
    I am sure Crosby Textor does.

    Three self avowed socialists in one room debating “what is socialiism?” would come up with with 27 (at least) different definitions.

    There were very serious problems facing governments in 1984 (nothing changes).

    Roger Douglas simply decided that everything was too hard and said “let the market decide”. and got a free ride.
    Tthe electorate got raped by the national party and assorted hangers ons

    Comment by peterlepaysan — July 15, 2016 @ 9:33 pm

  34. “Rentiers speak the language of von Mises and von Hayek, but they’re quite happy to use the very same ‘big government’ they keep dissing when it’s their own wealth and political support at risk of creative disruption.’

    That must be why the National led government is trying to change the RMA to make it harder for rentiers to block change and Labour and the Greens are opposing them. Right?

    Comment by Tinakori — July 15, 2016 @ 9:58 pm

  35. “Three self avowed socialists in one room debating “what is socialiism?” would come up with with 27 (at least) different definitions.”

    So would three conservatives debating conservatism, three liberals debating liberalism, three traditionalists debating traditionalism, etc etc.

    Comment by Ortvin Sarapuu — July 15, 2016 @ 10:58 pm

  36. @16 “the builders are ready to rumble” – do you know much about the construction sector in Auckland? The builders and all related trades are run off their feet. There is a serious labour shortage; I doubt the city could cope with any more construction without importing lots of workers (and of course, having to find somewhere for them to live).

    Comment by MeToo — July 16, 2016 @ 2:36 pm

  37. Tinakori: “Dame Anne has pretty good credentials as an academic but as a social and economic theorist not so much.”

    I don’t think that economic “chops” are a necessary prerequisite for critique of neoliberalism. For those of us who were around when the neoliberalism steamroller began to flatten the economy, the flaws in the model were apparent very early on. I remember widespread scepticism at Douglas’ assertions about “trickle down”: scepticism which turned out to be well-founded. It was economists who assured us that the model was working and our fears were unfounded. As if we couldn’t see with our own eyes the damage being done to our society…. That isn’t to say that there were no good outcomes, but many of us are dubious about the price society paid having been worth the gains.

    Sanctuary: “…the rise of neoliberalism parallels the ascendence of the baby boomers to power. Culturally, it was a rejection of the ordered society created by the post war welfare state consensus in favour of basically borrowing to have a generational party.”

    I think that this is a more simplistic view than the complex reality pertaining at the time when the fourth Labour government came to power. The snap election allowed little or no time for the Labour party to put forward economic policy; the voters – many of whom weren’t boomers, actually – had virtually no idea what Roger Douglas was planning to unleash on us. But Muldoon had become so unpopular by then, that the government was going to lose the election regardless. Nobody we knew then saw it as a chance to “borrow and have a generational party”. Moreover, many of us who were boomers suffered the job losses and vaulting interest rates (26 1/2% on term loan, just before the interest dam burst. Really…) that came with neoliberalism, while it was those in the generation older than us who benefited.

    Fact is, neoliberalism was conceived of by an earlier generation. To be sure, there were boomers in the Lange government, but of the real power brokers within it, Douglas wasn’t; neither was Lange. Or Bassett or Palmer – along with many others. The economy was certainly facing desperate times, but it by no means followed that there was no alternative to neoliberalism, despite what was happening in the UK and the US.

    Comment by D'Esterre — July 16, 2016 @ 4:19 pm

  38. “Three self avowed socialists in one room debating “what is socialiism?” would come up with with 27 (at least) different definitions.”

    I think we define NZ’s socialism pre 1984 as aspirational.

    Comment by Sanctuary — July 16, 2016 @ 5:07 pm

  39. D’Esterre says “I remember widespread scepticism at Douglas’ assertions about ‘trickle down'”
    You remember no such thing.
    Neither Douglas nor any one else in the Lange government made any assertions about trickle down. It was a phrase and a concept invented by those opposed to such policies to attack them.

    Comment by Matthew Hooton — July 16, 2016 @ 5:11 pm

  40. @D’Esterre – I was thinking more about the zeitgeist of the time. There was a general feeling of fin de siècle amongst the emerging baby boomer power brokers with Muldoon, and his attempts to preserve a dying economic and social order. Muldoon was simply a man out of his time and he had no clue what to do in the face of the rise of baby boomer liberalism. The 1984 election was a victory against the pro-tour, dour old New Zealand by a new, libertarian New Zealand that was chafing at the bit to be flashy and have some fun.

    Much of why Roger Douglas was able to succeed is because of an unspoken, deeply hypocritical electoral alliance beween urban liberals and neoliberal economic radicals. Since the urban middle class was in any case largely insulated against Douglas’s reforms they got their liberal new economy and society at no personal cost, and they’ve gone on to become generation rentier.

    Comment by Sanctuary — July 16, 2016 @ 5:17 pm

  41. The core reason why what the left calls neoliberalism was adopted was the collapse of our ability to sell our main primary products for good prices overseas. All of our other policies flowed from this, particularly the protection of local industries through restrictions on the import of overseas goods.Added to this was the management by politicians and officials of a much wider range of activity than is common today, of which the restrictions on retailing and hospitality are only the most obvious. Politicians and officials after all are wiser than their subjects. Until Dame Anne and those who talk about neo liberalism start to get down to this level of particularity and think about effective responses they can hardly expect to be taken seriously.

    Comment by Tinakori — July 16, 2016 @ 5:26 pm

  42. Matthew Hooton: “You remember no such thing.”

    Yes. I do. Back then, we had current affairs TV: Douglas said as much when being interviewed about his economic policies.

    Comment by D'Esterre — July 16, 2016 @ 7:22 pm

  43. I think Dame Anne’s talents are wasted on such a generic rant against neoliberalism of which the internet doesn’t lack a supply of.

    I’d be more interested in her views on the present day issues surrounding migration – which could be a somewhat more salient issue.

    Comment by NeilM — July 16, 2016 @ 8:44 pm

  44. Douglas may not have used the term “trickle-down”, but it certainly wasn’t used in a predominantly pejorative sense until well into the 90s. Philip Burdon, for one, seemed comfortable with using the term to describe his Government’s policies in the Bolger era. Until it became apparent that the redistibution of largesse was inexorably flowing upward, “trickle-down”, when applied to economic fashions was pretty much synonymous with the term “supply-side”, as favoured by advocates of Reaganomics. Speaking of which, Mr Hooton’s attempt to pop Nelson Mandela into his personal pantheon has to rank as some kind of benchmark of barefaced BS.

    Comment by Joe W — July 16, 2016 @ 9:02 pm

  45. Sanctuary:”The 1984 election was a victory against the pro-tour, dour old New Zealand by a new, libertarian New Zealand that was chafing at the bit to be flashy and have some fun.”

    We who’d lived through the 1981 Springbok tour and voted out the Muldoon government knew that there were baby boomers and older New Zealanders on both sides of that divide to which you refer. So it was a complex picture in which being a boomer wasn’t really particularly relevant; if there was a new libertarian New Zealand wanting to have some fun, it was the previous generation as well as the boomers. In fact, it could be argued that the previous generation was keener to let its hair down, having survived the privations of the War and the years before.

    “Much of why Roger Douglas was able to succeed is because of an unspoken, deeply hypocritical electoral alliance beween urban liberals and neoliberal economic radicals.”

    I don’t think that it was quite as strategic as it sounds here, at least in the beginning: the Douglas reforms were sprung on the electorate with little warning. To be sure, we’d seen what was happening in other polities, but pretty much nobody realised quite what lay in wait for us the other side of the election. No question that the Lange government won the 1987 election because it was voted in by people who would otherwise have voted National. And, of course,voted out in 1990 because Lange had put a stop to further reforms by Douglas. It’s a curious thing that those who voted in the Lange government in 1984 didn’t realise that the outgoing Muldoon government was the last left-wing government we would have, at least – by the looks of it – in the lifetimes of those of us who were voters then.

    “Since the urban middle class was in any case largely insulated against Douglas’s reforms they got their liberal new economy and society at no personal cost.”

    As a member of said urban middle class, I remember it as a time of great upheaval and job uncertainty, compounded by a period of ruinously high interest rates and the ’87 crash wiping out our savings and the value of our properties. Not altogether without pain, even for us, though orders of magnitude worse for those whose jobs were wiped out by the large-scale reforms. Anent which, one of the arms of state, the disestablishment of which has had the most disastrous consequences, was the Ministry of Works. You don’t know what you’ve got till it’s gone…

    Comment by D'Esterre — July 16, 2016 @ 11:10 pm

  46. @ D’Esterre, I hear where you are coming from, but I don’t think it negates the general point the first waves of reforms hit Maori and PI particularly hard. Between 84 and sharemarket crash it was the brown working class that took the biggest hit. Where I come from, Hawkes Bay, the massive job losses with the closure of the freezing works and the death of manufacturing dealt both Maori and the province a blow which it has never really recovered from.

    Comment by Sanctuary — July 17, 2016 @ 5:30 am

  47. Sanctuary: ” ….the first waves of reforms hit Maori and PI particularly hard. Between 84 and sharemarket crash it was the brown working class that took the biggest hit.”

    I couldn’t agree more. I worked with some of those people most affected. I didn’t mean to sound poor me-ish with regard to our situation and that of many in our social circle, just that we took a hit of a different kind. But I remain angry at the damage done to that brown working class to which you refer. There’s a causal chain directly connecting the desperate situation of the contemporary poor to those post-1984 reforms.

    Comment by D'Esterre — July 17, 2016 @ 9:00 am

  48. Whakatu and Tomoana (the very large Hawkes Bay freezing works) did not die because of anything a neoliberal did anywhere in the world. They – like their many cousins throughout NZ – died because the world stopped buying what they were producing at a price that allowed the owners of those works – some of them farmer cooperatives – to pay their suppliers (the farmers) and their workers enough in wages so the suppliers and workers could in turn afford to buy goods at much higher than world prices from protected and highly regulated domestic consumer industries – whiteware, televisions, food, etc, etc. While we had guaranteed markets at good prices, this formula worked after a fashion. When we didn’t, it didn’t. There wasn’t a lot of ideology involved and what there was followed rather than preceded the fundamental changes.

    Comment by Tinakori — July 17, 2016 @ 10:53 am

  49. Matthew Hooten at 39.

    For goodness sake, Matthew, what an incredible statement. You were an adolescent at the time. Those of us who were adults back then well remember Roger Douglas propounding the trickle-down theory as a major selling-point of Rogernomics.

    Comment by Steve Todd — July 17, 2016 @ 11:20 am

  50. The idea that the free market is “created by the state” and therefore morally equivalent to socialism is utter nonsense. Free markets primarily consist of individuals voluntarily doing the things they want to do. Yes it needs a legal system to work funnily enough, but how that translates into Danyl’s substantive point is beyond me.

    Comment by Matthew W — July 17, 2016 @ 1:58 pm

  51. Tinakori: “Whakatu and Tomoana (the very large Hawkes Bay freezing works) did not die because of anything a neoliberal did anywhere in the world.”

    Regarding those closures, along with later ones in the area,Te Ara notes the following:

    “The removal of agricultural subsidies and trade tariffs by government in the 1980s hit Hawke’s Bay hard because the region relied on the pastoral farming sector for revenue and employment. When the Whakatū freezing works near Hastings closed in 1986, around 2,000 full-time and seasonal employees lost their jobs. This was followed by the closure of other freezing works at Tōmoana in 1994 and Ōringi near Dannevirke in 2008.”

    Removal of tariffs and subsidies was at the heart of the neoliberal project, as implemented by the Lange government.

    Steve Todd: “Those of us who were adults back then well remember Roger Douglas propounding the trickle-down theory as a major selling-point of Rogernomics.”

    Precisely. I knew there’d be others here who would recall that. I well remember discussion about it at the time, both in the workplace and with friends and family.

    Comment by D'Esterre — July 17, 2016 @ 3:00 pm

  52. Trade tariffs? What particular trade tariffs struck NZ freezing works? I suppose you could argue that being able to import more varieties of food took people away from the meat and three veg approach but I wouldn’t want to base an election campaign on turning back that clock! The only ones that had a negative impact on NZ were those imposed by other countries on the import of sheep meat. That plus non-tarrif barriers like the EC’s sanitary standards that required costly upgrading of already marginally profitable meat works.

    Agricultural subsidies, yes, there were more than a few but they were all designed to try and prop up uncompetitive industries, particularly meat and wool. At one point farmers received incentives to maintain stocking levels and there were also subsidised interest rates from the Rural Bank. At their most desperate the subsidies involved buying surplus meat and rendering it down for by products. There were also other forms of assistance that supported ag research and farm advice. All were designed to help industries that were no longer competitive and for which the demand for the unprocessed product we were supplying was declining. The big freezing works depended on volume throughput, not further processing and could not adapt. All the subsidies did was slightly delay the reckoning. Urban taxpayers could only subsidise them for so long.

    To blame the government – any government – for the changes in the meat industry is to ignore the markets in which we export. If there was a NZ regulatory change that had a major impact on the viability of the industry it was the delicensing of freezing works in, I think, the late 70s. Until then a meat processing plant required a license and applicants had to go through a process that required them to justify building a new plant. New plants were necessarily smaller, and more sophisticated and therefore mortal threats to the huge volume processors like Whakatu and Tomoana. Once licensing ended the smaller plants could meet market demand much more effectively and add value. But all that happened under Muldoon who, when last I looked was definitely not a neoliberal

    Comment by Tinakori — July 17, 2016 @ 3:37 pm

  53. It’s funny what people think they remember. I’ve never heard a single economist or politician advocate trickle down, not one. It’s a complete straw man, and if someone remembers it, it’s probably akin to the mass hallucination at Fatima where the sun supposedly started doing weird things. Like most religions, people want to believe it so badly that they’ll imagine hearing eeevil right wingers say anything their imaginations desire.

    And the less said about this monstrously silly “neo-liberal” label, the better. Nobody calls it that. We call it “free market economics”, or even “Austrian economics” if you please. But if you label something “neo”, it must be bad, right? Just like neo-Nazis. See?! They’re the same thing! Bastards!

    The Matrix has you, Neo…

    Comment by blairmulholland — July 17, 2016 @ 3:49 pm

  54. One aspect of the failure of neoliberalism that deserves further attention is Danyl’s observation that

    “…The economy is based on rent-seeking rather than wealth creation…”

    Alongside the closures of freezing works in the aftermath of the removal of SMPs and other farming subsidies was the collapse of regional manufacturing. It was, and still is amongst the media and political elites, regarded as self evidently ludicrous that we cshould build locomotives in Duneddin, or TVs in Thames, or cars in Wellington, or clothes in Levin or have a large plastics manufacturer (PDL, where I got my first ever job) in Hastings. But is that really so? How much of that is actually true, and how much of it is simply the result of a combination of a useless management class, rentier foreign owned banks and ideological purity that exposes NZ manufacturing to unfair competition?

    Recently I was in Berlin, mainly to see a friend but also to meet with a friend of my friend to discuss potential business ideas. This chap set up his own company four years ago to do R&D into low energy networks and patent their various inventions to sell to larger companies. Him and his business partner now employ eight staff in Berlin and have partnered with four others in San Francisco, and are doing well having had a couple of their ideas picked up. I asked him how they got started. He said it was tough in the first three years, but they got a grant from the state government and a loan from the bank that saw them through. Now, this guy is a real entrepreneur. New Zealand has no tradition of entrepreneurship – first prize in the capitalist lottery in NZ is a well paid upper management role in a corporate, not being an entrepreneur – and our management class is utterly without dynamism, preferring to seek profits in rentier activities, utility monopolies and cartels. But even if we did have entrepreneurs imagine asking the government for a grant to try and invent something to eventually make moneyon the intellectual returns of royalties. You’d be laughed at. After all, if the need existed Hayak tells us it would have been invented already. Imagine asking a bank for a loan for a business that is going to invent something in a few years. They would want you to put your house up as capital, and if you didn’t have one they’d call security to eject the clearly mad people from their swish offices.

    Now, the thing is in Germany they make things. Beyer. SAP. BASF. Volkswagen. Siemens. apart from Deutscher Bank not a single finance company is in the top 20 German businesses. And they are all export orientated and successful. They achieve this despite having strong unions, high wages and six weeks annual holidays. They achieve this through excellent, dynamic management grounded in experience, a culture of innovation and workplace cooperation, and strong investment in R&D and productivity. The contrast with our dumb, cost obsessed, interchangable management class who plunder the balance sheet for shareholder return could not be starker. I am currently spending a few weeks in Dubai. I have noticed some NZ fruit and frozen meat here, but that is all. Where is our dairy products? They practically live on yogurt here, yet it all comes from the UK. No flavoured milks or even cheese, for Gods sake. Why are we not processing milk prodicts in high tech facilities in NZ for shipping to the gulf??? Our neoliberal economy is undynamic, rent seeking and dominated by risk averse management bureaucrats.

    Comment by Sanctuary — July 17, 2016 @ 4:22 pm

  55. “Where is our dairy products?”

    Perhaps our failure is the fault of our state education system, especially the english teachers, eh Sanctuary?

    Hard to find a better example of rent seeking than SMPs.

    And I think the Germans can afford high wages, strong unions and six weeks holiday as a result of their success not because of them.

    We sell a lot of stuff to the EU but we don’t sell more because of quotas and because we get higher prices elsewhere.

    “It was, and still is amongst the media and political elites, regarded as self evidently ludicrous that we cshould build locomotives in Duneddin, or TVs in Thames, or cars in Wellington, or clothes in Levin or have a large plastics manufacturer (PDL, where I got my first ever job) in Hastings.”

    No, it was regarded a self evidently ludicrous by the people who had to pay for them and who could see, as a result of expanding travel, that they didn’t have to cost half as much again or twice as much again, or……..

    Comment by Tinakori — July 17, 2016 @ 5:17 pm

  56. “They would want you to put your house up as capital”

    Which is another constraint on any government acting to ‘crash’ house prices. Too many of our small businesses are leveraged against those houses.

    Comment by Sacha — July 17, 2016 @ 5:24 pm

  57. “the Germans can afford high wages, strong unions and six weeks holiday as a result of their success not because of them”

    Three decades of tripartite bargaining has Aussie wages at 30% higher than ours for the same jobs. Unions can help make businesses work better (gasp!), and both Germany and Australia have embraced that notion. Whereas NZ has had the Employment Contracts Act, 90-day trials, youth wages and similar dull fuckery. Our managerial class needs a real investment in skills training. It’s not workers who are holding things back.

    Comment by Sacha — July 17, 2016 @ 5:27 pm

  58. Both Australia and Germany have youth wages.

    Comment by Tinakori — July 17, 2016 @ 6:33 pm

  59. There’s a bigger and more important issue with the Naomi Klein style critique of neoliberalism than just its cut and paste cliches re Elites and the need for a People’s Movement.

    It’s the replacement on the Left of achievable electoral goals with ideological purity.

    Given the urgent need for the centre left to regain power in Britain and maintain power in France – to keep out the worst consequences of the Right playing on nationalism and xenophobia – it really is time to put away the dreams of People’s Movements and get back to the duller but more effective road of broadening electoral support.

    Comment by NeilM — July 17, 2016 @ 7:16 pm

  60. Currently Hollande us under massive pressure from the Right over terrorism and yet left wing activists continue to label him “Blairite”.

    Similarly in Britain left wing activists are pulling Labour away from the broad base appeal it needs to win.

    In both cases the result will not be victory for a left wing People’s Movement.

    Comment by NeilM — July 17, 2016 @ 7:32 pm

  61. “Given the urgent need for the centre left to regain power in Britain and maintain power in France”

    #concerntrolling

    Comment by Ortvin Sarapuu — July 17, 2016 @ 11:24 pm

  62. Sanctuary: “They achieve this despite having strong unions, high wages and six weeks annual holidays. They achieve this through excellent, dynamic management grounded in experience, a culture of innovation and workplace cooperation, and strong investment in R&D and productivity.”

    Exactly so. We have family in that part of the world; Germany has traditionally been a centre for technological innovation (think industrial revolution) the arts, philosophy… among other areas of intellectual endeavour. Also – obviously – education: the kindergarten movement originated in Germany. There is a deep history of welfare and social-type housing, going all the way back to Jakob Fugger the Rich of Augsburg in Bavaria. Look him up: he was a contemporary of the Medicis in Florence. The housing scheme he set up – the Fuggerei – is still running. These aspects of German culture, along with those workplace elements that you adduce, explain Germany’s continuing success. Oh, and if you get sick, there are worse places to fetch up than a German hospital! Chances are they’ll be able to speak English as well; good luck with that particular boot being on the other foot, were one a German admitted to a NZ hospital though…would just be happy chance.

    Tinakori: “Perhaps our failure is the fault of our state education system, especially the english teachers…”

    This I’ve noticed: defenders of neoliberalism blame its failures on other parts of our society. A recent meme is to blame the poor for their desperate situation, instead of sheeting blame home to the very evident weaknesses of the neolib project. But it is never children’s fault for the circumstances into which they’re born; some will escape poverty, many will not. And it’s pretty much blind luck as to which group a child will fall into.

    “No, it was regarded a self evidently ludicrous by the people who had to pay for them and who could see, as a result of expanding travel, that they didn’t have to cost half as much again or twice as much again, or……..”

    At the risk of adducing anecdote as evidence, in 1974, we bought NZ-made Fisher and Paykel whiteware: fridge, washing machine, freezer, drier. The freezer is still going strong; we had to replace the washing machine in about 1990, the fridge died finally about 2003, we gave the still-functioning drier away when we replaced the washing machine, or possibly the following year. On the other hand, since 2001, we’re on our fifth (overseas-made) top loader washer: Simpson, Simpson (warranty replacement for first Simpson), Fisher and Paykel, F&P ( Consumer Guarantees Act replacement for previous), Bosch (which has already needed a warranty repair of door lock mechanism). And don’t get me started on cookers….

    Our NZ-made whiteware was durable and not expensive. Had the economic bulldozer not been run through such businesses in the last 30 years, we could still be building quality stuff here. And people would have worthwhile jobs. On the other hand, no doubt you’ll be aware of the ridiculous costs here for building materials? Clients of a relative in a construction-related business have brought in container-loads of German windows for their new builds. Even with all the costs of transport and so on, it’s still about half the price of windows here. Even if one could get the same quality and design in NZ: German windows are fantastic and simply blitz the competition.

    “Both Australia and Germany have youth wages.”

    That they do. Then the workers go on to real grown-up wages. Pity that doesn’t happen here.

    Comment by D'Esterre — July 18, 2016 @ 12:21 am

  63. Ortvin Sarapuu: “#concerntrolling”

    Ha! Yes, I’d noticed that as well. Presumably nothing of moment to contribute to the debate. Best to ignore it, I think.

    Comment by D'Esterre — July 18, 2016 @ 12:25 am

  64. “A recent meme is to blame the poor for their desperate situation”

    Blaming the poor is hardly recent

    Comment by Ortvin Sarapuu — July 18, 2016 @ 3:04 am

  65. I’ve never heard a single economist or politician advocate trickle down, not one. It’s a complete straw man

    I’ve heard loads of economists and politicians advocate the idea that business creates wealth and growth, and if you free things up for business by ‘getting rid of red tape’ or giving them ‘tax relief’ then that will grow the economy and the poor will benefit. That’s a completely standard belief in right-wing politics and neoclassical economics. So when people on the left want to mock it or critique it they call it ‘trickle down’. It functions on the same level as ‘the nanny state’. No one on the left wants to government to literally be your nanny, but they do favour more regulation etc.

    Comment by danylmc — July 18, 2016 @ 8:20 am

  66. Tinakori: What national says and what National does have diverged considerably since the days of Jim Bolger.

    Removing the RMA for one stated reason opens up all manner of risk in other, unstated, areas.

    The Greens and Labour are right to be skeptical.

    Comment by truthseekernz — July 18, 2016 @ 8:29 am

  67. Germany isn’t neo-liberal? I find it so difficult to keep up with the shifting terminology. The German driven EU austerity project has attracted some criticism for neo-liberalism. Yet here is this consistent slew of praise for the German social contract and an austere level of government expenditure.

    Any discussion of solely the benefits – high wages, lots of holidays, entrepreneurship, high growth, low unemployment – accrued to Germany is unbalanced analysis. Germany has austere socialism and implementing that here would not be a pain free process. Germany is directing reform in Greece, Spain, Italy and Portugal on how to create a social contract in the correct austere model – some friction is occurring. If these are the reforms to undertake here, we need to see if there is any suffering induced.

    With praise of the lack of managerialism inherent in the German approach, it is typical for half the equation to neglected dependent on political leaning. Right wingers will point to German public sector and left wingers to the business sector. Both will come to the conclusion that there is much merit to be found in implementing a half arsed program eliminating wastage of unnecessary managerial layers, either in the public or private sector depending on type.

    The Germans do both, but our politicians aren’t likely to be so fair handed and will merely gut the oppositions support base.

    Comment by unaha-closp — July 18, 2016 @ 10:38 am

  68. Ortvin Sarapuu: “Blaming the poor is hardly recent.”

    Indeed not. But in contemporary NZ, it’s been turned into an art form, which has percolated through much of society and its institutions, exemplified by the punitive approach to welfare which now pertains.

    Apologists for neoliberalism blame its victims for their own desperate situation, rather than acknowledging that it is neoliberalism’s weaknesses which have brought about the poverty suffered by far too many. It’s a puzzle, really: in what universe would anyone think that an economic model predicated on putting a big chunk of the population out of work wouldn’t have negative consequences on society?

    Comment by D'Esterre — July 18, 2016 @ 12:26 pm

  69. Danyl

    I take “trickle-down economics” to connote the idea that if company and top-personal tax rates are cut, “the rich” will spend the extra money on consumer goods and services provided by “the poor” and in this way the money will “trickle-down”. I don’t think you will find anyone who has advocated such a preposterous idea anywhere, ever.

    What supply-side tax cuts were designed to do is create incentives for greater investment in plant, machinery, the labour force etc and this would expand the economy, creating new jobs and greater profits and this would in turn expand the tax take. This may or may not be sound economics, but it is what was advocated by the supply-siders such as Roger Douglas. It is not in any sense about wealth “trickling down”.

    In contrast, the term “nanny state” refers to the state taking over the role that a nanny would have had, for example in a boarding school. Like “trickle down” it is mainly a term of abuse but I think it is closer as an idea to what is intended by advocates of policies criticised as “nanny state” than “trickle down” is to the concept of supply-side economics.

    Comment by Matthew Hooton — July 18, 2016 @ 6:14 pm

  70. unaha-closp: “Germany isn’t neo-liberal? ”

    No. It’s a social market economy.

    Comment by D'Esterre — July 18, 2016 @ 7:00 pm

  71. Matthew H – “supply-side” is effectively synonymous with “trickle down”, though the latter is a pejorative way of criticising the former.
    Economists might not have used the exact words but they have advocated the same thing in the public mind; reduced taxes and regulation for business, a side effects of which – in the dominant flavour of modern capitalism – being wealth concentration and asset inflation rather than the wealth creation, broader investment and a deeper tax base postulated.

    Comment by Gregor W — July 18, 2016 @ 10:34 pm

  72. Economists might not have used the exact words

    But that’s exactly what some economists have referred to. Like Brian Easton, for example:

    “We were promised that reduced taxes on the rich would result in them investing more (from their higher incomes) and innovating more (because lower taxes would be less penalising to risk). The idea was that this would result in faster economic growth, and that while they would benefit most (and therefore their income share would grow faster) there would be a ‘trickle-down’ effect so that (just about) everyone would benefit.”

    http://pundit.co.nz/content/what-is-happening-at-the-top-of-the-income-distribution

    Or Shamubeel Eaqub:

    “The same liberalisation also introduced a big increase in inequality. Rapid liberalisation meant significant job losses from previously protected industries, often well paid relative to qualifications.

    A big increase in income inequality in the mid-80s has remained stubbornly entrenched. The rising tide hasn’t lifted all and we can safely put to bed the ‘trickle down’ theory.”

    Increasingly those at the bottom are finding things harder, with ongoing offshoring of unskilled and semi-skilled jobs, and incomes barely keeping up with, or falling behind the cost of living

    http://www.stuff.co.nz/business/opinion-analysis/80714180/Shamubeel-Eaqub-Rethinking-political-thought

    And then there’s economics teacher Peter Lyons:

    “The term ‘trickle-down effect’ should be used only to describe an unfortunate ailment that can affect the elderly.

    In economics, it is often used to justify reducing tax rates for high-income earners.

    The belief is that taxing the rich is harmful for economic growth. But no conclusive data supports this.”

    http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11325867

    Comment by Ross — July 19, 2016 @ 7:01 am

  73. Economists might not have used the exact words

    But that’s exactly what some economists have referred to. Like Brian Easton, for example:

    “We were promised that reduced taxes on the rich would result in them investing more (from their higher incomes) and innovating more (because lower taxes would be less penalising to risk). The idea was that this would result in faster economic growth, and that while they would benefit most (and therefore their income share would grow faster) there would be a ‘trickle-down’ effect so that (just about) everyone would benefit.”

    http://pundit.co.nz/content/what-is-happening-at-the-top-of-the-income-distribution

    Or Shamubeel Eaqub:

    “The same liberalisation also introduced a big increase in inequality. Rapid liberalisation meant significant job losses from previously protected industries, often well paid relative to qualifications.

    A big increase in income inequality in the mid-80s has remained stubbornly entrenched. The rising tide hasn’t lifted all and we can safely put to bed the ‘trickle down’ theory.”

    Increasingly those at the bottom are finding things harder, with ongoing offshoring of unskilled and semi-skilled jobs, and incomes barely keeping up with, or falling behind the cost of living

    http://www.stuff.co.nz/business/opinion-analysis/80714180/Shamubeel-Eaqub-Rethinking-political-thought

    And there’s economics teacher Peter Lyons:

    “The term ‘trickle-down effect’ should be used only to describe an unfortunate ailment that can affect the elderly.

    In economics, it is often used to justify reducing tax rates for high-income earners.

    The belief is that taxing the rich is harmful for economic growth. But no conclusive data supports this.”

    http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11325867

    Comment by Ross — July 19, 2016 @ 7:02 am

  74. Economists might not have used the exact words

    But that’s exactly what some economists have referred to. Like Brian Easton, for example:

    “We were promised that reduced taxes on the rich would result in them investing more (from their higher incomes) and innovating more (because lower taxes would be less penalising to risk). The idea was that this would result in faster economic growth, and that while they would benefit most (and therefore their income share would grow faster) there would be a ‘trickle-down’ effect so that (just about) everyone would benefit.”

    http://pundit.co.nz/content/what-is-happening-at-the-top-of-the-income-distribution

    Comment by Ross — July 19, 2016 @ 7:03 am

  75. Or Shamubeel Eaqub:

    “The same liberalisation also introduced a big increase in inequality. Rapid liberalisation meant significant job losses from previously protected industries, often well paid relative to qualifications.

    A big increase in income inequality in the mid-80s has remained stubbornly entrenched. The rising tide hasn’t lifted all and we can safely put to bed the ‘trickle down’ theory.”

    Increasingly those at the bottom are finding things harder, with ongoing offshoring of unskilled and semi-skilled jobs, and incomes barely keeping up with, or falling behind the cost of living

    http://www.stuff.co.nz/business/opinion-analysis/80714180/Shamubeel-Eaqub-Rethinking-political-thought

    And there’s economics teacher Peter Lyons:

    “The term ‘trickle-down effect’ should be used only to describe an unfortunate ailment that can affect the elderly.

    In economics, it is often used to justify reducing tax rates for high-income earners.

    The belief is that taxing the rich is harmful for economic growth. But no conclusive data supports this.”

    http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11325867

    Comment by Ross — July 19, 2016 @ 7:03 am

  76. “OECD economist and report co-author Michael Förster said the long-held belief that there was an automatic trickle-down effect of wealth has proven not to be true.”

    http://www.radionz.co.nz/news/political/261370/tax-changes-not-the-answer-english

    Comment by Ross — July 19, 2016 @ 7:07 am

  77. Apologists for neoliberalism blame its victims for their own desperate situation, rather than acknowledging that it is neoliberalism’s weaknesses which have brought about the poverty suffered by far too many. It’s a puzzle, really: in what universe would anyone think that an economic model predicated on putting a big chunk of the population out of work wouldn’t have negative consequences on society?

    Thanks for asking.

    We apologists dislike the premise of guest workers and don’t want to return to dawn raids. We’re also quite glad that under neoliberalism a billion or so people in developing world have been raised out of poverty, benefitting from our free trade. We think of these people as people, not dirty foreigners who are out to steal our jobs. We think that only by cooperation will the entire world move forward and that the creation of protectionist trade barriers is a blight.

    We aren’t keen on seeing wealthy NZ capitalists afforded protection from competition, because we think these people are complete scum. At the moment I am having a personal hard time accepting the protection from competition that has been given to Auckland property owners by our “left wing” council – this has prevented the building of 25,000 houses so far, including 12,000 apartments. Growth has been deferred, established land owners have been protected from failure and people are living in cars – a policy mix which is totally right wing, but not neo-liberal.

    Comment by unaha-closp — July 19, 2016 @ 9:12 am

  78. Ross – my point was that economists who have espoused “supply-side” haven’t (I believe) used the term “trickle down”, even though in the terms of public perception they mean the same thing.
    So in this sense Matthew H is probably correct, but it’s dancing on the head of a pin.

    Comment by Gregor W — July 19, 2016 @ 9:38 am

  79. @Matthew Hooton said, ‘I take “trickle-down economics” to connote the idea that if company and top-personal tax rates are cut, “the rich” will spend the extra money on consumer goods and services provided by “the poor” and in this way the money will “trickle-down”. I don’t think you will find anyone who has advocated such a preposterous idea anywhere, ever.
    What supply-side tax cuts were designed to do is create incentives for greater investment in plant, machinery, the labour force etc and this would expand the economy, creating new jobs and greater profits and this would in turn expand the tax take. This may or may not be sound economics, but it is what was advocated by the supply-siders such as Roger Douglas. It is not in any sense about wealth “trickling down”.’

    The standard right-wing economic argument is that by making more money available to smart, hard-working rich people (who are rich because they’re smart and hard-working) that they will invest that money for the benefit of the economy. That is what a lot of people believe to be true. But the effect of those supply-side tax cuts was for the wealthy to pour money into luxury goods like mansions, sports cars, and yachts – i.e. the sort of consumption that benefits very few NZers – but by far and away what most wealthy NZers have done is buy up the homes of poor and middle-income NZers, especially in Auckland.

    I’d happily support lower, flatter tax if it led to investment in productive assets and had more equal distributional outcomes, but the evidence from right across the world shows that it’s absolute bollocks with bullshit on top covered in a truck-load of rubbish.

    Comment by RHT — July 19, 2016 @ 10:35 am

  80. @RHT there are some very rich NZers pumping money into ecological projects on land that they own. This doesn’t directly benefit NZers or the economy outside of the jobs it creates. Vanity spending is not just shiny toys, and is not always negative.

    Comment by Robert Singers — July 19, 2016 @ 12:35 pm

  81. @Robert Singers. I’m guessing you don’t subscribe to the dictum that “the economy is a fully-owned subsidiary of the environment,” then?

    Comment by RHT — July 19, 2016 @ 1:06 pm

  82. Thanks Joe W @ 44

    Matthew Hooton on Mandela:

    “I wrote a draft, which I am sure was awful, along the theme that it was only now that apartheid was gone that everyone, no matter what their political background or what they may have said before, could now see so clearly how evil the regime had been. The speech was a bit too much for Mr Bolger, but I was still proud when a few lines made it in to the final draft.”

    What a wonderful apologist for expediency you are/were – keep those thoughts in mind when the chickens of neo-liberalism come home to roost (if they aren’t already ) – and while your at it perhaps if your old man was as wrong about something as blindingly obvious as apartheid you should challenge a few other ideas he had – sending his kids to private schools….

    Comment by rodaigh — July 19, 2016 @ 3:01 pm

  83. …by far and away what most wealthy NZers have done is buy up the homes of poor and middle-income NZers, especially in Auckland.

    Good move them. They benefit easy money capital gains given to them by Auckland City Council. Their landholdings are kept free from competing with pesky new entrants into their protected marketplace by Council choking off Auckland land supply. Good old style of state sponsored profiteering at the expense of new entrants, typical of New Zealand prior to neo-liberalism.

    Comment by unaha-closp — July 19, 2016 @ 4:09 pm

  84. Yay, let’s repeat the Nat talking points that it is councils not govt who can fix our housing crisis.

    Until NZ addresses the incentives for foreign money via our foreign-owned banks and under-regulated currency to ‘invest’ in other people’s homes, no amount of land regulation will make a difference. Adding more supply just throws petrol on the bonfire.

    Comment by Sacha — July 19, 2016 @ 7:21 pm

  85. I’d be interested to know to what degree changes in income distribution are linked to changes in technology rather than to any particular economic programme.

    Also if social media is exacerbating and accelerating the extension of adolescent behaviour into adulthood.

    Comment by NeilM — July 19, 2016 @ 9:06 pm

  86. 13731587_633749560118991_2501487369986134642_n.jpg

    Comment by teararoawalkers — July 20, 2016 @ 7:05 am

  87. 84.Yay, let’s repeat the Nat talking points that it is councils not govt who can fix our housing crisis.

    Huh? Do try to keep up.

    Phil Twyford, Labour, has called upon the government to intervene to scrap the RUB land restrictions and free up land. The Nats have decided not to do this.

    BTW – well done with the right-wing NZFirst banning nasty foreigners and controlling monetary supply mantra.

    Comment by unaha-closp — July 20, 2016 @ 9:34 am

  88. To Mr Hooton.

    Trickle down economics are alive and well in the UK, as his fellow travelling nut jobs want to use Brexit as an excuse to cut company taxes and reduce wages.

    Comment by KJT — July 23, 2016 @ 9:54 am

  89. Milton Friedman Speaks – Is Capitalism Humane?

    Conclusion: what behaviour the system encourages, in those who toil under it, should help you determine whether it is a good system or not.

    Comment by Clunking Fist — July 23, 2016 @ 4:48 pm

  90. “Surely it isn’t beyond us to develop an economic model that incorporates elements of both individualism and collectivism.”

    FFS, we HAVE developed such a system: most industries are deregulated and they, and their employees and customers, pay the taxes that allow the government to provide the collectivist services we receive, such as police, roading, hospitals and schools. What most of you are doing is equating “neo-liberalism” with corporatism: the favouring of certain producers (particularly LARGE producers*) through uneven regulation or deregulation, or outright patronage.

    Comment by Clunking Fist — July 23, 2016 @ 5:00 pm


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