New Zealand’s Great Regression

Luke Malpass, of the Centre for Independent Studies, has written a sobering, but informative and well-written, article about New Zealand for the Journal of the American Enterprise Institute. He summarises the current state of the economy, and political landscape, before examining how we got to this point – with a particular focus on the reforms of the 1980s and early ‘90s.

A colourful piece, it describes New Zealand variously as a ‘Polish shipyard’ and a ‘beacon of liberalizing reform’ (before suffering from) ‘stultification’ and ‘lost policy mojo’.

The article begins with an anecdote about Ruth Richardson giving the vote of thanks at the PJ O’Rourke dinner last year (excerpts):

Delivering the vote of thanks was the Honorable Ruth Richardson, New Zealand’s indomitable former minister of finance and author of the “mother of all budgets.” Richardson had effectively dismantled the welfare state and slashed government expenditure in the early 1990s before Prime Minister Helen Clark’s Labour government reverted New Zealand to type. In her speech, Richardson noted that since her tenure, New Zealand had “lost its policy mojo” and implied that her former party (the current conservative National-led government) was about to commit “fiscal child abuse.”

 The article argues that New Zealand never fully embraced ‘reform zealotry’:

New Zealand is not in a league of international political big hitters. There are few things that Americans would know about New Zealand: maybe the Lord of the Rings films, perhaps our anti-nuclear policy, or, for the politically minded, the liberalizing reforms of the 1980s (colloquially known as “Rogernomics,” after Minister of Finance Roger Douglas). These reforms ensured that from 1984 to 1993, New Zealand was a beacon of liberalizing reform (liberalizing in the classical sense, as I will use it here) to the rest of the Western world. In reality, despite its great results and international recognition, New Zealand’s overtly ideological and doctrinaire approach to reform was an anomaly in the nation’s otherwise pragmatic path. New Zealanders never really got into reform zealotry, and although the medicine was taken, the exercise regime that would make it unnecessary in the future required a bit too much discipline. It was easier to fall back into the old habits of tax, spend, and regulate.

And so it is. New Zealanders are pleased that Helengrad (the pop culture name for New Zealand under Prime Minister Clark, 1999–2008) has fallen and the socialist government gone. But the nation also seems relatively content with a conservative government doing the same socialist things with marginally lower income tax rates. John Key’s National-led government prefers not rocking the boat—he is keeping up entitlements and continuing to tax and spend, and to clamp down on incorrect social behaviors.

Luke Malpass identifies the ‘50s and ‘60s as New Zealand’s most prosperous years, but argues that years of protectionist policies would eventually make reform a necessity:

The 1950s and ’60s were New Zealand’s “golden years”—it had the highest living standards in the world in the 1950s, largely due to postwar export industries, particularly sheep products to the United Kingdom. But hidden behind this prosperity were the seeds of a long period of decline and a slow process of the stultification of society. The nation was complacent during the good times, and successive governments combined a “she’ll be right” attitude with a misguided belief in the long-term viability of protectionist policies. It took 40 years for the consequences to hit home.    

 Then he launches into his account of New Zealand’s renowned economic reforms:

When they did, the nation responded with radical reforms in 1984. From being one of the most closed-off economies in the world, New Zealand became one of the most liberalized. When the Fourth Labour Government was elected in 1984, almost every area of the economy except the stock market was heavily regulated with tariff and quota protection import licenses and the granting of monopolies. As part of its protectionist policies, government imposed a total wage and price freeze for almost two years in 1982. The government owned about half of the economy and provided cradle-to-the-grave welfare.

I would take issue with one or two points but Luke Malpass has done a well-articulated summary of a turbulent but hugely significant and fascinating period of our history. It continues from here and is well worth reading in full. Here’s the whole article.

Scraping the barnacles off liberal

I read a nice piece yesterday by firebrand Member of the European Parliament and YouTube star Daniel Hannan, who visited New Zealand last year and spoke at a Business Roundtable function in Auckland – see his excellent speech on why Britain should get out of the EU here.

In the blog Dan examines the origin and abuses of the word liberal and the need to restore its true and honourable meaning.  Like the terms left and right – labels to which I and many others strongly object (see my black holes speech) – liberal has been commandeered for all sorts of misleading purposes.  Dan Hannan’s preferred label for himself? – a Whig.  

Dan begins:

My old friend Sholto Byrnes asks at The New Statesman whether “liberal” is becoming a dirty word again. He recalls the way Michael Dukakis was bludgeoned to a bloody pulp by the epithet in the 1988 American presidential election, and cites two contemporary examples of liberalism in retreat, one to do with gay rights in the US, the other with multiculturalism in Germany.

If we scrape away the barnacles that have attached themselves to it, the word “liberal” is rather an attractive one. It means committed to freedom, generous, tolerant.

and ends with a stirring defence of the liberal tradition:

Like Sholto, I think the liberal tradition in Britain is an honourable one. It has great achievements to its name: parliamentary supremacy, religious toleration, meritocracy, votes for women, the legalisation of homosexuality. I am, as regular readers know, a Whig. I believe in British particularism, parliamentary sovereignty, personal liberty, small government and maximum democratic control. I’d have been for Parliament in 1642, for the Revolution in 1688, for Reform in 1832, for Gladstone against Disraeli. I’d probably have been one of those Whigs who broke with the Liberal Party when began its drift towards social democracy at the end of the nineteenth century (the “and Unionist” bit in my party’s title dates from the merger of these “Liberal Unionists” with Bonar Law’s Conservatives in 1912).

Because liberal, in the US, simply means Leftist, Americans who believe in maximum freedom took to calling themselves libertarians, a soubriquet that crossed the Atlantic in the 1970s, but hasn’t caught on here to the same degree. Call it what you will, it’s as persuasive and manly a creed as any on the market. I leave the last word to J S Mill:

The only freedom which deserves the name is that of pursuing our own good in our own way, so long as we do not attempt to deprive others of theirs, or impede their efforts to obtain it. Each is the proper guardian of his own health, whether bodily, or mental or spiritual. Mankind are greater gainers by suffering each other to live as seems good to themselves, than by compelling each to live as seems good to the rest.

Click here to read the full blog

For those who haven’t seen it, and because I couldn’t resist, here’s Dan’s evisceration of Gordon Brown in the European Parliament last year:

Elites just don’t get Howard

For a regular fix of first-rate journalism and some serious analysis of Australian politics that goes beyond the length of Julia Gillard’s earlobes, it’s hard to go past The Australian’s Janet Albrechtsen.  Like this piece where Albrechtsen examines the Australian media’s misreading of the role of former Prime Minister John Howard in the current election campaign.

This recent sniffing by Fairfax media elites about the return of “Howardism” betrays one constancy: they just don’t get John Winston Howard. And it’s likely they never will. The reason is simple enough. If you don’t understand mainstream Australia, then Howard is equally mystifying. They cannot bring themselves to admit that Australia is quietly, comfortably conservative by nature. Not in that overtly American way of muscular individualism, flag-waving patriotism or screaming Tea Party opposition to big government. In Australia, public displays of philosophical affection give way to private pragmatism and common sense. Howard battlers are not pining for the past. They have always sought the leader and the government that best represents their values and aspirations.

Even the ‘better minds’ in the media just don’t get it, writes Albrechtsen:

Howard is invariably depicted as an embarrassingly dotty, dribbling old one-trick pony forever shamed from political life by the 2007 election loss. For them, Howard represents everything they, the educated classes, despise: flexible workplaces, strong border control, moderate climate change policies, indigenous intervention. And so on.

They failed to comprehend the differences between Howard’s 2007 election loss and Paul Keating’s drubbing in 1996. Mainstream Australians stood ready with baseball bats to boot Keating, his Italian suits, antique clocks and Mahler CDs out of office in 1996. Meanwhile, the educated classes cried into their chardonnay at the rise of a balding, nerdy chap in thick glasses who espoused family values and torpedoed political correctness.

In 2007, only the educated classes had their baseball bats at the ready for Howard. Most Australians did not harbour visceral hatred towards him. While Australia’s second longest serving prime minister certainly overstepped the mark on Work Choices, his bigger problem was overstaying his time in office. After 11 years as PM, Australians gave the new guy pretending to be Howard-lite a go. When they worked out Kevin Rudd was conning them, the battlers turned away long enough and swift enough for Labor to switch to a new face.

So why, she asks, “if Howard is such a fossil from the past, has Julia Gillard mimicked the former Liberal PM on the critical issues in this election campaign? “

When Gillard shelved the emissions trading system, she signalled she is browner than Howard. Likewise, Gillard copied Howard’s strong borders policy by proposing offshore processing of illegal immigrants and echoed Howard’s policies on Afghanistan and the US alliance. On ABC1′s Q&A on Monday night, Gillard – the architect of waste and mismanagement within the $42 billion schools building program — continued the me-too caper she started early on in the campaign, lining herself as the natural heir to Howard’s record of sound economic management.

In other words, Gillard knows this election will be decided in the homes of Howard battlers. Issues that concern Australians in the sun-belt seats of Queensland and western Sydney are very different to the left-of-centre agendas pursued by those in inner-city seats where our media elites work, live and practise pilates.

So how will Howard’s legacy play out in the polling booths on Saturday?

For much of the media, the prospect of Abbott becoming prime minister on August 21 is as repugnant as Howard winning in 1996. Mesmerised by Labor’s latest messiah, they speak about the “sparkle” in Gillard’s eyes. For them, a secular Gillard who pretends to be a conservative is far more preferable to a Catholic Abbott who is the real thing.

But,

The rest of Australia may beg to differ. In fact, it didn’t take long before Gillard started to look more Titanic than messianic. Witness her embarrassing call for help from Kevin from Queensland. Gillard and the number crunchers now know that Gillard for PM is not winning over voters in those critical Queensland seats no matter how much she talks about understanding the stresses of family life, balancing the family budget, buying that new pram and paying for those music lessons. She now depends on the man who she politically assassinated, a church-going family man, to pull Labor over the line. The question is whether Queenslanders are awake to Labor’s latest conservative con.