Economist Brian Easton looks at why this government will not be transformative and questions whether we want it to be

Economist Brian Easton looks at why this government will not be transformative and questions whether we want it to be

This is a re-post of an article originally published on pundit.co.nz. It is here with permission.


Half of the current cabinet could not vote in the 1990 election when the neoliberal government, among other things, attacked the foundations of the welfare state – an attack which has not been reversed. Only a quarter could have voted in the 1984 election when so many Labour voters felt betrayed by a party which promised consensus government and practised a blitzkrieg. A quarter of the cabinet has always voted in a general election based on MMP.

(This cabinet has an average age not very different from that of the Labour members in the 2017 cabinet – around 48 years. In totality, the 2017 cabinet was older because its New Zealand First members averaged 58.)

Time marches on but we may not always be aware of the battles of the past. Over half the cabinet have never voted when homosexual activity was criminal; only one voted before the liberalising of abortion in the 1970s. Neither legislation was perfect, nor as liberal as it is today, but the changes have been incremental since.

Or consider that in the 1970s, an economist talking to the older blue rinse set had to deal carefully with the issue of mothers returning to the paid workforce – ‘not their daughters’, they snorted. Forty years later, a National government was forcing mothers on benefits to go out to work. Ironically, the party which viciously attacked domestic purposes beneficiaries in the mid-1970s, has since had cabinet ministers – even a deputy leader – in whose careers the DPB played a critical positive role. ‘Normality’ had been reversed.

So what are normal and acceptable changes? The majority of today’s cabinet have lived all their adult life with high child poverty rates; doubled by National’s 1990 attack. They have lived with the marked increase in economic inequality which Rogernomics and Ruthanasia deliberately generated.

The issues of continuities are critical to understanding the development of New Zealand. When Jacinda Ardern said hers would be a transformative government, she must have been unaware that in the last hundred and more years there has been only one genuinely transformative government – on any careful meaning of the term.

That was the neoliberal government of the late 1980s and early 1990s. (Admittedly, it involved two phases with different parties in government.)

But what about, you may ask, the first (Savage-Fraser) Labour Government? It is true that they made some fundamental improvements to New Zealand but almost every one had earlier precursors. For instance, the Social Security Act has roots as far back as 1882 (when Colonial Treasurer Harry Atkinson, an acknowledged conservative, proposed an income support scheme not unlike the 1938 Act, and 1898 when the Old Age Pension Act implemented some key principles). Accelerating an underlying trend, especially after the stagnation arising from the Great Depression, is hardly transformative; Labour was (radically) progressive.

There are two groups of caveats. First, there had to be adaptation for change. For instance, Savage-Fraser introduced centrally funded hospital care, just as the scope of secondary healthcare increased markedly with new, more expensive treatments. (The previous Coalition Government – precursor of National – had similar, but more private, plans.)

The other out-of-trend was the intensive market intervention introduced to fight the Second World War. I know of no precursor (documented suggestions gratefully received) .

The market interventions hung on after the war long after they became obsolete and unnecessary. There was some market liberalisation from the 1950s, but it was the Lange-Douglas Labour government which undertook their final removal. In that sense they were a progressive government but they became transformative when they went on to introduce their extreme neoliberal economic regime. Few of its components had predecessors.

This is evident in the neoliberal ‘redesign’ of the welfare state of 1990 and 1991. Its roots are in the minimalism of the US approach, not in any earlier element of the New Zealand welfare state. (You could argue that New Zealand’s nineteenth-century welfare state was minimalist, but that was it starting up. Apply that to the neoliberal transformation and you conclude they were going back to the nineteenth century.)

There remain some components which belong to the great tradition. In principle we still have universal hospital care despite the attack in the early 1990s – although you may think wryly if you are on a waiting list or purchasing private hospital care to jump the queue. The 1998 neoliberal attempt to abandon universal earnings-indexed state retirement benefits was massively rejected by a popular referendum. However social security benefit rates and terms reek of a minimalism. Hence the high child poverty and income inequality. (The offset is low taxes on the rich.)

(There are many other policy areas which illustrate the same theme of neoliberal transformation which has not been reversed.)

Since the end of the intensive period of neoliberal change the policy response toward getting New Zealand back on its long-term track has hovered between incremental progressivism and incremental conservatism. The Clark-Cullen government started with the first approach and, running out of puff, wilted to the second. National governments since Ruthanasia have largely taken the conservative line, at best responding to crises (including those created by failed neoliberal policies).

The Ardern-Robertson Government (now free of the NZF sea-anchor) would probably like to get us back more towards the long-term track, but it (and here I include the public servant advisers) faces two major hurdles. The first is that the track has to be adapted for ongoing external, social and technological change and we are not very good at monitoring and analysing that. The second is, as the opening of the column set out, the leadership has little personal memory of what it was like earlier, nor is there a lot of historical memory.

So while, probably, all of the cabinet and many of their advisers detest the neoliberal framework they have little idea of a viable alternative.

That is the simplest explanation of why there is so much neoliberalism left in the discourse, policy and appointments. It is not adopted for ideological reasons, but because those in charge are unable to identify an alternative framework.

Do not expect a transformative government. You may hope for as progressive one, but the likelihood is that we shall only see incremental change. There will be some progress, much of which will be driven by crises and tensions. It will not be visionary.


Brian Easton, an independent scholar, is an economist, social statistician, public policy analyst and historian. He was the Listener economic columnist from 1978 to 2014. This is a re-post of an article originally published on pundit.co.nz. It is here with permission.

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

34 Comments

13
up

To the young and poor that voted for Jacinda. She has decided it is your fault that house prices are so high.

https://thedailyblog.co.nz/2020/11/30/let-them-rent-cake-jacinda-is-blam...

The young and the poor are on their own. They will have to come up with their own solutions. Their only value to the govt and the old farts is as serfs.

The writer's generation screwed the young's resource/energy chances.

And they used - still use - the writer's discipline (economics) to avoid confronting this theft.

And the current Govt is somewhere between the 'just keep it going until I exit' brigade, and the angry 'How dare you' age-group.

But whether the 3-year cycles and BAU survive long enough for then to have something coherent to take over, is the unasked question?

10
up

transformative will be a word of sarcasm in New Zealand in the next three years, same as KIWI Build.

Always was Xing. Empty sloganeering.

I hope the "Boomer blamers" read this article. They might realise it is the pollies who are to blame, not the people (despite JA).

If they still want to blame the Boomers then perhaps they should consider that it has been post-Boomers who voted the current and last two Governments in, and where is the change that they are demanding?

But as a Boomer I will repeat some of what I have said before, we can have a minimalist welfare state and should do, BUT there must in the first instance be jobs with decent conditions and wages available for everyone.

Orr is a boomer, enough said.

10
up

The TOP Party was founded by a boomer. The only party that has visionary policies. It is the young who did not get up and behind TOP to ensure they got 5% that are at fault.

Boomers did things if they wanted change, the young sit and tweet

I wouldn't read too deeply into this elections results, it was an aberration.

I blame the canaries at Pike River for what happened there too.

I'm a millennial and voted TOP (consecutive elections). A few of my friends did also. Unfortunately still got the wasted vote and tribalism narratives engrained which prevents any substantive change.

I also voted TOP. It's noted a wasted vote to vote your conscience.

I have a vision where rather than 'wasted' vote, the total percentage of votes which are subsequently not represented in parliament translate to a proportionate number of list seats that are retired for that parliamentary term.

Many National supporters voted for Labour this time around to keep the greens out. That tells you everything you need to know about Jacinda.

That's the peddled myth.

It's un-PC enough to invite vitriol, these days, but my take is that the female nurturing instinct saw many rural women voting for a rare example of nurturing leadership.

But our media is too hell-bent on not offending any sub-set of the species, to examine the possibility.

I think it's fair to blame both (won't change a thing, sadly). Pollies want boomer votes, so they don't do anything that could upset them. If Labour started implementing progressive policies, the boomers would 'vote them out' next elections.
To be fair, if more young people decided to vote (and educate themselves about politics), Labour and the other parties would try to appeal to them more.
So in conclusion, you can blame anyone - but in the end, the elected decision makers are making the decisions.

I still like the idea of letting existing owner-occupiers insure their current equity and then bringing in aggressive DTIs and LVRs. Status quo is not sustainable, let alone ongoing increases. If there's a way to give recent FHBs* a soft-landing and then press the "Undo" button, we should seriously consider it and start talking about how it could work.

*I have a minor conflict of interest in this regard.

I'm not sure firefighting will be a viable strategy for much longer as most people will regard this as a second term Labour lead government. However given recent governments good record on tepid management and poor record on leading change I can understand their reluctance. We cannot tolerate failure, therefore we cannot succeed.

No, 'we' don't want it to be transformative. Labour didn't campaign on a transformative platform. The only parties that campaigned on a transformative platform were Greens, TOP, Act

This is a good article.
Easton correctly identifies a 'brains trust' deficit in the government, with its lack of ability / desire to forge a different path.
The cynic would question though whether it's a 'brains trust deficit' or rather an intentional move to capture middle NZ and the status quo to hold on to power.

Transformative on major reforms is a long way off when the incumbents are struggling to keep their promises around simple policy decisions.
The party faked deep concern over migrant exploitation in NZ, vowed to end wage suppression, only to do a 180 and issue tens of thousands of 'essential skill' visas for cooks, cleaners and tour guides.

16
up

Yep Ardern and Co are real liberal phoneys.
I am getting sick of the sight of her and her faux concern.
The likes of this government and other phoney left wing governments help explain the rise of rightist populists.

Furrowed brow cares only about herself.

Come on they have only had the handbrake off for a few months! Let's see how they are doing in a year or two.
And I'm not sure how weak left wing politicians would help the rise of the extreme right?

It's already happening in Europe, which is the blueprint for what our politicians are trying to implement.

Yep Ardern and Co are real liberal phoneys

Not quite. They're definitely 'neo-liberal' in their attitudes and behavior.

I completely lost interest when he said - "..........government was forcing mothers on benefits to go out to work..."
So much for deep analysis. Did it not occur to him that nearly all mothers are forced to go out to work. Not just those on benefits. And the few who manage not to work get regularly asked as to how they manage it.

Brian Easton (and some here) appears to miss the viable alternative to the constant hovering between progressive and neoliberal that has beset this country - it's called the Nordic economic model (see: https://www.investopedia.com/terms/n/nordic-model.asp#:~:text=The%20Nord....) From here arises some of the current discussion around a proposed Universal Basic Income.

It's really a mistake to categorise how people think based on which generation they come from. Sure, there are some broad stroke generalisations that can be made, but for last 20 years we've been living in a world where the internet has made it possible to easily access perspectives and media from other eras. If anything, I've found that the generations younger than me are more informed than I was at their age because they haven't grown up in times dominated by binary for and against politics.

I do not see where's the progressive option in NZ to be honest, all I see are two neoliberal parties with different names, one says it cares about businesses, the other about the poor. Both have proven to not to be honest in these claims.

Possibly. I'm not sure if I see Labour as neoliberal per se. I think both parties have through expediency become more centrist, with neither being progressive in any meaningful way.

Who would have thought Mr Xi would embrace crony capitalism as quickly as he did?

Of course he would. China is now a full on capitalist and fascist state. A total sell-out to its CCP origins.

Welcome back Brian. Yeah na, these are either unreconstructed Rogernomes who wring their hands a lot or gutless 'Labour' people who are scared of the dark of doing something solid to get our many poor, homeless and ordinary productive workers out of this vicious situation. Fraser, Savage, Douglas, Lange? I think this lot is closer to the latter.

Tend to agree. But also happy that NZ has not seen the rise of a populism in the same way it happened in US, Brazil and UK.