Wednesday, June 24, 2015

New Zealand politics: 'Ruth , Roger and Me'. After three decades of market forces ‘trickle down’ economics it is time for a new story/direction.



New Zealand - the way you want it?

Do we need a new flag or a new vision? Both!

I recently listened to an interview with Andrew Dean and was impressed with both his ideas and his ability to handle the interviewer’s questions with respect and ease.

So impressed that I bought his book ‘Ruth Roger and Me: Debts and Legacies’ and I recommend it highly. Andrew grew up in the shadow of Roger Douglas and Ruth Richardson’s reforms – now
referred to as 'Market Forces' ideology or 'Neo Liberalism'.

An excellent read
The reforms moved New Zealand (along with other Western countries) from a regulated economy that was unable to cope with a changing world. At the time, the saying went, ‘there was no alternative’ (TINA).Ironically the changes from a more state controlled economy to the ‘free market’ was introduced by a Labour Government.

After three decades all the promises from the ‘hard medicine’ of deregulation have not benefited all as the term ‘trickle down’ wealth promised. A lot has been lost. It is now time for new ideas.
Andrew Dean

Andrew’s book is an attempt to ‘come to terms with the recent past’. It is his thesis that as a result of the changes has resulted in many people feeling ‘discomfort’ as a result of policies that have left people less certain, less protected and more stressful about their future. As well people are feeling ‘disconnected’ from their communities. It is all about self-responsibility.

Margaret Thatcher 'There  is no such thing as society'.
Andrew reminds readers of Margaret Thatcher’s infamous comment that ‘there is no such thing as society’ and that now young people see themselves as solely, or almost solely responsible for their economic success or failure. This replaces previous idea that the state’s role to ensure that everyone ‘be allowed to live lives of dignity - be given a fair go’.

The ideas introduced are now all but invisible and now it is assumed ‘that markets, allowed to operate freely and independently…. will make everybody better off’; wealth will ‘trickle down’.

Ruth R's 1991 Budget
The ‘stiff medicine’ of the reforms, according to Ruth Richardson will make us ‘healthier for it’ There is to be no gain without pain'. ‘By leaving welfare, trade unions, and state monopolies behind, we have become self-sufficient and free. If we are poor then that we will simply make us work
harder; and if that job pays very little, then we will be encouraged …to make better choices’. Ruth believed (still does) that 'we' needed to be freed from the 'tyranny of big government' which was 'sapping the individual spirit'/

Roger Douglas had a vision of no income tax, slashing of social spending of all kinds and the replacement of state provided healthcare and education with competitive and private and private user-pays systems. This is a privatisation agenda – the business world can do everything better than the government. The ideals of privatisation have in recent years led to asset sales and moves, through charter schools, to privatise education. Health is also open to privatisation.
Roger Douglas - Labour!

The reforms, according to Douglas, were all about the need to ‘break the dependency cycle which encourages some people to look to the State for support when they could be making it on their own’. This is all about worsening people’s standards of living to help them! The legacy of this thinking lives on and is now established as current political orthodoxy so natural to be invisible.

As a result of this thinking many Western counties have developed an ‘underclass’ of desperate people with their associated social problems: drugs, crime homelessness casual crime. The growth of such poverty confounds market forces thinking. Many in poverty now worry about money to support their families all the time. ‘Poverty’, Dean writes, ‘is more than lack of money: it is also a set of conditions that make it difficult to get ahead’- health costs, poorer life expectancy, and mental health issues.

As Dean writes, ‘being poor is bad for your health’. 

Today  widespread and deep poverty is in contrast to a New Zealand the  home of ‘cradle to the grave welfare provision’ – that was dismantled with Ruth Richardson’s Mother of all Budgets  in 1991. Ironically the first reversal in this policy was passed by the National Government in this year’s budget. A clear sign ‘market forces’ has not solved the problem? Labour’s working for Families programme provided some respite but in reality the poverty has deepened as income has increased at the top. As well, writes Dean,’the bottom 30% of society….experienced either no or very low gains in the thirty year period’.

 So much for the ‘trickle down’ theory.

Dean, as a recent student writes about the effect of the student loan scheme. Free tertiary education is now hard for recent students to imagine but was introduced in… He interviews the Vice Chancellor of the University he attended who had the task of introducing ‘market forces user pays’ into the universities.

The vice chancellor now suggests ‘there may be some things that cannot be easily captured in standard accounting methods’ and adds, ‘More market does not seem to have freed the worst off among us to participate in New Zealand society’.
David Lange , ' I want to thank all people whose lives have been wrecked by us'.















It is becoming clear that the guiding principles of ‘freedom and responsibility of the individual’ has not worked for all or the benefit of the wider society. Not all people are in a situation to be able to make choices without support.

There is now a need to return to benign government oversight and regulation; for state planning and redistribution; to value collective solidarity through unions and means to protect workers from exploitation. This is not a call to return to state paternalism (often referred to despairingly as the ‘nanny state’) but more a development of regional, community and local involvement in the name of the common good.

There is a need, Dean writes, to develop ‘social capital’ or cohesiveness to develop more community participation and responsibility. 

Dean quotes the research of Wilkinson and Pickett (authors of the book The Spirit Level) who write that a large range of social ills (such as crime, drug use, obesity and mental illness and educational attainment) increase with greater inequality as well as a decline in community life and social cohesion. People are left to fend for themselves and are less caring of others.

Young people in particular have been on the receiving end and many are feeling socially isolated, worthless and powerless. In 2014 11% of people aged 15-24 were not in education, employment or training; the youth unemployment was 19%.’ Unemployment in recent years has remained higher than in the thirty years after the Second World War’ and productivity has certainly been no higher since 1884 than it was in the decades after the Second World War’. The rich have gained while ‘for many the changes have been destructive.’

‘Home ownership is now a distant dream for people'.. ‘with affordability is most difficult for the young and the poor. ‘The speculative frenzy of the last decade’ has been ignored by the government. There is little popular support for solutions that would dampen the demand, such as a comprehensive capital gains tax’. ‘Make no mistake’, Dean writes, the housing crisis has been exasperated by the sanguine belief that the market will simply fix the problem’.  To solve this problem ‘would involve
governments building more houses themselves’. State houses have been sold off, or inadequately maintained, and currently are up for grabs for others to make use of; another move towards privatisation.

Fertile ground for opposition politicians to develop positive alternatives I would think but this would mean contesting the victory of the market forces ideology of the past thirty years. 

What has been lost is respect for the common good and, Dean writes, ‘addressing the nature of our duties and responsibilities to others’. The pain and the gain have not been shared by all.

In 1935 the First Labour Government was like a ‘second coming’ with its promise of social security, free medical treatment and its free hospital care for all; ‘so great was the joy in our family’ (Janet Frame). In contrast, writes Dean, ‘we now have a well-developed scepticism of utopian visions….one that has led to a political imagination that is insular, technocratic, and in the end, moribund’.
Michael Joseph Savage

Political discourse, he writes, now sounds like advertising campaigns for insurance companies e.g. ‘vote positive’.

Apathy about politics after three decades of market forces is rampant it is time, he continues for ‘a more imaginative, visionary, political  settlement….at the very least we must discard a political philosophy that ….is a failure …and that Labour ( needs) to broaden the meaning of freedom such that it includes rights of participation…that everyone feels part of.’

His book is asking for a new national story. ‘What if this story were to be one of aroha – feeling, empathy and compassion’ in contrast to the individualistic ‘winner takes all’ society we now live in. ‘A country in which people could really live a full life’ – all people.

First Labour Government
It is time to have a conversation of what kind of country do we want to be.  Growing inequalities and social dislocation will not be solved by the current ‘market forces’ ideology. We need a new view of the world to solve intractable problems we face today.

Best to read Andrews book to fully appreciate his thoughts.

A few of my own thoughts

The current market forces ideology (often called neo –liberal) was introduced in the 80s to reduce state control/compliance and to free the enterprise of the individual with the belief they would, make better decisions. After 30 years we still have top down government but increasing developed through privatised contracts.

Perhaps such changes were needed (Ruth Richardson’s ‘medicine’) but any advantages have not been shared and inequality, with its associated social problems, is growing.

An alternative to privatisation based on contracts and targets (which are open to ‘rorting’ and distortion is now required. What we now have is still top down - ‘free market Stalinism’; it is a process that shifts the blame to the providers.

                                                         The current government is leading to New Zealand
Privatization agenda
being run for the benefit of big business and international corporations and the process democratic values are being demeaned.

We have to get people to believe that the free market does not work in all situations – there is a need for central government to ensure all citizens benefit from economic growth. This does not mean a return to heavy handed state intervention but assisting regional and local communities to have greater responsibility, associated with greater resources to do so.  

Once New Zealand had Provincial Government; maybe it is time to return to some form of regional responsibility and diversity within agreed frameworks.

This would require a rebalancing of central and regional/local government.  Privatisation based on target setting is a too narrow a way to ‘measure’ quality of life for all citizens. With targets, it is not the ones you hit that always count – sometimes you miss equally important things you weren’t looking for and there are always unintended consequences.

Such thoughts would require greater faith in democracy; a feeling that all citizens need to be valued and listened to. We need to develop a culture that engages people at all levels. We need to have means to unify the various independent organisations so that they contribute to the common good. Schools, hospitals, welfare services, housing, NGOs, police all work independently – there must be ways to integrated them more fully?

The current government’s agenda is to deregulate the state, to privatise power and to allow corporations to have too much influence. We  now need government intervention to smooth out growing inequities but this ought not need be a return to the heavy hand of state intervention – more a ‘helping hand’ to ensure all benefit rather than waiting for the false promise of ‘trickle down’ economics.


It is now time for a real alternative – for the beginning of a new thirty years of sustainable and equitable development? Time for a new narrative; one based on diversity, fairness that requires the participation and ownership of all citizens.

2 comments:

Anonymous said...

A very interesting read Bruce. I despair that the Labour Party , rather than defining a real alternative, seems occupied with reacting to governments policies. And, to confuse things, National is delivering what some would see as labour ideas ( the first increase in beneficiary support since Ruth Richardson's 1991 budget and free doctor visits for under 12s) while at the same pushing their privatization agenda with their social housing and welfare policies.

As you say the issue is 'what kind of country do we want to be?'

Bruce said...

You are right. It is time for the Labour Party to put an end to introspection and reacting to National's policies and put forward ideas for a better New Zealand.

There must be a better way than 'free market Stalinism' with all it targets and handing over New Zealand to private enterprise and corporate interests with hpoe it will 'trickle down'?