New Zealand always seemed like the control group for what happens when neoliberalism isn’t just trialled, but fully embraced and hand-stitched into every institution. What’s astonishing isn’t the economic stagnation, it’s the political amnesia. How many times do you have to be mugged by policy before you stop inviting the same thieves back in? The choice between exit and voice is a bleak one when even the so-called alternatives just offer softer branding on the same austerity logic.
True, although NZ’s was not as large as Australia’s. None of this distracts from your fundamental argument, of course. I had thought that per capita incomes started to diverge earlier (eg the 1970s?), following the fall in wool prices and stagflation. But things definitely went backwards in the late 80s and early 90s.
That is a myth that as a Kiwi Kid growing up in NZ in the 90s & early 2000s, we basically had it stuffed down our throats about how Auzzy is better & richer, & how NZ can't afford much because we have a small population etc.
We were literally raised to believe our own country is too poor. Hence why we foolishly, repeatedly elected governments who were harmful, suckers for fear mongering I guess.
Auzzy mining industry is a massive part of that myth too.
Many countries throughout Asia & Africa are rich in minerals & have major mining industries to boot... they also have some of the poorest populations on earth.
It's not minerals & mining, it's a combo IMHO of tax policy, economic priorities & unions. Correct me if I'm wrong John, but I believe that the Auzzy work force is way more unionized than NZs.
Yes, we have been hoodwinked for longer than I've been alive.
Under John Key(over 15 years ago) we had mining exploration of our sea beads etc. Kiwis have forgotten about that because when they did the exploration they found out that mineral extraction was not viable.
It is horrendous to me that our current government wants to repeat that process & act like no has one tried it before. They also act like it's a given, that if only we could extract & sell the resources. it'll make us rich. Unfortunately many Kiwis are naively falling for this.
Yet the TTR company has just had its go-ahead via the fast-track legislation to mine the seabed off Hawera. All those years of resistance, the petition, the horrible waste of money to lawyers, all for nothing. Democracy? I don't think so.
"The governing parties, National and ACT are the same ones who gave NZ radical reform in the 1980s (ACT was formed by Labour Finance Minister Roger Douglas, who started the process)."
With this sentence, you are airbrushing a crucial piece of New Zealand political history, and I think the facts of what really happened in the 1980s might be part of the solution for your own "puzzle" about why it happened the way it did in Aotearoa, in comparison with Australia.
It was neither National nor ACT but rather David Lange's Labour government between 1984 and 1989 that carried out New Zealand's overnight switch from being the world's most complete cradle-to-grave welfare state outside the communist bloc to being one of the most radical neoliberalist economies on the planet. Significantly , the Labour government carried through this economic swing to the right while also pursuing a strongly independent and leftist foreign policy as well as social reforms.
The thing is, in the context of runaway governmental euphoria about changing everything, after the stifling paralysis of the Muldoon era under conservative National, Lange's government allowed a small cabal of born-again neoliberals led by Roger Douglas to instigate economic changes that were unheard-of - and within just a few years revealed themselves as a very cruel betrayal of what NZ Labour had stood for over the previous half century.
Thus, the fact that these radical right policies were carried through by the country's traditional centre-left party caused a political dislocation which lasted for at least 15 years and has probably permanently altered political attitudes in New Zealand. Labour fell apart while still in power in the late 80s as parts of the party (and the public) began to wake up to what had happened, but by then the farm had already been sold, and the only alternative was to vote in National - which gleefully took the right-wing radicalisation even further.
Eventually, a more economically responsible Labour was rebuilt but I would say that the 80s implantation into New Zealand of trickle down theory and the social approval of using money to make money has lasted more or less until now. In fact, Jacinda Ardern's government paralleled Lange's in that, on the one hand, it had a humanist heart of gold, but on the other, despite knowing that a capital gains tax was needed to counter growing inequality, it went weak at the knees over introducing it. Well, in fact, after 25 years of a neoliberal economy, its voters depended on not having one.
Hi Robert, I agree with all of this history and I didn't mean to airbrush this point. I treated ACT as the continuation of the Douglas cabal. There's a detailed discussion in the article with Tim Hazledine, but the link may be a bit wonky
After a quick skim, that article looks great! One of the first things I note, in terms of the Australia-NZ comparison, is that of course Bob Hawke was a union man who was not going to sell out the workers in a hurry, whereas David Lange was... well, almost a messiah figure, who I would say preferred to be an inspirational leader rather than a tight government disciplinarian. And he was there at the right time and in the right country for that: "God's own country" no less, and as all New Zealanders of his generation knew, the country had at least a couple of times in its history led the world in progressive social and economic reforms, and I think Lange really wanted to follow in that line, he probably trusted Douglas (whose own father was a union man and former senior Labour MP!) without contemplating too much of the economic fine print, and saw the possibility for New Zealand to blaze a trail once again - bearing in mind that the country's independent voice in foreign policy and social reforms were also part of the package. For a few heady years, it looked like they might, it caught the public imagination (they were returned with an even larger majority in 1987), and as a consequence, I think there was a whole generation of young professional New Zealanders, from the champagne lefties and on across the "business classes" to the right, who became converts to the cause. So naturally the National government that followed after 1990 also knew that it had to maintain the new faith, and that, being a real party of the right, had to take it even further. I don't really know much about how it all happened in Australia but I think this semi-revolutionary air that was achieved in New Zealand was key to why it went on for so long and was so extreme... maybe.
A crucial difference between Oz and NZ was that Australia's big cultural moment took place in the early 1970s with Whitlam as the inspirational figure. Whitlam's "crash through or crash" style, ending in crash was similar to that of Douglas, but politically in the opposite direction. Hawke was popular, but never seen in the same way, and very much a believer in consensus There was never much enthusiasm for the micro reform project outside the political class.
Well, in parallel with Whitlam, New Zealand had Norman Kirk - the original charismatic NZ Labour leader of that generation. And what set the NZ experience apart from Australia's was that Kirk died in office after less than 2 years as PM. So that, although his Labour government was hit by the oil shock and recession just like Whitlam's, in New Zealand it was under different leadership, and the Kirk aura remained unsullied. Not sure if this had anything to do with the choice of another "big man" - overweight and a great orator - in the 80s in NZ, but Lange also had the media in the palm of his hand.
New Zealand always seemed like the control group for what happens when neoliberalism isn’t just trialled, but fully embraced and hand-stitched into every institution. What’s astonishing isn’t the economic stagnation, it’s the political amnesia. How many times do you have to be mugged by policy before you stop inviting the same thieves back in? The choice between exit and voice is a bleak one when even the so-called alternatives just offer softer branding on the same austerity logic.
I always thought the relative difference in wealth could be explained by Australia’s lucky mineral abundance.
Aust and NZ were pretty much equal until the 1980s. And the big divergence in the 1990s predated Australia's minerals boom.
Doesn’t hurt to have a massive terms of trade shock in the early 2000s, though…
As both Australia and NZ did https://www.rnz.co.nz/news/business/332084/dairy-pushes-nz-export-power-to-44-year-high
True, although NZ’s was not as large as Australia’s. None of this distracts from your fundamental argument, of course. I had thought that per capita incomes started to diverge earlier (eg the 1970s?), following the fall in wool prices and stagflation. But things definitely went backwards in the late 80s and early 90s.
That is a myth that as a Kiwi Kid growing up in NZ in the 90s & early 2000s, we basically had it stuffed down our throats about how Auzzy is better & richer, & how NZ can't afford much because we have a small population etc.
We were literally raised to believe our own country is too poor. Hence why we foolishly, repeatedly elected governments who were harmful, suckers for fear mongering I guess.
Auzzy mining industry is a massive part of that myth too.
Many countries throughout Asia & Africa are rich in minerals & have major mining industries to boot... they also have some of the poorest populations on earth.
It's not minerals & mining, it's a combo IMHO of tax policy, economic priorities & unions. Correct me if I'm wrong John, but I believe that the Auzzy work force is way more unionized than NZs.
Yes, we have been hoodwinked for longer than I've been alive.
That's what I think as well but I don't know a great deal about NZ's export potential so happy to be educated by others.
Under John Key(over 15 years ago) we had mining exploration of our sea beads etc. Kiwis have forgotten about that because when they did the exploration they found out that mineral extraction was not viable.
It is horrendous to me that our current government wants to repeat that process & act like no has one tried it before. They also act like it's a given, that if only we could extract & sell the resources. it'll make us rich. Unfortunately many Kiwis are naively falling for this.
Yet the TTR company has just had its go-ahead via the fast-track legislation to mine the seabed off Hawera. All those years of resistance, the petition, the horrible waste of money to lawyers, all for nothing. Democracy? I don't think so.
Hi John! Love you bud. …did you ever read Princes of the Yen by prof Werner? We’ve had the central bank weaponised against us. Link to his doco in my piece here https://open.substack.com/pub/tadhgstopford/p/prisoners-of-the-crown-nzs-murdersuicide?r=59s119&utm_medium=ios
Will read with interest
"The governing parties, National and ACT are the same ones who gave NZ radical reform in the 1980s (ACT was formed by Labour Finance Minister Roger Douglas, who started the process)."
With this sentence, you are airbrushing a crucial piece of New Zealand political history, and I think the facts of what really happened in the 1980s might be part of the solution for your own "puzzle" about why it happened the way it did in Aotearoa, in comparison with Australia.
It was neither National nor ACT but rather David Lange's Labour government between 1984 and 1989 that carried out New Zealand's overnight switch from being the world's most complete cradle-to-grave welfare state outside the communist bloc to being one of the most radical neoliberalist economies on the planet. Significantly , the Labour government carried through this economic swing to the right while also pursuing a strongly independent and leftist foreign policy as well as social reforms.
The thing is, in the context of runaway governmental euphoria about changing everything, after the stifling paralysis of the Muldoon era under conservative National, Lange's government allowed a small cabal of born-again neoliberals led by Roger Douglas to instigate economic changes that were unheard-of - and within just a few years revealed themselves as a very cruel betrayal of what NZ Labour had stood for over the previous half century.
Thus, the fact that these radical right policies were carried through by the country's traditional centre-left party caused a political dislocation which lasted for at least 15 years and has probably permanently altered political attitudes in New Zealand. Labour fell apart while still in power in the late 80s as parts of the party (and the public) began to wake up to what had happened, but by then the farm had already been sold, and the only alternative was to vote in National - which gleefully took the right-wing radicalisation even further.
Eventually, a more economically responsible Labour was rebuilt but I would say that the 80s implantation into New Zealand of trickle down theory and the social approval of using money to make money has lasted more or less until now. In fact, Jacinda Ardern's government paralleled Lange's in that, on the one hand, it had a humanist heart of gold, but on the other, despite knowing that a capital gains tax was needed to counter growing inequality, it went weak at the knees over introducing it. Well, in fact, after 25 years of a neoliberal economy, its voters depended on not having one.
Hi Robert, I agree with all of this history and I didn't mean to airbrush this point. I treated ACT as the continuation of the Douglas cabal. There's a detailed discussion in the article with Tim Hazledine, but the link may be a bit wonky
After a quick skim, that article looks great! One of the first things I note, in terms of the Australia-NZ comparison, is that of course Bob Hawke was a union man who was not going to sell out the workers in a hurry, whereas David Lange was... well, almost a messiah figure, who I would say preferred to be an inspirational leader rather than a tight government disciplinarian. And he was there at the right time and in the right country for that: "God's own country" no less, and as all New Zealanders of his generation knew, the country had at least a couple of times in its history led the world in progressive social and economic reforms, and I think Lange really wanted to follow in that line, he probably trusted Douglas (whose own father was a union man and former senior Labour MP!) without contemplating too much of the economic fine print, and saw the possibility for New Zealand to blaze a trail once again - bearing in mind that the country's independent voice in foreign policy and social reforms were also part of the package. For a few heady years, it looked like they might, it caught the public imagination (they were returned with an even larger majority in 1987), and as a consequence, I think there was a whole generation of young professional New Zealanders, from the champagne lefties and on across the "business classes" to the right, who became converts to the cause. So naturally the National government that followed after 1990 also knew that it had to maintain the new faith, and that, being a real party of the right, had to take it even further. I don't really know much about how it all happened in Australia but I think this semi-revolutionary air that was achieved in New Zealand was key to why it went on for so long and was so extreme... maybe.
A crucial difference between Oz and NZ was that Australia's big cultural moment took place in the early 1970s with Whitlam as the inspirational figure. Whitlam's "crash through or crash" style, ending in crash was similar to that of Douglas, but politically in the opposite direction. Hawke was popular, but never seen in the same way, and very much a believer in consensus There was never much enthusiasm for the micro reform project outside the political class.
Well, in parallel with Whitlam, New Zealand had Norman Kirk - the original charismatic NZ Labour leader of that generation. And what set the NZ experience apart from Australia's was that Kirk died in office after less than 2 years as PM. So that, although his Labour government was hit by the oil shock and recession just like Whitlam's, in New Zealand it was under different leadership, and the Kirk aura remained unsullied. Not sure if this had anything to do with the choice of another "big man" - overweight and a great orator - in the 80s in NZ, but Lange also had the media in the palm of his hand.