Pining For the Golden Age that Never Was

Australian Financial Review, November 26, 2003

Denis Dutton


www.denisdutton.com


For many national economies, changes over the last fifty years have been evolutionary and incremental. Where they have been dramatic, they have been a function of world events — the Great Depression or the emergence of the European Union.

New Zealand, however, presents a more unusual case. Its most wrenching economic changes were begun in 1984 by the Fourth Labour Government and its Finance Minister, Roger Douglas, in reaction to the unsustainable collectivist policies of the previous prime minister, Robert Muldoon.

It is not easy for many younger New Zealanders, including young journalists, the appreciate the hold government had attained here by the early 1980s. New Zealand had become a Stalinist Anglo-utopia, a land of where government ran industries, a bank, hotels, air, rail, ship, and bus transport, was into printing and publishing. Import licensing meant that local manufacturers, protected by some of the highest tariffs in the OECD, could force on unwilling consumers a tiny selection of shoddy clothing, shoes, and household items.

Prices were controlled, along with foreign exchange rates, wages, dividends, interest, transport costs, rents, and foreign investment. Did you want to take a British magazine? You could ask the Treasury to buy sufficient foreign exchange for a subscription. If you desired to travel abroad, well, good luck. You could apply to the Treasury for a few hundred dollars for the trip.

It sounds a strange world when described today, but New Zealanders had a high tolerance for being pushed around by their government. The most notable example was the 6 o’clock swill, where the average punter got off work at 5.00 PM and was required to down as much locally-produced grog as possible before the bars had to shut at 6.00 PM. This got citizens, however drunk, home in time to the news on the government television service.

It was a mistake, journalist Warren Berryman has argued, to imagine that New Zealand was part of the western world. “Objectively, part from the fact that we spoke English, our inward-looking command economy’s closest counterparts could only be found in the Eastern Bloc. The Muldoonist economy could best be likened to a Gdansk shipyard run by Indian bureaucrats.”

Information assembled in State of the Nation, New Zealand, published by The Centre for Independent Studies, provides an especially useful view of the condition of New Zealand society since the 1980s. The general picture of life in our islands is clear: New Zealanders are living longer and are healthier than ever before. They make their way in a society that offers more wealth to everyone than at any time in its history. Education and training levels are at all-time highs. New Zealand exports a greater variety of products and services to more countries than ever before and buys from the world a huge range of manufacturing, agricultural, medical, and consumer goods.

More sobering is news of New Zealanders’ domestic arrangements and the country’s crime rate. Single-parent families as a proportion of all families with children grew from ten per cent in 1973, the year the well-intentioned Domestic Purposes Benefit for unmarried mothers was introduced, to nearly thirty per cent in recent years. While there is no denying the heroic efforts of many single parents in raising children on their own, often with wonderful results, the reality is that most children are disadvantaged by not having two parents, one or both working, to create a family.

The recent drop in crime could be seen as good news, but only comes as relief after an enormous increase — six-fold — in the crime rate between 1950 and the late 1980s. Imprisonment rates are high, but have not kept pace with crime. All of this has happened in a period not only of increases in personal wealth, but of high taxation and social welfare expenditure. So much for the idea that crime results from grinding poverty and unfulfilled needs.

There are many statistical revelations in the CIS study when long term series are set beside one another. For example, put health statistics against government expenditure on health. It is an achievement that health and longevity have improved so much at a time when, much to my surprise, medical costs, even with new drugs and technology, have been fairly stable. Newspapers and television in New Zealand, as in Australia, present a constant litany of health misadventures, but such coverage obviously gives a distorted view of medical reality, which is a remarkable story of general success. Sure, the doctors and health system bean-counters are forever at each others’ throats, but the statistics suggest that that their struggle is to the public benefit: overall, the health sector is actually clinically effective and well managed.

Employment is another area with surprises. Unemployment had begun to rise already in the 1970s, and was high levels even before the Fourth Labour Government came to power. This despite the fact the 1970s featured some of the most comical make-work schemes: for instance, the reassembly in New Zealand plants of cars that had been disassembled in Japan just so they could be put together here. The reestablishment of a genuine labour market, especially under the 1991 Employment Contracts Act, has resulted in a fall in unemployment to favourable levels by an OECD standard.

Notwithstanding the good statistical news brought together in the CIS study, many academics in New Zealand still debate the free-market reforms that Finance Minister Roger Douglas initiated in 1984 as though their benefits were unproven. As long as this argument goes on, I’ll continue to play a favourite dinner-party game: Wait for some bitter remark about "Rogernomics" and the 1980s, then innocently ask for a list of three things Roger Douglas and his reforming successors did that the speaker would want to reverse. Bring back the 66% income tax? The prohibition on weekend shopping? Bring back tariffs to abolish cheap imported crockery, toys, and power tools? Give us again government-decreed beer and toilet-paper monopolies, or a featherbedded rail system that ensured it was twice as expensive to ship a case of wine from Auckland to Dunedin as from Auckland to London?

Anyone who thinks New Zealand’s Golden Age lies in the past should study the data.

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Denis Dutton is Associate Professor in the Deartment of Philosophy, University of Canterbury. State of the Nation, New Zealand, by Jennifer Buckingham and Nicole Billante, is published this week by the Centre for Independent Studies in Sydney.