New generation government ending failed ‘neo-liberalism’?

‘Neo-liberalism’ has become a commonly used term meaning ‘everything that was wrong with politics and society’. Was the last three decades as bad as some make out? And are we going to see a sudden solution?

Newsroom has re-published and opinion piece first published prior to the election – Dame Anne Salmond: A final, brief election thought

This election has not been a contest between left and right, but between different generations and philosophies.

For the past 33 years, New Zealand has been gripped by neo-liberalism – a cult of naked self-interest, of the cost-benefit calculating individual, in which the only aim is success.

It’s completely amoral – the ends justify the means. It’s a brutal philosophy that has given New Zealand the highest rate of youth suicide, the worst rate of child poverty in the developed world; people living in cars or on the streets, babies dying of third world diseases.

That’s a fairly extreme description, with some questionable claims.

A new generation is emerging that has lived through the neo-liberal experiment, and regards it as an abject failure – environmentally, socially and economically.

Jacindamania isn’t about personality at all – it’s a collective sigh of relief that we might finally have a kind of leadership that reflects our core values as New Zealanders. A chance for a country that’s truly ‘clean and green;’ for honesty, decency and kindness in our public as well as our private lives.

And that’s another extreme, this time idealistic, and also inaccurate.

Inferring that ‘Jacindamania’ regards the recent past as “an abject failure – environmentally, socially and economically” is quite misleading.

Ardern agreed with Jim Bolger’s assertion that neo-liberalism in new Zealand had failed, but she has failed to convince.

Stuff in September – Jacinda Ardern says neoliberalism has failed:

Labour leader Jacinda Ardern says neoliberalism has failed and New Zealand has always been served well by interventionist government.

The opposition leader, outlining her economic ideology to RNZ in a lengthy interview, was asked if she agreed with former Prime Minister Jim Bolger’s assessment of neoliberalism in New Zealand: that it had failed.

“Yes,” she replied.

“New Zealand has been served well by interventionist governments. That actually it’s about making sure that your market serves your people – it’s a poor master but a good servant”.

“Any expectation that we just simply allow that the market to dictate our outcomes for people is where I would want to make sure that we were more interventionist.”

‘The market’ has not simply dictated outcomes. There have been varying degrees of intervention by successive governments, but there has still been considerable intervention. Changes like ‘Working for Families’ subsidies, student loan changes and the first increase in benefits for decades are all examples.

And one of the biggest current problems, large rises in property values, has been at least partly caused by too much intervention in housing supply via the resource Management Act.

Ardern however ruled out major changes to the legislation that sets out New Zealand’s monetary policy.

“For me the neoliberal agenda is what does it mean for people? What did it mean for people’s outcomes around employment, around poverty, around their ability to get a house? And on that front I stand by all our commitments to say that none of that should exist in a wealthy society. And there are mechanisms we can use that are beyond just our economic instruments and acts, to turn that around”.

Past governments have acting in a range of ways, not always successfully. All governments have tried to make improvements, and that’s what Ardern’s government aspires to, but incrementally more than radically. And they have already wound back some of their election promises.

Dr Toby Boraman from Massey University – Opinion: NZ politics’ soft neoliberal underbelly

Labour leader Jacinda Ardern has asserted that ‘neoliberalism has failed’. Instead, she claims, government intervention is necessary so the market will not dictate matters. 

While such a claim signals the beginning of an important shift in parliamentary politics, in almost the same breath she supported the free trade Trans-Pacific Partnership agreement, keeping government spending within limits, and maintaining government surpluses. All are examples of neoliberal policies.

Ardern’s comments highlight how virtually all political parties – and not just Labour – have yet to fully break with the strong neoliberal consensus that has dominated New Zealand parliamentary politics since 1984. This is despite a groundswell of disquiet about the effects of neoliberalism.

New Zealand needed a quick break from the highly interventionist style of Robert Muldoon in 1984 to avert an economic crisis. That was largely successfully thanks to David Lange’s Labour government and Roger Douglas. Things have been tweaked since then, and ongoing adjustments will be required, but there is no sign of any major departures in the current term of government.

Although the causes of growing inequality, the housing crisis, poverty, low-wages, casualisation and unemployment are multi-faceted and complex, neoliberal policies and economic restructuring have undoubtedly played a major role in exacerbating these problems since the 1980s. Neoliberalism has not led to a trickling down of wealth to the poor, but instead a torrent upwards.

A tad overstated.

Yet New Zealand parliamentary politics, it appears, is still dominated by an incredible shift to the ‘centre’. This ‘neoliberal extreme centre’, as Tariq Ali calls it, is so clogged it is virtually impossible to see any fundamental differences between almost all parties.

Practically every party subscribes to neoliberal policies of:

  • keeping inflation low and unemployment high
  • keeping government expenditure within fiscal limits (witness the ‘fiscal responsibility deal’ between Labour and the Greens)
  • keeping business and financial speculation largely free from regulatory control;
  • free trade (with a few exceptions)
  • low taxes (especially on the wealthy and companies, and no significant taxes on property speculation)

There’s some straight out bullshit in that.

All parties want to keep inflation low, for good reasons, but no party subscribes to ‘keeping unemployment high’.

A National party press release in August promotes Unemployment at lowest rate since GFC

“The unemployment rate has fallen to 4.8 per cent in the June 2017 quarter, the lowest rate since December 2008. Our strong economy continues to deliver for New Zealanders,” Mr Goldsmith says.

“The number of people unemployed has dropped by 3,000 this quarter, reflecting a robust labour market and increasing employment opportunities.

“Strong job growth continues, with 76,000 new jobs over the past year and 181,000 new jobs over the past two years.”

There is a fairly good reason for supporting ‘fiscal responsibility’, which means not borrowing more and more to pay for things the country cannot afford.

Business and financial speculation is far from “largely free from regulatory control”. There are clear rules on taxation on earning profits from ‘speculation’, which the last government toughened up on and the new government promises to take further.

And the over-regulation of the RMA has caused major problems in the housing market.

There is no ‘free trade’ – all trade is governed by a variety of trade agreements with various countries.

“Low taxes (especially on the wealthy and companies)” is highly inaccurate. New Zealand has a progressive tax system that taxes more the higher the income.

“No significant taxes on property speculation” is an alarming statement from a lecturer in politics.

Inland Revenue (June 2017): Property compliance at Inland Revenue

Property remains the principle investment choice for many New Zealanders, with trade in residential property averaging over $40 billion a year. For this reason, Inland Revenue has an increased focus on this area to improve compliance. In 2008 a team was established to address any compliance risks with property development and speculation and associated tax obligations.

In 2015 the Government introduced new legislation and provided additional funding for Inland Revenue to put further focus on residential property speculation of $6.65 million each year for 5 years.

This amounted to an effective doubling of resources reviewing property compliance. We now have around 95 staff focusing on risks in the residential property market to make sure customers meet their obligations in relation to returning any applicable tax on property gains.

Speculation on the share market – in fact any profits earned – are also taxable, as anyone who checks their Kiwisaver statements will know.

Boraman continues:

However, we don’t now live in the neoliberal ‘shock doctrine’ era of the 1980s and 1990s. This was when business and government – both Labour and National – imposed violent neoliberal cutbacks and economic restructuring on society.

More extreme language that misrepresents the changes that saved the country from going broke.

Today most parties have pulled back from those extremes of neoliberalism – including National and Labour – and now subscribe to a mild ‘pragmatic’ neoliberal politics. This involves a limited degree of government intervention in the economy, and of government spending.

More nonsense. Government spending has kept increasing through most of the last thirty years. It increased through the nine years of the last Labour Government, and jumped up when National took over in 2008 when trying to alleviate the effects of the Global Financial Crisis.

Overall the differences between the parties remain minor: the choice is between soft neoliberalism (National) and softer neoliberalism (Labour).

This current soft neoliberal – or ‘neoliberal lite’ or ‘third way’ – consensus shared by almost all parties contends that all that is required to deal with fundamental issues like housing is some tinkering around the edges, such as building thousands of state houses or offering subsidies for better insulation. These policies will take some heat out of the housing crisis, and will help many people.

Yet they will not, however, solve that crisis when tens of thousands of homes owned by speculators remain empty, and the economy has become increasingly reliant on property and financial speculation for economic growth, as Jane Kelsey explores in her book The FIRE Economy (2015).

Lifting the levels of the minimum wage, working for families’ tax credits (which is effectively a government subsidy for the low wages paid by employers) and the accommodation supplement (effectively a government subsidy for private landlords) will not reverse the historically high levels of income and wealth inequality, and will not address the interrelated issues of low wages, insecure work, and high underemployment and unemployment.

This gets to the nub of why pragmatic centrist politics don’t work: while ‘pragmatism’ is often seen as a virtue in New Zealand, such tinkering around the edges of problems will not solve deep-seated issues such as inequality, housing, low wages, casualisation, unemployment and climate change. These are all systematic problems that require creative, systematic and far-reaching solutions.

Overseas we have seen the rise of various social and protest movements against the increasing concentration of wealth under globalised capitalism today – indeed the late 2000s to the early 2010s witnessed, according to some academics, the largest popular protest wave in human history so far.

It eventually reached our shores with the large-scale mobilisations against the Trans Pacific Partnership Agreement during 2014-16, which rivalled in size some of the nationwide ‘mobes’ against the Vietnam War in the early 1970s.

I think it is from this extraordinary upsurge in popular discontent that solutions to the fundamental problems in society we face can be found.

Is there really an “extraordinary upsurge in popular discontent”? There was little sign of that in the last election, with National maintaining extraordinary levels of support after three terms in government, and the radicalism of the Greens coming close to failing to survive.

And I don’t think it will require a revival of Jeremy Corbyn-style social democracy, or nationalism, but instead needs to venture into territory not often discussed today: questioning the nature of capitalism.

I often see the nature of capitalism questioned – in part here, and it’s commonn at The Standard and The Daily Blog.

At the very least it will – of necessity – involve breaking from the shackles of the neoliberal straightjacket, instead of gnawing around its edges. It will mean we stop pandering towards a mythical ‘centre’ in an era of extreme inequality, and start to talk openly about the incredible concentration of wealth in the hands of the few, and loudly about the needs of the many.

That sounds more like a fringe activist at The Standard or The Daily Blog or Frog Blog rather than a political lecturer at a New Zealand University.

The country is hardly in “the shackles of the neoliberal straightjacket”, and Boraman contradicts himself, having also claimed we had moved to “a mild ‘pragmatic’ neoliberal politics”.

Inequality is a valid issue that should be addressed better, but ‘extreme’?

Saying “It will mean we stop pandering towards a mythical ‘centre’” is remarkable, given that most people are closer to the centre than the extremely poor or rich. The centre is a bit vague but it is far from a myth.

Like John Key and Bill English, Ardern will no doubt try to improve on what we currently have, and will no doubt have some successes and failures.

There’s a good reason why governments don’t make major untested changes unless they are forced into drastic action.

There are signs the the new government will represent a new generation of politics, but there is no sign that the new generation (apart from a few on the fringes) wants to throw out capitalism.

New Zealand politics doesn’t lurch from left to right. Just as we didn’t suddenly get a distinct ‘neoliberalism’ that has continued virtually unchanged for three decades, we are unlikely to suddenly acquire a new form of governance.

Under Ardern we may have taken a bigger step than normal but it remains in a similar direction, albeit more carefully tread.

Jacinda-mania and media-mania

There is no doubt that the mania over Jacinda Ardern took over the leadership of Labour three weeks ago is a phenomenon.

It is difficult to know how much is a genuine public reaction to a refreshing change of personnel and style, and how much was generated by a media that has become obsessed with celebrity style politics and click baiting. Probably both, but one feeds and accentuates the other. Each other.

Ardern has stepped up and handled the glare of the political spotlight with aplomb. One positive change is her positivity and her rejection of attack politics and barking at passing of cars, a trait that has dogged Labour and previous leaders for years.

Because Ardern launched her leadership into an election campaign there will not be much time to analysis her real strengths and weaknesses, and particularly the unchanged strengths and weaknesses of the Labour caucus and party.

Every now and again voters gamble on unproven abilities.  They have done that recently in other countries, on Trudeau in Canada, on Macron in France, and particularly on Trump in the USA.

If New Zealand ends up with an new Prime Minister and a new government the politicians and the bureaucracy will step up and will probably manage to  keep managing the country ok at least. We tend to have incremental rather than revolutionary change here, and that’s unlikely to change markedly after this year’s election.

There will be hiccups and difficulties, there always are, but utopia is unattainable, our democracy is imperfect, and our politicians are imperfect – as are our country and us.

Dr Suze Wilson, senior lecturer from the School of Management at Massey University, writes: We expect perfection from leaders when they are imperfect humans

The ‘Jacinda-mania’ (or Jacinda effect) New Zealand has experienced since the Labour Party decided to replace its leader just seven weeks out from the election says much about the way we view our leaders.

Much of the response to Ardern’s selection seems akin to finding a shiny new toy that can be poked and prodded to see what it can do. The more Ardern responds to this frenzy with composure, clarity of expression and good humour, the more she has commentators convinced that she’s the “real thing” when it comes to leadership.

It will, of course, take much longer to form a considered assessment of her leadership, but our desire for a heroic, “ideal leader” is itself problematic, especially when attention focuses largely on stagecraft and “looking the part”.

I’m not sure whether people do want and expect a ‘heroic’ leader. They tend to move quickly from one hero to another in the world of movies and thanks to the modern approach of media news politics has become to an extent just another show.

As long as the effects are sufficiently impressive many people may be removed enough from reality that they would pay for tickets to watch the end of the world.

Jacinda-mania highlights the huge symbolic weight attached to the role of a leader. Politicians and media commentators alike reinforce the view that there can be no interregnum (the period when normal government is suspended between successive reigns or regimes) without implying chaos.

This approach loses sight of the reality of the wider leadership capability within a political party, or any organisation.

This obsessive focus on the person at the very top of a hierarchy undermines our capacity to give due credit to the much more distributed nature of effective leadership, which involves the contributions of many people to make a political party, a sports team or an organisation successful. It is a distorting, romantic way of thinking that allows us to see only part of the leadership picture.

This focus on the leader has many other problematic consequences. It means we vest far too much hope in individual leaders, setting ourselves up for a greater level of disappointment when, inevitably, it becomes clear they are imperfect beings just like the rest of us.

Often this disappointment becomes vicious, bringing down good leaders simply because they weren’t perfect leaders.

Viciousness is an unfortunate reality of modern media and politics. This has been on display in the ‘bringing down’ of Todd Barclay, Andrew little and Metiria Turei.

Peter Dunne wasn’t brought down, he chose to step down, but viciousness was still on display around social media.

Another problem is the kind of fawning submissiveness and passive compliance, which can result from a romantic view of leadership.

Fawning submissiveness and compliance are common in politics – alongside a viciousness  directed at those who don’t fawn in submission and comply with a certain ideology.

Power is a brain-altering disorder and leaders are especially vulnerable to developing an exaggerated sense of confidence. Rather than indulging their egos, it would be better if we encouraged them to keep their efforts focused on serving the needs of constituents.

Try telling the media that. Celebrity style click baiting is becoming increasingly prevalent.

What is it about Ardern that is triggering such positive commentary, given her leadership is still largely untested in the role she now holds?

The phrases used by political commentators include that she looks and acts like a leader, has presence, looks in control, and has a serious vibe. Commentary of this nature highlights how much our impression of someone as a leader relies on matters of performance, in the sense of stagecraft, rather than actual results.

The risk with Ardern is that we won’t see how she will perform as Prime Minister unless we put her in that position. That’s a risk we take with every change of government and change of leader and lead party.

Being calm under pressure reassures others. Effective leaders do indeed play an important role in helping a group or society manage its anxieties. Not seeming fazed by difficult questions gives us a sense of someone’s self-belief, which is taken to infer something important about their ability to deal with the challenges we expect leaders to address.

So far Ardern has been generally reassuring.

Someone’s inclination to engage with, be defensive toward, or to shut down dissenting views gives us a sense of their approachability. In New Zealand, approachability is seen as an important quality of leaders.

That was a part of John Key’s success, and in her own way Ardern has so far succeeded very well with that too.

As an aside, some blogs who aspire to lead political debate in New Zealand could learn something about approachability and engaging rather than shutting down dissenting views.

And then there’s the “serious vibe” Ardern is said to have. It seems to rest on her spirited commitment to personifying Labour values in how she conducts herself. This appeals to those disengaged by more calculating approaches. This wider context matters a great deal for her potential for success: “Cometh the hour, cometh the woman”, after all.

In Ardern’s case, it seems her time has indeed come.

That’s how it looks. Whether she manages to attract enough votes to Labour and then negotiate a ruling coalition, or whether she just turns Labour into a credible competitive force in politics again this election to set up a three rebuild to the 2020 election, it looks like Ardern’s time in politics has come.

How much she is helped by a fawning media is largely immaterial – we have to accept that the will accentuate positives and negatives in politics, it’s just how things work.

There is no leadership in media, it is more of a pack mentality with very brief tenures as revolving top dog. Some seem to crave celebrity status but are left making or breaking politicians. They are collectively part of the glory and the gory.

Some voters see through the obsessive focus of media, some don’t.

Some voters will see through ‘Jacinda-mania’, some won’t.

The glamorising of politicians is part of modern politics, whether we like it or not. Those MPs who capitalise on media obsessions will do well. Until they fall, then the switch to vicious is rapid, as Turei found out.

Our politics has become thrash and trash, driven by a media obsessed with their own aspirations for importance as much as anything.

For now Ardern has mastered the attraction of attention that is an essential for a successful leader.

Jacindamania is a product of the right person in the right place at the right time being able to capitalise on mediamania.