‘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.