30 years of Rogernomics

Apparently today is the 30th anniversary of Rogernomics.

Stuff: Towns full of weeping women: Rogernomics, 30 years later

It was 30 years ago today. Former Cabinet minister Michael Bassett would go on to describe the anticipation, the nervous excitement, in his book Working with David: Inside the Lange Cabinet: “During the last days of March 1987 ministers held on to their hats, hoping that the first day of the SOEs wouldn’t result in too many April Fool’s Day jokes.”

April 1 was a Wednesday. Did it turn out to be funny? Not really. As Bassett writes, within a week of the radical conversion of government departments into State Owned Enterprises (SOEs), 4732 people had taken voluntary redundancy and another 100 went for early retirement. That is close to 5000 redundancies in one week, largely in small town and rural New Zealand.

Then-deputy prime minister Geoffrey Palmer predicted it would be the biggest change in New Zealand public sector history. He was right. It came as a kind of blitzkrieg. Then-finance minister Roger Douglas argued that it had to happen quickly. Bassett: “Speed was enormously important to managing change. As [then-minister of labour, state services and State Owned Enterprises] Stan Rodger would observe years later, sometimes there were so many rabbits loose in the field that opponents of change weren’t sure which to try to shoot.”

“In all, 19,133 departmental workers in Lands and Survey, Forestry, the Electricity Division, Civil Aviation, State Coal and the Government Accommodation Board were affected by the changes,” Bassett wrote.

Act fast and keep them guessing. In the 1980s, this was called Rogernomics rather t

Ignorance of recent political history

It political forums it’s common to see ignorance of recent political history in New Zealand. There are often comments about how damaging the supposed neo-liberal revolution has been to the country but scant knowledge of what came before (Muldoon) and with ‘Rogernomics’/

There was a typical discussion in This is deliberate on Kiwiblog yesterday.

The first comment was from Harriet:

I cannot understand why a party like Labour – that has always been for the ‘working man’ – puts so much of it’s time, money and effort into defending those who don’t, but could, work.

No wonder they are seen as being irrelevent to the working classes.

Newcomer ‘Fatsworth’ responded:

But not post Roger Douglas (ACT)

Labour been not been able to rid itself of the stench and actually return to the working class representative Party ideology that it was founded on.

Too many factions have been involved in the Labour Party over the years, and imo, the worst faction, the faction doing the most damage, was that of the Right, starting with Roger Douglas and Prebblisation – at the 1984 General Election.

This election was not David Lange’s to win – this election was always Roger Douglas’s to win.

I experienced what preceded this, the Muldoon era of price and wage freezes, farm subsidies, car-less days, mortgage interest of 20%, budget lurches and the country on the brink of going broke.

David Garrett:

Mr Fatsworth: Please list the reforms of the Lange-Douglas government which in ur view didnt need to happen.

Fatsworth:

I consider that you are well aware of what the Douglas reforms were about and what the results of such were/are.
They certainly were not for the benefit of the country as a whole – the so called free market industry ‘competition’ barely exists and the New Zealand consumer majority ended up paying the going rate of industry price fixing.
Example: Retail electricity provision.

I thought the electricity reforms came under the following National government, not Lange/Douglas and Labour.

Garrett:

In other words you can’t name ANY of the major Lange- Douglas reforms that didn’t need to happen…I didn’t expect you to pick “removing all subsidies for farmers” or even “removing all subsidies for manufacturers” but I did expect, perhaps, “restructuring the railways from a giant make work scheme” or even “floating the dollar”

Your answer suggests you actually haven’t a clue what was done in the Lange-Douglas era…you just don’t like it.

Fatsworth:

Subsidies removal? No – these still remain – WFF being the most costly today and that props up what?

Working for Families was introduced this century and is nothing like the Muldoon era subsidies.

The failure of Rogernomics.

I don’t think the trade off stacks up – thousands of NZ businesses going to the wall – hundreds of thousands of job losses – increased welfare expenditure – hundreds of thousands leaving NZ for Australia that became the true back bone of NZ – the ECA sold as an employee bargaining chip but never was – redirected disposable income into living costs – easy access to credit to make it look good – the selling of the electricity assets that rendered the majority into a servitude to the private investment sector.

Now – David Garrett – Name the benefits (apart from welfare and easy access to consumables) that this so called ‘miracle economic plan had/has for the New Zealand majority.

PaulL joins in:

Consider how many of those reforms were inevitable if we weren’t to go the way of Soviet Russia. Those NZ businesses were selling goods at a price that was higher than the market price. In other words, they were ripping off poor NZers (by and large). The Warehouse is one of the biggest forces for giving poorer NZers a better standard of living, and the bulk of their product comes from offshore.

The Rogernomics reforms just reflected reality. They haven’t been reversed for that reason.

Taking your points in order (since I have nothing better to do):

Subsidy removal. WFF is not a subsidy, it is a benefit. Subsidies generally refer to corporate welfare. Removing corporate welfare is generally a good thing. Remember the TVs that were manufactured in Japan, then disassembled by Japanese labour, then shipped to NZ, then reassembled using NZ labour? That was productive how?

Thousands of NZ business going to the wall. I think the word you’re missing in there is “unprofitable”. Those businesses only existed due to subsidies or protectionism. They were destroying value, driving NZ bankrupt, and making NZ citizens poorer whilst they did it. Remember NZ’s car industry? Any idea how in hell NZ was big enough to support a car factory? Remember the Toyota Camry with the Commodore 4 engine in it, courtesy of govt industrial policy? Crappy car with a crappy engine, putting the two together didn’t make it any better. Govt sucks at business.

ECA. A great way to get the unions under control, unions that were destroying NZ’s productivity. Remember the ports?

Redirected disposable income into living costs. Where would you suggest it go instead? Seems like disposable income should most go into living costs to me.

Easy access to credit. What, you’re objecting to the ability to get a mortgage (not to mention the ability to get foreign currency so you can travel overseas. Remember when the govt controlled who could get foreign currency? Should things still be like that?)

Selling of electricity assets to organisations that ran them at a fraction of the cost, reducing the wholesale price of power substantially. Keeping the lines companies as monopolies, however, not such a great idea – that’s now where half your power bill goes. Logically enough, the Labour party thinks the answer is to turn the productive part of the power sector back into a monopoly. As for servitude – remember the Labour govt that as a matter of policy wanted higher power prices so that people would use less energy? Ever consider that maybe power prices going up is actually an intention of Labour/Green policies?

The benefits are manifold:
– ability to travel internationally
– ability to buy products from international markets – including from Amazon in the US (in the old system importing these would have been illegal)
– ability to get a mortgage
– ability to start a business and set wages and prices without govt approval (remember wage and price freezes?)

That’s just a start. I think you’ve forgotten (or never knew) just how bad NZ was before Roger Douglas.

That was last night. Fatsworth hasn’t responded. I’ll update here if he/she does.