19 February 2011

I blame Roger Douglas

The retirement of Sir Roger Douglas is not surprising given he could be described as the venerable man of New Zealand politics, particularly since none of his generation remain in Parliament.   He has outlived his first finance nemesis, Rob Muldoon, for some years.  Outlived the man who led him into power (David Lange) by some as well, and all subsequent Prime Ministers bar Helen Clark have long left direct involvement in politics (as did his successors, David Caygill and Ruth Richardson).

Yet he had a profound effect that I blame him for.  He got me passionately interested in politics of principle not pragmatism.

See I was in my teens when Labour was elected in 1984, having remembered nothing other than Muldoon grumpily always being in charge, in an almost personality cult like perpetual presence on the news.  I remember, barring the exceptions outlined by Peter Cresswell (and voluntary unionism), Muldoon banning inflation, banning interest rate increases and directing the economy like someone who was always in control.

Yet all he did was fiddle and create unintended (but predictable) consequences.  Muldoon was known to get government departments like the Railways Department to hire people en masse in the year before the election, to soak up unemployment numbers, almost Maoist like to control politics.   Roger Douglas was something else.

David Lange's rhetoric about "consensus" and the banal anti-nuclear policy were the touchstones of the 1984 campaign, which was only made more exciting by Bob Jones and the New Zealand Party putting the boot into the insipidly spineless National Party.   However, behind the scenes Roger Douglas was ready to dish out the medicine New Zealand needed, to correct the gross distortions of many years of intervention, regulation, sclerotic state sector and stifling levels of taxation.

There is far far too much to recall about what life was like before the reforms started by Douglas, stifled by Lange, extended by Richardson and only slightly rolled back.   The left in New Zealand would rather forget about that era, because most were too blinded by the carrots of the anti-American anti-nuclear policy, the creation of the Treaty of Waitangi grievance industry, a bevy of new government departments (Women's Affairs, Pacific Island Affairs, Environment, Conservation), return to compulsory unionism and the hijacking of the education agenda.  You see whilst all of the things they liked were happening, Roger Douglas took a multi pronged approach, one which the economically illiterate left didn't understand, and which made the reforms of Reagan, Hawke and even to an extent Thatcher seem a bit wet.

Let's just briefly recall some of his biggest steps:

- Ending the wage, price and interest rate freezes, that had choked off credit and choked off any chance of prices and wages reflect demand and supply.  After a few years of intense pain, it all settled down;

- Floated the exchange rate, so the Reserve Bank wouldn't be pouring taxpayers money into propping up the NZ$, the immediate result was dramatic devaluation which eventually returned to somewhat higher levels;

- Tearing down the walls of import licensing, that gave a handful of businesses profitable monopolies to extract rents from consumers, whilst shutting out innovation, and dramatically reducing import tariffs so New Zealand would stop assembling TVs, telephones (and eventually cars) at prices several times that of other countries, and along with the acceleration of CER saw a wider range of food, clothing, shoes and other consumer goods at cheaper prices;

- Abolish umpteen statutory monopolies on market entry, and foreign investment restrictions which was visibly seen in new banks, domestic airline competition, new rental car firms, competing telephone companies for long distance and international calls (initially), new radio and TV stations, new service stations;

- Abolished subsidies for agriculture and most businesses, which saw many farms foreclose, but also the rise of diversification in agriculture.  The viticulture sector was able to take off, along with horticulture and the rise of more specialist producers.  The start of the phasing out of producer board saw exporters become more competitive, as they searched for new markets in Asia, South America and the Middle East, whilst Europe proved less and less accessible for agriculture;

- Reformed tax by abolishing the 66% top rate, flattening income tax rates, abolishing sales taxes that peculiarly penalised cameras and records at rates of up to 40%, replacing them all with a flat 10% on everything.  This simplification of the tax system killed all but the very high end tax advisory industry (H&R Block disappeared from NZ) and increased revenue;

- Drastically reformed and then privatised ailing state industries. From electricity generators to petroleum exploration, postal services, three banks, a steel company, television, state radio, land holdings, forestry holdings, coal mining company, the telecommunications company, two insurance companies, an airline, the weather forecaster, the air traffic control service, an international shipping company, a film company, a print works, a hotel company and a civil engineering company, were all either just restructured into commercial structures or sold.  Several subsequently went bankrupt, others had success (Peter Jackson bought the National Film Unit), but all dramatically improved performance.

Most of all he brought to politics a new honesty of principle and purpose.  In essence, New Zealand was going bankrupt and was so tied up in regulations and monopolies it was stagnating its way to developing country status.  New Zealand had dropped from being one of the three countries with the highest GDP per capita in the world in the 1950s to being ranked below Spain by the 1980.   He stopped the rot, and set the stage for a more service, export and dynamically oriented economy to emerge.

The magic of his approach was speed, he liked to say that he would aim at multiple targets at once, so at any one time those who might oppose would be split between multiple causes - causes of course based on spending other people's money, protecting monopolies or protecting failure.   However, it was the slowing down that started the failure to complete his "unfinished business".

What hamstrung him was the growth of the "new-left" public service that came with Labour, the reintroduction of compulsory unionism and the unwillingness to go further and faster with spending cuts, and cutting taxes (to a flat rate of income tax).  With the heavily unionised health and education sectors subject only to base level reform, it proved difficult to seriously address the underlying issues of those monopolies - and so it remains.

He didn't do what was popular, he thought of the long term, and I appreciated that.  I saw through the calls from those wanting their businesses protected, businesses that ripped off consumers and taxpayers by charging more than the excluded competition, and taxpayers by demanding subsidies.  I saw through the bleets of the worshippers of state owned trading departments, having experienced the ineptness of the Post Office, the extortion of its national phone service (the days when making a "toll" call required careful planning and was for birthdays or emergencies only), the infamous railways that lost freight, manufactured its own rivets, bought cheap and nasty underpowered buses and couldn't make a profit even while it had a statutory monopoly on most of its business!   

Roger Douglas rescued New Zealand's autarchic import substitution economy, that enriched a select few monopoly holders, kept tens of thousands in easy low productivity employment, inflated prices of everything from appliances to cars to shoes to records.   Only a tiny handful of Alliance retards would turn the clock back, prop up farmers with subsidies, have the Post Office run all of the phones and have a monopoly on delivery services, have Air NZ protected from "too much" foreign competition, and expensive locally produced clothes.

I supported Labour in 1990 because of Roger Douglas and the ongoing courage that government showed in doing what was unpopular in the face of a media that was consistently in favour of more state.  It sold Telecom months out from the election, whilst National gutlessly got elected on the back of a moaning public.  Of course after that Ruth Richardson carried the banner and did more of the good work for three years, till National's conservative gutless instincts took over, and reforms were stopped, reversed or slowed down.  Douglas wrote Unfinished Business, and it had a grand plan to move health, education and superannuation into personalised private accounts, with choice, and despite the mean spirited lies of the left - he wanted universal coverage.

You see Roger Douglas still believed in an element of socialism.  He wanted to retain the welfare state, funded from GST, with no income tax.  He wanted universal pensions, just provided with private accounts, topped up from GST for those who didn't save enough.  He wanted compulsory health insurance and education accounts for children, which would be topped up for those who didn't earn enough.  He believed in universalism, he believed in taxation, he even believed in ACC (just full competition between private providers that were compulsory to buy insurance from).  He simply believed that state providers are rather inept and monopolies deliver poor service inefficiently.

So while he is no libertarian, I am glad he got me fired up.  There is no compare between him and Bill English.  He is a giant compared to other MPs and it is a travesty of politics and New Zealand that he couldn't be a Cabinet Minister in the current government.

You see the revolution he started was, as Lindsay Perigo once said, not a revolution in the hearts and minds (although quietly most MPs wouldn't reverse what he did).  

For John Key to appoint him a Finance Minister would have required testicular fortitude that is scarce in the National Party, after all it was Jim Bolger who opposed Douglas in Opposition, and did nothing to reverse any of his policies as PM.   However, National just reflects the appalling inability of so many New Zealanders to understand their own history, in part because the minority who would turn the clock back have bulwarks in the media and education sectors.   National doesn't have it in them to defend Douglas - but he doesn't need defending.

With the exception of the economically illiterate socialist Greens, Jim Anderton, remaining Alliance retards (and the Alliance retard wing of Labour) and Winston Peters, Douglas's legacy is quietly acknowledged. 

His faults were real, for he was no libertarian, but I'm not going to dwell on those today.  For quite simply I blame Roger Douglas, for showing me that politics can include politicians brave enough to take on the braying mob, to not be a smarmy populist like Winston Peters, or a shrieking harpie like Pam Corkery, or a hand-wringing compromiser like Jim Bolger.  

I didn't always agree with Roger Douglas's principles, but I often agreed with his policies and he did far more good than harm in New Zealand.  Had his business not been unfinished, it wouldn't be quite what I would agree with, but I don't doubt New Zealanders as a whole would be a lot wealthier,  happier, healthier, better educated and have a far more vibrant and diverse economy.

The fact that we don't can be laid at the memories of David Lange, Margaret Pope, Jim Bolger, Jim Anderton, Winston Peters, Helen Clark, and the million or so New Zealanders who consistently vote for dependency, mediocrity and mundane fear driven politics of envy.

So farewell Roger, this government never deserved you and in some ways neither did New Zealand.   However, I'm glad I lived and grew through you being courageous and steadfast - and I know you don't need the endorsement, recognition and gratitude of others to know you were largely right.

Oh and Rodney? You are not even half the man he is, and you know it.


Kiwiwit said...

Well done - excellent commentary. I campaigned for Bob Jones in 1984 after being ejected from a Young Nationals conference for giving a speech calling the Muldoon Government the National Socialists, and voted for Labour in 1987 after seeing the only brave politician of our generation (Douglas) start to implement his vision. Unless we find another leader with his vision and balls we are destined to drop from our current position at the bottom of the OECD economic league to the ranks of third world nations.

Anonymous said...

That is brilliant, the best summation of Sir Rogers work I have seen.

Well done.

p.s..and I agree entirely with the comment directed at Hide.

Richard McGrath said...

Excellent summary, Scott. I have forwarded it to at least one person who rejoiced in Douglas' retirement.

Jeremy Harris said...

Great summary, I'm not prone to looking bad with regret (especially as I was 1 when he was elected) but I do lament the "cup of tea" and benching of Richardson...

A few more years, a bit more guts and we could have tackled the big three - Health, Education and Welfare...

Blair said...

Half is probably too generous by half.

QuinnaginO'finnigan said...

I read as far as health and education and other monopolies. What a crock of shit. your a fucking moron. A lot of what he did had to be done, but ideology is dangerous. Had he been allowed to go any further, we would now be like america. A third world country except for those at the very top. Thank god nobody listens to rabid idealogues like you pack of smarmy pricks.

Libertyscott said...

Quinn, thanks for giving me a laugh. You showed yourself up beautifully by saying "your a fucking moron" and "idealogues".

"We would now be like america". Not noticed the compulsory retirement savings accounts, the fully open education system and the Singapore like compulsory health insurance model in the USA - which is all that he advocated.
You ought to read his book Unfinished Business before showing yourself up as informed by what others tell you, not what he said.

Funny you talk of the US as being third world, have you visited much of rural Northland or the East Cape and explained why the status quo delivers that?

Of course Unfinished Business doesn't have pictures, so given you like to engage on the level of insults, you ought to get your literacy and spelling up to an adult level before continuing.