Jacinda Ardern gave herself the child poverty portfolio in 2017, and has retained it this term. There is still much to do to return New Zealand to the world class egalitarian society we once were.
Labour governed from 1935 until 1949. Savage died in 1940 and Peter Fraser became prime minister.
Labour expanded state activity until it covered the whole economy and a good deal of social life too. Its members were mainly British socialists who believed in a strong measure of state control, but they never set out to abolish private enterprise. They sought instead to have the state look after the old, the young, the sick and the vulnerable. The test was practicality, not doctrinal purity. They brought in a basic wage, a 40 hour week, a major programme of public works, including state housing, and built up the unions.
Paradoxically, Labour was beaten in 1949 by the National Party which adopted all its leading accomplishments.
Successive National and Labour governments between 1949 and 1984 tinkered with the welfare state but never abandoned it.
The United States of America had adopted a similar welfare state under Franklin Roosevelt, known as “The New Deal”, which guaranteed similar support to vulnerable citizens like New Zealand’s schemes but without free health care, which was only achieved under Obama’s Affordable Healthcare Act.
Then in the 1980s around the world came a new economic philosophy, which became known as “neo-liberalism.” One of its principal protagonists was Chicago School of Economics Professor, Milton Friedman. This caught on like wildfire where western countries had right wing governments; the major two being the United States under Ronald Reagan, and Britain under Margaret Thatcher. Under neo-liberalism, the state became a dirty word and its functions and power were diminished. The market, free and unfettered, was the answer to economic success. Everything depended on supply and demand, and would be priced accordingly.
Neo-liberalism ushered in a new era of inequality, with the obsession with wealth creation, the cult of privatisation and the private sector, tax cuts for the rich and the growing disparities between the rich and the poor. The uncritical admiration for unfettered markets, disdain for the public sector, and the delusion of endless growth, were all major parts of the neo-liberal myth.
Ironically, New Zealand’s Labour Party, which had ushered in the welfare state, led in 1984 by David Lange, (no raging right winger), but with Finance Minister, Roger Douglas, along with Richard Prebble and Michael Bassett, launched into neo-liberalism with great enthusiasm. They proposed selling off all state assets, privatising schools and prisons, and letting the market rip. It was carried on in New Zealand by Ruth Richardson in the next National Party Government.
Neo-liberalism has proved a huge failure, but its tentacles have clung on for dear life. Premises like “trickle down” which were an excuse to lower taxes on the rich so they would invest in businesses and staff, have failed dismally. Out of control finance companies, banks, and multi-national corporations ran riot. Mantras like “too big to fail, so it was too big to exist,” began to emerge. Billionaires are now two a penny.
In the 1960s a young school teacher could build a new house for three to four times his salary. Now it would take that same young teacher between 15 and 20 times his salary to secure an Auckland home for his family. The gap between the rich and the poor has escalated wildly in the last 30 years. Gated homes and communities are a sign the rich are hiding themselves away from the masses in safe havens. It smacks of fears of the apocalypse, or a peoples’ revolution.
As well known US economist, Joseph Stiglitz says, “inequality at these levels is reversible.” It is not inevitable, although French economist Thomas Picketty in his book Capitalism in the 21st Century points out with a simple equation the inherent fault of capitalism.
This simple equation says that where ‘r’ is the rate of return on capital and ‘g’ is the rate of growth in the economy, the returns on capital, or assets, will always grow faster than ‘g’, which is basically wage income.
Stiglitz, (The Price of Inequality) Picketty (Capital in the 21st Century) Wilkinson and Pickett (The Spirit Level) and in New Zealand The Rt Hon Sir Edmund Thomas, former high court judge, Max Rashbrooke, and many others have been bemoaning the dangers to a fair democracy of rampant neo-liberalism.
In the conclusion to his Bruce Jesson memorial lecture several years ago, Sir Edmund Thomas said this, “this country will not rebuild a just society unless and until, the lingering legacy of neo-liberalism with all its baggage of mantras and myths, is recognised for what it is, rejected as unsound and unfair, and vanquished from our political, economic and social discourse.”
It can be done, and this government has a duty to all New Zealanders to balance the waka, put in place fair taxes, and go back to the mantra expounded by Savage, Fraser and Co. - “We will look after our old, our young, our sick and our vulnerable.”
That, is what a progressive government is there to do. (John Elliott)