Mike Williams
I was given pause by a question I fielded after a speech I gave at a Fabian Society meeting at Auckland University on Tuesday and it led me to consider what direction our new Government might take.
I was asked if "neo-liberalism" was at an end and after some brief consideration, I said I thought it was.
Neo-liberalism is an economic and political philosophy that gripped much of the developed world in the 1980s and has a number of labels.
Rogernomics and Thatcherism are two of the most familiar.
The BBC has described Thatcherism thus:
"At its most crude, Thatcherism represents a belief in free markets and a small state. Rather than planning and regulating business and people's lives, government's job is to get out of the way. It should be restricted to the bare essentials: defence of the realm and the currency. Everything else should be left to individuals, to exercise their own choices and take responsibility for their own lives."
New Zealand embraced its own version of this mindset in the 1980s and 1990s and embarked on a programme of privatisation of state assets, benefit cuts, deregulation of the finance and labour markets and the removal of a structure of state subsidies which had grown up since World War II.
In New Zealand terms, neo-liberalism often meant a naive faith in market forces which briefly included such silliness as rebranding hospitals as Crown Health Enterprises. New Zealand politicians have traditionally not bothered much with deep and searching debates around philosophical principles so it was significant to hear the word "capitalism' used by Winston Peters in the speech he gave when he revealed his party's choice of a coalition partner.
He said that "far too many New Zealanders have come to view today's capitalism, not as their friend, but as their foe".
This wasn't new for Mr Peters. In a previous speech to an Auckland Rotary Club he was reported as saying "the truth is that after 32 years of the neo-liberal experiment, the character and quality of our country has changed dramatically and much of it for the worse".
These sentiments were echoed by Prime Minister Jacinda Ardern who made the general observation that when thousands of children were living in poverty, it could not be said that the economy was in great shape.
Capitalism is as old as organised humanity.
Amongst the very first examples of writing that we still have - the 5000-year-old Sumerian cuneiform tablets - there are records of trading transactions.
Attempts to establish alternative economic relationships, such as the Leninist version of communism, have universally proven disastrous.
Neither Winston Peters nor Jacinda Ardern was advocating some other alternative to capitalism as some commentators appear to be suggesting, rather some forms of mitigation of the worst effects of the extreme neo-liberal version of capitalism.
New Zealanders have never trusted pure market forces to deliver health and education services to the general population, and for much of our history a similar approach has applied to entry-level housing.
The new Government's "Kiwi build" policy of involving the state in the affordable housing market is therefore both a rejection of "neo-liberalism" and a return to a successful earlier model.
By assuming the title "Minister for Child Poverty Reduction" our new Prime Minister makes her fundamental political priorities crystal clear, but this will be a significant challenge.
New Zealand has a high level of child poverty for a supposedly well-off country by whatever measure you adopt and much of this sorry state of affairs can be sheeted home to the neo-liberal approach to industrial relations, which has weakened worker organisations and kept a firm lid on wages.
As the parents of 40 per cent of the children who live in poverty have jobs, they just don't earn enough to properly look after their kids, so a commitment to raising the minimum wage is a good place to start with an attack on child poverty.
The Government's commitment to raise the minimum wage from $15.75 to $20 per hour by 2020 is an attack both on child poverty and neo-liberalism.
Expect a strong defence of the neo-liberal economy by the wealthy who have benefited most.
The Employers and Manufacturers Association's dire and over-hyped warning that these minimum wage increases "will bring the economy to a grinding halt" is predictable nonsense.
We are not the only place seeking to reverse the inequality that came with neo-liberalism, The Economist reports:
"Next year South Korea's minimum wage will leap by 16.4 per cent to 7530 won an hour. The government wants to raise it to 10,000 won by 2020 - a total increase of 55 per cent. Long demanded by workers, the change will also help South Korea rely less on exports and more on domestic consumption, as well as potentially reducing inequality."