Neoliberal economic policy has taken a bit of a beating lately. Unregulated financial markets have exploded spectacularly and the wreckage is dragging the real economy down with it. The whole edifice is being propped up with trillions of dollars worth of taxpayer bailouts – as ever big business likes to privatise the profits and socialise the losses. As Newsweek declared – “we’re all socialists now”.
New Zealand in the late 80’s and 90’s was at the forefront of the great neoliberal economic experiment. This resulted in great social disruption, considerable hardship, and sluggish economic progress. Our neighbours in Australia, who adopted a much more cautious approach to reform, grew more quickly (pdf link) than us over the same period, and did so with much less upheaval.
England was another bastion of right wing economic policy under the Thatcher government (1979 – 1990) and those that followed. It is now thirty years since Thatcher took power, and the anniversary has prompted, in England, an evaluation of her legacy. Turns out that right wing economic policy has done England no favours either:
In the wake of the implosion of the financial free-for-all and corporate engorgement she unleashed, the Thatcherite diehards are struggling to rescue her name from a legacy of greed, entrenched inequality and economic failure. … If only young people knew, insist the irreconcilables, what a basket-case Britain was in the 1970s an “offshore banana republic”, a land of perpetual power cuts, strikes and unburied bodies they would understand why millions had to lose their jobs, industries and communities had to be destroyed and billions had to be handed over to the wealthy. …
You’d never guess from all this fevered snobbery and retrospective catastrophism that average economic growth in Britain in the dismal 1970s, at 2.4% a year, was almost exactly the same as in the sunny Thatcherite 1980s though a good deal more fairly distributed and significantly higher than in the free-market boom years of the last two decades. Nor would you imagine that there was far greater equality and social mobility than after Thatcher got to work. Or that, while industrial conflict was often sharp in the 1970s, there was nothing to match the violence of the riots and industrial confrontations of Thatcher’s Britain.
How much more evidence do we need that neoliberal right wing deregulated economies are bad for people and bad for growth? As we here in NZ await the delivery of what is being signalled as a pretty grim budget, the question naturally arises, is the National government going to repeat yet again the obvious mistakes of the past?