This morning, Labour leader Phil Goff announced that he was abandoning the NeoLiberal consensus on monetary policy, with the aim of getting a monetary policy that works for the many rather than the rich few. But specifics were few and far between – and Labour’s Finance Spokesperson David Cunliffe has said that there won’t be any, at least not until “nearer the election”.
Its a particularly irritating example of the politician’s meme of “keeping their powder dry”. The common wisdom among politicians and beltway “journalists” is that oppositions should do this, to prevent criticism and to avoid having good ideas stolen by the government. But the former amounts to lying to the public (and doesn’t work anyway, as well as making you look like you are full of waffle), while the latter is actively counterproductive. After all, if the goal is to implement your policies, isn’t having them stolen and implemented by the government a good thing?
But I forget: the goal isn’t policy change, but power. And to politicians, policy – the stuff that affects our lives for better or worse – is simply a means to an end, a rhetorical prop in pursuit of that goal.
Update: OK, so that last bit was a bit harsh. I have a deep vein of cynicism about politicians which I should keep under better control. But as someone who loves detail, thinks the merits of policy actually matter, and that people can decide on complex matters of policy for themselves, this “keep your powder dry” approach followed by politicians and excused incessantly by their beltway stenographers frustrates me intensely. Moreso when I see how different things could be.
Look at the Greens. They don’t keep their powder dry. They release their policy details. And they’ve won their arguments by doing so. Even National, who just a few short years ago were deep in denial about climate change, now realise they have to look “credible” on those issues (they don’t, but they realise they have to try).
“Keeping your powder dry” is refusing to have the argument. Which means in turn that you don’t win it. That might not matter to politicians – after all, does winning arguments with the public win votes? If not, do they need to care about the views of anyone outside parliament? – but as someone who believes in an active democratic citizenry, it matters to me.
Update: Also see NRT’s On “keeping your powder dry” II
lprent: My comments overleaf.
This was requested by rocky as a guest post. But I thought I’d attach my opinion about why this approach to policy formation is being used. Personally I find this a welcome approach – signaling an area of policy change in advance.
There has been a broad agreement inside the party for a long time even from the economic drys (like me) that we’d hit the end of the usefulness of the strong single focus of the Reserve Bank Act. Its effect on carry money increasing the volatility of the exchange rate has been hurting the export based industries that I work in.
However there hasn’t been a broad agreement about what needs to change. It has been decades since we have seen the debilitating double digit inflation figures that plagued my early life, but people of my age still vividly remember it.
Whatever we do it will not be simple to make it work effectively, and that will require considerable political support from inside the party. The debate inside the party is likely to be pretty robust between now and the detail. That takes time because Labour is a broad party in the range of views inside it – probably more so than any other party in NZ.
Announcing a change in direction like this frees up that debate inside the party for the next year about what is important and reasonable to do. Similarly it does the same across the left (and right if they stop being stupidly reflexive). It also signals to the world markets that the rules will change – so there are no surprises. NRT is looking for something that isn’t agreed yet. Phil is signalling that Labour is starting to review what it intends.
Update: I read Phil Goff’s comments hidden in the business pages of Granny this morning. I have no idea how he keeps using my arguments. I can assure readers that it is just a confluence of opinion.
Opposition Leader Phil Goff said the monetary policy regime adopted 20 years ago had worked reasonably well for a decade.
“But increasingly over the the past decade and most particularly in my role as Minister of Trade, I saw the huge difficulties being caused both by the level of the exchange rate and its volatility.”
Goff acknowledged the importance of keeping inflation and inflation expectations down.
“I’m part of the generation that remembers double-digit inflation under Muldoon,” he said. “We won’t throw the baby out with the bathwater. Price stability is important.”
But he questioned whether it should be the sole objective of monetary policy and whether the tools at the bank’s disposal were adequate.
But Goff said: “You can’t say we can’t put up alternative ideas [in opposition]. That is what our role is and the rating agencies know that when in government Labour has pursued responsible economic policies. But they would equally say what worries them about NZ is that it has run a current account deficit for as long as it has, and it would be stupid for us, or the Government, not to consider what alternatives might allow better performance.”