From: Murray Dobbin <[log in to unmask]>
Here is my latest column. Please post widely.
http://www.nationalpost.com/financialpost/fpcomment/story.html?f=/stories/20
000815/370328.html
Financial Post
August 15, 2000
By Murray Dobbin
The real lessons from New Zealand
Vaunted privatization push devastated the country,
rather than saving it.
It has been so long since anyone in the business press has
praised the New Zealand “miracle” it is almost as if we
imagined the whole thing. But, of course, the current silence
is really no mystery. The fifteen year free market experiment
has been an unmitigated disaster. The suffering caused
amongst ordinary New Zealanders is well known: the
highest youth suicide rate in the developed world, the
proliferation of food banks, huge increases in violent and
other crime, the bankruptcy of half the farms in the country,
the economic disruption of hundreds of thousands of lives
and health care, education and other social services
devastated by the mad marketplace scientists.
But, of course, neo-liberal ideologues don’t hold much truck
with the human consequences of their experiments. So let’s
examine those things they do care about. The
revolutionaries promised to tear down the “debt wall,”
unleash spectacular economic growth, spur foreign
investment and productivity, create enormous new wealth
and new and better jobs.
They failed on every count. Instead of a brave new economy
they delivered an economic Frankenstein’s monster. The
initial wave of changes - deregulation, privatization, tariff
elimination - was justified by the infamous debt crisis. This
was a ruse all along. Even Sir Roger Douglas admitted this
when I interviewed him in 1992. The “crisis” New Zealand
faced post-election in 1984 was a currency crisis brought on
by Douglas himself.
As for the debt in 1984 it was NZ$22 billion but after ten years
of experimenting it had doubled to NZ$45 billion - in spite of the
sell off of NZ$16 billion in state enterprises. Today it has finally
returned to 1984 levels but only through more crown assets
sales.
And economic growth? In the years 1985 - 92 average
economic growth in the OECD countries totalled 20% while
in New Zealand it was negative: -1%. The promised
creation of enormous new wealth went into reverse with real
GDP in 1992 at 5% below the ‘85-86 level. A burst of growth
from1993 to 1995 petered out and steadily declined until it
dipped into negative territory in 1998, posting the fourth
worst growth in the OECD.
The transformation of the economy was supposed to spur
foreign investment but it mostly meant a feeding frenzy on
domestic corporate assets. In 1993 the proportion of GDP in
investments was just 70% of what it was in 1984.
The restructuring of the economy failed most dramatically on
the unemployment front and the country has never managed
to get back to any where near the 1984 level of 4%. The
“workless and wanting work” figure peaked at over 18% in
1993. In 1999 that figure had only been reduced to 11.2%.
The radicals also promised increases in productivity but
again they failed to deliver. After eight years of restructuring
and massive labour deregulation New Zealand’s
productivity began a steady decline compared to its
neighbour, Australia. From 1978 to 1990 the rates had been
similar. The gap steadily increased between1990 and 1998
with Australia posting a 21.9 % increase and New Zealand
just 5.2%.
Only the wealthy in New Zealand could see any success in
this destructive exercise in social engineering. Between
1984 and 1996 only the top 10% of income earners
measurably increased their share of total income. The
lowest 10% lost 21.6% of their 1984 income. Over 50% of
the total working population had lower real income in 1996
than in 1984.
There are lessons from New Zealand, but they do not
involve adopting that tortured country as a model.
The first lesson is that the unfettered application of ideology
is inevitably destructive -- not just of democracy, social peace
and equality but of the economy. Even as the revolution
continued to deliver disastrous results its promoters claimed
it was because it had not gone far enough.
The second lesson is that parliamentary democracy Anglo-
Saxon style has proven extremely vulnerable to the ravages
of ideology. A virtual executive dictatorship can implement
policies that are never even debated during elections - as
happened in New Zealand in 1984. The only thing that
stopped the zealots from going even further was the
introduction of proportional representation in the early ‘90s
and the subsequent election of minority governments.
And that leads to the last lesson. Globalization is not
inevitable nor irreversible. The current New Zealand
government (a coalition of a chastened Labour Party and
the left-wing Alliance) is unfortunately still committed to
signing free trade and investment agreements. But it is
reversing many of the most destructive policies. Included in
this re-think is the reversal of privatisation of Accident
Compensation Insurance, an immediate rise in pensions, a
halt to sale of state houses and a commitment to rebuilding
the state housing stock, the appointment of review
committee on electricity pricing, the freezing of tariffs on
clothing and footwear, and the re-recognition of unions.
The pity is that New Zealanders had to suffer through so
much in the first place.
Visit our Web Site for information about our Seniors Participatory and
Community Quality of Life Projects! Free Reports Also.
http://www.utoronto.ca/qol http://www.utoronto.ca/seniors
********************************************************************
Long have I looked for the truth about the life of people together.
That life is crisscrossed, tangled, and difficult to understand.
I have worked hard to understand it and when I had done so
I told the truth as I found it.
- Bertolt Brecht
********************************************************************
Dennis Raphael, Ph.D.
Associate Professor
Department of Public Health Sciences
Graduate Department of Community Health
University of Toronto
McMurrich Building, Room 101
Toronto, Ontario, CANADA M5S 1A8
voice: (416) 978-7567
fax: (416) 978-2087
e-mail: [log in to unmask]
|
