Listener 25 February, 1991

Keywords: Growth & Innovation; Labour Studies; Macroeconomics & Money; Social Policy;

A popular folk song on US campuses in the late 1960s was Pete Seeger’s “Waist Deep in the Big Muddy”. It described how one night an army platoon attempted to ford a swamp-river. The commander said he knew where he was going. It was just a matter of pushing on. Some of his troops were less certain, but were exhorted with such phrases as “don’t be a nervous nellie” and just show a little determination”.

So, encumbered with their heavy equipment, they struggled ankle deep …knee deep …waist deep …to shoulder deep. The inevitable happened. The commander suddenly disappeared; the rest turned around and got out.

The following day, as they recovered the drowned body trapped in quicksand, the .troops realised their commander had not really known as much about the swamp-river as he claimed.

The song was popular because of its parallel with Vietnam. Step by step, presidents Kennedy and Johnson had got the people of the United States into the terrible swamp of Vietnam. Each step was accompanied by exhortations to ignore nervous nellies and show determination, for soon the battle would be turned. And each step led further into the catastrophic mire.

I have been reminded of that song a number of times in the last few months, not least after having read Treasury’s Briefing to the Incoming Government: 1990.

Most government agencies brief their incoming minister, but the Treasury briefing is grander -to the whole government. I expected it to account for the performance of the economy over the previous six years and explain how we got in such a terrible economic swamp. Its 1984 post-election briefing did. But to do so this time posed a problem for the Treasury. It was its advice that was being taken in the 1984-90 period: like the battle commanders in Vietnam, it was leading us into the swamp.

So Treasury avoids a serious review and gets on with its policy prescriptions. Even here the omissions are surprising. The incoming government, committed to growth, must have been dismayed by Treasury’s advice on the subject. There is none. Like the fox who could not get the grapes, Treasury apparently has decided that growth is no longer a matter worthy of pursuit.

What it did decide was that the government had to pay more attention to its fiscal position. This is a pleasant change from its 1984 advice, when it told the government that it did not need to worry so much about the government deficit if it floated the exchange rate. Six years ago economists told the Treasury it was talking nonsense, and the 1990 briefing agrees. Nevertheless, the quality of the macro-economic advice in 1990 is worse than in 1984. As one senior economist, nameless because he wants to keep his job, remarked to me, this year’s advice is “pathetic”,

There is a long chapter on social spending {which heavily influences the fiscal position), I thought the approach was more moderate than the 1987 briefing, with its undergraduate essay on the ideology of social policy, But the 1990 section is still tough, as you would expect from any Treasury anywhere in the world. Controlling expenditure is the universal Treasury nightmare.

The 1990 briefing even recognises that income deprivation exists in New Zealand (before the December benefit cuts). A background paper, released shortly after, shows the Treasury thinking on the issue is about where social research was 15 years ago.

Perhaps this is a consequence of the Treasury isolating itself from the mainstream of New Zealand intellectual life,) But at least it now recognises the problem of poverty.

The chapter on the labour market is worthy of a separate review. The briefing is contemptuous of the Labour Relations Act: a “limited reform …achieving limited ends”, The Treasury colonels clearly favour unlimited reforms aimed at achieving unlimited ends. The quote precisely places Treasury in the political spectrum.

One of the outstanding books written in New Zealand was Karl Popper’s The Open Society and Its Enemies. Popper supports piecemeal social engineering: limited reforms for limited ends. He is scathing about the authoritarians of the left and of the right with their unrealistic blueprints for total revolutionary change. Yet that is the sort of advice Treasury gives on the labour market.

The message of the briefing is “don’t be a nervous nellie”, “show a little determination”, “follow me”, “even though we are in it up to our necks, I know where we are going”,

Seeger describes “The Big Muddy” as a love song, recalling George Sand’s, “We must not forget this indignation, which is one of the most passionate forms of love.”

Colin James’s description of the Rogernomics revolutionaries as the “Vietnam generation” showed a poor understanding of what the 1960s dissenters were about. They were elsewhere on the river-swamp. The last verse of that song (slightly amended) goes:

Well, I’m not going to point to any moral,
I’ll leave that for yourself,
You’re still walking, you’re still talking,
You’d like to keep your health.
But every time I read the Treasury papers,
Them old feelings come on.
We are waist deep in the big muddy,
The great foll says to push on.