Listener: 12 September, 1992

Keywords: Political Economy & History;

I treasure the Tom Scott cartoon which shows the boiler room of the economy, jam-packed with pipes under great pressure, full of leaking joints, bandages, holes and bulges, and with interest rates bursting away. In the middle of this chaos is a small balding gnome, Robert Muldoon, holding a wrench and saying: ‘Okay, so there’s a little seepage.’ Tom was referring to the wage and price freeze, but the image of an economy under strain, with the Minister of Finance reassuring us, characterises the Muldoon years from 1967 to 1984.

We are only now beginning to understand the transformation of the economy over which Muldoon presided. It is most obvious in the external sector. John Gould has tables in The Muldoon Years which show how New Zealand had one of the least diversified export structures in 1965 but, by 1980, we were average among OECD countries in terms of the diversity of what we sent and where we sent it. No other rich country went through such a rapid change. What made it especially difficult was that we were transforming from what we produce best in the world – pastoral products – to that which we do well — horticulture, fish, forestry, tourism and related manufactures.

The external change was driven by falling relative prices for meat, wool, and butter as northern hemisphere protection squeezed our markets and world demand grew slowly. Exporters responded to depressed pastoral prices by seeking new products and adding value to the old ones. New Zealand’s export sector is closely linked with the domestic economy so the external transformation pressed in on our internal arrangements – forcing us to change the economic rules, demanding we liberalise markets, ‘deregulating’ the economy. You cannot run a progressive, diversifying export sector without a similar vibrancy internally. Protection and inflexibility had to be reduced, although, in my — and Muldoon’s – view, that does not mean the abolition of all social protection.

Muldoon did not recognise the significance of the transformation. He had grown up in a ‘mono-cultural’ New Zealand that specialised in the exporting of processed grass to Britain. Suffering personally from the trauma of the Great Depression, he accepted most of the economic reforms of the first Labour government, which were effective while we could depend upon Britain and grass. This nostalgia for the past pervaded his soul – recall how sycophantic he was over royalty. But his respect for the highly managed economy was reinforced by his lust to be boss, an appetite which was increased by what it fed on.

And so he resisted the changes forced on the economy. Although there was considerable economic liberalisation while he was minister of finance, his grudging gradualism meant there was not enough.

Muldoon was an intuitive man. I doubt he articulated his chief reason for resisting. Economic change generates social change, and ultimately political change. The political coalition that he led was undermined by the changes, which is why by the end of his era he was so out of touch with the Wellington and Auckland establishments (which latched onto the incoming government with alacrity).

In many respects this new coalition doesn’t have the authority of the old one, and certainly it is not trusted by the public in the way that Keith Holyoake’s was in the 1960s. Of course there was a lot of dissent then – especially over Vietnam – but there was not the same anger towards politicians.

It seems likely that because of the economic changes wrought by the great external diversification, plus some crucial social changes, such as those involving women and the Maori, it is no longer possible for any single party to represent the increasingly heterogeneous and restless ‘middle’ New Zealand. And that is probably the best reason for replacing the first-past-the-post election system with proportional representation.

Decades ago the old ways gave us a government which, although elected by a minority tried to represent the community as a whole (although those on the margins always got a poor deal). It is no accident that those in power today are the greatest proponents of first-past-the-post, while the rest of the country feels increasingly alienated. We need a system where the country’s diversity is as explicit in the political process as it is already economically and socially.

The many narrow-visioned and mean-spirited comments on Muldoon after his death were indicative of the man in life. Faced with a national crisis such as the 1981 tour he could only divide rather than unite. Yet his critics could be as narrowminded as he, as often failing to see the wood for the trees. But, in ability, and willingness to command a situation, the tiny man towered over his colleagues and, even in death, many of his critics. No living New Zealander has had so many fictional characters based on him.

In command Muldoon tried to do too much. If he was the engineer with the wrench down below, he was also the purser on the deck reassuring the passengers, and the captain on the bridge steering the ship in stormy seas away from the rocks. Trying to return to the nostalgic past, he headed the ship into the gale. No wonder so many were seasick.