Orthodoxy Rules: OK

Cullen, Anderton, English and Bradford Would Make A Great Team

Listener18 December, 1999.

Keywords: Political Economy & History;

Right to the last day before the election, business commentators presented their own self-interest disguised as ideology disguised as analysis, in a vain attempt to affect political outcomes. They symbolised the end of an era: out of touch with the polity, out of touch with the economy, arguing a case that was known to have failed, as if it is impossible to learn from experience.

In fact the new government’s promised economics are mainline, reflecting a policy framework typical of those in the rich world. Even Alliance leader Jim Anderton, now in triumvirate with Helen Clark and Michael Cullen, is far more economically orthodox then he is demonised. (Some of his caucus colleagues are not.) Were a grand coalition of the main parties necessary, Cullen and Anderton with Bill English and Max Bradford would make a great economics team. There would be policy differences of course, but there is a commonality in their economic vision of a market economy with cautious interventions to make it work better. As in the case of the first Liberal government (elected in 1890), the First Labour government (1935), and the Third Labour government (1984), there will be considerable continuity of policy before and after, despite our liking to present each as a break from the past.

English is a Bolger man, on the centre right and enormously influenced by Catholic social teaching. His time as Minister of Health taught him that commercialisation solved little. He learned that if we want a better public health system, we are going to have to spend more on it. He faced up to the tension between higher public spending and lower taxes by trying to build into party policy the principle of a dollar extra for each. English’s youth – he is 38 – means he has still has much to learn and develop. One hopes he gets the chance.

Bradford, older at 57, has a reputation for extremism. He will not repudiate his commitment to the Employment Contracts Act, and some of his early ministerial pronouncements were pro-commercialist. But he came up with orthodox (and interventionist) responses to microeconomic failure in energy and the knowledge economy. He was a Treasury official from 1966 to 1978 (with a stint in Washington), which makes him one of “Henry Lang’s Babies.” Lang, Secretary of the Treasury at the time, was analytic, empirical, and pragmatic. After he retired, Treasury drifted into the excesses of Rogernomics. Bradford has returned to his roots.

National’s English/Bradford vision of economic management got lost in the election. Jenny Shipley had been made prime minister to shift National to the right, from Jim Bolger’s seeking the middle ground. But the rightwards lurch left the centre open to Labour, and through most of 1999 the party’s economic policy, led by English and Bradford, crept back. National abandoned the strategy during the election, and went head on with Act, fighting for the heart of the right, leaving the centre deserted.

Meanwhile, the Labour-Alliance non-aggression pact worked brilliantly. Labour focused on the centre, while Alliance covered the left. Although he died almost a year earlier, Labour Party president Michael Hirshfeld contributed as much as anyone to the centre-left victory when he saw the absolute necessity of some agreement, despite the two parties’ stand-off when he took over.

Carrying over the pact into government will be much harder. Of course there will be personal tensions, but Cullen and Anderton ought to be able to work together. However, Anderton will be pulled towards more radical policies by his caucus, the bulk of whom lie to his economic left. To keep the relationship effective, Labour will have to make concessions (and there is a minority within the Labour caucus who will be happy to do so).

The big challenge will be to get equity considerations into policy in a consistent way. For fifteen years they have been ignored, with an almost exclusive policy focus on efficiency. I still see officials’ papers which are almost totally devoid of any notions of fairness. The new government will want a more thoughtful approach.

The underlying tensions within the new government are no different from those under the single party government, when the leadership was sensitive to democracy. Without that sensitivity – as occurred under Muldoon, the subsequent Labour governments, and the early Bolger government – there was a repression of dissent. That wont work in a multi-party government. The two caucuses will lead to a public debate, which at first may be bewildering to the public, especially if anti-democrats present this as failure, rather than as a part of the consultative process. In time the public may learn that economics is not the clean cut subject leading to pure policy which some commentators propose, especially when they want to present their self interest as the only alternative.

Hopefully, in the post-1999 political environment, the media will lift the bans they placed on some commentators in the early 1990s because they criticized the government’s policies. The result has been a lop-sided presentation of economic orthodoxy, with a widespread misunderstanding of both the economic debate and the incoming government’s policies.