Author Archives: Brian Easton

The London Economist and the New Zealand Economy

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A response to an Economist article of 30 November 2000.

Keywords: Growth & Innovation; Macroeconomics & Money; Political Economy & History;

A summary of The Economist’s position of the New Zealand economic reforms might be:

New Zealand had to change its economic policies from at least the early 1980s. The path of the reforms was riddled with ‘blunders’ and ‘hubris’. The Economist enthusiastically supported them at the time, despite warnings of the weaknesses that the microeconomic reforms were extremist and the macroeconomic reforms faulty. The outcome has been a much poorer performance than other countries – such as Australia – which tackled the same problems with a more thoughtful, incremental and technically competent approach. This conclusion applies even ignoring the rising inequality and the social distress. Nevertheless, The Economist thinks New Zealand should continue to pursue the policies which have failed in the past. Victory is about implementing ‘right’ policies, not getting better outcomes.

His Way

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Listener 9 December, 2000

Keywords: Political Economy & History

One of the rogernomic reviewers of Barry Gustafson’s His Way: A Biography of Robert Muldoon, Rod Deane, asked how could Muldoon be the leader of a ‘free enterprise party’. As it happens the National Party has not been primarily such a party, but a private enterprise one, advocating the state actively supported business. When the party was founded in 1936 the proposal to include in its constitution opposition to interference by the state in business was defeated.

Private (Debt) Worries

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The Story of Our Economy has been one of Secret – and Occasionally not so Secret – Debt Crises.
Listener 11 November, 2000

Keywords: Macroeconomics & Money; Political Economy & History;

In 1939 New Zealand faced a debt crisis. The government had to roll over £17m of debt and borrow a bit more to pay for imports in excess to export revenue. The Minister of Finance, Walter Nash went to London to obtain the money. The terms initially offered were so harsh that expressions like ‘bankruptcy’ were used. Privately, of course, for the public had no idea how close a run thing it was. Writing up this story recently led me to think just how much the story of the New Zealand economy has been one of secret – and very occasionally not so secret – debt crises. Listing all of them would take more than this column, but many readers will recall the currency crisis of 1984.

Does the IMF Work? in Another Great Depression the Answer Be No.

This entry was posted in Macroeconomics & Money on by .

Listener 28 October 2002.

Keywords: Macroeconomics & Money;

Wanting to avoid the Great Depreciation of the 1930s, the leaders of the world established the International Monetary Fund in 1945. It has a number of purposes but a major one is to provide enough international liquidity should a 1930 type crisis ever occur again. Think of the IMF as the international equivalent of a reserve bank, and don’t confuse it with the International Bank for Reconstruction and Development (a.k.a. ‘World Bank’) whose purpose is to provide international capital for development investment, not short-term liquidity.

Changing Policy Horses

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Should the Economic Reforms be Intensified or are New Policies in Order?
Listener 14 October, 2000

Keywords: Growth & Innovation; Macroeconomics & Money;

There is a debate going on about what to do about the economy. The loudest view is that it is the fault of the new government, and that we only have to return to the policies of the last fifteen years and everything will come right. There are three reasons why this is not very compelling. First, the Labour-Alliance government does not seem to have changed policy that much. Second, the ‘collapse’ began in early 1999 or even 1998, well before the new government took power. And third, over the fifteen years the performance of the New Zealand economy has been the worse in the rich OECD, inflation excepted. So the past policies have failed, and are unlikely to succeed in the future.

Sutch, William Ball 1907 – 1975: Teacher, Economist, Writer, Diplomat, Public Se

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Dictionary of New Zealand Biography, Volume Five (1941-1960), 2000, p.504-506.

Keywords: Political Economy & History

William Ball Sutch was born in Southport, Lancashire, England, on 27 June 1907, the third of five children. He arrived in New Zealand at the age of eight months, when his family migrated to Wellington. His father, Ebenezer (Ted) Sutch, was a journeyman carpenter, and his mother, Ellen Sutch (née Ball), a dressmaker. Both had determined characters, and were widely read in the social fields, despite having only elementary schooling. They were staunch Methodists and were involved in the United Ancient Order of Druids Friendly Society. The household allocated various tasks to each child, independent of gender. Bill’’s included making the soap, jam, pickles and Yorkshire pudding, polishing the floors, turning the mangle, bringing the findings (such as cotton thread) for his mother’’s work, and minding the baby. His strong-minded and financially canny mother, whom he adored, gave him a lifelong commitment to women’s causes.

The Experiences Of Monetary Union

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Listener 30 September, 2000.

Keywords: Macroeconomics & Money;

It is extraordinary how much economic debate in New Zealand is oblivious to any evidence. Recent advocates of the New Zealand economy going into monetary union with Australia or the US seem quite unaware that it has spent over half of the time since 1840 in one, and is currently in one. We can learn from both experiences, but the lesson is not what the advocates want us to hear.

Douglas Robb: 1899-1974

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Chapter 6 of The Nationbuilders

Keywords: Health; Political Economy & History;

Douglas Robb may appear to be among the most privileged of the nationbuilders in this book. His father was a manager of the Kauri Timber Company and the father-in-law from his marriage to Helen Seabrook in 1935 was even better placed. He was too young for the First World War, too old for the Second. The depression of the 1930s did not impact as heavily on the practice of the promising young surgeon as it did for many other occupations. But a year before he was born, Robb’s father came to New Zealand because the climate would be better for his tuberculosis. Two of his sons caught the disease in their infancy. There were no particularly effective therapies in those days, and the eldest died from TB at the age of 21. The second, Douglas, suffered until he was almost 40, when the symptoms suddenly disappeared.

Muldoon’s Mark

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Listener 16 September, 2000

Keywords: Political Economy & History;

Barry Gustafson’s comprehensive biography of Rob Muldoon was launched in the same week that the New Zealand exchange rate sunk to a record low against the US dollar. Had Muldoon been alive he would have predicted the collapse (although not its exact date), and he would be predicting further turbulence on the world financial markets (as he did before the 1987 sharemarket crash). Of course Muldoon got a lot of things wrong, but his single biggest prediction proved far too correct. He resisted the advice to liberalise the New Zealand economy other than at a cautious pace, because he said it would not work and it would damage people.

The Nationbuilders

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Auckland University Press. 2001. 318pp.

Who shaped the New Zealand nation in the middle years of the twentieth century: Whose were the ideas. the visions. the practical skills: The Nationbuilders is a collection of linked essays on individuals and companies in the years from 1931 to 1984 who contributed in major ways to building a New Zealand nation. They include well known individuals like W.B. Sutch and forgotten influences like Douglas Robb. The book captures the intertwining of the lives of politicians. their advisors and their mentors as well as the experiences which drove them.

While the focus is on the economic strategy of the times. Brian Easton also looks at the cultural. social. union. business and foreign policy strands in the nationbuilding project. The book finally explores what happened to nationbuilding in recent years and options for the future. An original lively and provocative book. it is backed by powerful nationalistic emotions and by a deep distaste at the kind of country that has been fashioned since 1984.

Henry Lang: 1919-1997

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Chapter 14 of The Nationbuilders

Keywords: Political Economy & History;

The day I finished the first draft of this chapter I walked past the Henry Lang Memorial sculpture, in a small park nestled between various government buildings, where once had been Broadcasting House, an architectural gem in its own right, and an important centre of the nation’s culture in general, and drama and music in particular. In the Great Hall of Parliament House, magnificently restored by the Warren & Mahoney partnership, Helen Clark, the Prime Minister announce a major funding and structural package, ‘Building Cultural Heritage’, for her adjunct portfolio, Arts, Culture and Heritage. Did I hear Peter Fraser and Norman Kirk chuckle? Henry Lang would have said, ‘absolutely first rate.’

Dr Sutch: (1907-) 1951-1975

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Chapter 10 of The Nationbuilders The earlier part of his life. Keywords: History of Ideas, Methodology & Philosophy; Political Economy & History; Sutch must have returned to New Zealand in 1951 with renewed self-confidence. His overseas sojourn had proved he was world class, while he had successfully published two books in the previous decade, and…
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Bill Sutch: 1907-1950 (-1975)

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Chapter 7 of The Nationbuilders  Chapter 10 – later life from 1951Keywords: History of Ideas, Methodology & Philosophy; Political Economy & History;   Bill Sutch was not only one of a handful of public servants who shaped economic and social policy between the 1930s and the 1960s. His thinking has continued to influence economic and…
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Sutch and Security

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This was originally intended as an appendix to Chapter 10 of The Nationbuilders. It was decided that the story distracted from the main themes of the chapter (and the book) and was omitted. It is placed here on the record. This is the version prepared in September 2000.

Keywords: Political Economy & History;

The evidence that Sutch was security compromised before the meetings which led up to the incident in Holloway Road in 1974 is almost non-existent. It is true he admired the Soviet Union, and the US government treated him as a security risk in the 1950s, although given its McCarthiest frame of mind that may say no more than he had thwarted the US over UNICEF, and in New York he was friends of East-Central Europeans (some of whom subsequently fled to the West), although apparently he had little to do with the Russians.

Cultural Commerce

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Listener 2 September 2000

Keywords: Literature; Social Policy;

This column is written more in sorrow than anger. Hopes were high when the then Leader of the Opposition, Helen Clark, announced that on assuming the premiership she would also take the Arts and Culture ministerial portfolio. The National Government had been squeezing public spending and that, with the appointments it was making, was generating an authoritarian, politically correct, and backward-looking distribution of the limited funds and leadership in the arts and heritage sector. Hopes were exceeded with Clark’s announcement of some $86m funding for the next three years, although much was a catch-up of the deficit arising from the miserliness of the previous government.

The Sustainability Of Student Loans

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Paper for the ‘Student Loans Summit’, 25 August, 2000

Keywords Education

It is important when thinking about Student Loans, or indeed about any other facit of government policy, that the policy which drives it is seen as a part of a total policy framework evolved out of a taskforce which was established in 1984 to completely review government policy. I imagine at the time that some of the outcomes of the taskforce thinking were expected like privatisation and corporatisation. But the comprehensive framework of commercialisation may well not have been, nor may they have expected the proposals to, say, reform student access to tertiary education. That was to come later. By that time the rule of making government activities run as though they were business ones, was no totally accepted in the policy community, and it was natural to do that as much as the public would allow. What that means is that the policy of student loans have to be seen in this wider context, and to challenge them involves a different policy framework.