Watchdog 155 December 2020, p.80-85.
Brian Easton has been researching the New Zealand economy for about 60 years. He writes that the pre-sent analysis is offered as a summary of his life’s work. By focussing on the economy, Easton wants to emphasise that it is how people earn a living that shapes social relations. As a text to explain who New Zealanders are and why, readers will find the book invaluable.
The title is derived from the poet Allen Curnow, whose often quoted thoughts about NZ were of “two islands not in narrow seas/Like a child’s kite anchored in the indifferent blue’. British migrants had ventured to a “A land of settlers/With never a soul at home”. Echoing Curnow, who wrote in the 1940s, the leading literary journal called itself Landfall. In 1933 Gordon Coates, the last Reform Party Prime Minister, remarked that before refrigeration, that is up to the 1870s, we were an isolated island.
Bruce Jesson- observed this cringe, which he saw as the immaturity of a “hollow society”. Unlike, say, America, which had evolved its way of life for generations before its successful war of independence, the migrants were starting from scratch. In these musings, Maori are absent, the general attitude being that they could mostly be ignored.
When Curnow wrote I was a small boy, but shortly after he was fretting about his narrow seas, I had my first political thought. My grandmother, born in Waimate, had referred to the UK as “Home”. I told her off. Despite that, I recall not being sure what country I was in. We kept hearing about England, the producer of books, singers, games, famous people, and there were waves of Brit immigrants in the immediate postwar years. Discussing this with a contemporary in my university years, my friend said she remembered the same confusion.
Perhaps this was a Christchurch thing? But Easton might say that it was in fact a countrywide thing. He points out that most of the early migrants were either from small farms in southern England or from Presbyterian Scotland. As a result, the crude Church of England versus (Ireland and) Catholic hostilities were not imported to any great extent (but note the final paragraph below). Many wanted nothing more than to own enough land to be able to farm and to be left alone. The culture was marked by pragmatism and moderation. Migrants wanted to escape the rigid class divisions and urban slums of the old world.
So, real life meant that the Wakefield plan to transplant British habits of class and ethnicity failed. He had wanted to set a “sufficient” price for land so that workers could not buy-in. He had envisaged an economy based on crops, but pastoralism dominated. In any case there was very little money around. Maori had some as they sold food to the settlers but most Pakeha struggled.
The widespread lack of capital meant the early farms often failed. Imported animal pests depressed productivity. Rabbits took over parts of Otago, forcing farms to be abandoned (astonishingly, only in the last few years has the importance of biodiversity and conservation values begun to attract serious attention. Seven generations after the rabbits first plagued and the gorse first spread, there are still political leaders who think looking after the environment would detract from economic performance).
Easton talks a lot about myths, pointing out that the frequent use of “myth to denote a false story is not its main meaning here. Easton’s myths are stories that might or might not be true. Often, they describe something that was real but has become less so. Myths are what we like to see, whether true or not. A unifying theme is that the popular political myths from history are almost always distortions, the Left being not as radical as its champions deem to be the case, and the Right being not as reactionary as it is often said to be.
This applies to the first Liberal and Labour governments, not really all that radical, and to Reform and National governments, not really all that awful. Circumstances create policies, and not vice versa, Easton insists, and NZ governments have (almost) always reacted to them as circumstances seemed to suggest, without preconceived notions.
The defining circumstance of post-European settlement has been town versus country. In this context the Liberals, personified by Richard (King Dick) Seddon, and Labour, by Michael Joseph Savage, are the townie tradition, and Julius Vogel was the chief architect of Reform and National. Perhaps so, as his ambitious public borrowing could be seen as foreshad
owing Piggy Muldoon’s “Think Big” schemes, but a social democratic history of investing in public infrastructure is also Vogelian.
The Quarry Economy
Both traditions were reacting to circumstance. Theory and grand ideals have seldom been in play. Another central theme in the book is what Easton calls the “quarry”, the extractive enterprises which the Governments of the UK and NZ saw as the purpose of New Zealand. Before organised migration to the main towns began in 1840, the islands that Abel Tasman had named were of interest only to restless men who hunted seals and whales.
The first Europeans were adventurers who saw the new colony as a resource for immediate exploitation. Untroubled by the thought of a permanent or regulated future, they hunted seals and whales to near extinction. Then, following organised migration, came the flax economy. Gold rushes saw Dunedin becoming the main city, whereas, after the kauri gum market declined, so did early Auckland, which was evolving past being just a quarry, but with links to Sydney, it became a focus for manufacturing and finance, and after Waikato’s swamps were drained, dairy boomed.Coal was first mined as early as 1849, and is still being dug up, but with at least some environmental awareness these days, it is going the way of the pre-Adamite seals and whales (in some parts of the country “Pre-Adamites” refers to the Europeans who pre-dated Government sponsored migration). The quarry economy attached itself to the town and country division. Coalmining, for instance, was at the core of support for Seddon, who represented Westland. Sheep farmers and suppliers tended to the Vogel strain; shearers and freezing workers, quarriers, to the Seddon strain.
One Big Sheep Farm
The product which most shaped the country was wool, which helps explain the historical dominance of conservative interests. The east side of both islands from Hawkes Bay to Otago was virtually a sheep farm. In 1882 the first refrigerated ship set off for the UK with frozen lamb and mutton. Butter also became a viable export, so the relative dominance of wool was eased as the economy became a bit more rounded.
The myth has it that a radical Scot in the Seddon government was so enraged by the feudalistic land-owners in the old country that he led the charge to break up the huge sheep farms. Easton does not even mention the brave warrior (John McKenzie), preferring a more mundane explanation. He discusses Ready Money Robinson, who farmed 90,000 acres around Cheviot in North Canterbury. He says the estate was broken up because of a family dispute, in the context of the emerging meat export market rendering the vast wool farms no longer viable.
According to Wikipedia, the farm, heavily in debt, was subdivided after Robinson’s death. His will had left the matter to his four daughters. They could sell if all agreed, as they did. Is Easton too eager in his myth busting? It wasn’t about just one family. In all, across the country 1,000,000 acres were subdivided, creating 7,000 smaller farms. That changed the country. Another historian has written that the difference in wealth between the Ready Money class and the poorest was more extreme than what had existed in France before their revolution.
Whatever. It was during King Dick Seddon’s day that the ethic that Jack was as good as his master began to dominate social discourse. Smaller farms meant more jobs and services in the provinces. The role of women became more appreciated, Seddon saying that they were a civilising influence. Easton’s essential point is upheld. It was changes in the economy and technology that led to Liberal dominance, not Liberal dominance that led to this enhanced democracy.
Yet it remained the case that only two animals, sheep and cows, and only one market, Britain, accounted for pretty much all NZ’s place in the global economy until the UK joined the European Economic Community in 1973. Or so goes another myth, but Easton argues that diversification of both products and markets was already under way. Otherwise, NZ would not have adapted to the new order as successfully as it did.
While the influence of the Liberal Party lifted living standards generally, for Maori, not living in sheep country, it was less so. The first land sales were limited to Governments, but this lapsed as private sales to settler farmers came to be allowed. Easton suggests that a reason for this was that the UK government never wanted to spend more than it needed to for basic law and order in its quarry, so cash-deprived NZ governments were relaxed about allowing private sales. They would have wanted to speed up settlement.
Maori land, communally owned and thereby less able to adapt readily to change, was less likely to prosper. Much of it was in the central North Island, remote from markets and rail links. So, Maori poverty persisted. Some lived frugally by choice, preferring traditional subsistence farming, as did quite a few Europeans. An impatient State, with a “use it or lose it” ethic, was unimpressed.
Easton provides statistics from 1900, by when early trends had settled in. Life expectancy for non-Maori New Zealanders, at an average of 58, was considerably longer than what the average Briton, American or Australian could expect, but for Maori it was considerably less than all four others, reaching the 1900 non-Maori level only by the 1960s.
Similarly, non-Maori New Zealanders were more literate than Britons, and taller, but Maori were often more literate than both, because Protestant missionaries wanted them to read the Bible. Life was tough for most. In 1900 11 of every 12 non-Maori babies survived, but less than half of English babies, and only a third of Maori babies, survived. In England more babies survived in the country than in (industrially polluted) towns. NZ now sees five in 1,000 non-Maori and seven in 1,000 Maori die in infancy.
In all these health and welfare measures, Maori have been closing the gap with other New Zealanders in every decade since the settlers arrived, but as we know only too well, the gap persists. Of course, the statistics are relative. NZ might have been more progressive and more egalitarian than the UK and the US, but, by present standards, for the majority life was a struggle through the first 100 years.
Consensus About Social Security
The tradition of moderation and compromise that held – until the 1980s’ Lange government’s assault on living standards – is exemplified by the consensus about the benefits of social security. Here again, Easton is keen to take us down the middle of the road. While Liberal and Labour governments were typically the original sponsors of welfare measures, Reform and National tended to accept the changes once they were in place.
But not always. Harry Atkinson, who put out early feelers for a Welfare State in the 1870s, was accusedof being “subversive of the social order”. In 1882 George Grey (sounding very much like Donald Trump) held that any attempts to better the lot of the working class would be “anti-family, anti-Christian, extreme communism”. Savage, the first Labour PM, saw them as “applied Christianity”. Sid Holland, the first National PM, saw them as “applied lunacy”.
Wanting a minimalist State, Governor Hobson in 1840 and his immediate successors – effectively the first Governments – had not taxed income and they did not invest in education and health, which is part of the reason that the 1918 flu pandemic claimed 8,550 lives. Following the conventional wisdom, Easton suggests that the start of modern policy came in two stages, the first from the Liberals at the turn of the 20th Century. They introduced pensions, female suffrage, industrial arbitration and other measures which, together, saw off the minimalist State.
The second stage could be dated to the first (1935-1949) Labour government. They built State houses and raised working class living standards. In 1938 the Savage government passed a Social Security Act, enabling the tradition of social democratic policy that still informs (if hesitantly) Labour today. By 1944 health, previously surviving on crumbs, was allotted 2% of GDP. It is now 7%. Significantly, in this time of Covid and recession, it should be borne in mind that, because of the Savage/Walter Nash investment in public welfare, NZ recovered from the Depression earlier than did the austerity regimes in the old world.
That progressive and humanist impulses have always co-existed with the minimalists is indicated by the 1852 thoughts of James Fitzgerald, Superintendent of Canterbury: “There is something awful to my mind in the prospect of a great mass of the community increasing in wealth and power without the moral refinement which fits them to enjoy the one or that intellectual cultivation which enables them to use the other”.
Or, take the recommendation of Bill Sutch, one of the country’s great civil servants, who argued in 1962 that “the greatest need was for the development not of ‘land’ nor of ‘capital’ but of the third, the ‘human’ factor in production”. The next year Sutch wanted to persuade Wellington that in “the mature economy… (an emphasis on) education, the arts, industrial design, housing and town planning and infrastructure’ is needed to guide policy. Without that focus NZ would remain dependent as a “neo-colony”. He was not just talking about the economy. To achieve real independence, NZ needed a social and cultural transformation. In Easton’s terms, Sutch was talking about how NZ might become more than a quarry.
What a pity it is that, 170 years after Fitzgerald and 60 years after Sutch, the minimalists still among us reject a humanist culture and think the only purpose of public education is to turn out products for the labour market. And what a pity that their quarry mentality holds that productivity is enhanced mainly by lowering wages, extending working hours, and exporting raw materials (in Canada, once another quarry, historians refer to how the country’s early migrants were seen to be “hewers of wood and drawers of water”).
After the early benefits of trading with unprepared colonists, Maori were mostly either on the land or in the quarry. Apirana Ngata, the much-celebrated champion of Maoridom, thought that most were “satisfied to live on minimal reserves, with seasonal excursions into the labour field”. He advocated “modernisation”, the need to move to towns and cities. In 1901 the Maori population was 45,000. In 1951 it was 135,000. At that stage, when economic growth in the country at large was surging, most Maori were still farming. Others were typically working in freezing works or construction.
More recently, the increased importance of urban jobs encouraged a significant Maori uprooting from the country to the cities and the ethnic wealth gap began to close. “A Maori born in 1974 had about as much training as a non-Maori born 30 years earlier”.38% of Maori worked as managers, professionals, technicians or trade workers as compared to 53% of non-Maori jobholders.
As the national economy grew, so too did an increased Pasifika immigration, but Rogernomics was soon to betray both demographics by closing down many of the very enterprises which had encouraged them to move in the first place. This was the root cause for much of the urban unrest and dislocation that worries us now.
Reluctance To Acknowledge Class
Easton, though, warns against the present obsession with associating brown people with child poverty, crime and unemployment, even if well-meaning liberals hope thereby to champion their cause. He points out a simple fact that the national conversation seldom acknowledges: the majority of poor households are non-Maori. “Part of this confusion arises because of the reluctance of New Zealanders to contemplate the existence of socioeconomic class. The consequence of the neglect is that the existence of a Maori meta-class – despite its considerable social graduations – is often used as a proxy for class analysis”.
A result of this bias is that “policies which target only Maori fail to address most of the poor”. This is why “middle class good intentions sometimes result in working class racism”. There is good reason to assume that, were NZ to have shared the severely racist past of, most obviously, the US, and were it to have encouraged a present tense Trumpist politics, we would have been suffering a comparable Deplorable breakdown into tribal division and hate.
Individual prejudices might exist, whether based on ethnicity or religion, but how much do we need to prioritise race relations? Easton suggests that as “most Maori have some education, have jobs, live peaceful and enjoyable jobs in societies, the current emphasis on culture and language has created a stereotype of Maori as failures”.
Referring to 2013, Easton looks at the comfortable class who were enjoying an income of at least $100,000 a year. It included 5.9% of non-Maori, but also 2.6% of Maori. The poorest, defined as those existing on less than $15,000 a year, comprised 29% of non-Maori and 36% of Maori. These numbers are close. What is not close is the difference between 100,000 and counting and 15,000 and not counting. The one big underlying fault line is not ethnicity but inequality, which hampers everyone. Here again the popular mythology is inaccurate. “Gross income inequality is slightly less for Maori” than for the country as a whole.
A reader of the main parties’ platitudes who did not have experience of living in NZ might be surprised that the 2017 election saw 29 Maori MPs in Parliament (a number essentially unchanged after the 2020 election). They included Winston Peters, Simon Bridges, David Seymour and Jami Lee Ross, but not Paul Goldsmith. As a quartet they do not strike one as being notably put upon, nor as champions of an equality of life chances. What all four happen to have in common is a distaste for placing ethnicity at the core of what public policy should consider. They are not alone. Easton reports that one in six New Zealanders report Maori ancestors (how many of us know all about our ethnic antecedents?).
To see how we all got to where we are now, we could go back 75 years to the third period of policy development, when the present Labour/National dominance emerged. For the first two decades after World War 2 pastoral exports were humming along so well that there was no pressure for governments to adapt policy to suit a world that was changing. Easton thinks that is part of the reason NZ policy makers succumbed to the Rogernomic attack so readily. They had not been thinking about the need for fresh approaches.
Nation Yet To Recover From Neo-Liberalism
Easton counts five long stagnations in NZ’s post-colonial history, all but one of which were brought about by external factors that little NZ was powerless to resist. The exception is the Lange/Douglas recession. That wound was self-inflicted. For ten years from 1985 the dogma of neo-liberalism went unchallenged and unabated, resulting in an economic contraction so severe that it was not until 1995 that the economy returned to the level from which it had started. In the meantime, deep austerity and National’s subsequent Ruthanasian slashing of welfare investment and benefit payments created generations of deprivation that disproportionally affected the poor. The nation is yet to recover.
Easton shows that at the core of neo-liberalism was a wish to transfer wealth to the already wealthy through tax cuts. A severe increase in inequality was the intended and necessary result. Giving the one per centers more did nothing to help the country at large, there being none of that mythical trickling down that resulted. Public resources were reduced by the same amount as private riches were increased. End of story.
Earlier complacency was one thing, but another reason for the lack of progressive response to the Rogernomes was that the Kirk/Rowling Labour government (1972-1975), admirable in other ways, had done nothing to anticipate life after the collapse of wool prices from the mid-60s, Kirk having little interest in economics. The pastoral economy had peaked in 1966 when wool provided 91% of exports. It now reaches 3%. Then followed nine years of Muldoon’s very traditional ministrations. So, almost everyone outside the Beehive when Labour’s coup against its supporters was launched was unready.
We’re given an insight from as far back as 1904, when Andre Siegfried remarked that a New Zealand propensity to be “scornful of scientific thought makes them incapable of self-distrust. Like almost all men of action they have a contempt for theories; yet they are often captured by the first theory that turns up. They propose simple solutions to the most complex problems with astonishing audacity”.
He could have been talking about 1985, when the State was in thrall to a handful of young economists just back from picking up the fad of economic libertarianism, largely from American academies. We’ve critiqued them all in these pages ever since, and nothing we have said needs to be amended now. When Lianne Dalziel, Christchurch’s Mayor, sought financial advice – should the city sell its assets? – she went to Rob Cameron. Cameron is known for a long history of pushing for all and any public assets to be privatised. That is what his company is there for.
Dalziel knew what the answer would be. Even after 35 years of neo-liberal failure, some (at least) Labour politicians have not changed their spots. In the name of growth, growth and more growth Cameron and his mates contrived to shrink the economy, which through the Rogernomic years grew at 15% less than it had previously. The experiment was “an abject fail ure”. Siegfried would not have been surprised that the ideologues despised empirical research so they did not know that in the Savage/Peter Fraser era the economy had grown faster than even their own imagined rate would have achieved.
In contrast, during the manic years between 1988 and 1993 unemployment averaged 8.7%. Just as you can simultaneously develop human social potential and financial wellbeing (Savage) so can you simultaneously deprive human potential and shrink gross domestic product numbers (Roger Douglas).Helen Clark used to point out that if you are in a hole you should stop digging, but this was not advice that the Rogernomes, with their cult-like faith in untested theories, would have appreciated. They preferred the “ludicrous argument” that the failures were the result of the Lange, Palmer, Moore and Bolger governments not having dug themselves even deeper into debt and inequality.
Easton quotes Geoffrey Palmer’s 2014 opinion that the civil service then would have been unable to carry out 1985 reforms, so massive had been the assaults on administrative capacity and institutional memory. Implicit in the narrative is that the first two years of the Kirk government were pivotal. Big Norm, enormously popular, has assumed an iconic (mythical?) status in Labour circles. He left school at 12. He built his own house. Only the third Kiwi-born prime minister, he was also its first genuine working class leader, being neither a former union official nor a full time party official. And he will certainly be the last such leader.
It was the Kirk team that introduced the country to the idea that NZ could challenge the foreign policy assumptions of the UK and the US, and it was the first to take internationalist perspectives such as expressing support for the UN. Kirk spoke up against South African apartheid, and the 1975 Treaty of Waitangi Act introduced the country to all the related policies and processes that have followed.
In some ways Kirk was a child of his time. He seemed unaware that women were burning their bras and looking up at glass ceilings, and he did nothing to reform and democratise economic policy. Looking back, it might seem surprising that it was not until 1977 that the National Anthem asked God to defend NZ rather than asking Her to save our gracious Queen. Kirk had gone by then but he had prepared the ground for this simple flowering of independence and maturity.
Labour’s Focus On Identity, Not Economics
The subsequent Labour focus on identity, diversity and culture, as opposed to economics, can be dated from this time, as can the trend for the Party’s politicians and supporters to emerge from the professional classes rather than the working classes (is this another reason for Norm’s big reputation? Did Labour feel it had to reward the retiring era with a gold watch?).
Curiously for such a moderate and unemotional observer, Easton flips in the occasional unsupported generalisation. He talks of NZ’s “extraordinarily effective system of governance”, and even of an economic “miracle”. He’s probably referring to the bureaucracy, which gets more credit, even if it is often implicit, than the politicians do. Some civil servants are expressly praised. Clarence Beeby, in education, is singled out, which is fair enough, but why not Sutch?
As part of Easton’s myth busting, none of the PMs who are habitually exalted are much so here, but a couple who are usually ignored are picked out for praise. NZ’s first settlers might have thought they were in narrow seas but, following Kirk, the Ardern government has the potential to look up from the provincial quarry and see across the oceans.
When Jacinda was reminding Judith that Collins is living in the past, she was saying that the time when the needs of the quarry economy dictated policy about everything else has been and gone. In common with successful societies around the globe, a mature post-colonial NZ is moving beyond crude extraction.
Time For Quarry Economics To Be Scrapped
As Thomas Piketty insists jobs based on sheer physical labour are inevitably becoming fewer and remuneration for toiling at them will continue to lag. Technology and services will continue to dominate. Education is going to become increasingly necessary. This much should be obvious.
Easton does not try to forecast where to from here, but we can give it a shot. The 2020 election could be seen in Eastonian terms as being at least, in part, an expression that the country is ready to move beyond the quarry economy and the quarry culture, the incoming Government not having to endure the carping of New Zealand First, the one Party that has been all quarry.
There’s a myth that Easton treats only lightly, the one that has it that only the National Party can understand economics. This is myth in the sense of being untrue, and there has never been a rational reason to believe it. And now, at last, the 2020 election has purged the fake news. Neo-liberalism has long been discredited. Could quarry economics join it in the scrap heap?
As a hint as to what changes in attitude and policy might suggest themselves, consider the lot of the Irish. Up until about World War 2, male Irish New Zealanders tended to be hampered by an imported discrimination which induced them to be stuck in the various quarries or else, as in America, in limiting alternative ambitions to being a cop or a priest. Yet, as the economy broadened in the era of post-war growth, this long anachronistic hangover of imperialism vanished. After just a few years any lingering class or ethnic or religious biases based on British history were unimaginable.