[I wonder: what happened to the balance of political power in NZ that pushed and allowed Rogernomics? -- Jim]
From: Jurriaan Bendien
Bremer was quoted as saying:
"A fundamental component of this process will be to force state-owned
enterprises to face hard budget constraints by reducing subsidies and
special deals," he said. "Iraq will no doubt find that opening its
borders to trade and investment will increase competitive pressure on its
domestic firms and thereby raise productivity."
I had to think, hell, this sounds just like Finance Minister Roger
Douglas used to talk in New Zealand in the second half of the 1980s.
Remember what happened ? Well, the "Labour" government went on a spree
of privatisations, government restructuring and deregulation that was
the envy of the neoliberals in the Western world for a while. In fact
it was a bit like Chile without a military coup. Hosannahs were sung
about the daring policies of the NZ government, and NZ was supposed to
be the "model" for how to reconstruct an economy. For a while anyway,
later OECD economists retreated from their earlier enthusiasm and said
things had happened a bit too fast, a bit too radically - they were
worried about "social coherence" and "social capital" and suchlike.
Actually, proportionally, approximately as many New Zealand residents
went overseas, as left East Germany after the falling of the Berlin
wall. I do not have the figures handy here, but there's got to be
something like 300,000 kiwis in Australia by now.
I just came across an old paper written by a now deceased comrade of
mine, the trade unionist and socialist Geoff Pearce, in 1996 called
"Rodgering the economy: the downside of the New Zealand model", which
was a critique of consultant capitalism. Consultancy was a really
lucrative business in New Zealand in the later 1980s, because the
government didn't actually have the in-house expertise to sell off
public assets etc. For example, they would want to sell off half a
million hectares of state forest, but nobody could say what the forest
was worth. That is what you had consultants for.
To cut a long story short, Pearce examines what happened to the New
Zealand economy. Well, in 1992/1993, economic growth shot up to almost
8 percent, and the economists were saying "hurrah" and there was a lot
of euforia. But by December 1995 it was about 2 percent,
conventionally measured, and after that there was no real growth
anymore; currently, there's just very weak economic growth.
The OECD actually claimed that the average annual increase in
productivity, using conventional measures, went from 0.9 percent in
1975/1984 to 0.5 percent in 1991/1996. The consultants claimed that
liberalisation had produced over 200,000 new jobs, but, between 1991
and 1996 over 165,000 jobs were lost. Sure, there was a slight net
gain in jobs, but it was more like people were forced to get other
jobs than they had before, and the new jobs were often part-time and
casual labour, mainly in the service sector. Have a look also at
population growth. Restrictions on minimum and maximum working hours
largely disappeared (the trade unions were smashed and dwindled to a
small number of members).
According to the Minister of Statistics, a person working for one hour
or more per week would be considered to be employed. Following that
sort of logic, I could make up some really good figures too. Nowadays
New Zealand has one of the highest rates of involuntary parttime
employment in the OECD (measured by the number of parttime workers who
would prefer a fulltime job). The number of employed as a percentage
of the population of working age has not yet recovered to the 1987
level as far as I know.
Other stunning achievements: between 1991 (when the Employment
Contracts Act was passed) and December 1995, wages increased 5.4
percent and consumer prices rose 12.1 percent. Thus, while there was
something like an aggregate economic growth of about 19 percent or so
over that period, real wages actually fell. An employers survey showed
over two-fifths of them had reduced overtime rates (extra pay for
extra hours worked) and another two-fifths had frozen them for five
years (they would not increase with increases in base pay). Again,
about two-fifths of employers had cut penal rates (about 44 percent
froze them altogether) for anti-social working hours and a third said
they used more parttime and casual workers. In 1996, the minimum wage
was about 4 US dollars and for youths under 20 there is no minimum
wage for paid work (it sounds sexy except if you have to work for
Macdonalds, as a cleaner or stuff like that). A new practice developed
where employers would hire staff as "agents" rather than employees, so
they could pay them less than the minimum wage.
There are now more millionaires in New Zealand probably than anywhere
else in the world, measured proportionally, per head of population.
How did that happen ? Well a massive transfer of income occurred.
Between may 1991 and December 1995, the wages component of the the
national income fell by over 2 percent and the investors share rose
over by 3 percent. It does not seem like much, but in 1996 NZ dollars
that meant something like cutting 2 billion dollars from workers
incomes and adding 2.7 billion to investors incomes every year.
The Christians came to the conclusion that something like one in five
New Zealanders and three out of ten New Zealand children were living
in poverty. In its wisdom, though, the Statistics Department had
actually axed the production of its Real Disposable Income Index,
which showed the trend in real take-home pay by quintiles. Instead
they made a Labour Cost Index which reflects to total cost of hiring
labour to employers. In 1996, two-thirds of all New Zealanders live in
families with a a total gross income of under 20,000 US dollars per
year.
The consultants praised the Government for cutting taxes. But hold on
a minute ! State services previously provided free are now charged on
the "user pays" principle. A sum roughly equal to the cost of the
total tax cuts was also cut from welfare benefits and pensions in
1991. Only about a third of the tax cuts benefited low income earners,
two-thirds went to the top third of income earners. The retirement age
was raised from 60 to65 years and if you are poor and don't save for
your own retirement then by the time you are at retirement age you
might well consider doing yourself in.
A Price Waterhouse consultant actually mooted the idea of raising the
retirement age to above 70 years (life expectancy for NZ males is 72
years). I assume that his idea must be that we should all go whoring
when we run out of cash. It's not a case of "your money or your life",
but a case of "your money and your life".
The NZ Government proudly claimed, with new accounting techniques,
that it had wiped out its debts by selling off the family silver. But
actually the private sector borrowed more offshore than the state paid
back to its creditors. In fact, between 1966 and 1996 total
indebtedness rose from NZ 1 billion dollars to NZ 70 billion dollars.
The British magazine The Economist commented wrily: "New Zealand has
the world's best fiscal and montary policies... while at the same time
remaining as the developed world's most indebted country".
The state owned enterprises that were sold off are now under direct
control of overseas companies, half the shares traded on the stock
exchange are now owned by foreign companies, the central business
districts are owned by foreign companies, the tourist resorts, the
farms and the forests. At the same time, since 1991, NZ companies
invest more offshore, than offshore companies invest in New Zealand.
Effectively, the NZ government is reduced to a kind of local authority
debating about civil morality.
What the Reserve Bank governor likes to do, is to keep interest rates
well above the rate of inflation, like, for example 8 percent or 10
percent. There is legislation to stop inflation from being more than
2-3 percent or so. In New Zealand, about two thirds of the people live
in owner-occupied houses, and this "tight monetary policy" is
something you feel when you pay your mortgage. This is what "market
discipline" is about: we depress the economy, so that people may
become strong and self-reliant. Except that if you look at the social
data it isn't really happening much. Beyond a bit of flying around on
hot air and whoring, working folks are rather stuck really, their
options are more limited than they were before. A lot of them just
dream of getting rich and play the lottery.
A farmers' leader pointed out in 1996 that a sharp 26 percent rise of
the NZ dollar against the US dollar cost the New Zealand dairy
industry a billion dollars in two years, causing some farmers to walk
off the land. The sheep flock that New Zealand was once famous for,
declined by over one third between 1984 and 1996. Family farming is on
the way out - something like forty percent of NZ farms are now less
than 20 hectares, that is to say, they are just hobby farms for the
propertied classes.
Now, dear reader, you might ask me, why tell me all of this stuff now,
isn't this old news ? The reason I am writing it up again, is because
Bremer wants to do, what the Labour Government tried to do in New
Zealand WITHOUT any military intervention whatsoever, and very little
effective political resistance. The New Zealanders thought
pragmatically, "well give them a go, see what happens" and if they did
not like it, they left the country, if they could. If, in New Zealand,
the policies which Bremer recommends for Iraq have demonstrably failed
to be successful, except for making the richer richer and the poor
poorer, plus make everybody work harder and longer all round, how can
you believe that those policies would work in Iraq ? What Bremer talks
about is just a total fraud, a rich kid's indulgence, and I sincerely
hope that Iraqis will wake up to it, and throw this tyrant out of
their country. In my opinion, even if Saddam Hussein did some very
nasty things and carried on a senseless, horrific war against Iran
(aided by Western arms), his regime's domestic record is actually
rather favourable compared to the deaths and misery resulting from the
UN sponsored sanctions and the current American occupation. I am aware
that Tony Blair is relieved that Sadam Hussein is gone "because he
killed people" (he ought to learn some maths !) but the quality of
life that Iraqis can look forward to now, if they stay alive, is as
grim as Blair's poorest constituents. Of course, the Americans deny
being able to add up dead people in Iraq. Mathematics is something you
do at Harfart.
Some people like to ridicule me for being a utopian socialist, but the
question I would like to ask is, "who are the real utopians anyway ?".
Jurriaan
