issue 188 - October 1988
Exporting greed to the world
Thatcherism has become one of Britain's biggest exports.
And in both Aotearoa (NZ) and Australia, the economic policies
associated with it have been pushed through by Labor governments.
These days I avoid walking along the main streets of Auckland and Wellington, Aotearoa's largest cities, because they have become unpleasant places. In recent years they have been in a constant state of demolition and rebuilding. Not so long ago they were staid and stolid cities consisting of buildings dating back to the late nineteenth or early twentieth century. Now they are dominated by flashy mirror-glass towers which all look much the same, yet which compete with each other for effect.
This parallels the transformation which has taken place in our way of life. Until the beginning of this decade, our lifestyle resembled our buildings. We were a staid and stolid people, not particularly competitive, ambitious or acquisitive.
The 1980s have changed all that. Since its election in 1984, the Lange Labour Government has inflicted on the country what could roughly be described as a speeded-up Thatcherism. There has been a rapid deregulation of finance and the economy. Public assets are being sold. And the structures of the State are being dismantled.
The Government's financial policies - popularly known as Rogernomics after Finance Minister Roger Douglas - have been especially damaging. One of its first reforms was to abolish exchange controls, so that money moves freely in and out of the economy. Interest rates have been kept high in the belief that this controls inflation. Billions of dollars have poured into the economy as a result, most of them used for speculative not productive purposes.
In effect debt has been recycled through the local economy, with everyone taking a cut along the way. This was the source of quick speculative profits which created an impression of wealth and prosperity. It was an illusion. In reality finance had ceased to serve industry and had begun to cannibalize it instead.
Hundreds of thousands of small investors were attracted to the sharemarket, indulging their venal instincts in a squalid scramble for capital gain. Consumed with avarice, they seemed to lose all common sense. And the media and much of the public became obsessed with newly rich entrepreneurs and their opulent lifestyles, with their mansions, helicopters and executive jets.
In 1987 the bubble burst, as it had to, with the October sharemarket crash hitting Aotearoa harder than other countries. Around 60 per cent was wiped off the value of local companies and a number have since collapsed. Despite this, there has been a permanent change to the values and attitudes that prevail in this country. Money is the topic that dominates public affairs. Public attitudes are increasingly competitive and amoral. The adulation of the rich is matched by complete indifference to the poverty and hardship that has appeared in rural areas.
One consequence of the Government's policy of deregulation was that the business community of Aotearoa became literally lawless. In the conditions of pandemonium of 1986 it turned out that we lacked the laws and regulations necessary to enforce minimum standards of business honesty. It was as though local businesspeople couldn't cope with their new-found freedom and succumbed to the temptations of an environment in which anything goes.
In the most extreme cases, on the futures and contributory mortgage markets, actual confidence tricksters have been at work and have got away with millions. In the less extreme cases, it hasn't been so much a matter of overt criminality - after all, hardly anything is against the law - as of the complete collapse of ethical standards.
One of the great scandals of the share-market in 1986 was the prevalence of insider trading - the use of confidential information for private gain. In other countries this practice is regarded as a fraud on the investing public: people who indulge in it are prosecuted criminally and banned from the marketplace, as Ivan Boesky was in the US. In Aotearoa insider trading is perfectly legal. It is publicly defended by businesspeople, academics and journalists, and the practice is rife.
In addition, the sharemarket crash brought to light unethical practices within some of the leading companies of the land. Some of them have been investigated by the authorities - but no action has been taken. This is what you would expect in a country whose business community is a law unto itself and whose affairs have been a tale of avarice and incompetence.
WHILE it has not occupied the centre of the Australian political stage, the New Right has been remarkably effective in writing the script. Indeed it is hard to think of a major issue on which it is not making the running.
This is hardly surprising given the degree to which the Hawke Government's economic policies are influenced by New Right ideas. 'Economic rationalism' - the demand for deregulation, small government, monetary restraint - dominates all areas of public discussion and political decision making. It is the accepted wisdom in university economics faculties, government departments and newspaper editorials.
Under the direction of Treasurer Paul Keating, the Government has deregulated the financial market and is progressively diminishing tariff protection for Australian industry. It is proud of the fact that federal government expenditure has fallen from around 30 per cent to 26 per cent of Gross Domestic Product. This percentage is already well below the Western average; on present tendencies it will soon be lower than that of such well-known low spenders as Japan and the US.
What was long advocated by the 'Dries' on the conservative side of politics, and was part of the rhetoric of the previous Liberal-National government of Malcolm Fraser, has been put into practice with a vengeance by the Labor Party. It has reduced government expenditure more effectively than either Margaret Thatcher or Ronald Reagan. And there is now a strong push to move even deeper into Thatcher territory by 'privatizing' major public assets such as Qantas and Australian Airlines.
While business profits soar, Government policy remains one of restraint - there has been an eight-per-cent cut in average real wages - and lower taxes on high-income earners. In addition it has moved away from a universal system of welfare to a selective system: welfare is no longer a right of citizenship but a sign of failure. There has been a dramatic increase in social inequalities, especially between the very rich and everyone else. Multi-millionaire entrepreneurs such as Alan Bond and Kerry Packer, who have massively increased their wealth in the climate of deregulation, flaunt their connections with Hawke and other leading Labor politicians.
These policies have produced widespread disenchantment and cynicism amongst rank-and-file Labor Party members. The only significant challenge to the New Right's economic agenda has come from the Left of the trade union movement. Their programme Australia Reconstructed, which recommends a strongly interventionist role for government in the economy, certainly has its critics (on the Left as well as the Right). But it has provided the beginnings of a strategy with which to counter the New Right offensive - a strategy which the Left has lacked for at least a decade.