Bolger and Neoliberalism

If Jim Bolger now opposes Ruthanasia, why did he preside over its implementation?

I quite understand Jim Bolger’s rejection of neo-liberalism. Bolger is an active Catholic (as is Bill English); neoliberal ideology is a long way from Catholic social teaching.

Ironically, there was a Papal Encyclical, Centesimus Annus, in 1991 as Bolger presided over the neoliberal policies for which he and Ruth Richardson are remembered. It was reaffirming the teaching in Rerum Novarum published one hundred years earlier with an approach not unlike that of Social Democracy. Another forewarning was that the New Zealand Catholic Bishops had earlier posted a pastoral letter in which they rejected the principles of the Employment Contracts Act.

 How is Bolger to reconcile his 1991 position with the opposite one he took in his recent interview with Guyon Espiner? Saying he has moved to the left is not helpful. (One right-wing commentator described him as now being to the left of Helen Clark.) He was an active churchgoer while prime minister and had campaigned in the 1990 election on a gospel of reconciliation following Rogernomics.

There are hints in the interview. One is a nonsense. Within hours of coming to office he learned that the Bank of New Zealand needed a large capital injection. True. But it could have been accommodated without burning the entire house down. It was used as a repeat of the currency crisis which seduced the 1984 Lange-Douglas government to panic into particular (neoliberal) policies.

Bolger admitted that he appointed Richardson as Minister of Finance because he was beholden to some party interests – ones which certainly did not respect Catholic social teaching. There was a widely held Wellington view that she out-manoeuvred him over the pre-Christmas 1990 Economic and Social Initiative which set off the first rocks of the avalanche. As I recall, he was out of the country when the statement was being settled, and came home to find a raft of decisions had been made which he could not reverse.

So he spent much time in his first term bridling in the neoliberals, sidelining Richardson and then sacking her after the 1993 election and sacking Simon Upton from the health portfolio when it became too clear it was on a disastrous course. His Mr Fixit was holiday mate and Catholic, Bill Birch who, however, continues to defend the Employments Contract Act (which we are certain was imposed on the government by some of its neoliberal and business ‘friends’).

Bolger is correct that the budget projections indicated a yawning fiscal deficit and that something had to be done. It does not follow that the measures taken were appropriate – certainly not in terms of the reconciliation message of the election campaign. Whatever you may think of the social impact of the measures, Bolger takes some pride in having fixed the unsustainable deficit (and adding to the flexibility in the labour market), albeit at the cost of withdrawing social protection from a lot of people in need of it.

He may well have expected his neo-liberal measures to work in the way his advisers promised. They did not. Hence his carefully crafted ‘neoliberalism has failed’, and the honest admission that he had learned from his mistakes.

But who told him the policies would work? There are not many today who would put up their hand and say ‘this was my advice’; failure is an orphan. When they do, they defend their failures with ‘alternative facts’. For instance, the ECA did not increase productivity. (It increased profitability, which is not the same thing.)

The health redisorganisation lacks any family support. At the point at which the new structure was put in place one minister, Paul East, said there would not be the promised productivity gains the measures were predicated on. A couple of years later, after considerable backtracking, the new Minster of Health, Bill English, announced that the health system was back on the track it would have been without the shambles of the ‘Americanisation’ of the  early 1990s. Sadly many people suffered unnecessary poor health and even death in the interim.

Anybody who had the least knowledge of how health systems function knew that the redisorganisation would not work. Not only were their concerns ignored, but they were completely shut out from advising the government. There were very eminent health economists from overseas visiting the country at the time and they were not consulted either. You were involved if you knew nothing about health systems; I recall seeing papers by the inexpert advisers which would have struggled to get a pass in a second-year health economics course.

The problem was more general. Bolger seems to have had only neo-liberal advisers without any leavening of sceptics. Surrounded by the true believers, Bolger became one, while gullible journalists passed the beliefs onto the public.

Crucially the sceptics proved to be right; hence Bolger’s current grumpiness about his policies. What had happened is that during the earlier Rogernomic period there had been a rooting out from the advice system of anyone who was sceptical, justified by their not being true believers and hence incompetent. Historical reflection tells another story. The incompetents were the neoliberals.

There is a well-established research finding of ³group polarisation²: when like-minded people get together, and speak and listen only to one another, they usually end up thinking a more extreme version of what they thought before they started to talk.

This was quarter of a century ago, but while we are less ideological today I see a similar pattern. Given a choice between a team player and a competent sceptic the system goes for the former, pretending that team players are the experts and the outsiders cannot be relied upon. Not only do the appointed incompetents bring the average down, but they have not the judgement to identify competence and so the appointments they make lower quality standards further.

Twenty-five years after Ruthanasia, its prime minister has vigorously expressed his doubts over the policies which were implemented then. Given our reluctance to go for competence, we should not be surprised if the pattern is repeated in another quarter of a century.