Everything about Rogernomics totally explained
The term
Rogernomics, a
portmanteau of "Roger" and "economics", was created by analogy with
Reaganomics to describe the
economic policies followed by
New Zealand Finance Minister Roger Douglas from his appointment in
1984. The policies included cutting agricultural
subsidies and
trade barriers,
privatising public assets and the control of
inflation through measures rooted in
monetarism, and were regarded in some quarters of Douglas's
New Zealand Labour Party as a betrayal of traditional Labour ideals. The Labour Party subsequently retreated from pure Rogernomics, which became a core doctrine of
ACT.
Background
During the
1970s and early
1980s, New Zealand was faced with a series of economic problems brought on by changes in the global economy, many of which directly affected the country, such as
Britain’s entry in to the
European Economic Community in
1973. New Zealand was rating badly for living standards and economic performance compared to
OECD averages: in
1980 it had slipped from being in the top five OECD countries to 19th Roger Douglas, who would later become finance minister, went so far as to say that the country stood “on the brink of economic ruin”. In
1983, Douglas became responsible for Labour Party economic policy. Throughout the year he attempted to create an economic policy for the next government. Although his ideas were unorthodox for a Labour Party MP, Douglas wasn't at this time a free market ideologue, but someone looking for practical solutions to the problems of the economy. He was greatly influenced by
Doug Andrew from the Treasury, who had spent time working with the
World Bank, when he became a strong supporter of free market economics. In June 1983, Andrew became the Treasury liaison with Labour and participated in the party’s debates. He arranged for Douglas to meet non-government economists to draft an economic policy, the result of which was the Economic Policy Package put together by Andrew, Douglas and economist
Geoff Swier, and was accepted by the caucus Economic Committee. The package faced opposition when presented to the Labour Party Policy Council: an alternative policy was written by
Public Service Association economist
Peter Harris and others. Neither policy had enough support to be accepted, but Douglas had the advantage that caucus had the power to send any policy it didn't agree with back to the policy council. Because of this the alternative policy had no chance of being accepted, and the Economic Policy Package became the basis of Labour Party policy.
The reforms
After the
snap election of 1984, Douglas hastily began to reform the New Zealand economy, under the government’s slogan of "We will do the right thing". The speed of the reforms can partially be attributed to the ‘currency crisis’ that resulted from
Robert Muldoon’s refusal to devalue the dollar after being advised to do so by the incoming government. Labour had planned to devalue the dollar but hadn't announced devaluation as part of its election policy - Douglas later stated that doing so "...would wreak havoc in the foreign exchange market and invite a run on the New Zealand dollar". Political commentator
Bruce Jesson argued that Douglas acted fast to achieve a complete economic revolution within one parliamentary term, in case he didn't get a second chance. The reforms can be summarized as the dismantling of the Australasian model of state development that had existed for the previous 90 years, and its replacement by the Anglo-American neoliberal orthodoxy based on the monetarist policies of
Milton Friedman and the
Chicago School.
Immediate results
New Zealand became part of a
global economy. With no restrictions on overseas money coming into the country the focus in the economy shifted from the productive sector to finance. Finance capital outstripped industrial capital There was a structural change in the economy from industry to services, which, along with the arrival of trans-Tasman retail chains and an increasingly cosmopolitan hospitality industry, led to a new ‘café culture’ enjoyed by more affluent New Zealanders. Some argue that for the rest of the population, Rogernomics failed to deliver the higher standard of living promised by its advocates.
After Rogernomics
The policies of
Ruth Richardson, sometimes called "
Ruthanasia", are often seen as a continuation of Rogernomics. Richardson was Finance Minister in the
National Party government from
1990 to
1993.
Douglas claimed in contemporary interviews that Rogernomics couldn't be confused with Reaganomics in that he was strictly controlling the New Zealand fiscal deficit while the Reagan administration permitted that of the USA to expand dramatically. However, Douglas didn't have a hostile Congress to contend with. Having made this point, Douglas generally escaped having to answer the more difficult question of how Rogernomics could be distinguished from
Thatcherism.
A major criticism of Rogernomics is that the reforms were undertaken without a detailed philosophical basis so it could be argued that the reforms were not fully completed.
Further Information
Get more info on 'Rogernomics'.
|
External Link Exchanges
Do you know how hard it is to get a link from a large encyclopaedia? Well we're different and will prove it. To get a link from us just add the following HTML to your site on a relevant page:
<a href="http://rogernomics.totallyexplained.com">Rogernomics Totally Explained</a>
Then simply click through this link from your web page. Our crawlers will verify your link, extract the title of your web page and instantly add a link back to it. If you like you can remove the words Totally Explained and embed the link in article text.
As long as your link remains in place, we'll keep our link to you right here. Please play fair - our crawlers are watching. Your site must be closely related to this one's topic. Any kind of spamming, dubious practises or removing the link will result in your link from us being dropped and, potentially, your whole site being banned. |
