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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. Reaganomics (a portmanteau of "Reagan" and "economics" refers to the Economic policies promoted by United States President Ronald The term microeconomic reform (or often just economic reform) refers to policies directed to achieve improvements in Economic efficiency, either by removing distortions New Zealand is an Island country in the south-western Pacific Ocean comprising two main landmasses (the North Island and the South Island The Minister of Finance is a senior figure within the Government of New Zealand. Sir Roger Owen Douglas (born 5 December 1937) a New Zealand politician formerly served as a senior Cabinet minister Year 1984 ( MCMLXXXIV) was a Leap year starting on Sunday (link displays the 1984 Gregorian calendar) 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. In Economics, a subsidy (also known as a subvention is a form of financial assistance paid to a business or economic sector A trade barrier is a general term that describes any government policy or regulation that restricts International trade. Privatization is the incidence or process of transferring ownership of business from the Public sector (government to the Private sector (business In economics inflation or price inflation is a rise in the general level of prices of goods and services over a period of time Monetarism is a school of economic thought concerning the determination of national income and monetary Economics. The New Zealand Labour Party is a New Zealand political party The Labour Party subsequently retreated from pure Rogernomics, which became a core doctrine of ACT. The New Zealand political party ACT New Zealand (commonly known as "Act" and pronounced to rhyme with "fact" though internal image-makers push the phrase

Contents

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. This article is about the Decade 1970-1979 For the Year 1970 see 1970. The 1980s was the decade spanning from January 1 1980 to December 31 1989. The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom, the UK or Britain,is a Sovereign state located The European Community (EC is one of the Three pillars of the European Union (EU created under the Maastricht Treaty (1992 Year 1973 ( MCMLXXIII) was a Common year starting on Monday (link will display full calendar of the 1973 Gregorian calendar. 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[1] Roger Douglas, who would later become finance minister, went so far as to say that the country stood “on the brink of economic ruin”[2]. Year 1980 ( MCMLXXX) was a Leap year starting on Tuesday (link displays the 1980 Gregorian calendar) In 1983, Douglas became responsible for Labour Party economic policy. Year 1983 ( MCMLXXXIII) was a Common year starting on Saturday (link displays the 1983 Gregorian calendar) 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 was not 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. The World Bank is an internationally supported Bank that provides financial and technical assistance to developing countries for development programs (e 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. Geoff Swier studied economics at the University of Auckland, New Zealand 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. The New Zealand Public Service Association ( PSA) is a Trade union representing over 55000 members who work in the public sector and State Sector in New Zealand Neither policy had enough support to be accepted, but Douglas had the advantage that caucus had the power to send any policy it did not 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. [3]

The reforms

Main article: Fourth Labour Government of New Zealand

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 Fourth Labour Government of New Zealand was the government of New Zealand from 26 July 1984 to 2 November 1990 The 1984 New Zealand general election was a nationwide vote to determine the shape of the 41st New Zealand Parliament. 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. Sir Robert David ("Rob" Muldoon, GCMG, CH ( 25 September 1921 &ndash 5 August 1992) served as Prime Minister Labour had planned to devalue the dollar but had not 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"[3] The business community became aware of the government's plan and speculated against the dollar, converting New Zealand funds and credits to foreign currency, and then back to a larger quantity of New Zealand dollars. [3]

The reformers argued that the speed with which the reforms were made was due to the fact that New Zealand had not adjusted to Britain’s abandonment of the empire, and had to move quickly to ‘catch up’ with the rest of the world[1]. Douglas claimed in his 1993 book Unfinished Business that speed was a key strategy for achieving radical economic change: "Define your objectives clearly, and move towards them in quantum leaps, otherwise the interest groups will have time to mobilise and drag you down"[4]. Year 1993 ( MCMXCIII) was a Common year starting on Friday (link will display full 1993 Gregorian calendar) Political commentator Bruce Jesson argued that Douglas acted fast to achieve a complete economic revolution within one parliamentary term, in case he did not get a second chance. Bruce Jesson (1944 - 1999 was a left wing Journalist, author and political figure in New Zealand. [5] 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. Milton Friedman (July 31 1912 November 16 2006 was an American Nobel Laureate Economist and Public intellectual. [1] The financial market was deregulated and controls on foreign exchange removed. Subsidies to many industries, notably agriculture, were removed or significantly reduced, as was tariff protection. The marginal tax rate was halved over a number of years from 66% to 33%; this was paid for by the introduction of a tax on goods and services (GST) initially at 10%, later 12. 5%, and a surtax on superannuation, which had been made universal from age 60 by the previous government. [6]

Immediate results

New Zealand became part of a global economy. The rising Technology has allowed our environment to be characterized as a global one With no restrictions on overseas money coming into the country the focus in the economy shifted from the productive sector to finance. [7] Finance capital outstripped industrial capital[1] and redundancies occurred in manufacturing industry; approximately 76,000 manufacturing jobs were lost between 1987 and 1992[4]. Year 1987 ( MCMLXXXVII) was a Common year starting on Thursday (link displays 1987 Gregorian calendar) Year 1992 ( MCMXCII) was a Leap year starting on Wednesday (link will display full 1992 Gregorian calendar) During wage bargaining in 1986 and 1987, employers started to bargain harder. Year 1986 ( MCMLXXXVI) was a Common year starting on Wednesday (link displays 1986 Gregorian calendar) Year 1987 ( MCMLXXXVII) was a Common year starting on Thursday (link displays 1987 Gregorian calendar) Lock-outs were not uncommon; the most spectacular occurred at a pulp and paper mill owned by Fletcher Challenge and forced changes to work practices and a no-strike commitment from the union. A lockout is a Work stoppage in which an Employer prevents employees from working Fletcher Challenge is a now defunct Multinational corporation from New Zealand formed in 1981 by the merger of Fletcher Holdings, Challenge Corporation Later settlements forced more concessions from unions, including below-inflation wage increases, a cut in real wages. [8] 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. [1]

After Rogernomics

The policies of Ruth Richardson, sometimes called "Ruthanasia", are often seen as a continuation of Rogernomics. Ruth Richardson (born December 13 1950) served as New Zealand 's Minister of Finance from 1990 to 1993 and is known for her strong pursuit Ruthanasia, a Portmanteau of Ruth and Euthanasia, is the pejorative name (typically used by opponents given to the period of free-market Richardson was Finance Minister in the National Party government from 1990 to 1993. The New Zealand National Party ("National" or "the Nats" currently forms the second-largest (in terms of parliamentary seats Political party Year 1990 ( MCMXC) was a Common year starting on Monday (link displays the 1990 Gregorian calendar) Year 1993 ( MCMXCIII) was a Common year starting on Friday (link will display full 1993 Gregorian calendar)

Douglas claimed in contemporary interviews that Rogernomics could not 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 did not 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. Thatcherism is the system of political thought attributed to the governments of Margaret Thatcher, British Prime Minister from 1979 to 1990

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 reading

Notes

  1. ^ a b c d e Philippa Mein Smith, A Concise History of New Zealand, Cambridge University Press, Melbourne: 2005, pp. 201-216.
  2. ^ Roger Douglas, There's Got to Be a Better Way, Fourth Estate Books Limited, Wellington: 1980, p. 9.
  3. ^ a b c Bruce Jesson, Fragments of Labour Penguin Books, Auckland: 1989, pp. 58-63.
  4. ^ a b Judith Bell, I See Red, Awa Press, Wellington: 2006, pp. 22-56.
  5. ^ Bruce Jesson, "The New Rights Network of Power" in To Build a Nation: Collected Writings 1975-1999, edited Andrew Sharp, Penguin Press: 2005, p. 190.
  6. ^ Michael King, The Penguin History of New Zealand, Penguin Books (NZ), Auckland: 2003, p. 490.
  7. ^ Bruce Jesson, "The Changing Face of New Zealand Capitalism" in To Build a Nation ibid. , pp. 177-178.
  8. ^ Colin James, The Quiet Revolution, Allen & Unwin New Zealand Ltd in association with Port Nicholson Press, Wellington: 1986, p. 166.


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