New Zealand and the Tragedy of Neoliberalism

New Zealand – In a Land of Plenty

Directed by Alister Barry (2002)

Film Review

This documentary provides a blow by blow account of the advent of “neoliberalism” [1] to New Zealand in the 1980s and 1990s. The feature films of British filmmaker Ken Loach document the tragic consequences of Margaret Thatcher’s brand of neoliberalism (Thacherism). I have yet to find similar films tracking the brutal effect of American neoliberalism (under Reagan, Bush senior and Clinton).

In 1984, the assent of Labour Prime Minister David Lange (and Finance Minister Roger Douglas [2]  to power resulted in a sudden shift from New Zealand’s 40-year commitment to full employment to a regime in which jobs and living wages were deliberated sacrificed to a brutal campaign to quash inflation.[3]

The film traces the stepwise process by which Douglas collaborated with the Reserve Bank of New Zealand to increase unemployment by massively increasing interest rates. With no access to credit, businesses quickly began shutting down and laying off workers \.

This move was followed by cutting public sector employment (in the government owned railroad, state energy companies and post office) and the elimination of farm support by way of price stabilization and crop subsidies. Squeezed between prohibitive loan rates and loss of government support, thousands of families lost their farms and livelihood. Unemployment skyrocketed as cheese factories and freezing works depending on the agricultural sector shut down.

At the end of 1984, the Lange government also ended protective trade barriers that protected New Zealand manufacturers, immediately flooding the domestic market with cheap imports from China. The move effectively killed New Zealand’s home grown manufacturing sector (mainly auto, shoe, garment and home appliance production).

During its two terms in government, Labour persisted with these draconian reforms despite massive public protest and open rebellion by rand and file Labour Party members. During the 1990 election, Labour voters stayed home, and the conservative National government took over the neoliberal agenda.

by the mid-90s, more than half of New Zealand’s unemployed (many of whom were over 55) had been out of work more than six months. The National government responded to the chronic unemployment crisis by slashing unemployment and welfare benefits. Despite a big increase in free food distribution at schools, foodbanks and other charities, resulting malnutrition levels resulted in an epidemic (which persists to the present day) of rheumatic fever, meningitis, asthma and other illnesses of poverty.

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[1] Neoliberalism is a model of extreme free market capitalism that favors greatly reduced government spending, deregulation, globalization, free trade, and privatization.

[2] It’s unclear how Roger Douglas, a right wing conservative, became Finance Minister under a Labour Government. He later helped form the pro-corporate ACT Party and served as an ACT list MP between 2008 and 2001.

[3] Inflation hurts bankers far more than it hurts workers, especially those relying on credit cards to pay for basic survival needs. In reducing the value of money, it simultaneously reduces the value of debts owned to banks. See Who Does Inflation Hurt Most

 

 

 

The Rise and Fall of Britain’s Working Class

The People: The Rise and Fall of the Working Class 1910-2010

By Selina Todd

John Murray Publishers (2015)

Book Review

The People is about the rise of the British working class during World War I and its systematic erosion during the seventies as the Thatcher government systematically dismantled Britain’s manufacturing base.

British workers first began to see themselves as a cohesive force during 1914-18 as hundreds of thousands left domestic service (where most were employed) for the war industry. Working class consciousness reached its zenith during World War II, in part due to discriminatory treatment by the Churchill government. Working class women were often forced to leave well-paying jobs to be conscripted into the munitions industry. In contrast, middle and upper class women were exempted from conscription because they did “voluntary” work. Middle and upper class families also found it easier to be exempted from the mandatory evacuation scheme. The latter required rural families were required to accept child evacuees from urban centers without compensation.

The Churchill government provided virtually no funding for the mandatory evacuation scheme (which was organized mainly by schools and charitable groups), nor for benefits for families who lost housing, jobs and breadwinners due to German bombing, nor for proper air raid shelters. Government provided shelters were so wet and filthy, Londoners spontaneously seized and occupied the subway system, and there was nothing the government could do to stop them.

According to Todd, the austerity cuts that have turned Britain into a low wage economy actually started in 1976 (three years before Thatcher was elected prime minister) with public spending cuts imposed on the UK as a condition of an IMF loan. For the most part, this “free market” attitude continued under Blair and New Labour.

In her Afterward, Todd sees evidence of a growing popular discontent over inequality in the rise of UKIP (the United Kingdom Independence Party) and the Scottish independence referendum. The latter, she maintains, was actually more about inequality. More recently, this discontent has manifested in the election of left wing Jeremy Corbyn to run the Labour Party and the successful Brexit referendum.

The Billionaires Who Helped Destroy Democracy

The Mayfair Set: Four Stories About the Rise of Business and the Decline of Political Power

Directed by Adam Curtis (1999)

Film Review

The Mayfair Set is a four part documentary series profiling the right wing financiers responsible for the financialization of the British-American economy in the seventies and eighties. It also explores the simultaneous transfer of real power away from elected representatives to banks and financial markets. “Mayfair Set” refers to a private London gambling club – the Clermont Club – where many of these future billionaires were members.

Part 1 – concerns British aristocrat Colonel David Sterling, founder of the British SAS (Special Air Service). In the sixties and seventies, Sterling created a series of private mercenary armies to fight independence movements in Africa and elsewhere. In addition to secretly fighting Egypt’s invasion of Yemen in 1962, he also set up numerous arms deals for Saudi Arabia,* with the assistance of notorious Saudi arms dealer, Adnan Khashoggi.** He also created the Saudi air force.

Part 2 – concerns two right wing Clermont Club members John Slater and Tiny Rollin. Slater was a corporate raider who almost singlehandedly wiped out Britain’s manufacturing sector in the seventies and eighties. He did so by targeting specific companies for hostile takeover, stripping their assets, sacking thousands of workers, and investing the proceeds in the share market. Rollin was responsible for bilking newly independent African nations of their mines, factories and plantations.

Part 3 – concerns Slater’s fellow corporate raider, Michael Goldsmith, who emigrated to the US in 1980 and paired up with junk bond guru Michael Milken to destroy America’s manufacturing base by initiating dozens of hostile takeovers of US companies. In 1990 Milken was sentenced to 3 ½ years prison on 94 counts of fraud, racketeering and insider trading.

Part 4 – concerns the rise to power of Clermont Club darling Margaret Thatcher and her (controversial) embrace of Egyptian businessman Mohamed Al-Fayed. Al-Fayed saved her government when currency speculator George Soros led a vicious attack on the British pound in 1992. Al-Fayed would subsequently blow the whistle to the Guardian on all the British MPs who accepted bribes from him. Al-Fayed was father to Dodi, the boyfriend killed in the car crash with Princess Diana.

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*British arms sales to Saudi Arabia, which continue to the present day, have become extremely controversial owing to the Saudis’ carpet bombing of Yemen and the resulting humanitarian crisis.  See Shelve UK arms sales to Saudis over Yemen, say two MPs’ committees

**Khashoggi first came to public attention for his role in the Iran-Contra scandal, in which George Herbert Walker Bush and other members of the Reagan administration illegally sold weapons to Iran to finance their illegal war against Nicaragua’s Sandinista government. Khashoggi also had direct links with the alleged 9-11 terrorists (see Spike the News) and was the uncle of Dodi Al Fayed, the boyfriend killed in the car crash with Princess Diana.