Shortly after I started as a bus driver at Go Wellington as a Bus Driver I recall overhearing drivers talking about the company changing shifts to reduce drivers’ overtime pay. One driver, a former bank teller believed the problem was the union leadership. In his view what the Tramways Union needed was “a smartly dressed lawyer in a suit and with a good haircut to come and sort everything out.” Instead of this, the drivers ended up with me as their union president, no suits but I did eventually get a haircut. More importantly, what drivers got was a democratic union where drivers stood together and improved their pay and conditions.
The Great man of history theory is nothing new and has been quite seriously rebuffed by historians for many years. In Leo Tolstoy‘s War and Peace he firmly rejected the “great man” (and when he wrote this in the 1860s, it was men who were being written about), a theory claiming that in fact, they are only “history’s slaves.”
Yet, much of history is still written about and from the perspective of our leaders. In politics, it is a truism that leadership is of paramount importance, yet few can really define what ‘leadership’ really is. The common features tend to be personal strength, decision-making powers, bringing together and managing a team, the ability to communicate, and in effect being the human embodiment of a political ideal or movement. More cynically, money, good looks, fame, and various superficial qualities also help.
It is certainly true that the performance of a party leader can decide an election result, and this is understandable as they are in a position of responsibility where they must exercise judgment. The risk though is that the personal qualities or weaknesses are given greater emphasis and boring detail like tax policy is reduced to who came up with the best slogan or soundbite.
This issue is not a new one. Whilst it is currently vogue to blame all the world’s ills on social media, the reduction of politics down to a popularity contest of leaders predates Twitter. It has probably always been a feature of politics and certainly something that has constantly been a feature of democracies. Leaders with deep voices for example have tended to perform better, as physiologically we find them more authoritative.
The problem is, once we understand that to be a successful leader it helps to have certain qualities and mannerisms, those with ambition quickly start to act the part. Building a personal brand based on characteristics common among successful leaders has become the tried and trued playbook of many ambitious upcoming politicians, business leaders, and others aiming for positions of power. Maybe this is just smart and anyone who is ambitious needs to learn these unwritten rules? But when many believe politics and civil society is in decline, should we not think more critically about leadership?
There can be very little doubt about the importance leadership has played in recent politics. My recent post about Rishi Sunak and the state of the British Conservative Party outlines, the challenges facing the UK Government today make it very difficult for the Tories to win the next election. Whilst Rishi Sunak certainly has some of the qualities of a successful leader, he is simply too constrained by the situation he faces to really lift support for the Conservative Party now, though this may change. Likewise in New Zealand, Jacinda Ardern’s meteoric rise to power in 2017 and global popularity shortly after, dissipated throughout 2022 as the current economic crisis hit.
To paraphrase Harold MacMillan, what shapes the course of political history is “events dear boy, events”. Having certain qualities can get one into leadership positions, but ultimately one’s time in power is judged by how one responds to events. And more often than not, leaders only have limited control of these or their own legacy.
Labour in the UK currently has a double-digit lead in polls ahead of the Conservatives. The Polls immediately after the Truss/Kwarteng mini budget gave Labour their biggest lead ever, with a lead of 33% over the Tories. This has since fallen back to a 20% lead, still making Labour the strong favourites were an election to be called today. For this reason, there will be no election in the next year if the Conservatives have anything to do with it. The next election must be held at the latest in January 2025, and in all likelihood will be sometime in mid-2024. Given how terribly the Government has performed, it is hard to see how they could make it back even if the economy begins to recover.
However, just as one should never underestimate the UK Conservative Party as an electoral force, one also should never underestimate the UK Labour Party’s ability to clutch defeat from the jaws of history. It is just under two years ago that Labour under the current leadership of Keir Starmer lost the Hartlepool byelection, a so-called red-wall seat previously held by Labour since 1964. Much has happened since then but given how quickly things change in the current political climate, who knows what will be happening in 2024.
After the last UK election, I wrote a series of posts assessing why the UK Labour Party Lost. Shortly after this, a leaked report showed that factionalism was so bad within Labour that members of the Party head office tried to sabotage the 2017 election for the party as their favoured faction was not in charge. At the time few could see Labour making it back to power in 2024, with many predicting that Boris Johnson would be Prime Minister for the coming decade.
Starmer was elected Leader of the party in April 2020 having run on a platform of trying to bring the factions together. Specifically, Starmer’s campaign would continue the popular policies from Labour’s 2017 manifesto would be the ‘basis of the Party’s ‘foundational document’ for policy under his leadership. This recognised the fact that whilst Corbyn and the Momentum faction supporting him had become quite unpopular, the social democratic platform Labour ran on in 2017 was popular, more so than the party in itself. Now, in 2022, Starmer has said this document is being put to one side and instead the party will be “starting from scratch” leaving many to ask, what will Labour’s next policy manifesto look like?
The backdrop of course is the coronavirus pandemic and the economic chaos it has caused, followed by the Russian invasion of Ukraine. Added to this is the economic ineptitude of the Truss and Kwateng mini-budget has meant the UK find itself in a very difficult economic situation. The challenge for Labour now, is that it needs to be seen both as credible economic managers who can repair the damage caused by the current government, yet also present a programme that addresses growing inequalities. In particular, it needs to address the fact that most people under 40 in the UK are now significantly worse off financially than their parents were at that age. The younger voters who supported Labour in the 2017 ‘youthquake’, who were disproportionately disadvantaged after the last decade of austerity, are looking to the opposition to address the growing inequalities and to create a new social contract that works “for the many, not the few.”
It is not clear how the current Labour leadership will address this, with the prevailing thinking in the party now being that people on the left have nowhere else to go, and the priority for Labour now being to win former Tory voters over. The risk is that younger voters and voters on the left become disillusioned and stay at home, or cast a protest vote for The Greens or some other candidate. This may not seem a problem now, but if polls begin to narrow by 2024, stay-home or protest-left votes in a First Past the Post electoral system could be fatal in marginal constituencies.
The current Labour leadership wish to put as much daylight as possible between the Party now and the Corbyn years. This has meant distancing themselves from some of the more popular parts of the 2017 manifesto, including public ownership of rail, energy companies and other public services, despite most party members and the British Public favouring nationalisation in this area. Starmer and shadow chancellor Rachel Reeves have said such policies do not stack up against the Party’s fiscal rules. This could create tension for a future Labour Government. Internally, the Government would be fighting both the ‘soft’ and ‘hard’ left on these issues. Also, many voters, not only those who vote Labour, would become frustrated if the private companies continue to profit from a rail system that’s expensive and unreliable or an energy market that forces people into poverty.
At the same time, those on the left of Labour need to accept a few hard facts. The 2019 election defeat was a devastating loss caused in no small part by missteps, poor tactics and wrong policy calls by Corbyn, his advisors and Momentum. Also, Labour may have increased its vote considerably in 2017, but despite losing seats, the Tories also increased their overall percentage of the vote and got more votes than Labour.
Corbyn has done himself absolutely no favours with his frankly idiotic position on Russia’s invasion of Ukraine, calling on the west to stop arming Ukraine and aligning with the Stop the War coalition’s position which appears more critical of NATO than Russia. This has now made it very easy for Starmer’s team to say that Corbyn will not have the whip restored. The left has now spent two years wasting energy trying to defend Corbyn and campaigning for him to get the whip restored. This absolutely plays into the hands of their opponents who now have good reason to expel leftists for not showing solidarity with Ukrainians.
Compare this to the US Democrats where Jo Biden’s former rival Bernie Sanders is now chair of the Senate Budget Committee, and a clear pact was made between the left and the moderate factions of the party to help beat Trump in 2020. Electoral politics is about building coalitions. The left in the UK needs to accept they alone do not have majority support and need to work with what they term the “soft left” and more centrist factions to win. The current Labour leadership need to ensure that the left still has a stake in Labour winning, and give enough to motivate the left to vote and campaign for Labour. In 2020 the Democrats learnt the hard lessons from 2016 when Sanders supporters were shunned by Hillary, resulting in many not supporting her campaign after the primaries and ultimately allowing Trump to win. In 2020, the Biden campaign made sure the left had a stake in a Democrat victory, and it paid off.
The fact is that to win elections, especially in a First Past the Post electoral system, a party needs to build a coalition of support. In 1997, UK Labour was able to build a coalition which in addition to the people who’d supported it throughout the Thatcher years, voters who’d supported the Thatcher project and its broad economic programme, but by the mid-1990s wanted something new, more socially liberal and slightly more moderate economically. This coalition held for three elections, but in 2010 many from this group of voters had drifted to the Lib Dems under Nick Clegg or back to the Conservatives under David Cameron who promised a more socially liberal and compassionate conservative party.
Starmer and the faction around want to build back the same coalition of voters they had in 1997. The problem is 25 years later, which included a decade of austerity, the voter demographics are more polarised and complex. The Conservative Party in 2022 has been forced to abandon Thatcher economics that Truss and Kwarteng tried to resurrect from the dead, and instead are now raising taxes, including for top income earners. The so-called centre-ground in politics is not the same as that in 1997. In fact, the term ‘centre’ is lazy political shorthand as if voters are easily categorised into ‘left’, ‘right’ and ‘centrists’ the latter swinging between the two and acting as king-maker. It has always been more complex than this, with people being more socially conservative on certain issues or economically liberal on others. The Brexit debate cut right across the old political divides with people across the spectrum, across class devices and cultural backgrounds being completely divided on the issue. A working-class voter in Hartlepool was not considered a swing voter until very recently, nor was an upper-middle-class voter in Kensington. Yet in the 2020s these voters will be part of the much larger ‘swing vote’ that will decide the next government.
Then there are the four nations of the United Kingdom. The majority of UK voters live in England, so inevitably this is where elections are won and lost. Historically, Labour has performed well in Scotland and Wales, with Northern Ireland having its own difficult history and different parties. Labour still performs well in Wales, having controlled the Welsh Senate since its creation in 1999. The 2021 deal between Welsh Labour and the Welsh nationalist party Plaid Cymru has been clever in securing broad support of support within the devolved government there.
The situation in Scotland is nowhere near as rosy. Traditionally, Scotland was a Labour stronghold, yet in the 2019 election, the party won only one seat up there. The Scottish National Party (SNP) have controlled the Scottish Parliament since 2007. There was a small amount of comfort for Labour in the 2022 local council elections where Labour came second to the SNP, but still a long way behind. Even the polls showing Labour with a 33% lead over the Tories nationally, had Labour was far behind the SNP in Scotland. Whilst support for independence hovers around the 50% mark in Scotland, it is consistently higher now than during the last independence referendum in 2014. The SNP have been clever to build a coalition of former Labour left voters and Scottish nationalists including some from the centre-right. By contrast, the various deals being done by Labour with the Conservatives and Lib Dems to stop the SNP risk doing more long-term harm to Labour’s chances in left-leaning Scotland.
For Labour, the strategy to win not only the next election but to start winning more often in the UK is to win over more English voters, as over 80% of the population live there. English voters have traditionally been small ‘c’ Conservative and large the ‘C’ Conservative Party usually do well, especially in the South outside of London. A wholesale return to Corbyn’s era politics is unlikely to shift this. In the short term, Labour with more of a 1997 flavour may win the next election, but it is not 1997, and very soon voters will grow restless.
English voters might be conservative but may see the need for economic reform so more people have opportunities. They will expect serious government interventions in housing, employment, education and transport. Already we have seen a Tory Government partially renationalise the railways, increase taxes to fund social care and lift Univeral Credit (the UK’s universal benefit), things the Tories would not have considered in the 1990s. The fact is society has changed. And in politics. you need to adapt. Traditionally the Conservative Party are much better at this than Labour. Whilst the Tories will probably now lose the next election, but, the size of their loss and Labour’s win will determine how long they spend in opposition. For Labour, winning more often will require nuisance and being adaptable. Yes, learn the important lessons from 1997, but know that times are now different and so too are policies and tactics. The left may not be strong enough to win, but they are still too big a block now to ignore and are more significant than in the 1990s. Like the Biden campaign, Starmer’s team will need to give the left something that means they can at least give grudging support. In turn, the left need to accept that a few important gains are better than none at all and the great cannot continue to be the enemy of the good or even the ok-ish.
The next election could well go to Labour, or at least be lost by the Tories due to their ineptness at running the country in the last few years. Labour’s internal problems have not gone away, it is just that the Conservative Party’s internal issues are now a lot worse and unusually for them have been aired in public. The opportunity for Labour is to build a winning coalition that helps them win not just the next election, but to start winning more than they lose.
On October 25 2022 Rishi Sunak became the fifth leader of the Conservative Party since they came to power in 2010. Having lost the membership ballot in the summer, Tory MPs having seen the polls after the Mini Budget and facing the prospect of electoral annihilation, coalesced around Rishi Sunak and ensured he was the only person on the ballot. In short, MPs no longer trusted their party membership after the Liz Truss fiasco.
When a new Prime Minister comes in and appoints a new Cabinet it is referred to as a “new government.” This wears somewhat thin when many of the “new” Cabinet Ministers have served in previous governments, many only a few weeks earlier. The likes of Michael Gove, Dominic Raab or Penny Mordant have served under previous Prime Ministers pursuing the same Conservative Party policies in Government. The Conservative Party were elected in 2019 on a Manifesto that the public expect them to implement. The accumulative issues of the last 12 years or the last 12 months have not disappeared with a change at Number 10.
The Truss libertarian experiment, described by Paul Goodman editor at Conservative Home as the economic experiment, which blew the roof off the chemistry lab. The Conservatives, having learnt in 2017 that policies of austerity are electoral Kryptonite, now face the reality that small government libertarian policies much craved by many tory members, simply will not work. Sunak inherits a party bereft of ideas and vision and is now forced to increase taxes to pay down public debt and fund public services such as the NHS. Promises made in 2019 to cut taxes would have been difficult to implement before the pandemic, now they simply are not possible.
The longstanding problem with British politics, as other commentators have pointed out, there is an expectation of European levels of spending on public services, but a naive view that the country can also have American levels of taxation. This is a problem not just for the Conservative Government, but for the opposition who once in government will have the choice of increasing taxes or slashing public spending. My next blog post will address this issue further.
Brexit is adding to Britain’s economic woes. In 2021 the UK faced a 14% fall in trade with the EU. The new trade agreements have not offset this, with deals like the one signed with Singapore largely mirroring Singapore’s deal with the EU meaning no gain from leaving the single market. In the case of the Australian deal, the desire to quickly conclude negotiations resulted in terms less favourable to Britain. There is no appetite from any of the main political party’s to revisit the decision to leave the European Union and to date little evidence that another referendum would see a different outcome. However, this becomes an issue of economic management with many leading Conservative politicians having boasted that having left the EU, Britain could negotiate favourable trade deals with the rest of the world. There is little prospect of a Free Trade deal with the US and the geo-political situation means deals with China are also unlikely, and in both cases, it is unlikely any deal would be favourable to Britain. The Conservatives since 2016 have talked of the opportunities of Brexit, yet have delivered few. This may not be top of voters’ priorities right now, but certainly, for many businesses, including those who have supported and donated to the Tories in the past, this is a serious problem. This is not a problem Sunak or any Conservative leader is likely to fix without going back on earlier commitments and renegotiating terms with the EU.
The Conservative Party are the natural party of Government in Britain and is the most electorally successful party in Europe. One of their great strengths is internal unity and discipline, much more so than Labour who more often than not air their dirty laundry in public. In the last 18 months, internal infighting has dominated the Conservative Party and ground the government to a halt over the summer while they elected a new leader, only for the winner to resign and be replaced by the runner-up weeks later.
Sunak’s ascent to the top job has not reduced these internal divisions at all. The below tweet from former Minister and Conservative MP Nadine Dorries recently gives some idea of the simmering tensions within parliament:
The ‘Get Brexit Done’ coalition has fallen away with many former voters and supporters feeling disillusioned with the Tories’ performance in Government. Whereas in 2019, enough voters could get behind The Conservatives over Brexit, now there are fewer policies areas where the government have an advantage over the opposition. Attempts to attack Labour regarding recent union industrial actions have not landed so far. Many feel sympathy for striking nurses and feel health workers are not paid enough. Traditionally Rail workers get a bad rap for taking strike action without explaining their position to the public very well. RMT General Secretary Mick Lynch has been much stronger than his predecessors at making a case for his members. At the same time, with inflation above 10% many have sympathy with striking workers, and many more see the problem as poor economic management by the government even if they do not like unions going on strike. The current situation feels much more like the Ted Heath Conservative Government in 1973 than the Thatcher Government taking on the Miners Union a decade later.
It will be very difficult for the Conservative Party to win the next election. Certainly were an election held today the government will lose. But this is why there will be no election in 2023. In the best-case scenario, the economic situation is unlikely to improve until early 2024. Further to this, Sunak will want as much distance as possible from the Kwarteng Mini Budget, and this will take time. As well as an improved economy, the Tories will need to restore party unity both within their MPs and the broader party membership – who didn’t vote for Sunak.
A wedge issue, like Brexit, was in 2019, could help the Conservatives, but it is unclear what this would be. After 12 years in power, it is difficult to talk about ‘fixing the asylum system’ without it begging the question why haven’t you done so already? Slogans like a coalition of chaos about Labour and the SNP may have worked in 2015, but given the last year the Tories are in no position where they can accuse others of creating chaos. Certainly the 2017 slogan of strong and stable will not work again.
Despite everything that has happened, it would be a serious mistake to underestimate the British Conservative Party which has proven time and again to be an electoral force to be reckoned with. In England, where over 80% of British voters live, Tory is the default option in many parts of the country. The polarisation within Britain is high with tensions from the Brexit debate and ongoing calls for Scottish Independence still simmering. The Tories can certainly play these divisions to their advantage in the hope of winning support.
As the next post will discuss, Labour should be able to win the next election, but it is not a certainty yet. They have their own internal issues to resolve.
Last week people in New Zealand and around the world were shocked to hear that Jacinda Ardern had resigned as Prime Minister. An unexpected end to her extraordinary five years in this role. Her exit, like everything else she had done as a leader, was on her terms.
Jacinda Ardern has surprised people throughout her political career, not least when she took over as Labour Leader in August 2017. She took the New Zealand Labour Party from a long way behind in the polls to government in just a few weeks.
I first heard of Jacinda Ardern just after the 2008 election. Labour had just lost power after nine years in office. Ardern was one of the new MPs being touted as the future of the party. At that time I was not a party member, having left in 2002 and did not rejoin until 2013. Whilst I was hearing Jacinda’s name a lot, much of the noise was from the Wellington bubble and party insiders. It was only later that I, like most New Zealand voters was to see the political force she really was.
I first met Jacinda at Labour Leadership campaign hustings in Auckland in 2014. She was Grant Robertson’s running mate and I was the campaign manager for Andrew Little, who went on to narrowly win that leadership contest. We were standing outside this hustings event leafleting for our respective campaigns. I realised just before the meeting that my cell phone was about to die, so asked if I could borrow her charger. Unfortunately, she did not have one, and for the next 90 minutes, I nervously watched my phone’s battery bar decline.
Jacinda came in as a list MP, having unsuccessfully contested the safe Tory seat of Waikato in 2008. In 2011 and 2014 she ran in the Auckland Central electorate, which prior to 2008 had been considered a moderately safe Labour seat. Jacinda was unsuccessful both times and remained a list MP until 2017 when she won Helen Clark’s old electorate of Mount Albert. Shortly after this, she became Deputy Leader of the Party.
Up till this point, Jacinda only had limited support outside the political bubble in Wellington. She was a strong performer in parliament and from 2014 onwards had started getting some very good soft media building her brand as a relatable politician. But it was once she became deputy leader that her profile really began to grow. When polling started to show her personal support was ahead of the party leader, her promotion was only a matter of time.
In August 2017, just a few weeks out from the New Zealand General Election, Andrew Little resigned as party leader as it was clear that he was unlikely to win. A few days later Jacinda was elected leader. In the days that followed Labour’s polling numbers started to bounce. As the campaign wore on, National Party (the NZ Tory Party) Prime Minister Bill English, who had taken over the role only a few months earlier, began to sound rattled. By the time of the main leader’s debates, Jacindamania had taken hold.
Despite all this, it was still far from certain that Labour could win the election. After nearly a decade of polling behind the National Party, the last-minute polling surge still felt like it could still fall away again.
In my blog post from 2020, I described the last time I met Jacinda, just one day after she became the Leader of the Opposition:
A few weeks before leaving New Zealand, my friend Rob and I were in Burger Fuel on Cuba Street the hipster trendy part of Wellington. Piko was renting an office space in the old Wellington Trades Hall and we were doing painting and renovations of the space. In our crappy paint-covered work clothes we sat in Burger Fuel when Rob alerts me to who had just walked into the restaurant. 24 hours beforehand, Jacinda Ardern had replaced Andrew Little as leader of the Labour Party. We both knew Jacinda so said hello and talked about the Stand with Pike campaign we had been working on which Jacinda had pledged to support a few hours before. This slightly awkward conversation with the new leader of the opposition did not last long. None of us, I suspect even Jacinda, knew that in a few weeks’ time, she would achieve one of the greatest upsets in New Zealand’s political history and become Prime Minister
A few weeks later I moved to London. By the time I had left, the polls had narrowed and it looked as though the election would be close. I arrived in London on Monday 11 September, and that afternoon went down to New Zealand House in Haymarket to vote for the New Zealand Labour Party. Whilst I wanted NZ Labour to win, I still did not believe they would. As I watched the election results come in just under a fortnight later, it still seemed like the National Party would just hold on for another term. But a series of factors conspired, resulting in what is still one of the most surprising NZ political victories in living memory.
Social democratic values and policies are in fact far more aligned with the New Zealand public than the Tories. I believe the same is true in Britain, as I outlined in my blog posts on why the UK Labour Party lost the 2019 election. Yet in both countries, the Tories win more elections than they lose. In the years 2008 to 2017 when the NZ Labour Party were in opposition, Labour policy often had far more support than the Labour Party. For example the Key Governments’ partial privatisation of state-owned assets in 2011 which Labour opposed. On that specific issue, polls showed public opposition to privatisation. Yet in 2011, National was easily reelected and Labour’s share of the vote declined.
Jacinda’s strength as a leader became apparent during the 2017 campaign. She was able to bridge the gap between policy and people’s perceptions. She convince people that Labour values were aligned with their own, in a way that many of her predecessors simply had not. Her warmth, her strong communication style and her positivity gave a human face to centre-left politics, one that voters could relate to.
The results of the 2017 election were close, and whoever formed a government would need to form a multi-party coalition. Here again, Jacinda showed skill and strength by being able to build bridges with New Zealand First, a socially conservative centrist party, and the Green Party. This required compromises which disappointed much of Labour’s base, yet got Labour into Government so they could implement at least some of their policy agenda.
Over the last five years, Jacinda has held up as a model of progressive political leadership throughout the world. There are many examples of where she has shone as Prime Minister. The best example is her response to the Christchurch Mosque shooting in 2019:
Her statement immediately following the attack against the Christchurch Muslim Community was clear “they are us” , a clear condemnation of Islamophobia by a world leader. When Donald Trump asked what he could do to help Jacinda replied he could show “sympathy and love for muslim communities”
They are us. Three words to the Muslim world showed compassion, humanity and inclusion after an act of evil.
The New Zealand Government’s initial response to the pandemic in 2020 was another example of strong leadership. In crisis management, it is crucial that you quickly assess the relevant information and then act decisively. The decision to close the border and put in tough restrictions was not an easy thing to do, but it undoubtedly saved thousands of lives. Not least as the health system Labour inherited when they came to power in 2017 had been badly underfunded and under-resourced for a decade. After only 30 months in power, there had not been enough time to turn this around. The restrictions were tough both for people in NZ and for people like me living overseas and unable to return. Much as people may now blame Jacinda and the Labour Government for the tough restrictions, they might also want to consider the impact of National’s mismanagement of the health system for nearly a decade. This mismanagement of the health system left it vulnerable to collapse during the pandemic.
In October 2020, Arderns’s Labour Government won the biggest majority of any New Zealand government in half a century. Jacinda’s crisis management and clear communication during Covid, the Mosque shooting and the White Island eruption all contributed to this victory.
After Labour won its second term in office, I outlined some of the challenges the government would face:
The coming term will not be an easy one for Labour, as the COVID-19 pandemic continues to rumble on and the world plunges into the worst financial crisis in decades. On Saturday Labour were rewarded for their handling of the crisis so far, but the hard part is yet to come. On the one hand, they need to rebuild the NZ economy at a time when international tourism is dead and export markets are volatile. But even prior to this the New Zealand economy was unbalanced and in a precarious state. Its over-reliance on dairy exports has made it vulnerable if anything happens to this market and resulted in over-intensive dairy farming which has harmed the environment – not a good look for a country that brands itself as clean and green. It also faces growing inequality with significant growth in homelessness and poverty in recent years.
The above was a fairly accurate summary of the challenges Ardern’s government would face in its second term. What nobody expected at that time was the Russian invasion of Ukraine and the havoc this would cause the world economy, already severely strained by the pandemic. Governments around the world have struggled with this crisis, with New Zealand being no exception. In May 2022 I wrote the following:
At the start of 2022 there began to be a seachange in New Zealand politics. The Government’s handling of the pandemic had strong support in 2020 and for much of 2021. But as more and more people were vaccinated, and increasingly other countries lifted their travel and other Covid restrictions, public support began to wane. The protests outside the New Zealand parliament in 2022 were a minority of anti-vaccination campaigners. This group, inspired by the January 6 Capitol attack in Washington did not enjoy widespread support. But they demonstrated that the polarisation that other English-speaking democracies faced in recent years had reached New Zealand. Alt-right, anti-science and anti-government protests caused considerable disruption outside parliament in Wellington. Those opposed to the protest became frustrated that the police and government had not moved them on. By the time these protests ended on 10 March 2022, support for the government had taken a hit.
At the same time as these protests and a struggling economy, Jacinda faced a new leader of the opposition. In the lead-up to the 2020 election, National managed to go through three leaders in four months. By the time of the election, they were no longer seen as a credible opposition and suffered their worst election defeat in 18 years. In late 2021 National put forward a new leader, Christopher Luxon. A former CEO of Air New Zealand, Luxon came into parliament in 2020 and was immediately touted as a future leader. Whilst in no way a match for Ardern in terms of oratory or style, Luxon could credibly challenge the Government’s record on bread-and-butter issues like housing, economic management and its slow delivery on infrastructure projects such as light rail in Auckland. Whilst Luxon has trailed Ardern in preferred Prime Minister Polls, for nearly a year National had maintained a 5-7% lead over Labour. At the end of 2022, it felt like Ardern’s government would likely face an electoral loss in 2023.
Critics of Jacinda Ardern have been quick to say that her resignation now was a way of avoiding electoral loss later in the year. Others have pointed to the level of hate and vitriol that Ardern has had to put up with in recent years, including former NZ Prime Minister Helen Clark who said that “Jacinda has faced a level of hatred and vitriol which in my experience is unprecedented in our country.”
Below is Jacinda Ardern’s resignation speech, I will leave the reader to decide for themselves what her reasons really are:
It is too soon to say what Jacinda’s legacy will be. She will certainly be remembered for becoming a mother whilst being a world leader. For her presence on the world stage as a voice for feminism and progressive politics. She ushered in a generational and attitudinal change in New Zealand politics. While internationally she offered an alternative to the politics of Trump, Bolsonaro, Scott Morrison and Viktor Orban.
Ultimately, governments are measured on their longevity. Both in terms of how long they are in office, but also how long their policies remain in place. Jacinda Ardern’s legacy will be judged not only on Labour’s successes under her leadership but also on how well Labour performs after her resignation.
On Wednesday, New Zealand will have a new Prime Minister, Chris Hipkins, who will lead Labour into the October 14 General Election. Chris certainly has his work cut out for him over the next few months. That being said, the coming election is by no means a foregone conclusion. For all the challenges of the past five years, he inherits a government that has much to be proud of, not least Jacinda Ardern message of kindness, inclusion and positivity. To quote the outgoing Prime Minister, “bring it on.”
You probably will not remember me. I was the campaign manager for Andrew Little when he ran for Labour Leader back in 2014. The last time we met was in Burger Fuel on Cuba Street the day after you took over as Labour Leader in 2017. I was with my colleague from Piko and we were both covered in paint after doing work at our Trades Hall office. We certainly weren’t expecting to meet the future Prime Minister that evening.
I am emailing to say thank you for all that you have done, both in New Zealand and internationally since becoming Prime Minister. I now work as a Researcher in Westminster and I can say that you have earned the respect and admiration of politicians from all sides of the political divide over here in the last five years.
In particular, I wish to acknowledge the strong compassionate leadership you took after the Christchurch Mosque attack. Your simple statement “they are us” regarding Muslims living in Aotearoa had a profound impact and broke down barriers of hate and ignorance at a time when tensions were so high. I still tear up thinking about how important your showing humanity and compassion was at that dark time. Thank you.
Your government’s response to the coronavirus in 2020 was the right one and undoubtedly saved thousands of lives. Again, having lived through the UK response to this crisis, I and many others living here looked to the NZ response with considerable admiration.
The last couple of years has been difficult for governments throughout the world. The Ukraine invasion on the back of a global pandemic has seen inflation skyrocket everywhere. People understandably look to their elected representatives in difficult economic times and we know that the actions of the government can help or hinder economic recovery. But there is also much that is out of the hands of the nation-state. Where governments can have the most impact is on policies that help in the medium to long term. In the short term, options are quite limited and it is easy for our leaders to take the blame for things that are largely out of their control. The New Zealand government has managed this crisis better than many in the last 18 months. In years to come I hope this is recognised.
Your legacy as Prime Minister will be as someone who showed both strength and compassion in some of the most challenging times faced by any leader in modern times. On the world stage, you are rightly held up as a model of progressive political leadership, and I am certain this will continue into the future in whatever role you take on next.
Finally on a personal note, due to the coronavirus, I was only able to spend two weeks in Aotearoa during your time as Prime Minister. But as a Kiwi in London, I was proud of your leadership both of our party and of the country.
The premiership of Liz Truss will be remembered for many years to come. She will be remembered as being the shortest-serving former UK prime minister (for now), resigning after seven weeks. It will be remembered that only two days after going to Balmoral to meet the monarch, Queen Elizabeth II passed away having served 70 years on the throne, making Truss her 15th and final PM. People will also remember the Truss premiership for plunging already bad Conservative Party polling numbers down to record lows, giving the opposition Labour Party an unprecedented 30% lead. But the main thing her seven weeks as Prime Minister will be remembered for – destroying the longstanding myth that the Conservative Party are good at managing the economy.
As outlined in a post earlier this year in a global economic crisis, governments, in the short term at least, are limited in what they can do to remedy the situation. However, the one thing governments can certainly do is not make the situation worse. In this Liz Truss and former Chancellor Kwasi Kwarteng failed spectacularly.
The now infamous ‘mini budget’ or “Growth Plan” of 23 September 2022 caused the pound to hit an all-time low against the US dollar, and force the Bank of England to intervene to prevent chaotic drops in gilts prices from stinging pension funds and threatening financial stability. How on did the UK’s natural party of government, the party of sound money and fiscal responsibility manage to get it all so badly wrong? And so quickly?
Since 2008, as pointed out in my last blog post, right-of-centre governments have stepped back from full Thatcherite free market policies due to the fact that these policies directly resulted in the crisis of the last decade. Whilst free market and trickle-down economics may no longer be electorally viable, there remain many true believers in the small government crusade.
The decline and fall of Boris Johnson as PM was entirely of his own making and had been on the cards for some time. During the period, the disquiet within the Conservative Party was not so much over “Party-Gate” but the increase in taxes, namely National Insurance, to keep their manifesto commitment to fund social care, a policy area where previous governments have failed to grasp the nettle. Tory Party members were furious that a Conservative Government had raised taxes, and former Chancellor Rishi Sunak was in their eyes to blame. Enter Liz Truss.
Truss, on becoming Foreign Secretary in early 2022, began doing these strange photos where she was imitating former Tory Prime Minister Margaret Thatcher. This Thatcher cosplay was matched by sound-bite rhetoric about free markets and individualism. This really played to the home crowd with supporters in the Tory Party claiming “in Liz we Truss.”
Warnings from former Chancellor Sunak that the programme announced by Liz Truss when running for leader would make the economic situation worse were ignored by the party membership. In Liz they Trussed, in early September she became Conservative Party leader and Prime Minister.
A decade before coming to power, a group of right-leaning Tory MPs authored a book titled Britannia Unchained, a treatise, arguing that Britain should adopt a different and radical approach to business and economics or risk “an inevitable slide into mediocrity.” These MPs belonged to the Conservative Party ‘Free Enterprise’ group and included Liz Truss and the person a decade later she was to appoint as Chancellor, Kwasi Kwarteng.
In a later attempt to shift the blame to former Prime Minister Liz Truss for what happened, claiming he warned her the government were moving too fast. Kwarteng has not yet apologised for his mini budget on 23 September or the catastrophic fallout. In fact, his frustration seems more with the fact that Truss ended up sacking him, not long before being forced to resign herself. The truth is, the throwing caution to the wind approach of slashing taxes, removing restrictions on banker bonuses, and slashing other regulations such as IR35 were all consistent with what he and Truss had argued in Britannia Unchained a decade earlier. And these ideas found favour with the Conservative Party membership – with the idealised view of Thatcher’s vision of small government, deregulation and low taxation. For the general public, this was not so much ‘Britannia Unchained’ as ‘Libertarians Unhinged.’
Where this mini-budget really hit the rocks, especially with the financial markets, was the unfunded tax cuts and spending increases. The Tories, having implemented austerity policies during their first term in office with the Lib Dems, found out the hard way that underfunding the Police or the NHS was simply not an option. The 2017 election where they lost their overall majority, and Corbyn’s Labour had an unexpected surge in support largely due to increased turnout by young voters, was largely due to an anti-austerity backlash. In Kwarteng’s mini-budget, the solution was that the government borrow to pay for tax cuts and spending increases. The former Chancellor argued that cutting taxes and red tape this would stimulate economic growth meaning the government would soon be able to repay the debt.
Many were surprised to see financial markets react to a right-wing Tory budget in this way. Threats of capital withdrawal and other measures are not uncommon when centre-left governments try to implement their agenda. Yet here we had a right-wing budget and the market responded badly. One issue was that Truss and Kwarteng completely ignored the Office for Budget Responsibility before preparing the mini-budget. This office was set up by former Conservative Chancellor George Osborne, in response to his claims that Labour had acted financially irresponsibly when in power. This office was designed to be a check and balance for the left, yet it was the right who fell foul of it. One of Britain’s key selling points is that is a rules-based economy. By not consulting the OBR before the mini-budget, Truss and Kwarteng damaged Britain’s brand.
Cutting taxes at a time of high inflation is not a terribly smart move as it will drive up inflation further. Borrowing money to cut taxes and increase spending is what the Government in Greece did prior to the 2008 financial crash, with devastating consequences. Add both of these to a world economy struggling in the wake of the pandemic and the Russian invasion of Ukraine, it is no surprise that the markets reacted as they did.
Within days, Truss was forced to sack Kwarteng and announce a U-turn on the mini-budget, to much tormenting that “the lady is for turning” with reference to Margaret Thatcher’s famous quote. Within 44 days of becoming Prime Minister, Truss announced her resignation, having days earlier replaced her friend Kwazi Kwarteng with Jeremy Hunt as Chancellor and almost all measures in the mini-budget had to be reversed.
It was would easy to blame Truss and Kwarteng for this specular failure. Many have cited her shocking performances in the media as why ultimately she resigned and question how someone got to the highest level of public office when so clearly unable to perform. Leadership qualities play a significant role, and in modern politics media presentation is critical. But this was not a problem of style and presentation alone, as abysmal as this was under the Truss premiership.
The initial reaction to the Mini Budget in September was very positive from many in the Conservative Party and their cheerleaders in the tabloid media.
For Tory Party members and Daily Mail readers, this was the budget they had been waiting for. Far from being a surprise, the mini-budget was implementing not just the promises of Truss’s leadership campaign, but the wishes of many rank-and-file Conservatives. After enduring Sunak’s National Insurance increase the free market wing of the party finally had their way, at last, a true Tory budget. Never mind Britannia Unchained, this was Conservative Party unleashed.
The ‘get Brexit done/anti-Jeremy Corbyn’ coalition that won the Conservatives the 2019 election now finds itself in tatters. Not only were so-called red wall voters from the North East of England put off by the return of trickle-down economics, but polls show that large swaths of traditionally Conservative voting south of England were also in despair. Within the Conservative Party, those who still subscribed to Edmund Burke’s view that no “generation should be arrogant enough as to only think of themselves” and that borrowing for tax cuts would harm future generations, found themselves in the minority. In fact, the enduring influence of one-nation conservatism made popular by Benjamin Disraeli, of pragmatism and paternalism was replaced with an unwavering belief in small government and the market.
That Conservative MPs managed to avoid another membership ballot and Rishi Sunak replacing Liz Trus is the topic of the next blog post. Needless to say Conservative MPs, many from Constituencies once considered save tory, are now terrified by recent polls. Allowing the party membership a say risked a further dose of trickle-down right-wing economics, making the Tories unelectable for a long time. It was the party members who supported Truss, while in the first round, only 50 backed Truss for leader, though other candidates who had MP backing early on also espoused not dissimilar economic views.
Some who supported Truss may now have reflected on what happened and perhaps realise that these policies not only do not work, but electorally they are poison. But many on the right will blame it on Truss, her leadership style and the speed with which she tried to implement the reforms. In many ways, the fact that the mini-budget changes were done quickly and communicated poorly was a good thing, as it meant these policies were reversed quickly. A more media-savvy and gradual implementation would have done more harm in the long term. It is no accident that since 2008, free market trickle-down economics has been out of fashion. The Truss premiership has been a timely reminder that these policies do not work and should not be tried again.
The demise of Boris Johnson’s premiership in 2022 was both a surprising political upset and entirely predictable at the same time.
It was a political upset when considering the large majority the Conservative Party won in 2019 under his leadership, the best result of any political party since Thatcher’s 1979 election victory. Yet, after months of reports about Party Gate and scandal after scandal involving both Boris Johnson and various other MPs, his eventual resignation in June 2022 became inevitable. Indeed back in February last year my blog post questioned how he was still in post and argued that his brand was damaged. Five months later, after yet another scandal involving Deputy Chief Whip Chris Pincher, he was forced to resign.
It is still too soon to say how history will judge Boris Johnson, not least because there is still the possibility that he may return as Tory Leader someday. Few can deny that his ascent to the role of Conservative Party Leader and Prime Minister in 2019 profoundly impacted British politics for many years to come. In 2019 I said that one of Boris’s strengths as a politician was that he could tap into people’s hopes and fears. He would have been a formidable Leader of the Opposition, and if the Conservative Party do not win the next election this theory may be put to the test.
Yet, Boris Johnson is a deeply flawed character whose political ambition has and continues to come first. What little political or policy conviction he held was primarily about staying on brand and winning votes. This in itself is not unusual and in modern politics, one can have quite a successful career by being transactional and self-promotional.
Boris Johnson was ultimately undone by both his own character flaws and by the direction of the Conservative Party, the latter being seriously out of touch with the mood of the British public.
Plenty has already been said about Johnson’s character flaws, which were well-known long before he became Prime Minister. For those who backed him, there was plenty of evidence that things would turn out as they did. The fact is that like Johnson, his backers promoted him for short-term gain. Specifically to break the political deadlock caused by Brexit and to win an election largely on that issue. It worked.
But the fixes the Johnson leadership provided, under the guidance of Dominic Cummins and others, were largely short-term. His oven-ready Brexit deal may have won the election in 2019, but has resulted in a long-term stand-off over the Northern Ireland Protocol causing ongoing problems. The bold assertion during his resignation speech that his government had fixed social care is simply not true, with the system overwhelmed and the system still facing serious workforce shortages and lacking proper integration with the NHS.
The three years of Johnson’s premiership will be largely remembered for the Government’s management of the coronavirus pandemic. As I have addressed in earlier posts, the Government failed in its response to the pandemic. Yes, the rollout of the vaccine was a success, in no small part because this task was administered by the NHS, one of the most trusted British institutions, rather than being contracted out to businesses with close association with the Conservative Party. Examples of favourable business deals, such as those given to Dido Harding or Michelle Mone, whose companies were awarded lucrative government contracts and failed miserably in delivering have left a sour taste in voters’ mouths.
This all happened under Johnson’s watch and he was simply not fit to lead the country during this crisis. But he did not act alone. It was a failure not only of the Conservative Government but also of the British state. The crisis highlighted the country was not prepared for a pandemic, and longstanding underfunding of the NHS made this much worse.
A month before Boris Johnson’s resignation at PM, I argued that during the current time when inflation has increased globally, national governments are limited by what they can do, in the short term at least. Incumbent governments of all political persuasions have struggled in the last year, so it is not surprising that the Conservative’s polling numbers have been poor during this crisis. But in the same way that the Tories blamed Labour’s spending levels for the 2008 financial crisis, despite strong evidence that this was not the case, they cannot now claim economic problems are beyond the control of the nation-state without looking like hypocrites. Again, the short-term electoral gain in 2010 has now made a rod for their backs a decade on.
Yet he retains core support within the Conservative Party, and with a group of Tory MPs. He also enjoys a surprising level of support still with the British public, though nowhere near the level he enjoyed in December 2019. His two months as caretaker Prime Minister in July and August 2022 during a cost of living crisis certainly did not help matters, where he partied in the Cotswalds and took holidays in Greece while many voters struggled to pay their bills. Meanwhile, the Tory Party spent the summer holding a leadership election, where, as the next post will discuss, the least competent candidate was elected by Tory members.
Boris Johnson believes that like his hero Winston Churchill, he can return to power one day. He probably believes that he fixed social care, did a good job during the pandemic and did a good job with his Brexit deal. Or he knows that if you repeat a lie often enough people start to believe it. When you have a legacy to protect and want a future in politics, you say what you need to say and do what you need to do. And the Tory Party? Would they put him in power again? If they thought it would increase their vote, yes they would. That he is not suitable or trustworthy is no matter, when the motivation is power at all costs.
Were Johnson to return as Tory Leader for the 2024 election, he would almost certainly lose. However, he may motivate a section of the Tory base and Brexit supporters, possibly mitigating the losses. On the other hand, this might spur on a wave of tactical voting by Labour, Lib-Dem and Green voters to punish the Tories for putting Johnson back after all that has happened.
It is risky to make predictions, but it is safe to assume we have not heard the last of Boris Johnson. And much like Berlusconi in Italy, the results will undoubtedly be bad both for politics and the country.
As the world currently goes through a post-pandemic and Russian invasion of Ukraine fuelled economic crisis, it is interesting to reflect on the economic crisis of over a decade ago and how the public responded at that time.
After the 2008 financial crisis, despite predictions to the contrary at the time, there was a global shift to the right in the years that followed. Examples of this include the fall of the Brown Government to the Tory/Lib-Dem Coalition in the UK in 2010 or the Clark Labour Government being voted out in 2008. After some initial excitement about Obama’s election in 2008, the Republicans easily won the 2010 mid-terms. There were plenty of other examples across Europe, South Asia and South America of progressive or centre/centre-left governments falling.
Given the financial crisis exposed the failings of the banking sector and free market economics, it would seem strange at first that it was the political right who were the primary beneficiaries of this. In certain countries, incumbency was the issue where rightly or wrongly the party in power were blamed. The late 1990s and early 2000s were the height of the Third Way era, meaning many progressive governments had accepted and made little attempt to reverse the free market reforms of the 1980s. Whilst this position was electorally popular up to this point, by 2008 this position was not tenable. Meanwhile, the right was much quicker to pivot away from Laissez-faire to a more traditionally conservative position, raising concerns about immigration whilst claiming to be prudent economic managers. The politics of austerity were never popular where they were implemented. Yet, the argument that national debt is like household private debt where you just have to tighten your belt to get out of the red was not adequately challenged. That cutting social spending, holding down wages and other earnings and other such measures resulted in less money in the economy thus making the crisis worse became obvious, eventually. Yet in the early 2010s, many European Governments were implementing these sorts of policies.
It was in this context that ‘Occupy Wall Street’, which quickly grew into the international Occupy Movement was born. Anger at banks being bailed out in the US whilst people’s homes were being repossessed and a feeling that the elected politicians had failed to stand up to Wall Street sparked this protest movement. The protests took inspiration from the Arab Spring protests in early 2011 which successfully brought down a handful of corrupt rulers in the region such as Muammar Gaddafi of Libya and Hosni Mubarak of Egypt amongst others.
Although there was some involvement of organised labour and other elements of the traditional left was involved, many more were not. In part, this was due to the reluctance of the main social democratic parties to be involved with such a movement, especially in the US when there was a Democrat in the White House. For many in the movement, there was a level of antipathy towards members of the political establishment, including those on the left.
As a friend of mine said to me a few times during the 2003 Iraq War protests “mass movements shoot up like a rocket, and subsequently fall like a stick.” Within a few months, the initial movement had dissipated. This was very similar to the late 1990s early 2000s anti-globalisation movement, the difference being that Occupy was responding to a serious financial crisis and failure of the global banking system. By contrast, anti-globalisation was reacting to the moral shortcomings of institutions such as the IMF or the World Bank and accused multi-national corporations of undermining democracy and self-determination, especially for those in less well-off nations.
It is interesting to look back now to see how both the anti-globalisation and the Occupy Wall Street movements influenced policy over the coming decade. Both were clear attempts to forge a new left in the post cold war era in response to the new right. On the surface, neither made any direct impact, with the free trade and the IMF agenda still rumbling on after the anti-globalisation protests in Seattle, Genoa and elsewhere. Likewise, the banking sector after 2008, took the government bailouts, the executives paid themselves bonuses and people paid the price, including mortgage foreclosures in the US. This contributed to the backlash against Obama during his presidency, as mentioned in an earlier blog post.
Ironically, the 2008 financial crisis saw the right move away from free market deregulation policies, in no small part as they had just failed on such a spectacular and global scale. The right became much more concerned with reducing debt through reducing government spending and other austerity policies. This is not inconsistent with free market ideology, more radical deregulation policies were not pursued with such vigour. With both the Brexit referendum in the UK and the rise of Trump in the US, the right began moving away from international trading blocks such as the EU or NAFTA. The claim by the anti-globalisation movement in the early 2000s was that the Neo-Liberal agenda wanted the free movement of capital, but not people. Certainly, in the case of Brexit, this was to see greater restrictions on both.
Not for the first time in history, the right took the sentiment of the anti-globalisation campaign and used it to pursue what is now termed a more ‘populist’ agenda. The UK Conservative Party winning “Red Wall”s seats in 2019 or Trump winning in the “rust belt” in 2016 were all in part due to this more ‘anti globalist’ agenda by the right. It also reflected that trying to openly pursue free market policies post-2008 was not going to work. Unlike the left, the right was as always quick to adapt to the changing environment.
The Occupy movement’s influence over politics in the 2010s is less obvious. Whilst the larger protests soon became much smaller, this movement did help shape the narrative of the left in the coming decade. The slogan “we are the 99%” stuck as did accusations of politicians serving the 1%. The surprising levels of support for Jeremy Corbyn’s Labour Party in 2017 and the rise of Bernie Sanders in the 2016 Democratic Primary owed something to this anti-corporate, anti-banking campaign of a few years earlier. More significantly, as the left needed to reinvent and reposition in the 2010s, this movement at least in part helped shift the centre-left parties towards a stronger anti-austerity and pro-public services position. The austerity light ‘moderate’ position some social democrats espoused in response to the financial crisis was never going to gain public support, especially when austerity was soon shown to have deepened rather than halted the economic crisis of the time.
Sudden mass movements may not instantly change the world. My friend’s analogy of the rocket becoming a falling stick may have been a good comparison. But maybe the falling stick in a small way did help change the course of history at least a little bit.
Throughout my time being active in politics, people have discussed the rise of Neo-Liberalism and the free market that occurred throughout much of the world from the late 1970s onwards. Yet few seem to really understand the reasons for this significant shift in economic policy at that time, which continues to shape our society today.
Those less familiar with the works of Karl Marx may not be familiar with the concept of the tendency for the rate of profit to fall. One does not need to be a Marxist nor socialistically inclined to believe or understand this law of economics, which explains what has happened in the last half-century of economics. As Wikipedia explains:
To simplify this concept in explaining what happened in the late twentieth century we simply need to understand that in response to the 1930s depression many nations and particularly developed nations invested in infrastructure to stimulate their economies and create employment. This was followed shortly by the Second World War where investment in industry was required. Then after the war, the Marshall Plan rebuilt Europe, whilst similar investment and rebuilding occurred throughout the late 1940s. This period of investment in response to the depression and war created the post-war boom resulting in significant economic growth.
Keynesian economics whereby government policy and intervention in the economy and significant levels of government spending are required to stimulate the economy and prevent depressions. This theory dominated government policy in economically well-off nations from Great Depression until the mid-1970s, when the post-war boom came to an end. The thing Keynesian economics was meant to prevent happening, did happen. So in 1979, Margaret Thatcher came to power in the UK, and the following year Ronald Reagan in the US, and with them came a sea change in economic policies not just in their own countries but internationally.
The Neo-Liberal project essentially was to move away from state intervention and allow the invisible hand to do its dirty work. Privatisation of state infrastructure such as rail or power companies, reducing spending on public services and increased user pay charges, and generally reducing the size of the state to try and stimulate the private sector. Part of this also included reducing employment rights including laws protecting the right to collectively organise, ultimately resulting in reduced earnings for most people. As my series of blog posts about the trade union movement suggested, the job of those wishing to attack union rights was often made much easier by the fact that most union leaders and a poor understanding of economics or how to respond to the end of the post-war boom.
New Zealand was peculiar in its transition to Neo-Liberalism in that it was the Labour Government of 1984 to 1990 that first introduced and championed these right-wing economic policies. At the time the big political issue in New Zealand was the Nuclear Free movement which successfully stopped US Nuclear ships from visiting New Zealand. Whilst this was a worthy campaign, it is strange to think that a government selling off state assets (often for less than their market price) and putting thousands out of work managed to win support based on a Nuclear shipping policy when their economic decisions were hurting so many.
Neo-Liberalism and reducing the size and expenditure of the state were meant to stimulate the economy. For whatever short-term gains were made in the 1980s and 1990s, which generally only benefited the 1% wealthy elite, it soon became clear that the fundamental problems in the economy still remained. Unregulated or self-regulating markets resulted in terrible outcomes including the Pike River mining disaster in New Zealand, the Grenfell Tower fire in London, and the levee failures in New Orleans during Hurricane Katrina all from lack of regulation and investment by the Government.
The 2008 crash ended the widely held belief that the market could correct itself or that wealth would trickle down. This crisis was due to a lack of financial regulation and was then made much worse by those countries who insisted on implementing austerity measures to restore public finances, instead of making the economic situation worse. Neo-Liberalism now is discredited and few governments either on the left or right really have an appetite for the types of policies Thatcher and Reagan promoted 40 years ago. As I will discuss in another blog post on Liz Truss’s brief time as Prime Minister, attempts to follow such a path now generally end in disaster very quickly.
After the fall of the Eastern Block Communist/Marxism ideology has been largely discredited. The end of the post-war boom saw an end to Keynesian economics and a shift to Neo-Liberalism, which is now also largely discredited. In 2021 economic policy is largely populist and a weird mix of Keynsian/Keynesian-lite interventionism with a sprinkling of laissez-faire rhetoric. So far in the 21st century, Capitalism has lacked any serious rivalry from any other theory or system. But capitalism has also run out of ideas. This is not just an abstract notion as the political upheavals in recent years stem from people feeling let down and angry by an economy that has not delivered. Yet, there is no clear alternative to the status quo. People were shocked in 2016 when the UK voted for Brexit and the US voted for Donald Trump as President. The increasingly polarised and challenging political world we live in can be blamed on many different factors. But at its core, I believe much of the trouble is caused by the lack of economic policy ideas that can address some of the great challenges we face.
We can learn much from mid-20th century Keynesian economics, but we also need to understand the limits of this theory and what caused the shift away from them from the late 1970s. Whilst the Neo-Liberal experiment also failed, we should also understand that bureaucratic and cumbersome regulation must have a purpose, and whilst state investment in public services can have real benefits we must be clear about what these actually are when this money is spent. Whilst I subscribed to socialist ideas in the past, it is clear that attempts to implement such a system to date have all ended in failure. However, we can still take Marx’s economic analysis (if not subscribing fully to his proposed remedy), specifically what he had to say about the tendency of the rate of profit to fall. Before we decide whether the current economic system can be reformed or needs to be completely replaced, we first need to improve the general understanding of how our economic system works.
My previous post discussed how in recent US history, mid-terms have generally gone against whoever has control of the White House. Whilst the Republican Party did regain control of the House, it was by the narrowest of margins, 222 to 213. Meanwhile, the Democrats once again have control of the Senate and in Governor races made a net gain of two against the Republicans. This was a long way from the so-called red wave some predicted that the Republican Party would make huge gains just as they did in 1994 or in 2010.
The second factor is Trump’s ugly legacy on US politics and the Republican Party.Two years ago I wrote the following:
The ugly finale of the Trump presidency will have long term consequences. While many Republican lawmakers now distance themselves from Trump, it took them far too long. For the last five years, they have allowed Trump to create a narrative of misinformation tapping into America’s worst prejudices and fears. Trump has successfully built a following based on these lies and in the process created a political climate of hostility and fear that will inevitably now lead to further conflict and civil unrest.
Within the Republican Party, there is now a clear split between two broad factions. The first are those who continue to support Trump, his false claims they he in fact won the 2020 election and the style of manipulative and divisive politics he has come to represent. The second faction is traditional conservative centre-right voters and those in the party who can see that it is time to move on from the Trump era.
Behind all this is a deeper problem, that the Republican Party’s ultra-conservative hard right, including the 20 who blocked McCarthy’s election as House Speaker, are unwilling and unable to compromise even with the more moderate wing of their own party. This hardline approach dates back to the Newt Gingrich era in Congress post-1994. In the past, this may have seemed a sign of strength, but the recent divisions trying to elect a speaker show the Republican Party as weak and deeply divided. Both the Democratic and Republican Parties are broad churches and would both probably be two or three parties in most European democracies. In 2023, the Democrats under the Biden Presidency are doing a much better job at appearing to be a united political force. By contrast, a Republican Congress that struggles to elect a speaker has not shown voters they can govern.
Overall, the 2022 midterms were the best for any sitting Democrat President since 1978. Whilst losing control of the House is disappointing, the Republican majority is slim. Should hardliners try to block the Biden agenda as they did with Obama, they risk moderate Republicans breaking ranks. Further, hardline Republicans overplaying their hand in Congress may scare moderate voters away from the party and at the same time motivate the Democrat base to win back the House in 2024. Add to that the prospect of Trump returning in 2024, it could be about to get very messy in the Republican Party.