Refuting Rogernomics myths

I listen to a lot of talkback radio because it gives me a feel for where people sit. It's reasonably representative politically. The conversation about the return of Roger Douglas has been substantial over the past week. As you would expect the positions are polarised. But the support is higher than I expected. Sometimes my view of the average intelligence of voters is tarnished by the seeming preponderance of political ignoramuses but this week my faith has been rekindled by the callers who can talk knowledgeably about economic philosophy and are prepared to debate the ideas. What is also needed are a few facts and figures that squash the mindless myths that have grown up around Rogernomics.

Some callers, especially to Willie Jackson, have talked about suicides due to redundancies, the hearts being ripped out of small town New Zealand, with Jackson running the line that Douglas is a 'mongrel'. (The 'mongrel' had the guts to ring in by the way and will appear for a question and answer session some time in April.)

But let's have a look at the claim that Rogernomics caused widespread and devastating unemployment.



Clearly New Zealand was not alone during the early 90s and not the worst-off either in terms of unemployment. None of the other countries experiencing high unemployment had implemented the sorts of economic reforms NZ had. Roger Kerr talks about the effects of 'disinflation' being significant during this period. Why did new monetary policy focus so heavily on controlling inflation? Rampant inflation during the 70s and 80s had a lot to do with the employment slump of the early 90s.

Another caller talked about how New Zealand's GDP per capita tumbled due to Rogernomics. "Rogernomics is why we are now 22nd in the OECD", he said.



We had already fallen from being near the top in the 50s to 18th by 1982.

I don't want this election campaign to be about fighting past battles but ACT must be able to quickly and simply refute the claims made by those who will attack them. Candidates should remember a few statistical facts that can be absorbed and are indisputable.

Without the reforms things would have gotten a lot worse. With them New Zealand's recovery was faster. What a shame Douglas never got the chance to finish the job. What a shame he never got his flat tax in. What a shame Labour have managed to undo much of the achievement by ramping up government spending and regulation.

And isn't it great to be having some real debate between left and right economic theory, debate about the future of the country, instead of a personality contest between Helen Clark and John Key?