Wednesday, July 21, 2004


With various people mulling over the 1984 revolution , I thought I might as well weigh in. To my mind, there were two absolutely unforgivable aspects of the "reforms": they undeniably made those at the bottom of our society worse off in real terms, and they were grossly undemocratic.

I've blogged about the effects of the "reforms" on the poor before (most notably here), but to summarise: the rich got richer and everybody else got poorer. And not just in relative terms, but absolute ones. Most of the blame for this can be sheeted home to Labour's 1988 tax cuts, which transferred wealth from the bottom 80% of our society to the top 20%. This is unforgivable behaviour from any government, but was especially unforgivable from Labour, a party which had traditionally stood for the interests of the poor and downtrodden - and made all the worse by the fact that it didn't actually work. The "payoff" for the "economic stimulus" provided by cutting the top tax rate was five years of low or negative economic growth and an enormous structural budget deficit, which was temporarily papered over with asset sales. Which is yet another reason to be highly sceptical of right-wing claims that tax cuts increase government revenue and produce higher growth: we've done the experiment, and it was a complete failure.

On the democratic front, successive governments gained power by being economical with the truth, and once in office, lied blatantly about their intentions. Labour's 1984 manifesto was hardly indicative of what it would do in government; their 1987 campaign was built on promises that they would rebuild social services and not sell state assets - promises which were simply ignored once re-election was secured. They abused Parliamentary procedure to ram legislation through without the usual checks and balances, frequently passing bills in parts or under urgency to prevent public scrutiny. On several occasions, they even passed legislation through its first reading with entire sections marked "[to come]", making a mockery of the entire legislative process. This was partly due to the autocratic Parliamentary culture of the time, but largely due to the "reformers" inherent distrust of democracy - they knew that the electorate would never accept their policies (the economic theories on which those policies were based said as much), and so we had to be forced to "take our medicine" - for our own good, of course.

This experience - and National's 1990 betrayal (they campaigned on a platform of ending the "reforms" and returning us to a "decent society", but once elected adopted Labour's policies and pursued them with even greater enthusiasm) - is the chief reason why we have MMP: so that future governments will be hamstrung by having to work in coalition, and will never be able to do that to us again.

In hindsight, many of the reforms are uncontentious - the abolition of farm subsidies and trade barriers, the adoption of the SOE model for some government enterprises, the requirement for government departments to keep open and honest books - but the speed with which things were done and the utter disregard for the human consequences or public opinion poisoned the entire program. Change was necessary - but not that much, not that fast, and not that way.