Mr. Humes History Lesson

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Appeared in the Vancouver Sun, Feb 7, 2002
Ontario Hydro’s privatization is the latest of a litany of changes reversing the top down government strategy that had been the legacy of the misspent 20th century. And, of course, there is the galling reality that the current Ontario policy is being informed in large measure by lessons from Tony Blair’s Labour Party in Britain.

Nobody could have expected life long believers in the old ways to simply give it up. As the hero of the power to government, John Maynard Keynes, pointed out, people seldom change their ideas after the age of 30. So, they don’t go away and they don’t change their views….what do they do when, for example, they are faced by the likes of Premier Gordon Campbell, a liberal and former CUSO worker busily besting the likes of Mike Harris and Ralph Klein?

One thing they do is engage in historical revisionism. Take for example the Vancouver Sun’s own Stephen Hume who recently delivered himself of a column which purported to survey the evidence on the effects of New Zealand’s reforms in the mid 80’s. These reforms, says Hume, are the template for Campbell and to know what effect the Liberal policies will have we need only look at New Zealand’s experience. Needless to say, given his point of departure, we are not surprised to find that Hume’s tour of the Antipodes dwelt predominately on the swamps and that the expedition returned with the verdict that the New Zealand policies didn’t work there and they won’t work here either.

Hume is correct in at least one thing and that is the connection between B.C. and New Zealand. In 1983, then Premier Bill Bennett enacted a comprehensive program of policy change following the sort of ideas which the Fraser Institute had been suggesting were required to pull BC away from the brink of economic catastrophe. The Institute spread the word of this program around the world and Bennett himself addressed a worldwide gathering of pro-market reformers in Victoria in September 1983.

The intellectual leader of this group, Professor Milton Friedman, later described Premier Bennett’s program of reforms as one of only two cases where a leader had successfully brought about such an abrupt change in the course of economic and social policy. The other leader was Margaret Thatcher whose program to that date Friedman judged less comprehensive in scope.

More than a year later, the pro-market Labour government of David Longe and his finance minister Roger Douglas began the process of dealing with the financial crisis which was the aftermath of pink Tory Prime Minster Robert “Piggie” Mouldoon and the loss of imperial preference for New Zealand’s agricultural products in the UK market. Contrary to Hume’s rendition of events through the words of the “experts” he cites, the main decline in the standard of living in New Zealand had already occurred and the radical reforms following BC’s example were an attempt to halt a slide into a 3rd world abyss.

Any assessment of the BC originated, New Zealand reforms, has to be conducted relative to where New Zealand would be otherwise. Of course this is almost impossible to say. We can observe that most of the New Zealand reforms adopted in the fall of 1984 and the subsequent wave of reforms adopted by the Labour government have remained in place – including the bold monetary policy of Donald Brash, which Canada and the US have begun to follow.

Of course, historical revisionism is not restricted to the pages of the Vancouver Sun and there are ongoing attempts by odds and sods political coalitions in New Zealand to suggest that things were much better before Rogernomics and Ruthansia (respectively named after New Zealand finance ministers Roger Douglas and Ruth Richardson). But, just like Tony Blair made obligatory rhetorical contributions to the coffers of the old left while remaining a Thatcherite at heart, most of Rogernomics remains. Trade unions have been successful in partly gutting the Labour Contracts Act and to that extent employment gains have been less assured.

Of course, New Zealand has not been immune from the ravages of deflation in the commodity sector. But unlike the situation in 1984, they are not in a chaotic financial crisis.

There is another feature of Mr. Hume’s history lesson that needs correcting and that is the implication that what is currently happening in BC is in some sense radical. It is not. While some like Bennett advisor Norman Spector have suggested that what the Liberals are doing is more radical than the 1983 BC reforms, that notion lacks a sense of context. What Bill Bennett did was epoch marking in its time since it was undertaken against a backdrop of continuing governmental expansion elsewhere in Canada and much of the rest of the world, including New Zealand.

Mr. Campbell by contrast is following in the footsteps of Harris and Klein but through much deeper and thicker doo doo. The changes yet proposed such as the reductions of the public service and welfare restructuring are modest by comparison with the Klein changes. Much more will have to be done to achieve the gains which Alberta and Ontario have reaped. And speaking of that, you would have thought that both these provinces, rather than Zealand, would have provided a more relevant and appropriate standard by which to judge British Columbia. But only if you’re interested in assessing the likely positive impact of the changes.

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