Alan Greenspan and Roger Douglas

Note: this post originally appeared on ‘Douglas to Dancing’, a blog I maintained from 2007-9 on the ACT New Zealand political party. The blog was an extension of the thesis I wrote about the Act Party in 2007, From Douglas to Dancing: explaining the lack of success of ACT New Zealand and evaluating its future prospects (PDF).

I’ve noted before that ACT has many international connections – perhaps more than any other New Zealand party. Much of this stems from the work of Roger Douglas as Minister of Finance during the 1980s, after which Douglas was recruited as an international consultant on economic reform. Moreover, ACT has often been keen to look abroad for policy proposals, such as when it became keen on the “Wisconsin Works” work-for-the-dole scheme during the late 1990s. More recently, in 2006 Rodney Hide and Heather Roy travelled to Germany and Ireland to look at how the German Free Democrats (FDP) and Irish Progressive Democrats (PD), which they saw as being similar to their own party, managed to be so much more successful.

Other New Zealand parties do have international connections, but they tend to be more rigid. The Green Party, for instance, works with the Australian Greens, despite the Australian party enjoying little electoral success (mostly due to majoritarian voting – a better role model would be the pioneering and very successful German Greens); Labour looks to its namesake in Britain and to the Australian Labor Party for clues to boosting its own fortunes. Some proposals the Labour Party comes up with here, notably the infamous “pledge card”, were taken holus-bolus from Tony Blair’s NewLabour.

Given the international connections of Roger Douglas, it did not come as a great surprise to find mention of him in former US Federal Reserve chairman Alan Greenspan’s recently published autobiography The Age of Turbulence: Adventures in a New World. But alas for Douglas, he is not credited as a pioneer of economic reform, even for this part of the world. Rather, Greenspan enthuses about the actions of Australian Labor Prime Minister Bob Hawke and now former PM John Howard and Treasurer Peter Costello. Referring to Hawke, Greenspan says his reduction of tariffs and loosening of the employment market resulted in an “amazing economic turnaround…increasing real per capita income by more than 40 percent [from 1991-2006]”. Amidst a double page of praise for Australia, Douglas is reduced to just one sentence which implies he was just a copycat: “New Zealand, goaded by Finance Minister Roger Douglas, engaged in similar reforms in the mid-1980s with the same impressive results”.

Greenspan’s comments cut to the core of the ACT story. Firstly, the NZ reforms did not grant us the “same” results; otherwise our incomes would not have dropped relative to Australia over the same time. Secondly, Greenspan’s overlooking of Douglas as a pioneer of economic reform mirrors ACT’s own complaints that it never gets the credit for its own ideas. Thirdly, Greenspan’s ensuing praise for the actions of Howard, Costello and others since the 1980s is a reminder that despite some further reform directed by Ruth Richardson from 1990-1993, the trinity of Douglas, ACT and ACT-like policies of lower tax and regulation have been largely out of the cold since Douglas was dismissed as Finance Minister in 1988.

That was 20 years ago.

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