My decision to leave British politics in 1994 and return to New Zealand reflected both the pull of my home country and my failure to convince my colleagues in the British Labour Party that they were embarking on a mistaken course.

I had become increasingly despairing of the determination of those who eventually became New Labour’s leaders to embrace policies that I believed were fundamentally flawed.  Tony Blair, Gordon Brown, and their allies were convinced that Britain’s economic future lay in the financial institutions of the City of London.  They were persuaded that the market should not be second-guessed and would always get the right answer.

They were, as Tony Blair told Rupert Murdoch, “all globalisers now.”  They were “intensely relaxed”, as Peter Mandelson notoriously asserted, “about people becoming filthy rich” – with the corollary that they were equally relaxed about widening inequality.  They accepted that government should treat economic policy as a largely technical matter of controlling the money supply that could safely be left to supposedly non-political bankers.

They welcomed the asset bubble and the conspicuous consumption of the rich as evidence that these policies were working.  And, though public opinion deterred them from joining the eurozone immediately, they remained convinced that a single European superstate – insulating so-called free-market policies against popular scrutiny - could be imposed on the people of that hugely diverse sub-continent.

My decision to return to New Zealand was for me and my wife a good one.  But it was disappointing to find that New Zealand had abandoned its long-standing commitment to social justice and community and had become the standard-bearer – lauded by The Economist  – for the “free-market” policies that were expected to produce a new era of unparalleled prosperity.

Like everyone else in the developed world, we were constantly assured that there was no alternative, and that the huge wealth amassed by a tiny minority would eventually “trickle down” to provide at least some benefit to the rest of us.

These simple certainties were, however, stood on their head by the global financial crisis.  We learned that asset bubbles would burst, that markets could not be relied on to get the right answers, and that only  governments could step up to the plate to save us from disaster.

But the cheerleaders for (and beneficiaries of) the policies that had produced such a disaster were not to be deterred simply because all experience showed that they had been wrong.   So, in the United States, for example, political leaders solemnly assert that – in the general interest - tax cuts for the rich must remain sacrosanct, while the unemployed must fend for themselves. 

In Europe, the architects of the eurozone insist that the Greek people must shoulder the burden of the inevitable meltdown.  And, right across the globe, our policy-makers defy all common sense by pushing austerity as the only remedy for recession.

Our political leaders in New Zealand offer no exception to this sadly defective performance.  They, too, plod wearily along the same well-worn track, providing yet one more proof of Einstein’s famous dictum that to go on repeating the same process while expecting a different outcome is the definition of insanity.

Yet, we have good reason to expect better.  This should be a time when New Zealand’s great advantages can be brought to bear.  We have the huge benefits of climate and geography, we are politically stable, we have an educated workforce, we provide a safe and welcoming context in which to do business, and we have access to the world’s fastest-growing markets for the products we are uniquely skilled at producing.  What more do we want?

Yet our government continues to give priority to its own finances.  All the talk is of financial orthodoxy, of getting the government’s own (perfectly manageable) deficit down.  Little attention and even less action is given to our real problems, getting our people back to work and reducing our propensity as a country to borrow from overseas – even though those are the issues that have led to the credit downgrades that we were told had to be avoided at all costs.

Those who practice what I call “politics by label”, however, judge arguments not by their weight but by their provenance.   For such people, facts can be ignored if they appear in the mouths of the wrong people.

In pointing out what a depressing document is the Treasury’s pre-election forecast (even with the by now obligatory element of over-optimism), I do not merely draw attention to the wasted three years during which we have barely lifted our heads above the recession-imposed parapet.

What I do is re-affirm the arguments I have made over 35 years in public life.  I bemoan the lack of ambition and leadership shown by this and other governments.  I regret the failure to understand that economics is no longer (if it ever was) just a matter of the bottom line.  It is, as Keynes said, “a behavioural science”; it involves how people lead their lives, how they interact with the natural world, and how they live and work together in society.

Where can we find the courage to break the shackles of a barren and discredited ideology?   Where can we find even a glimmer of new thinking? 

Bryan Gould

26 October 2011