The Post: Confronting old orthodoxies and hard truths

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In Britain for work recently, I asked everyone I met the same question: can their country be fixed? After months of reading headlines about “broken Britain”, of seeing stories of collapsed public services and soaring poverty, I didn’t necessarily expect a positive answer. But what I learnt was illuminating – for New Zealand as much as for the UK.

In London, it was impossible to miss the damage done in the twelve years in which the Conservatives have governed with a toxic mix of incompetence and cruelty. The average wage is essentially the same now as it was in 2010, embodying an extraordinary, and distressing, stagnation of living standards.

Brexit has permanently damaged the British economy, according to every reputable analyst. Trade is down, investment is down. This is what economic self-sabotage looks like. And it’s something to remember here whenever Christopher Luxon touts National’s fiscal credentials: conservatives don’t always make good economic managers.

More troubling still are the social impacts: in Britain last year, one charitable network alone delivered three million food parcels, a depressing record. Nearly eight million people are waiting to see a doctor. Owing to increased poverty and malnutrition, a by-product of Conservative austerity, new cohorts of British children are literally getting shorter.

For the mostly middle-class people I encountered, life was still tolerable. In the warm summer evenings they sat in public parks, picnicking in that picture-postcard way the British do, dog-walkers and young families mingling under the calmly lengthening shadows.

But even so, my acquaintances feared for their country’s future. They worried about others’ struggles, about long-term decline and the erosion of society. And they were sceptical about whether politics had any answers.

In few countries, indeed, is there a clearer sense of the tide running out on the political certainties that have dominated recent decades. And this leaves both major parties stranded.

Margaret Thatcher’s 1980s reforms, just like our own Rogernomics, were supposed to unleash entrepreneurialism. And in part they did. But hands-off, laissez-faire government also fostered what the French call rentiers – people who live passively off the income from their assets – and encouraged firms to extract super-profits.

In Britain, this is most noticeable among their privatised water companies: sold debt-free by Thatcher, they have since borrowed £53bn and paid out £72bn in dividends, enriching their shareholders while hiking water charges and pumping sewage into the Thames.

Rentiers can be found, too, among the older generation whose homes have soared in value as house-building has plummeted, and who maintain that state of affairs by blocking all development. They then help their kids buy a house, while others 30-somethings are left paying exorbitant rents; inequality replicates across generations.

And as the rentiers profit, others struggle. One leading Conservative thinker, Nick Timothy, argues that Britons have become “serfs to debt, trapped by low pay and bloated assets”. So loud are these recriminations that columnists like the FT’s Robert Shrimsley have begun asking: do Conservatives “still believe in capitalism?”

But UK Labour also faces a dilemma. Too timid to challenge economic orthodoxy, the party seems unwilling to significantly raise taxes if it wins the next election, expected sometime next year. It promises instead to repair public services using the proceeds from higher economic growth.

But, as the former Labour adviser James Meadway argues, turbo-charged growth may not be possible, as climate change sparks extreme weather events, crop failures, food and water shortages, “and the conflicts all these help produce”.

The parallels with New Zealand politics, though not perfect, are clear. We have our anti-development rentiers. We have problematically privatised utilities: notably, the electricity ‘gentailers’. Most of all we have cartel-like behaviour in industries dominated by a few players who can hike prices at the consumer’s expense: supermarkets, banks, fuel retailers.

All this challenges our image of a New Zealand economy founded on plucky entrepreneurialism. It also suggests laissez-faire capitalism is working rather less well than intended – something that should concern National, the party of free markets, as much as anyone, though it seems largely indifferent to the problem.

Meanwhile, we face an ever-more intolerable situation in which the older generation’s healthcare and pension demands grow but we tax only the resources on which the young rely: incomes in the form of salaries and wages. Surely, the resources dominated by the over-60s – assets like rental properties and financial investments, in other words capital gains and wealth – cannot remain untaxed forever.

Yet Labour leader Chris Hipkins has ruled out such levies in his political lifetime. Admittedly that may last only three further months. But still there is a growing risk of political stasis: an unwillingness to confront old orthodoxies and hard truths.

Britain shows us what happens when, over the course of a decade, politics fails to engage with a new reality. We must not slip into that same slough of despond.