Brian Rudman

Brian Rudman is a Herald columnist looking at Auckland and national issues

Brian Rudman: Shearer electrifying free-market debate

Labour Party leader David Shearer. Photo / Mark Mitchell
Labour Party leader David Shearer. Photo / Mark Mitchell

What just happened? Bland, colourless Labour leader David Shearer has suddenly been transmogrified into a working-class hero.

At a single stroke he's tossed an exploding pressure-cooker into the middle of the electricity part-privatisation process, promised everyone cheaper electricity, and left his right-wing foes on the sideline, spluttering long forgotten Cold War invective.

Mighty River Power chief executive Doug Heffernan was so riled by the thought he might not end up running a fully "private" enterprise that he forgot he was still a public servant - albeit one on $1.49 million a year - and denounced the man who could be his future boss as promoting "a socialist consumer model".

Economic Development Minister Steven Joyce called it "economic sabotage" and a "half-baked Soviet Union-style nationalisation", while Prime Minister John Key was cruising the airwaves muttering about the proposal being far left and "barking mad".

The reality was rather less revolutionary. Mr Shearer and Russel Norman, the Green Party co-leader and presumably deputy prime minister in a future Labour-Green coalition government, had proposed a Pharmac-like new Crown entity, NZ Power, which would negotiate power prices and buy electricity from the big five generators on the public's behalf.

It's the sort of intervention the promoters argue is commonplace in Europe and parts of the United States.

But to rightist politicians and their commentariat fellow-travellers, accustomed to nigh on 30 years of free-market Rogernomics orthodoxy, it was a heretical bolt from the red.

I had to crack up at one of my fellow opinionists comparing Mr Shearer to Hugo Chavez, while another wailed that "critics are very good at pointing out what is wrong with free markets while ignoring the extent to which they work immaculately every day across every aspect of this crazy, comfortable modern life".

I'm betting there are not many people in Greece, or Spain or, closer to home victims of the local finance company collapses, who view the sainted market through such rose-tinted spectacles.

In the aftermath of the most recent world financial crisis, to say nothing of local calamities like Pike River and the Carterton ballooning tragedy, it might seem commonsense that markets, both large and small, need regulating.

But for the true believers, this is as hard to accept as having to admit that the use of fossil fuels is causing global warming.

Since the fall of the Berlin Wall in 1989, they've developed a semi-religious belief in the free-market economy as an essential bed-fellow of liberal democracy. Leading the way was American academic Francis Fukuyama who wrote a celebrated article as the wall came down, declaring: "What we may be witnessing is not just the end of the Cold War ... but the end of history as such; that is, the end point of mankind's ideological evolution and the universalisation of Western liberal democracy as the final form of human government."

In Whoops!, a riveting book on the origins of the 2008 global financial collapse, journalist John Lanchester zeroes in on the fall of the Berlin Wall and how capitalism was allowed to run wild after the victory over communism.

While lauding Western liberal democracies as "the most admirable societies that ever existed", he says the populations of the West benefited for decades "from the equivalent of the ideological beauty contest between the capitalist West and the communist East, both of them vying to look as if they offered their citizens the better, fairer way of life".

Western governments intervened in all sorts of ways, providing free schooling, free medical treatment, social assistance for the needy, and all sorts of regulations to protect the citizenry from the excesses of the free market.

But "then the good guys won, the beauty contest came to an end and so did the decades of Western progress in relation to equality and individual rights". Inequalities of income rapidly grew. Water-boarding torture of prisoners of war became acceptable and "the financial sector was allowed to run out of control".

Instead of the free market being "subject to argument and comparison with other systems, it became an item of faith, of near-mystical belief ... the finance industry made up the class of priests and magicians and began to be treated as such".

As a one-time member of this priesthood, multi-millionaire Prime Minister Key no doubts finds the Shearer/Norman apostasy both incomprehensible and outrageous.

But with the polls hinting at the possibility of a Labour-Green coalition victory in 2014, it is the sort of brake the free market and its acolytes should start preparing themselves for.

It's ironic that it's taken the distinctly non-ideological Mr Shearer to challenge the 30-year-old orthodoxy.

Of course, some of his critics on the left are complaining he hasn't gone far enough.

But within the party, there's a buzz of support for the leader that until now has eluded him.

Debate on this article is now closed.

- NZ Herald

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