Trump and Muldoon

Over the last few days, a couple of local commentators (here and here) have been drawing parallels between Donald Trump and our own former Prime Minister, Sir Robert Muldoon.  I commented on one of those pieces, somewhat sceptically, and didn’t give it much more thought.    But yesterday Tyler Cowen devoted his Bloomberg column  to attempting to make exactly the same comparison, which prompted me to think about the case more carefully.

What would you think of a Western democratic leader who was populist, obsessed with the balance of trade, especially effective on television, feisty and combative with the press, and able to take over his country’s right-wing party and swing it in a more interventionist direction?

Meet Robert Muldoon, prime minister of New Zealand from 1975 to 1984. For all the comparisons of President Donald Trump to Mussolini or various unsavory Latin American leaders, Muldoon is a clearer parallel case.

I’m still not remotely convinced.  Any parallels seem superficial at best, and deeply unfair to Muldoon.  Without claiming any particular expertise in Italian politics/history, I’m not sure why Cowen would go past Silvio Berlusconi if he wants to find parallels among leaders in modern democratic states. –  and, even then, it is hard to believe that Italian governments were quite as shambolic as the Trump administration has been in its first few weeks.

If the similarities are few and superficial, the differences are pretty profound.  We can start with the personal:

  • Muldoon served in the army for several years in World War Two.  Like many prominent Americans (Cheney, Clinton) Trump avoided military service in wartime.
  • Despite suggestions of an extra-marital affair, Muldoon had one wife, for life.
  • Muldoon was neither a product of, nor revelled in, celebrity culture.
  • Muldoon wasn’t a wealthy man, and didn’t trade in influence or connections to build personal wealth.  He lived pretty modestly and his finances weren’t a secret.
  • Whatever people thought of him and his government’s policies, few doubted his genuine concern for New Zealanders, and no one ever thought that his motivation for being in politics was some sort of narcassism or craving for respect.

One can easily think of other differences.  Muldoon held high office for almost 15 years –  almost six years as Minister of Finance and then Deputy Prime Minister in governments led by other people, and eight and half years as Prime Minister (and Minister of Finance).  Ours is a parliamentary system, with no history of outsiders suddenly ascending to office  –  and so, for all the talk of “taking over his country’s right-wing party”, Muldoon joined it young, worked hard for it, rose gradually within it, had his undoubted talents recognised by those who worked closely with him, was selected (by his fellow members, all selected at a local constituency level), first as deputy leader, then as leader.  As leader of a parliamentary party –  able to be ousted at any week’s caucus meeting, at any time –  he won three general elections.  And Trump?   How many leading Republicans voluntarily chose him as their candidate?

As Cowen notes, Muldoon was also well-known for his fearsome command of detail.  He was a highly effective minister with a huge capacity for work.    And if he didn’t always agree with officials, those who worked for him recognised his respect for the role of public servants, as advisers.   Muldoon ran a disciplined administration –  in contrast, say, to the weak Prime Ministerial leadership and management in the administration that followed his.   Trump has published numerous books under his name, but Muldoon wrote books himself.

Of course, some of these sorts of comparisons aren’t new.   I pulled down from a box in the garage this morning, my copy of the Citizens for Rowling publication.   Six weeks or so before the 1975 election –  Muldoon’s first as party leader – a group of fairly prominent New Zealanders launched this high profile campaign, notionally in support of the then Labour Party Prime Minister, Bill Rowling.  In fact, it was pretty openly a “Citizens against Muldoon” movement –  people appalled at Muldoon’s pretty aggressive style, and at his popularity (“I ask the Nationals how they would feel if Mr Muldoon was the leader of the Labour Party” –  I imagine the answer would be “worried that we were about to lose badly”).  One of New Zealand’s leading journalists outdid himself lamenting the threats to individual freedom

“it happened in the United States during the era of Senator Joe McCarthy; it happened in Germany in the 1930s. I used to believe that it couldn’t happen in New Zealand.  Now I am not so sure.”

It didn’t of course.

Was Muldoon’s style one I was particularly comfortable with?  No, not really. He was a self-described “counter-puncher”, and willing to take on pretty aggressively those who challenged him.  Politicians like Muldoon’s predecessor as National Party leader, John Marshall, and his predecessor as Prime Minister, Bill Rowling, probably naturally appeal more readily.   But as party leaders, those two won no general elections at all.  Rowling, a profoundly decent person and effective minister, fought three elections against Muldoon, and lost them all.  The second and third were close, but the first wasn’t –  it was one of the biggest electoral reversals in New Zealand history (popular vote, and parliamentary seats), led by Muldoon, who was a fearsomely effective campaigner.   Not many people voted for Muldoon in 1975 because he “wasn’t Clinton” (or the New Zealand equivalent).

What of policy?   Muldoon became Minister of Finance in early 1967.  A year later, faced with a collapse in commodity prices, he oversaw a devaluation and an IMF-supported programme of macroeconomic stabilisation.  It was tough –  cuts to subsidy, fiscal restraint, markedly reduced access to credit –  and effective.  His first term as Minister of Finance saw a continuation of the slow progress towards financial sector liberalisation.

But when people focus they most often concentrate on his term as Prime Minister, in which he also served as Minister of Finance  (in New Zealand until the late 1980s it wasn’t uncommon for the Prime Minister to also hold a major portfolio –  Forbes and Holland has also been Ministers of Finance, several Prime Ministers had also been Minister of Foreign Affairs, and David Lange also served as Minister of Education).   Even then, the focus is often on the later years of his term –  and recall, by contrast, we are less than one month into the Trump presidency.

The external circumstances were probably the most difficult any New Zealand government has faced since the Great Depression.  The terms of trade had fallen very very substantially and New Zealand was grappling with reduced access to its major foreign market, the United Kingdom, following the UK entry to the EEC.  Official opinion was quite divided about the best way forward –  how temporary should the fall in the terms of trade be treated as for example.  In the earlier years of the Muldoon government, much of the policy news was  pretty positive:  elected on a mandate to “restore New Zealand’s shattered economy”, Muldoon markedly cut back key consumer subsidies, and –  over the doubts of some key officials –  undertook a quite far-reaching (for its time) liberalisation of the financial sector.  The fiscal deficit was reined in.   (A few years ago one pro-market former senior public servant, not exactly a fan of the Key government was to note to me his view that the first three years of Muldoon were materially better than the first three years of Key).

There were mistakes: the new public pension system, materially better in concept that what the previous government had put in place (and still the basis of our effective system) was excessively, and unnecessarily, generous.  But the details had been explicitly campaigned on –  policy wasn’t simply a matter of few idle phrases and atttitudes.

For those looking for direct parallels, the early days of the Muldoon government did see a defeat in the courts.  Having campaigned forthrightly on replacing the system of public pensions, Muldoon on assuming office indicated that contributions to the prevous system could now cease.  That hadn’t yet been legislated by Parliament, although with the huge parliamentary majority National had, there was never any doubt it would be.  In Fitzgerald v Muldoon the courts did their job in restraining executive over-reach.

The economists’ indictment of Muldoon mostly focuses on his second and third terms.  Fiscal deficits weren’t kept in check –  although the high rates of inflation then quite common in advanced countries (Muldoon’s biographer notes that as late as 1981, Australia, the US, the UK and New Zealand all had double-digit inflation) –  tended to exaggerate just how bad those deficits were.  And if I think Cowen is quite wrong to describe Muldoon as “favouring easy money” –  it was mostly a case for favouring low unemployment, in a country where for several decades there had been almost none, and where everyone accepted that getting on top of inflation might involve transitional unemployment costs –  there was no consistent sustained effort to get inflation down, even gradually.  He’d rather have had inflation down, and kept unemployment low –  thus his ill-fated heterodox approach in 1982 (a wage and price freeze, and a cessation of the continuous devaluation of the exchange rate, all designed to break the cycle of wage inflation expectations and high wage settlements).  But then not wildly dissimilar policies had been tried in the US only a decade earlier.

Cowen also calls Muldoon a protectionist.  There is little evidence for that claim.  He wasn’t the enthusiast who drove the CER agreement with Australia –  generally seen as material liberalising measure, even allowing for trade diversion risks –  but as the process went on he was instrumental in making it happen, despite the mutually disdainful relationship between Muldoon and his then Australian counterpart.  Initiatives that Prime Ministers really oppose typically don’t happen.  Muldoon recognised that an economically successful New Zealand required international trade, and more of it –  and his government was one constantly grappling with threats to access to the European markets for meat and dairy exports.  His government initiated industry studies to help wind back domestic protection for manufacturers servicing the domestic market (car assembly, TV assembly etc) and if the programmes of export incentives were expensive and misguided, the fundamental insight wasn’t –  a successful New Zealand was likely to be one in which New Zealand firms found competitive niches internationally, in a world in which we had no bargaining power and no one owed us any favours.

And what of Think Big?  Here is Cowen

His most significant initiative was called “Think Big,” and, yes, it was designed to make New Zealand great again. It was based on a lot of infrastructure and fossil fuels investment, including natural gas, and it was intended to stimulate the country’s exports and remedy the trade deficit. Because New Zealand’s parliamentary system of government has fewer checks and balances than the American system, Muldoon got more done than Trump likely will.

Yet this bout of industrial policy worsened the already precarious fiscal position of the government, and Muldoon’s public-sector investments did not impress.

Cowen elsewhere quotes Muldoon’s biographer, Gustafson, who makes it clear that Think Big was never primarily Muldoon’s project.  And while I won’t defend those projects, it is important to recognise some of the context: a take or pay agreement in respect of major gas resources that had been signed by the previous government, and yet another large upward shock to oil prices in 1979.  I’m deeply sceptical of most government investment projects –  perhaps especially those that rely on commodity price forecasts –  but I’m told that even within the Treasury at the time, a fairly large chunk of the staff were sympathetic to at least important parts of the set of projects eventually under the label “Think Big”.   It all ended up ruinously expensive, and Muldoon has to accept responsibility –  but it wouldn’t have happened without the able (if misguided) responsible senior minister at the time, Bill Birch.   And we run Cabinet government here.

New Zealand, of course, is rather unimportant to most people (New Zealanders aside).  The United States remains one of the most important international powers.  And so while our foreign policy doesn’t matter much to others, theirs does.   Whatever concerns people have about Trump’s knowledge of, or approach to, Russia, Iran, Saudi Arabia/Yemen, China, North Korea or wherever,  Muldoon was a consistent and fairly predictable member of the western alliance.  To the distaste of some, but consistent with our 30 year membership of ANZUS, he welcomed visiting American warships and –  whether he did it for reasons for sentiment or realpolitik trade considerations –  won my admiration for his military support for Britain in the Falklands conflict.

Even at this distance in time, I’d argue that Muldoon remains a profoundly ambivalent figure.  But I’d argue that, against extremely challenging circumstances, New Zealand moved forward rather than backwards under his stewardship.  There were plenty of backward steps, and quite a few mis-steps, and he was a politician not a saint –  so when Tyler Cowen writes of one policy that perhaps his “intentions might not have been entirely benign”, one might only observe that most politicians operate with the next election in mind –  but there was plenty of progress too.  Muldoon appointed plenty of able people as ministers (and some duds too), and if he was suspicious of some of them, he allowed or enabled a whole variety of useful reforms to happen –  small, certainly, on the scale of what came afterwards, but he was a product of his times, his party, and his background.

What do I have in mind?   Milk and bread were heavily subsidised when Muldoon took office, they weren’t when he left.   The CER agreement did facilitate a material opening of trade with Australia.   Saturday shopping was generally banned in 1975 –  it wasn’t by 1984.  Restrictions on road transport –  favouring rail –  had been materially woundback.  The Official Information Act was introduced on Muldoon’s watch.  The foreign exchange market was being freed up, and government bonds were being auctioned for the first time.  Even the price freeze had actually expired under Muldoon –  and official forecasts then suggested inflation subsequently could have been kept to 5-7 per cent.  Voluntary trade unionism became a reality late in Muldoon’s term, and one of his last acts as Minister of Finance had been to announce that subsidies to farmers would be wound back.

Was it a great record?  Probably not.  Were there mistakes?  For sure.   But was democracy, the rule of law, the freedom of the press, or the strong anti-corruption conventions that governed New Zealand society, government, and public sector seriously threatened or eroded?  Not at all.  Did he, or his ministers, enrich themselves or their families?  No.  And we had a Prime Minister with the attention span, and intellect, to make considered (if perhaps often wrong) decisions, and to defend them coherently.

From this standpoint, only a month in, Americans –  and the rest of the world –  should probably count themselves very fortunate if the Trump administration turns out anything like Muldoon’s.

And if people are still looking for precursors and comparators, the Berlusconi precedent looks more relevant, and frankly more disconcerting.

 

 

23 thoughts on “Trump and Muldoon

  1. My knowledge of NZ politics started on arrival 14 years ago. (On the whole I like what I see.) I find this essay informative and persuasive and a pleasure to read. I’ll be watching for other comments in the hope of learning more.

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  2. Michael
    Thanks for writing and publishing such an interesting and informative piece.
    I found it fascinating, albeit I think you have focussed on the positive aspects of Muldoon, but I guess that was the point.
    NZ hasn’t much in the way of accessible economic/political history making your piece doubly impressive.
    I recently read The Italians, an excellent book about the Italian people and their foibles, including Berlusconi. And it certainly appears that Trump is much more in his camp than Muldoon’s. Although even Berlusconi has redeeming features not available to Trump, such as being self made. Tim Brown

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  3. A bit revisionist.
    While Muldoon achieved a few things often the getting there was unpleasant
    One event sticks out above all else is the Simon Walker episode

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    • Revisionist? yes, probably, altho little of what I wrote would be inconsistent with, say, Gustafson’s biography (as distinct from the popular impression). And of course, my motive wasn’t a full assessment of Muldoon, but mainly to reject the Trump comparisons.

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  4. Many of the think big projects under Muldoon did recreate a need for a higher skilled workforce. Perhaps we need to start think about the Expansion of the budding space hub in Gisborne to perhaps the equal of SpaceX of Elon Musk or the rival of NASA with government grants.

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  5. I found this very interesting. I was 12 when Robert Muldoon lost the election to David Lange. All i’ve ever grown up with was that Muldoon was a disaster. I think the constitutional and financial crisis around the devaluation of the NZ dollar during the transition to the Labour Government is an important part of the Muldoon legacy that is not covered in your essay.

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    • I didn’t cover that 84 post-election episode. I don’t really think of it as a constitutional (or much of a financial) crisis, but it certainly wasn’t Muldoon at his finest. I don’t think he was a great PM or even a great finance minister – altho he did good stuff in with the bad – but he wasn’t (remotely) like Trump.

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  6. “Rowling, a profoundly decent person and effective minister, fought three elections against Muldoon, and lost them all…” is true, but in 1978 Rowling won more votes than Muldoon but first Past the Post meant National was returned as the government.

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    • True, but one can only win on the rules agreed for the game, and under FPP we ran a parliamentary system in which seat by seat votes were the basis – including for campaigning and spreading campaign resources.

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  7. Trump has been clear about Iran as a threat, the need for secure borders and that NATO is outdated (we are not fearing Russia now but Islamic jihad so why have Turkey in the alliance). He has obviously had a great meeting with Netanyahu and for the first time a US president is not dictating but listening. He understands the issues with US education, a divided nation and the almost completely brought and paid for useless media. He has identified China’s trading practices need challenging which is not a new US policy but perhaps he will do a good job here? Hopefully he will have success in these areas but if not, at least he has been clear about the issues.
    It is a shame that NZ does not have a leader that sees things clearly, instead our leaders have fallen so far as to do the bidding of muslim countries (New FTA with Saudi Arabia one of the most barbaric countries on earth that has sex slave markets, chops off hands/heads does not allow women to drive or be out in public alone and if they are found out alone they are raped by the police, or foreigners to enter other than to work in designated areas and any other view point other than wahhabi islam) in attacking Israel at the UN.

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    • Couldn’t disagree about how distasteful (and worse) is our governments’ pandering to Saudi Arabia. Sadly Trump seems just as keen as Obama, as Bush, as Clinton, as Bush….as Roosevelt on that approach, and particularly (currently) the shameful war in Yemen.

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      • With the US blocking world trade unless it is heavily weighted in its own favour, most of Europe in turmoil and Asia average incomes still in the lower end of the pay spectrum, it pretty much only leaves us with. Saudi that still would pay a premium price for our halal meat at a high NZD.

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      • Sweden is a peaceful democratic state that has long been a safe haven for those fleeing conflict. Yet many young people whose families took refuge there are now turning their back on the country. More than 300 people have gone to fight in Syria and Iraq, making Sweden per capita one of the biggest exporters of jihadists in Europe

        http://www.bbc.com/news/magazine-37578919

        John, are we also going to ban Sweden as one of the biggest exporters of Jihadists in Europe?

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    • john, that sounds like Trumps version of the US. Police raping black men with police batons, foreigners rounded up and a likely register of Muslims and Verbal attacks of Jewish reporters in the White House press conferences.

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    • Trump is rather outdated with his China rhetoric. China recently burned a trillion USD reserves to buy Yuan in order to keep the Yuan currency higher when the market was selling the value down. China is redirecting its economy towards domestic consumption rather than export production.

      Walking out of the TPP only has strengthened NZ and Australia’s move towards Involving China in the TPP.

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  8. getgreatstuff and your version is straight from soros’s media. If you watched the press conference you will see nothing of the kind happened. You think muslims are not a problem? Odd you blame a president for a policeman’s actions, bizarre logic. So money is so important you are happy to trade with the greatest exporter of jihad terrorism over the last 50 years rather than seek other markets like re-establishing trade with the UK prior to 1971?

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    • Strange that you would blame the actions of a few nut case terrorists on the entire Saudi people? So why would it be strange to blame the atrocious actions of police officers under a Trump presidency?

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    • I am pretty sure we would sell meat to the UK if the UK would buy meat from us but why would they if they can get it cheaper elsewhere as they have been. Face reality the UK has none of the old loyalties that NZ is still one of its colonies and that it is obligated to fund our lifestyle.

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  9. Michael,

    Muldoon for all his many faults did not rely on fake news as Trump does as I have shown.

    Nor did he have the conflicts of interests that Trump now has.

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  10. Getgreatstuff your indoctrination is severe probably from listening to the main media rather than reading facts. Saudi Arabia has been the main exporter of jihad terrorism in the last 50 years only recently over taken by Iran. They recently deported 41,000 pakistani muslims as they hypocritically feared jihad from them. If you read reputable (pew) and academic surveys you will find sharia law (muslim law used in Saudi) is supported globally from 10-99% of the muslim population in each country. Hardly a few when the highest religious act in Islam is jihad (killing non-muslims) and the second highest act is going to a non-muslim countries and making it muslim.

    As for the UK who knows the future and what will happen with their brexit, but whatever that outcome to contemplate business with Saudi Arabia is disgustingly inhumane. May I suggest you educate yourself on female genital mutilation (currently conducted on 200 million young girls each year), child rape, female rape, wife beating, taqiyya, hand chopping and draconian laws on non-muslims enthusiastically enforced under sharia law in Saudi Arabia.

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    • John, you should familiarise yourself with this.

      “For almost twenty centuries . . . the church was the archenemy of the Jews—our most powerful and relentless oppressor and the worlds’ greatest force for the dissemination of Anti-Semitic beliefs and the instigation of the acts of hatred. Many of the same people who operated the gas chambers worshiped in Christian churches on Sunday. . . . The question of the complicity of the church in the murder of the Jews is a living one. We must understand the truths of our history.”

      —Abraham Foxman, Anti-Defamation Leaguei

      Writing in Mein Kampf, Hitler said: “Today, I believe that I am acting in accordance with the will of the Almighty Creator: by defending myself against the Jew, I am fighting for the work of the Lord” [italics in the original].” In addition, there are those who would allege that it was not only Hitler’s personal “theology” but also two thousand years of anti-Semitism by the church in the name of Jesus that laid the foundation for the Holocaust.

      https://jewsforjesus.org/issues-v16-n10/hitler-s-theologians-the-genesis-of-genocide

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      • There is nothing in the bible to embrace anti-semitism Yes the Jews were responsible for Christ’s death but without his death no-one but no-one gets to heaven!

        Hitler was a lot of things but christian???? gimme a break

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      • I was just about to make that point myself about Hitler.

        (Which, of course, is not to deny that the historical treatment of Jews in many Christian kingdoms has not left a lot to be desired.)

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