Prosperity and Austerity: A Brief History of the Economic Tensions that Define Modern New Zealand.

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John A Lee 1936.

John A Lee: Portrait of a Well Meaning Extremist.

John A Lee was 21 when the First World War broke out. He had been on the road since he was 14, sleeping rough and eating inadequately. He had been in and out of institutions (mostly for petty theft) and had picked up tuberculosis somewhere along the way. Not especially interested in the idea of fighting for King and Country he nevertheless volunteered immediately imaging death on the battlefield preferable to death in a hospital bed if that was the way his disease was going to take him. It was the condition of his lungs kept him out of uniform but he persisted and with the help of an understanding Doctor was finally able to join the New Zealand Expeditionary Forces in 1916. He often said that he went to war as an observer and not as an ardent soldier nevertheless his time in service was remarkable.

He singlehandedly captured four German soldiers manning a machine gun emplacement on the Wytschaete Road near Messines in Belgium in 1916 and later that same year saved his Taranaki Company from a machine gun nest when he and two others crept up around behind it and captured forty two men and two machine guns. His left forearm was amputated after he was caught in an explosion during the Battle of the Somme in September 1916 and his war was over. For his efforts he was awarded the DCM, The Distinguished Conduct Medal.

His war adventures go some way toward describing his character and temperement but only pain half the picture. Born in 1891 he was the child of a solo mother in a time when such a thing was considered shocking. (His father was by all accounts a wild and charismatic entertainer with a gambling habit). His siblings shared different fathers and his mother often sought charitable help to keep everyone fed. He described their family life as one of ‘grinding poverty.’

He attended school infrequently and drifted into a life of petty crime. A sometime ward of the state he experienced the harsh indignities of the workhouse/borstal system (the infamous Burnham Industrial School) an experience that was to inform him for the rest of his life. An incorrigible escapee he was often on the run and through various misadventures learned the art of subterfuge in order to maintain his freedom.

He educated himself at provincial libraries and remained a voracious reader throughout his life. He was a particular and devoted student of socialist writers Jack London and Upton Sinclair and by the time he joined the army he was so deeply committed to the concept of socialism that he was nicked named ‘Bolshie Lee.’ His last jail stint ended in 1913 after he was released from Mt Eden Prison for smuggling alcohol into the King Country.

*Liquor was prohibited in the King Country for more than 70 years although tales of ‘sly groggers’ who smuggled alcohol into the district abound. Prohibition began in and ended on 13th November 1954 after the locals voted for an end in a referendum.

His 1963 book ‘Simple on a Soapbox’ was Lee’s account of his time in the first Labour Government and addressed his the events that lead to his expulsion from the Labour party and was one of the three books on the shelf of my childhood home that weren’t Readers Digest Condensed Books. I used to wonder at the title and often took it down to examine the cover art, a sort of modernist style sketch that I found endlessly fascinating.

Of course the subject matter itself was way and afar beyond my ability to understand but not so his autobiographical work ‘Children of the Poor’ which I found later in the school library. A rip-roaring account of his time in institutions and on the run from the law it is also a powerful political polemic that takes square aim at the social and economic injustices Lee was keen to expunge from society. I was shocked and moved by Lee’s portrait of social injustice in New Zealand and experienced my own first primitive political stirrings as a result.

I later learned that this book created quite a storm when it was published in 1934 lifting the veil as did on mainstream attitudes toward the poor, disadvantaged and disenfranchised. His critics accused him of overstating his case and exaggerating his experiences nevertheless it was an influential work that sold by the truckload and stirred much debate and reflective soul searching.

Lee, variously described as charismatic, fiery, impetuous and witty, believed that New Zealand was uniquely placed to create a unique brand of democratic socialism that recognised the nations inherent individualistic qualities (i.e. that perhaps socialist collectivism was not the best method for our primary industries) while providing for the disenfranchised and standing up for the rights of the workers.

With the tsunami of the Great Depression sweeping over the land Lee wrote ‘We are living in an ethical twilight, with the ideals of the new in our hearts and the pattern of the old upon our minds.’ In his mind Capitalism was collapsing and all societies had to choose, he believed, between fascist reaction and socialism. ‘We will lead you on a march that will inspire the whole of the earth’ he prophesied and indeed, the experiments of first Labour Government (1935) were closely watched and had a profound influence on many societies seeking solutions to the challenge of the Great Depression.

Lee was first elected to parliament in 1922 (the youngest ever MP at that time), lost in 1928 and won again in 1935 with single biggest majority ever achieved in the young nations history but despite his value to the party as an orator, policy maker and charismatic frontman (as a war hero his presence was invaluable), his impetuous and fiery temperament set off warning bells with the parties leadership.

Savage Vs Lee

 

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Michael Joseph Savage on the campaign trail

Like Lee, Michael Joseph Savage came from a background marked by poverty and hard labour and like Lee he was a self-educated and well-read socialist and with that education came a desire to improve the lot of the working person. Savage, who was a first hand witness to the tragic lot of the working poor and socially disenfranchised, described his take on socialism as ‘true Christianity in action’ a political philosophy that was interested primarily in social and economic justice rather than hard-core socialist ideology. In Savage’s mind, capitalism wasn’t beyond redemption, a position that was at odds with radicals like Lee who believed that capitalism was essentially a failure. This difference in perspective proved the breaking point in a friendship that had had otherwise been very close.

Savage had inherited the leadership of the party after his predecessor and fellow Australian Harry Holland died suddenly of a heart attack while attending the funeral of the Maori King in 1933, an accession that was rigorously opposed by Lee who felt that Savage was too cautious in his approach yet in the eyes of the electorate, then as now suspicious of extremism, the centrist and conciliatory Savage was the perfect figure for the day and carried Labour to their first electoral win in a landslide victory in 1935.

Lee began to resent Savage and Savage become wary of Lee (describing him as ‘too wild and unconventional’) and despite Lee’s obvious abilities as an organiser and manager; Savage kept him at arms length. The frustrated Lee did not help his case for a Cabinet position with a constant stream of abusive backbiting aimed directly at Savage whose considered approach to change clashed with Lee’s radical urgency.

In 1938 Savage fell ill with colon cancer but he postponed the required surgery focused as he was on a raft of reforms and the looming European war. Sensing opportunity in Savage’s misfortune Lee stepped up his campaign against him with the publication of an essay in 1940 titled ‘Psychopathology in Politics’ which implied that Savage’s physical condition had destroyed him mentally.

Savage responded at that years Labour Party Conference by stating that Lee had made ‘ two years my life a living hell with all the venom and lying innuendo of the political sewer, using my illness to destroy me as a political force’. As a result Lee was expelled from the Labour Party and 24 hours later, early on 27 March 1940, Savage died at his home in Wellington.

Lee had been undone by his inability to control the aspects of his nature that allowed him such success on the field of battle. His temerity given full reign became an obsessive urge that undermined his position in Labour’s inner circle, and whatever he thought about Savage, the party and public did not agree.

Lee’s response was to launch a new political movement called the Democratic Labour Party renamed the Democratic Soldier Labour Party for the 1943 elections. Lee’s autocratic leadership style had a negative impact on the new party and confirmed that Labour’s decision to keep him out of the central leadership had been a wise one. Lee lost his Grey Lynn seat and political career was effectively over. He devoted the rest of his life to writing, critiquing Labour (‘Labour is a despotic machine, hostile to democratic values, and victim of an unholy alliance of greedy unionism with corrupt politicians’) and running a successful bookshop, Vital Books. He died at his home in 1982, aged 91.

 

Reform Within Capitalism

Savage’s government of reform shaped the economic and social direction of New Zealand for decades to come creating in the process not only one of the world’s wealthiest nations, but also one of the fairest. 40 years after Savage’s historic victory, NZ had the distinction of having the most equitable distribution of wealth in the world.

Despite their differences Lee and Savage helped transform the nature of the society they had inherited. Dispensing with the social and economic traditions inherited from Britain, they and their contemporaries set NZ on a new course of economic self-determination that made humanitarian concerns the central factor of economic policy and the process redefining the nature of nationhood and the purpose of society.

Labour won 4 consecutive elections before losing the government benches in 1949. It would be 8 years before they would govern again. In the meantime the new conservative National party government maintained Labour’s ‘cradle to the grave’ universalist welfare state, building on those early foundations and further enhancing NZ’s status as a world leading social laboratory.

Tension is a defining factor in any robust democracy and in New Zealand this tension has manifested itself in a endless tug of war between private and public interests and the challenge of governments, both of the political left and right, has been to maintain a balance that does not tip the scale too far in either direction. As New Zealand matured as a democracy one thing became certain to among most political players, this electorate did not tolerate extremism, favouring instead a sense of fair play that considered the needs of the majority above the needs of the few. A delicate balance that governments by in large maintained successfully until the 1980s when the nation set itself on a new direction.

With Lee’s passing in 1982 the nation buried the last of the reforming architects of the 1930s. Two years later that legacy became the target of a robust ideological war of attrition that was to become the defining hallmark of that decade. The 4th Labour government introduced free-market liberalism by stealth.

The previous conservative government headed by the autocratic Robert Muldoon was a strange mix of heavy-handed interventionist socialism and conservative social values that divided the community on a series of issues. The early 1980’s were marked by anxiety and an atmosphere of tension as New Zealand examined itself with rigorous intensity. By the time the 1984 election rolled around the electorate was ready for change. The nation had looked into itself and did not like what it was seeing and a new Labour government with revolutionary social agenda marched triumphantly into office.

Led by the charismatic David Lange this government was ready to met all the expectations of a community ready to take a bold step forward into the future but for one factor. The new minister of finance Roger Douglas surprised everyone, including the party itself, with a reformist economic agenda that was totally at odds with Labour’s traditions. Trade barriers were dismantled, financial rules were loosened, unions were disempowered and much of the nations state owned infrastructure was sold off in what could be described as a knee-jerk reaction to the previous forty years of state control.

The Doors to Fortress NZ were thrown wide open and the nation was set to wheel and deal its way to a new level of prosperity, or so the sale pitch went. With hindsight it is easily argued that the economy was due an overhaul and some liberalisation was necessary but for ordinary working Kiwis the extent of the changes came as a psychological shock. None of the caution of Savage here, this was the anti-Lee given full reign.

The government fractured, warped and ate itself as the reformists argued for further and more radical economic liberalisation while the traditionalists called time saying enough was enough. A new conservative government elected in 1990 took up the argument.

Centrist Prime Minister Jim Bolger held his radicals in check for a considerable time before being rolled by the extremist faction headed by Jenny Shipley. The nations first female Prime Minister was an avowed right wing conservative of limited ability whose biggest fault was her lack of perception regarding the wider electorate and its intolerance for ideological politics. Mistaking her inner circles enthusiasm for extreme reform as the pulse of the nation she found herself quickly and unceremoniously dumped at the next available election.

Since then the electorate has selected economically centrist governments dedicated to New Zealand’s tradition of social progressiveness but 81 years after the first Labour government addressed the dire social condition of working people, our love affair with unfettered free market economics has bought us perilously close to that which we left behind many decades ago.

Today our income disparity rates among the widest in the developed world, total combined national debt has reached staggering heights and many of the acquired rights of working people have been watered down if not struck for the law books. Child poverty is at it’s worst since the 1930s and public housing is being sold off at a time when the working poor are finding it difficult to pay the rent.

The official response from the current conservative government has consistently been “there is no poverty in New Zealand,” or in other words, “nothing to see hear move along,” a similar response to the conservatives of yore as they faced the looming threat of the Great Depression.

In early 2016 comments from the conservative Minister of Finance Bill English warned that a period of ‘Austerity’ might be necessary to address national debt. As with the rest of the developed world the conceit in New Zealand has been that that it is the Corporations and wealthy individuals who create jobs and that by providing them with tax breaks we are encouraging them in their noble endeavours.

These tax breaks have been instrumental in powering the nations debt as the government has been borrowing to fill the gap between tax revenue and the needs of the community. The statistical evidence reminds us that it is in actually small business that provides for the bulk of working people yet the mythology overstating the contribution of the 1% persists meaning that ‘Austerity’ will be directed at those who can least afford to bear it.

I return here to John A Lee. In 1932 he persuaded the Labour Party to organise mass meetings to address the conservative governments ‘retrenchment’ response to the Great Depression. At a meeting in Dunedin Lee declared: ‘we are at war against those who are trying to drag the people down to degradation and poverty. We are starving our way to prosperity in a world of plenty, and it can’t be done’.

 

Epilogue

My grandfather Bill was a young Dairy farmer in 1935 when the Savage led Labour government came to power. The price for butterfat was low, his debt was high and like so many other farmers he was wondering if he was going to lose his land. Lee and Savage were monetary reformers determined to use the mechanics of the banking system to benefit the nations people and the plan was use Reserve Bank credit to pay Dairy Farmers a guaranteed price for butterfat. (This was one of the areas of disagreement between the two men. Lee wanted to take the use of reserve band credit much further than Savage was prepared to do. Savage preferred a more orthodox approach using a mix of conventional debt borrowing and government credit fearing inflationary kickbacks if too much new money was set loose in the economy).

Bill had been to see both Lee and Savage speak and returned to the farm convinced by their plan and besides the ruling conservatives (the traditional party of the farmers) had nothing offer beyond belt tightening.

The first Labour Government paid Dairy farmers a pound for a pound of butterfat, more than enough to shore up the farms finances. It allowed him and his contemporaries the income to invest in their local dairy Co-Operatives and create solid middle class lives for their families. For the rest of his life my grandfather spoke fondly of both Savage and Lee and the differences these men made to his life.

My paternal grandfather, forever after a proponent of monetary reform (using the Reserve Bank to create and distribute debt free money to stimulate growth and pay for the necessities that couldn’t be covered through general taxation) shared something of Lee’s suspicion of overly powerful Unions (in order to strengthen the position of working people in society the first Labour government had made unionism compulsory and thereby powerful, a power which many, including Lee, claimed made them somewhat corrupt) and transferred his vote to Lee’s Democratic Labour movement hence the books pride of place on the families bookshelf.

I grew up in the 1960 and 70s safe in the bosom of a middle-income family, the third generation to be raised on that piece of land my grandfather had wrested from infertile former swampland. We were not rich but neither did we want for anything and there was never any doubt that our prosperity was due to the likes of Lee and Savage. Their story is not history; rather it is a prescient tale about the swings and roundabouts of political fashion, a story that reminds us that when testing times come knocking complacent orthodoxy is not the solution but then neither is radical extremism. The truth lies always in the vast grey rather in the carefully drawn black and white and best of New Zealand has always been found in that grey.

Government has a sacred duty to step up when times are tough and provide where private interests cannot and will not and to ensure that the needs of ordinary citizens are adequately provided for. Contemplating the heady times of the 1930’s and the approaching Austerity of 2016 I realise as much as everything has changed, so much stays the same. I am also reminded of the importance of perspective, a quality valued little the arena of ideology.

Books by John A Lee:

  • Children of the Poor, 1934.
  • The Hunted, 1936.
  • Civilian into Soldier, 1937.
  • Socialism in New Zealand, 1938.
  • The Yanks are Coming, 1943.
  • Shining with the Shiner, 1944.
  • Simple on a Soapbox, 1963.
  • Shiner Slattery, 1964
  • Rhetoric at the Red Dawn, 1965.
  • The Lee Way to Public Speaking, 1965
  • Delinquent Days, 1967.
  • Mussolini’s Millions, 1970
  • Political Notebooks, 1973.
  • For Mine is the Kingdom, 1975
  • Soldier, 1976
  • The Scrim-Lee Papers. 1976 (with CG Scrimgeour & Tony Simson)
  • Roughnecks, Rolling Stones & Rouseabouts, 1977
  • Early Days in New Zealand, 1977
  • The John A. Lee Diaries 1936–1940, 1981

 

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John A Lee 1981, the year before his death

 

 

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