The most depressing contribution, so far, to the debate over quantitative easing (QE) belongs to Labour's finance spokesman, David Parker.
OPINION: Responding to the Greens' call for $2 billion of QE, to bring down the value of the Kiwi dollar, Mr Parker stated: “I'm not in the camp that says the Government should direct the Reserve Bank as to what monetary policy tool it uses, whether it should be lower interest rates, or loan to valuation ratios or some sort of levy on capital inflows or quantitative easing.”
This is the old economic orthodoxy speaking, and proof of Labour's inability to free itself from the neoliberal ideology of the 1980s. It also gives the lie to all those who have taken comfort from Mr Parker's much publicised “conversations” with internationally renowned economists like Joseph Stiglitz.
Had Mr Parker been genuinely influenced by them, he would have been willing to challenge the notion that interfering politicians' hands must be kept away from the big economic levers. But, by pointedly distancing himself from those who are willing to direct the Reserve Bank to use its monetary tools for the public good, Mr Parker has proved that Labour, like Louis XVIII, has “learned nothing and forgotten nothing”.
He has also provided an alarming glimpse of what is likely to happen if National's increasingly inept economic management leads to a change of government in 2014. Should a David Shearer-led Labour Party emerge with the largest share of the Left vote, and with Mr Parker as its preferred finance minister, the Greens' more radical, people-first, approach to economic management will be over-ruled.
New Zealand will experience again what it was forced to endure between 1996 and 1998: a coalition government at odds with itself, seething with intrigue, and prone to sudden and destabilising political lurches. In this scenario, Greens co-leader Russel Norman will play the role of Winston Peters to Mr Shearer's Jenny Shipley and Mr Parker's Bill Birch.
And, just as the National-NZ First coalition government, riven by ideological differences, fell apart after less than two years, so too will any Labour-Green coalition in which the primacy of politics is not the activating principle of both parties.
Presented with Mr Parker's proof of Labour's unreconstructed neoliberalism, what should the Greens do? Mr Peters' experience as New Zealand's only “treasurer” should warn them that the smaller party in a coalition government cannot expect to exercise more than token economic influence. Treasury will always end up in the hands of the most powerful coalition partner.
But denied effective control of the next government's overall economic direction, what hope have the Greens of avoiding the fate of every other small party which has nailed its colours to the mast of a much larger vessel? While Labour remains a neoliberal party, what chance has it of effectively addressing problems caused by neoliberal policies? And what chance have the Greens of avoiding being cast as part of the problem, instead of what they have always claimed to be: the beginning of the solution?
Dr Norman's advocacy of QE and his championing of New Zealand's exporters and manufacturers is not only politically courageous but very shrewd. By promising to take the QE lever of economic power into their own hands the Greens have forced Labour to reveal its own.
Mr Parker, backed by his leader, has signalled Labour's unwillingness to abandon that creaking foundation of neoliberal statecraft, the “independent” (ie, subservient to the financial sector) central bank. In doing so, he has confirmed Labour's unwillingness to do any more than administer New Zealand's economic decline.
The Greens' path forward is as challenging as it is clear. Dr Norman should announce that a coalition with Labour will be contemplated only from a position of strength. Only if the Greens are the Left's largest party.
- The Dominion Post