Time of reckoning for New Zealand imminent, says academic

Time of reckoning for New Zealand imminent, says academic

The role of the public intellectual is to stimulate debate and raise unsettling questions. With The FIRE Economy: New Zealand’s Reckoning, Jane Kelsey proves once again to be a formidable bearer of the mantle.

This long-awaited sequel to the author’s The New Zealand Experiment is a sharply attentive critique of the legacy of New Zealand’s neoliberal project at a time of international turmoil.

FIRE is shorthand for today’s economy where the main sources of wealth are Finance, Insurance and Real Estate. This book details how ‘financialisation’ has progressively hollowed out the New Zealand economy since 1984 and burdened households and the country with massive unsustainable debt. The housing bubble, finance company collapses and the insurance hangover from the Canterbury earthquakes are symptoms of a market fundamentalism that celebrates easy profits and risk, and treats the people and communities who lose as collateral damage.

Kelsey argues forcefully that New Zealand is in a ‘state of denial’, a term borrowed from International Monetary Fund researchers making similar calls of other affluent states in the aftermath of the Global Financial Crisis. A disturbing complacency – the return, in effect, to ‘business as usual’ – makes a reassessment of the FIRE economy, and the neoliberalism that sustains it, more urgent than ever. The fates and responses of countries such as Greece, Ireland, Spain and Iceland stand as cautionary tales that deserve our attention.

Taking up that challenge, Kelsey explains why we must engage in a national discussion on the social, economic and political costs of continuing as we are. In particular, she focuses on the dangers of privatising the state, and of embedding neoliberalism in our laws and institutions. She considers what a post-neoliberal era might look like and what obstacles we must overcome to get there. In criticising the neoliberal project and its social fallout – deepening levels of poverty and inequality, the abdication of the state’s responsibility to its citizens, the transfer of risk to the most vulnerable – Kelsey is far from a voice in the wilderness. Her views are shared by a range of international commentators, whose reputation and authority New Zealand cannot afford to ignore.

• Mark Carney, Governor of the Bank of England: Just as any revolution eats its children, unchecked market fundamentalism can devour the long term dynamism of capitalism itself.

• Joseph Stiglitz, chair of the UN Commission on Reforms of the International Monetary and Financial System, reflecting on the causes of the Global Financial Crisis: Underlying many of these mistakes were the economic philosophies that have prevailed for the past quarter-century (sometimes referred to as neoliberalism or market fundamentalism).

• Christine Lagarde, Managing Director of the IMF:The true role of the financial sector is to serve, not to rule, the economy. [We need to be] making income tax systems more progressive without being excessive; making greater use of property taxes; expanding access to education and health; and relying more on active labour market programs and in-work social benefits.

The FIRE Economy is a remarkable and important achievement, not least because, as Kelsey demonstrates in a revealing appendix, her original research was conducted in the face of increased structural barriers impeding free and transparent access to information about governments’ operations. This too, she argues, is a matter for concern and urgent debate. For anyone interested in our recent past and – more critically – our precarious future, The FIRE Economy is a must-read.

ENDS

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