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Bassett Tackles The State
The Politician As Historian

Trevor Burnard - 10/9/99

Interview by Trevor Burnard - Part 1

Michael Bassett discusses his new book The State in New Zealand 1840-1984
Reprinted from History Now

Michael Bassett has had a rich and varied career, both in politics and history. After completing undergraduate and graduate degrees at the University of Auckland, he finished a PhD at Duke University. Returning to New Zealand in the mid-1960s he combined an academic career with political office. His achievements in both history and politics have been considerable. Elected to Parliament in the 1970s as M.P. for Te Atatu, he was a prominent member of the Labour Government of 1984-1990, becoming Minister of Internal Affairs and Minister of Health. Both before, during and after political service he wrote history. He has written books on the 1951 Waterfront Strike, the Third Labour Government, and the Department of Internal Affairs and political biographies of Sir Joseph Ward and Gordon Coates. His most recent book is The State in New Zealand 1840-199 (Auckland University Press).

In your new book,The State in New Zealand 1840-1984, you argue that New Zealanders have always been receptive to the idea of an interventionist state and suggest that this willingness to have an activist state differentiates us from other countries. Why do you think New Zealanders have liked the State so much?

Donald Denoon argues in Settler Capitalism: the Dynamics of Dependent Development in the Southern Hemisphere (Oxford 1983) that new societies formed largely in the nineteenth century (most, with the exception of Canada, in the southern hemisphere) showed early willingness to use the State for experimental purposes. In New Zealand a degree of planning came with the first settlers. The Wakefield settlements were designed to replicate a slice of English life. Because of the prevailing British thinking of the late 1830s the Wakefield settlements were bigger and bolder in New Zealand than in South Africa and in South Australia, but like all such social engineering over time, no more successful. What really drove state experimentation in each place was the fact that settlers had so little capital while the infrastructural challenges before them were so enormous. Only the State could order things as well as have the capacity to borrow for essential development. Once public authorities proved their ability to borrow and construct roads, bridges, hospitals and schools and also to run services such as railways, why stop there, especially when depression closed in towards the end of the 1870s? Helping industries to develop, finding jobs for settlers who had been led to believe they would get them, and assisting with access to farms and housing followed naturally. Only a small minority of early politicians had any fixed ideas about the boundaries between public and private activity, and any reservations were pushed aside in the rush towards the pragmatic use of the State's powers. Soon a culture that relied on politicians and put as much faith in the efficacy of public endeavour as it did in private enterprise had emerged.

What was not understood was that the State could profitably undertake only limited things when economic times were bad and returns from exports fell. The public enjoyed the good times (1895-1920; 1936-1966), and supported spending to the hilt. They then could not understand why it was so difficult to continue such spending when the world economy turned down. Demands for state intervention always increased during bad times, ironically at the very time when the Government's capacity to borrow was reduced, and therefore its ability to do much that was useful was hobbled. Like many a household or business, the Government found itself shouldering high overheads and reduced income. Yet New Zealand's fiercest election campaigns - 1890, 1931, 1935, 1975, 1984 (and 1999?) have always followed economic downturns when the State's inability to produce miracles was clear. Re-adjusting one's overheads is always necessary in personal and commercial situations, but voters have seldom seen it as appropriate when it comes to the State's obligations. Historically, New Zealand's voters have always wanted a change of government to make the State their saviour once more. Lucky governments, such as the Liberals in the 1890s, and Labour in the 1930s, coincided with a return of good times and were able to satisfy expectations. They were rewarded with long terms in office. Others have not been so lucky.

You subtitle your book Socialism without Doctrines. This suggests that New Zealanders have had very limited ideological commitment to theories about the State. Instead, New Zealanders tend to be pragmatic interventionists. Why is there such a strong non-ideological bent to New Zealand policy making? Do you think that State activity has not been driven by any underlying ideological concerns?

So far as I am aware the term "socialism without doctrines" was first applied to New Zealand in 1901 by Albert Metin. Others such as Andre Siegfried writing a few years later also noticed the lack of doctrinal debate about the use of the powers of the State. Little has changed since those days. No substantial philosophical justification for State activity has ever emerged in New Zealand, and I doubt whether it would have helped matters much if it had. I confess that I myself have little interest in theory. In my earlier political days I thought that the State could usefully intervene in many aspects of the economy and society. Witnessing the lack of success that resulted from such interventions has caused me to reduce my belief in the usefulness of the State. If I were asked to define where the boundary line between state and private initiative should be drawn it would be rather nearer to the minimalist end than it once was. But that conclusion results from experience, some of it at close quarters, rather than from any philosophical belief. Speaking personally, I would add a moral dimension: it is wrong, even wicked, to go on promising and doing that which the evidence shows will almost certainly be costly and futile. If this mixture of motivations adds up to a philosophy, then so be it. But it is hard to elevate it to the grand status of a doctrine!

In my view the pragmatism of New Zealanders is one of their most enduring features. The danger comes from the fact that it has been easy to intervene; to draw back once an intervention has been proven foolish is much more difficult. Many peoples' careers can be adversely affected, if the State changes direction. Such changes happen all the time in the private sector as industries and commercial concerns change direction, adopt new priorities, and adapt to the market place. But the State has proven to be a much less flexible animal because we feel that it can and ought always to fix problems. Sometimes, sadly, it can only make things worse: State Mines (1901), the Government Tourist Bureau (1901), Railway Road Services buses (1926), many of the activities undertaken by New Zealand Rail itself, and the establishment of the New Zealand Shipping Corporation (1973) and Supplementary Minimum Prices for farmers (1978) spring to mind. With the benefit of hindsight we can see that most or all these interventions were doomed to failure from the beginning. Has the New Zealand public learned from these experiences? Sadly, I doubt it. A willingness to use or misuse the powers of the State seems to be alive and well.

You stress that while state intervention was necessary and effective in the nineteenth century, the state became overly intrusive and state activity became socially and economically counterproductive in the twentieth century. Why do you say that? Are your views on the historical importance of state activity different from other historians?

The socially obtrusive state accompanied big economic and political interventions. Liquor, gaming, and censorship laws were tightened during the First World War when soldiers were overseas, and were kept in place when peace returned. At first, busybodies wanted to ensure that those who stayed at home were, like the soldiers, denied good times. Once passed into law, such controls acquired a wider band of supporters, some of them the controllers themselves who resented any thought of change. The recipients of pensions beginning with Old Age in 1898, Widows in 1911, the Blind in 1924 and Child Allowances from 1927 always wanted more. Striking a fair balance between society's responsibility to help those in need, and leaving the individual with a responsibility to make some effort on his/her own behalf, has always defeated governments. They have simply found it easier to extend the range of benefits and the level of payment with the result that the costs of social welfare have gone on increasing steadily while the Government's income enabling it to pay has fluctuated, sometimes moving along a steady downwards trajectory. Introducing the Domestic Purposes Benefit (DPB) 1973, non-earner benefits under Accident Compensation Corporation (ACC) 1974 and National Superannuation (1976) at a time when New Zealand's terms of trade were adverse was foolhardy. Huge extra costs were piled on to taxpayers at a time when the country's income was ebbing. Not surprisingly, inflation took off, something that has always been the enemy of poor people with small savings. Economic growth slowed. These days economists argue that when the State's share of economic activity in a country exceeds 25 per cent of Gross Domestic Product (GDP) there is usually a decline in economic growth which is needed to pay the bills. Since World War Two the New Zealand State's share of GDP has always exceeded 25 per cent . It was 28 percent in 1950, 41 per cent in 1982, and hovers today around 37 per cent. Not surprisingly, New Zealand's economic growth keeps falling behind what is needed to sustain even a reduced level of state activity. Consequently our standard of living does not increase as fast as it should.

In saying these things, my views of state activity are significantly different from those of most New Zealand historians who seem to regard the health of the economy as a secondary consideration to the desirability of keeping everyone in state-provided comfort. Keith Sinclair, our best-known historian, was unabashedly a welfare stater who watched the wind-down after 1984 with increasing incredulity. Many others have written about New Zealand history as though the steady march forward by the State equated with progress. In some areas such as the provision of public goods - roading, railways, electricity production and reticulation, state housing - the State was an engine for progress. In other areas its interventions have been much less successful (State Mines, Government Tourist Bureau, Railway Road Services), and in the cases of the Shipping Corporation, the introduction of Supplementary Minimum Prices, and the Think Big energy schemes of the late 1970s and early 1980s, downright disastrous. Far from New Zealand's history of state intervention being one of steady upward progress, it has been one of successes and failures, much like the record of many a private company out in the market place.

Has your experience as a high level cabinet minister given you any special insights into the functioning of the state? Has your political service changed how you write history?

Yes, my fifteen years in Parliament including nearly six as a Cabinet Minister, three of those in the major social portfolio of Health, certainly gave me insights into the functioning of the State. I concluded that many historians and political scientists have an overly simple and romantic view of the political process. For several years I was Minister of Health and my wife was an elected member of the country's biggest hospital board. I was in a unique position to witness what happened to the money which the minister passed on to the board. I realised that in all too many cases the money was being wasted. Understanding that from every million dollars given by the Government to a public hospital board about $900,000 of it was paid out in salaries to providers with little guarantee that the patient for whom the services were designed received any tangible benefit, convinced me that the State had lost sight of its basic health goals. With the assistance of an uninquiring media, the deliverers of many state services had taken over much of the welfare state from the intended beneficiaries. The political process had been perverted. Moreover, many politicians came to believe that they were helping patients, students or beneficiaries, when in reality they were helping the providers of the services and allowing these providers to make policy - often in their own interests. My optimism about the potential for good in state action revealed in my book The Third Labour Government (1976), and in some of my essays in Getting Together Again (1979), has been gradually replaced with a much greater cynicism about the ability of the State to produce beneficial outcomes for the public. While the State must always set standards and ensure that those who can't afford good education and health care get it, that doesn't mean that governments and their employees are the best providers. History shows us they are unlikely to be.

Read NZine next week for Part 2 of this interview in which Michael Bassett discusses the effect of his involvement in the 1984-1990 Labour government on his view of the state in New Zealand, the interactions of Maori with the state, the impact on New Zealand history of important impulses in American history, and his choice of topics for his books on New Zealand history.

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