New Zealand 1980S Economic Reform Essay

6498 WordsNov 4, 201126 Pages
In the 1970s, the proportion of monetarist advice was rising to central government in a cerebral, hard fought, but by no means unconstructive, debate with the various Keynesians. Radical Monetarism did not appear publicly until the writing of Treasury’s 1984 post election briefing. But the group of Radical Monetarists who were to take power was evolving within the Treasury and the Reserve Bank, probably from the late 1970s and certainly by the early 1980s. A couple of canards need to be put down. First, as already explained, it did not represent a `mainstream’. In fact a small group within Treasury and the Reserve Bank developed a set of ideas and analysis, which was then imposed on the rest of the government economists, and ultimately the nation. The imposition occurred without open debate, and there was no moderating influence from the university economists, who to this day are more sceptical than those in government and business.[8] Second, neither were the policy prescriptions forced upon Treasury by some outside agency, such as the IMF (the most popular candidate of the conspiracy theorists). It is true that some of the prescriptions advocated in confidential papers by the IMF were also adopted by the Radical Monetarists, and undoubtedly their economists had an intellectual impact upon the group (as did the OECD economists).[9] I know of no evidence that in the early 1980s they were strong-arming the New Zealand government, although of course they were encouraging the government to take some particular courses of action.[10] It is true that the primary influences on the ideas of the reformers came from overseas, including the IMF, the OECD, and some American universities (Bollard 1989:9; Choat 1992). But their ideas were accepted voluntarily, if uncritically. At issue is not whether there was some insidious external subversion, but to what extent the

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