So let’s have a quick history lesson and see if we can learn something.
The year is 1945. World War II has ended. Nazi Germany has been defeated by the allied forces: the United States, Britain, France and the Soviet Union. In Britain, it was Prime Minister Winston Churchill who led his country to victory. He was celebrated as a hero in May 1945. But only two months later, the Brits elected a new Parliament and a new Prime Minister, Clement Attlee. Why did they elect Attlee and his Labour Party? Well, because Attlee had a simple and appealing message: Britain had won the war. But now it needed to win the peace, too. Clement Attlee promised to build a ‘New Jerusalem’ – a country where milk and honey flow.
And how did he want to make that happen?
Well, with the same tools that Britain had used to win the war: a massive, collective, national effort. The idea was that the British state, which had defeated evil Nazi Germany would now use its extraordinary power to build a better country. The Attlee Government took control of the British economy. Entire industries were nationalised. Coal, iron and steel, aviation and railways, telecommunications and shipbuilding, gas and electricity supplies, even the long-established Bank of England. They were all brought into state ownership.
Britain’s new economic order expanded the welfare state. The Attlee Government created the National Health Service. Countless regulations and controls accompanied it. Britain never got as close to central planning as it did in the years following World War II. The result was dismal. It ended in economic disaster. In 1973, the UK had to introduce the Three-Day Week to save electricity. Then, in 1976, it needed a bailout from the International Monetary Fund. The economic crisis culminated in the “Winter of Discontent” of 1978/79, when nothing worked. The British experiment of a state-run economy had failed. So, Britain demonstrated how not to pursue economic policy.
For sure, sweeping state powers are necessary to win wars. But running an economy is different from fighting a war. Ironically, the country that showed the alternative was West Germany. For the Germans, their total war had ended in total defeat. German cities had been bombed out; the economy lay in ruins; the population was demoralised; the nation was morally disgraced. These were hardly the best conditions for an economic recovery. But West Germany managed an economic miracle.
The miracle was led by Ludwig Erhard, a liberal economist. He later became Economics Minister and Chancellor. In all areas of the economy, the West Germans did the opposite of Great Britain. There were no nationalisations, no economic planning, no price controls. Instead, there was solid monetary policy through an independent central bank, economic freedom and a basic system of social security. Erhard called his concept the “social market economy” and promised “prosperity for all”. It delivered just that. West Germany became the economic powerhouse of the post-war era. By the late 1960s, West Germany overtook Britain in GDP per capita.
If we look at New Zealand today, we just fought a kind of war: that was the war against Covid. For this war, we gave the state extraordinary powers: to lock us up, to close our borders, to support the economy. But now that we are leaving Covid behind us, we need to return to our liberal traditions. We cannot let the state plan our lives. We cannot let it run large parts of the economy. We need a free market, a free economy and free Kiwis to generate prosperity for us all. And to deliver opportunities for all New Zealanders.
That is what I have learnt from history. And I hope you enjoyed this history lesson.
Dr Oliver Hartwich is the Executive Director of The New Zealand Initiative think tank. This article was originally published by The Common Room and is published here with kind permission.
And how did he want to make that happen?
Well, with the same tools that Britain had used to win the war: a massive, collective, national effort. The idea was that the British state, which had defeated evil Nazi Germany would now use its extraordinary power to build a better country. The Attlee Government took control of the British economy. Entire industries were nationalised. Coal, iron and steel, aviation and railways, telecommunications and shipbuilding, gas and electricity supplies, even the long-established Bank of England. They were all brought into state ownership.
Britain’s new economic order expanded the welfare state. The Attlee Government created the National Health Service. Countless regulations and controls accompanied it. Britain never got as close to central planning as it did in the years following World War II. The result was dismal. It ended in economic disaster. In 1973, the UK had to introduce the Three-Day Week to save electricity. Then, in 1976, it needed a bailout from the International Monetary Fund. The economic crisis culminated in the “Winter of Discontent” of 1978/79, when nothing worked. The British experiment of a state-run economy had failed. So, Britain demonstrated how not to pursue economic policy.
For sure, sweeping state powers are necessary to win wars. But running an economy is different from fighting a war. Ironically, the country that showed the alternative was West Germany. For the Germans, their total war had ended in total defeat. German cities had been bombed out; the economy lay in ruins; the population was demoralised; the nation was morally disgraced. These were hardly the best conditions for an economic recovery. But West Germany managed an economic miracle.
The miracle was led by Ludwig Erhard, a liberal economist. He later became Economics Minister and Chancellor. In all areas of the economy, the West Germans did the opposite of Great Britain. There were no nationalisations, no economic planning, no price controls. Instead, there was solid monetary policy through an independent central bank, economic freedom and a basic system of social security. Erhard called his concept the “social market economy” and promised “prosperity for all”. It delivered just that. West Germany became the economic powerhouse of the post-war era. By the late 1960s, West Germany overtook Britain in GDP per capita.
If we look at New Zealand today, we just fought a kind of war: that was the war against Covid. For this war, we gave the state extraordinary powers: to lock us up, to close our borders, to support the economy. But now that we are leaving Covid behind us, we need to return to our liberal traditions. We cannot let the state plan our lives. We cannot let it run large parts of the economy. We need a free market, a free economy and free Kiwis to generate prosperity for us all. And to deliver opportunities for all New Zealanders.
That is what I have learnt from history. And I hope you enjoyed this history lesson.
Dr Oliver Hartwich is the Executive Director of The New Zealand Initiative think tank. This article was originally published by The Common Room and is published here with kind permission.
5 comments:
But we are not Germans. We lack their tremendous drive and ability. We have a large low skilled portion of the population content on benefits or to remain low skilled with employment and contribution according. Germans have not been and are not obsessed with return to a stone age culture and obsolete non productive language. We do not comply with regulations as Germans do but forever strive to work around or change. Was the reborn Germany finaced and owned by Germans or by outsiders as most major investment here seems to be?
Thank you. It is an interesting article.
I agree with Robert Arthur. The author gives us too much credit. We are not German - we are the polar opposite of a population possessing the ability & drive to succeed. Yes, we work hard, but so do hamsters on a hamster wheel; we are inefficient & apathetic. By & large we are just an unskilled, unproductive nation reliant on some form of welfare to help us out - we expect the State to subsidise pretty much everything. Conversely, the same mentality that saw the Nazis build an incredible road up to a Hitler’s holiday pad at the top of a huge summit in just 18 months (a sharp contrast to how long our roads take to build), is the same mentality that saw them go from drowning in debt & in literal ruins post WWII, to one of the wealthiest & most productive countries in the world. Germany is a country that has a world class health system, world class education, coupled with zero tolerance for truancy (the penalty is substantial fines that are followed through), & where things like cigarette vending machines can actually be left to hang on posts in Subways or outside shops etc without being ripped off & stolen. No one can name even one town in New Zealand where this could happen.
New Zealand, by sharp contrast, has succumbed to progressive ideology & as they say, if you go woke, you go broke. And we are going seriously broke - no money, no plan & increasingly dismissed overseas as a country that does not value freedom or women. We are seen as a backward hick town to be laughed at. In fact, I would say we are becoming the real life version of 1984; a dystopian hell hole. It is not the New Zealand we used to be so proud of. And it is not going to improve anytime soon. Our current politicians, with the exception of Matt King, are morally & politically corrupt. They all, including David Seymour who is meant to be a libertarian (probably the worst sell-out out of all of them), supported things like the annihilation of our human right to body autonomy & the right to refuse medical treatment, & they all voted for the self ID law, both of which will have had & will continue to have long term economic consequences. And no one can see it or just don’t want to see it. The ‘she’ll be right’ attitude that worked for us in the past, is betraying us. Right now our children are being taught men can have periods instead of the times table (or learning to differentiate ‘boarders’ from ‘borders’), no one can go into hospital without a RAT & a mask, people are still mandated out of their jobs, & our health system prioritises expensive & unethical medical treatment for trans people over those like bowel cancer sufferers. All the while our media just looks on. We are doomed.
And commentators don’t forget English is no longer valued. Another critical way in which the country formerly known as New Zealand is isolating itself from the world.
It surpise me that overseas publications have not picked up on the disaster unfolding here. With maoridom so effectively brainwashed and so many motivated to think only of themselves, we will likely land several Te Pati mps. Their antics should make the world stage and so eventually reveal NZ as a total laughing stock mad keen on returning to the stone age.
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