No return to the old 'ordinary'

Economists and politicians talk endlessly of economic "recovery". But what are we "recovering" to?

And can we go there?

A "re-" prefixed to the wrong word can seduce us away from the uncertain future to a comforting - but lost - past.

Take the Act party, in conference this coming weekend.

Twenty years ago, Act's formula for economic and, as a result, social policy powered a lot of thinking and a large amount of government policy, here and in many market-economy countries.

Much smaller government, greater individual and corporate freedom and weariness of "welfarism" formed a tide in intellectual and political circles.

But by the late 1990s National Party ministers had tired of and grown resistant to Act's lectures and those of its supporting think-tank, the Business Roundtable.

So, too, the Key-English Government: it wants smaller government but in the sense of more efficient and effective delivery of roughly the same level of services; it is liberalising labour, building and some other law, but not (so far) to 1990s levels and has tightened financial regulation and some competition and other law and is not slave to market ideology; and it is trying to reformulate, rather than reject, welfare.

Act's slide is no surprise.

John Key gave it breathing space by driving National towards the centre after Don Brash's Act-like leadership. Rodney Hide, in 2005 a skin-of-the-teeth survivor of National's Mr Brash period, got Act on life-support in 2008 only by adding a hard law and order policy (with an unfortunate choice of MP to lead it). Scandal and internal dissension corroded Mr Hide's leadership and now Act is led by National's John Banks, after Mr Brash gatecrashed the party and Mr Key engineered a high-profile vote-Banks ploy in Epsom.

Act faces two questions on Saturday. The simple one (well, actually not so simple, but simpler than the other one) is how to bring through promising young Activists like David Seymour and Stephen Whittington. If voters could see past Mr Banks' bombast and bluster to these smart young folk, that might be something to vote for in 2014. But Act has to do that from a tiny base, in a field crowded with parties.

The steeper challenge for Act is to keep its message relevant at a time when market ideologies have been tarnished by the global financial crisis (GFC) and are being swamped in an ideological ferment. To continue to argue, as socialists used to when the welfare state began to flounder, that being purer will overcome the shortcomings of incompletely applying theory has much less purchase post-GFC.

New theories are needed to explain and respond to modern societies and economies buffeted by faster and voluminous information and tidal and torrential movement of people, finance, production and jobs. To polish up old theories is to try to recover past ascendancy, not claim the new high ground.

The questions are different.

Old answers will not do. We aren't going back to the old normal. It has gone, with its comforts and discomforts.

Talk of the "rebuild" of Christchurch illustrates that point. "Rebuild" suggests restoring what was there before.

But Christchurch is now different. However it is built, the CBD to come will not recover the old Christchurch. Likewise, in many areas, houses are not allowed to be rebuilt on the same ground. Something new has to be built.

"Revitalise" is more appropriate than "rebuild". With a new energy, Christchurch could "renew" itself as a world-class example of modernity and imagination. (It probably won't.)The "re-" prefix attached to some words (like "new" or "think" or "develop") can suggest doing things differently and thereby point ahead. But mostly "re-" means a return (a turning back) to a prior state.

That is so in economists' and politicians' obsession with economic "recovery". Recovery suggests that by applying various old poultices we can recover and restore the economy we had before the balloon of borrowing we pumped up popped.

That will not happen. When we floated up with that balloon into the debt stratosphere, an airstream took us to a different terrain, on to which the deflated balloon deposited us.

The issue for economists and politicians - and political parties and theorists - is to work out what works in this new place.

To do that, new questions have to be framed and the thinking and policies and actions of business and government managers have to be adjusted and modernised.

Retrofitting old notions and reActivating old ways of doing things will not work.

Act, though very small beer these days, epitomises this challenge. But it is not alone: all parties (except New Zealand First, which rides populist waves) will have to reframe, rethink, redevelop and renew to fit the emerging but not yet definable new normal.

So far, none of them is really trying.

They go on looking for "recovery" even though the economy and society aren't recovering the way they used to in the old normal. Some day they - and we - will realise we are in new territory.

- Colin James is a leading social and political commentator.


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