Editing Rogernomics (section)

==Douglas and the development of economic policy, 1969–1983==
[[File:Roger Douglas, 1996 (cropped).png|thumb|Roger Douglas in 1996]]

Douglas became a [[New Zealand Labour Party|Labour]] member of Parliament at the [[1969 New Zealand general election|1969 general election]]. He showed his interest in economic policy in his maiden speech, in which he argued against foreign investment in the domestic economy.<ref>New Zealand Parliamentary Debates Vol 365 pp. 123–128</ref> His case for external protection of the domestic economy and government involvement in investment was characteristic of the Labour Party of the time. From 1972 to 1975, Douglas was a junior minister in the [[Third Labour Government of New Zealand|Third Labour Government]], where he won a reputation for his capacity for innovation.<ref name = "Bassett 1976">Bassett, Michael ''The Third Labour Government'' Dunmore Press 1976 {{ISBN|0-908564-35-X}} pp. 24–25</ref> This government followed a broadly [[Keynesian economics|Keynesian]] approach to economic management.

As a minister, Douglas was innovative in the context of the [[public sector]]. As Broadcasting Minister he devised an administrative structure in which two publicly owned television channels competed against each other.<ref>Bassett 1976 p. 31</ref> He was among the government’s leading advocates of compulsory saving for retirement, which he saw not only as a supplement to public provision for retirement but as a source of funding for public investment in economic development.<ref>Bassett 1976 p. 82</ref> The [[Pension|superannuation]] scheme he helped design became law in 1974, but was disestablished by [[Robert Muldoon]] almost as soon as the [[New Zealand National Party|National Party]] won the [[1975 New Zealand general election|1975 election]].<ref>{{Cite book |last=Gustafson |first=Barry |title=His Way: A Biography of Robert Muldoon |location=Auckland |publisher=Auckland University Press |year=2000 |isbn=1-86940-236-7 |page=237 }}</ref>

Douglas maintained his interest in economic issues in opposition. He framed his chief concern as the deep-seated problems in the structure of the economy that had contributed to deteriorating economic performance, and a [[standard of living]] that was slipping in comparison to that of other developed countries. In 1980, he described New Zealand as a country living on borrowed money, unable – in spite of the record efforts of its exporters – to pay its own way in the world.<ref name="Douglas 1980">{{Cite web|last=Douglas|first=Roger|date=30 June 1980|title=Alternative Budget – A Personal View|url=http://www.rogerdouglas.org.nz/budget.htm|url-status=dead|archive-url=https://web.archive.org/web/20120313162807/http://www.rogerdouglas.org.nz/budget.htm|archive-date=13 March 2012|access-date=27 April 2021}}</ref>

The post-war political consensus had produced stability but Douglas came to view this as being at the cost of innovation.<ref name="Easton, Brian 1997">Easton, Brian ''The Commercialisation of New Zealand'' Auckland University Press 1997 pp. 6–8</ref> Both major political parties maintained the high levels of protection introduced by the [[First Labour Government of New Zealand|First Labour Government]] from 1936 onwards, and since 1945 both parties had aimed at maintaining full employment. However, beneficiaries of the regulated economy had flourished in both public and private sectors.<ref>Bayliss, Len ''Prosperity Mislaid'' GP Publications 1994 pp. 42–45</ref>

Douglas argued that only radical action would improve the economic outlook. In 1980, he published an "Alternative Budget" that attacked what Douglas called the Muldoon government's "tinkering" with the economy. He wrote that twenty years of pandering to entrenched interests had dampened productive investment. The Labour leadership saw his proposals and their unauthorised publication as unfavourable comment on Labour policy. The Labour leader [[Bill Rowling]] publicly rebuked Douglas.<ref name="Douglas 1987">Douglas, Roger and Callan, Louise ''Toward Prosperity'' David Bateman Ltd 1987 {{ISBN|0-908610-70-X}} p. 16</ref> Douglas then published his thinking in the form of a book.<ref>Douglas, Roger ''There's Got to Be a Better Way'' Fourth Estate Books Limited Wellington 1980</ref> Alongside far-reaching proposals for reform of taxation and government spending, it advocated a twenty per cent devaluation of the dollar to increase the competitiveness of exports. Although radical, it took an eclectic approach and did not hint at the abandonment of Labour's Keynesian policy framework.<ref name="Oliver 1989">Oliver, W H in Easton, Brian ed ''The Making of Rogernomics'' Auckland University Press 1989 {{ISBN|1-86940-041-0}} p. 13</ref>

Douglas became increasingly frustrated by what he saw as the Labour Party's reluctance to deal with fundamental issues of economic policy. He claimed in 1981 that Labour had an image as a party that would promise the public anything to be elected. He argued that the party should agree on its economic policy before it agreed on anything else, and allow economic reality to play a part in its decision-making. Unable to convince Rowling of the merit of his case, a disillusioned Douglas decided to stand down from parliament at the [[1981 New Zealand general election|1981 election]].<ref>Douglas and Callan 1987 pp. 21–27</ref> One of those who persuaded him to stay was Labour’s deputy leader [[David Lange]], who offered to make Douglas [[Minister of Finance (New Zealand)|minister of finance]] if Lange was prime minister after the 1984 election.<ref>Lange, David ''My Life'' Viking 2005 {{ISBN|0-670-04556-X}} p. 143</ref>

===Events after the 1981 election===
After Labour's narrow loss in the [[1981 New Zealand general election|1981 election]], Douglas found a growing audience in the parliamentary party for his view that Labour's established approach to economic policy was deficient. His colleague [[Mike Moore (New Zealand politician)|Mike Moore]] claimed that there was a public perception that Labour policy sought "to reward the lazy and defend bludgers".<ref>Oliver 1989 pp. 28–29</ref> Douglas's case for a radical approach was strengthened by the belief among many of his parliamentary colleagues that the economy's deep-seated problems could only be solved by extensive restructuring. It was understood that some restructuring must follow the [[Closer Economic Relations]] agreement with Australia, which took effect in 1981 and reduced barriers to trade between Australia and New Zealand.<ref>Oliver 1989 p. 31</ref> At the same time, many economists were arguing for the greater use of competition as a tool of policy, and expressing concern about excessive or inappropriate regulation of the economy.<ref name="Jesson 1989">Jesson, Bruce ''Fragments of Labour'' Penguin Books 1989 {{ISBN|0-14-012816-6}} pp. 39–40</ref> In 1983, Lange succeeded Rowling as Labour leader. He gave Douglas responsibility for economic policy and made it clear that economic policy would determine other policy.<ref>Oliver 1989 p. 30</ref>

Although Douglas was innovative in his approach, and his open disregard for Rowling had earned him a reputation as a maverick, he remained within the mainstream of economic thinking in the parliamentary Labour Party.<ref>Oliver 1989 p. 35</ref> He argued in 1982 that the government should actively support small business, and intervene to stop the aggregation of assets by big business. In his view, the government should use the tax system to encourage productive investment and discourage speculative investment. Until the end of 1983, Douglas saw exchange rate, tax and protection policies as means of actively shaping the business environment. In August 1982 he supported a contributory superannuation scheme as a means of funding industrial development and in February 1983 he wrote a paper called "Picking Winners for Investment" which proposed the establishment of local consultative groups to guide regional development. In a paper dated May 1983, Douglas argued that an [[unregulated market]] led to unhealthy concentrations of market power.<ref>Oliver 1989 pp. 13–15</ref>