The old or the new? Responses (or not) to turmoil

On Friday a few score current and former MPs and partners will over dinner commemorate a signal political event: the election of the first Labour government.

This was at a time of unstable global politics, soon to generate a world war, and economic disequilibrium after a deep depression.

Friday’s celebration (coming soon before a shadow cabinet reshuffle) has been got up by Stuart Nash, great-grandson (by adoption) of Sir Walter Nash, 14 years Finance Minister and three years Prime Minister.

The younger Nash is often offside with the more politically correct in Labour. But Sir Walter would recognise his connectability with wage earners and small businesspeople.

On November 27, 1935, Sir Walter was Labour’s No 3. No 2 was Peter Fraser, 1940-49 Prime Minister and a leading small-nation voice at the United Nations founding.

No 1 was Michael Joseph Savage, a saint in Labour mythology, who described the post-1935 social security, wider education and free health care as “Christian socialism”. Capitalism was to be tamed for the benefit of the wider community. And, broadly, it was.

With high inequality now back, this ambition is again a core Labour focus, the point of Grant Robertson’s “future of work” commission and of Jacinda Ardern’s children’s policy, among others.

But Labour is out of office and set to be out on its hundredth birthday next year — as it was at its birth and on its tenth, fortieth, fiftieth, sixtieth and eightieth birthdays.

Who blew out all those birthday cake candles?

National — out of office at birth and on its tenth birthday but in office on its twentieth, thirtieth, fortieth and sixtieth and set to be so on its eightieth next May.

One big National win came on November 29, 1975, halfway between 1935 and Nash’s bash. That election brought Sir Robert Muldoon to power.

Few in National would now celebrate that event. Sir Robert’s response to global economic turmoil in the wake of the 1973 oil shock and high inflation was to divert down a populist track paved with Labour-like capitalism-constraining policies.

He did do some tentative deregulation, notably on imports of intermediate goods. But as the trade and budget balances slid, he heavily regulated wages, prices and even interest rates, kept foreign exchange controls on and raised income taxes, in part to pay for an unaffordably generous pension scheme and big subsidies for cost-hammered, uncompetitive farmers.

That drove many National members and supporters, particularly under-45s, out of the party and off to vote for other parties. Then as his successor-leaders Sir Jim McLay and Jim Bolger tried to rebuild the party, Sir Robert made life difficult for them.

From 1984 Labour made the changes Sir Robert couldn’t, swinging into free-market territory which would have been recognisable to pre-1935-ers. It kept the welfare state largely intact but made employment insecure, thereby undoing the 1935 Savage-Fraser-Nash principle that a wage should be enough to sustain a family.

The common factor in 1935 and 1975 was global instability and, with that, local instability. But the future in each case was different.

The 1935 policy settings, coupled later with a more settled global political and trading system once the “west” and Russia worked out how to coexist, were followed by two decades of stability and prosperity. National adjusted to the new rules and presided from 1949.

Muldoon’s error after 1975 was to stick to those ways when changed circumstances were hollowing out the terms of trade and undermining manufacturing and living standards, which required different thinking.

And now?

We are in an edgy era when, at the drop of a turban, police haul a student out of a café after a panicky phone call. PC Plods can’t be expected to know the difference between a Sikh and a Muslim.

Jitteriness about personal safety and fear of ethnic “others” will likely grow, especially while Islamic State worshippers of bullets and bombs spread mayhem into societies with which the great majority of us share values, heritage and ethnic origin — and, quite possibly, into our haven.

That is one element in a disordered world in which the rules of even five years ago no longer apply.

Contributing to that disorder and dismantling of old rules are new types of economic, financial, communications and personal globalisation which worm-eat walls we hope to build around us. This new globalisation is driven by rapid technological, geopolitical, geo-economic and geo-demographic change.

This erosion of the old rules adds up to turmoil greater than in 1935 and 1975 and a sharper choice for political parties and activists between old responses — as with Muldoon in 1975 — or new responses — as with Savage and Co in 1935.

Savage headed a new regime making new rules. Muldoon headed the tail-end of a regime run on rules by then old. John Key heads a regime run mostly on rules that are ageing.

The question for Friday’s diners is: who heads the next new regime?