The Polish Shipyard: Myth, Economic History and Economic Policy Reform in New Zealand *

Article excerpt

[...] by 1984 the New Zealand economy was the most regulated economy outside the Soviet bloc. We were the Poland of the South Pacific. (1)

The tangle of regulations, controls, prohibitions, economic stagnation and massive government management and interference in just about every sphere of business, social and personal life by July 1984 made New Zealand appear [...] more like one of the then-communist nations such as Poland rather than a 'Free World' country like America or Australia. (2)

It was illegal to drink alcohol in a restaurant or to manufacture carpets out of anything but wool.

Buying margarine required a prescription from a doctor.

It was against the law to truck goods commercially for more than 40 miles without permission from the railways.

A permit was needed to order an overseas journal.

To invest abroad, a New Zealander had to renounce his citizenship.

There was once a wildcat strike in a meat freezing plant because the men's lunch time French fries were burned.

Union membership was compulsory for almost everyone, and contracts were binding on far removed companies that had nothing to do with negotiations. (3)

Policy opportunities and legitimate choices are conditioned and constrained by the understanding of what has gone before. History provides a dataset to interpret and explain today but also justifies some decisions, and excludes and delegitimises others. (4) As Skocpol and others argue, policy makers react to "policy legacies"--policy decisions, instruments and solutions that have been tried in the past, and perceptions of their failure and/or success. (5) But if the past can make the present--so those in the present remake and restructure the past to their own ends. History is not just an assemblage of facts. It is a social construction--sometimes even a deliberate invention--understood through human thought, language and interaction, and it can be marshalled to win arguments and policy debates and to serve political and other aims. (6) History too can be an inspiration for myth, mis-remembered or reconstructed as it is. But myth is not something that is simply "untrue" or irrational, an unexamined doctrine that will fall away in the face of thought and empirical evidence. Instead, myths have an existence and function above and beyond an historical "reality". They can serve vital political and ideological functions, suppress and mediate conflict by providing unifying symbols, language and understandings, and harness emotional and intellectual energy towards ends that can serve the wishes of state or political and other elites. (7) Myth gives a simplifying and comforting structure, and an understanding, to a complex, confusing, somewhat frightening and barely understood world.

We investigate a widely held myth in New Zealand's economic history--that of the Polish shipyard. This is the orthodox and common-sense understanding that the New Zealand economy before the election of the reforming Fourth Labour Government in 1984 was something not only highly regulated--but as something uniquely so amongst developed nations, with a stagnant economy declining in the post-war era and nearing collapse by the 1984 election. Media commentators, economists, lobbyists, politicians, historians, journalists and university students across the political spectrum talk of this highly regulated--and even socialist--New Zealand as if it were a given. In this article we show that the Polish Shipyard myth is a myth in the sense of being untrue. We do this by examining New Zealand's post-war economic history, and by testing many strongly held beliefs against historical economic data. New Zealand was not overly-regulated by the standards of the time, with many of its policies reflecting developments elsewhere; it was generally liberalising in the post-war era; and its economic decline and supposed collapse have been considerably overstated. …