1979-1989 David Lange
David Lange's spectacular transformation of New Zealand was preceded by his own. When he was first elected an MP in 1977, Lange, the poor person's barrister, was hugely overweight, wore his hair long and lank and boasted a wardrobe of bloated suits. By the time he led the Labour Party into power in July 1984, his stomach had been stapled, his hair shaped and he'd acquired a tailor.
Unchanged was the blazing wit — often cruel — that is so often the fat man's armor. When Margaret Thatcher dispatched a baroness to admonish Lange after his government had banned U.S. nuclear ships from New Zealand ports, Lange called out as she left his office: "You've forgotten your broomstick." And after the Americans responded to his antinuclear policy by withdrawing military cooperation with New Zealand, Lange told the U.S. ambassador, who owned a racehorse called Lacka Reason: "You are the only ambassador in the world to race a horse named after your country's foreign policy." He could be almost too clever. When the Greenpeace vessel Rainbow Warrior was bombed in Auckland harbor, Lange knew almost immediately that the French government was responsible. Advisers warned him to stay quiet; when asked at a press conference who was behind the bombing, Lange simply whistled La Marseillaise.
Lange's Labour Party came into office amid a financial crisis and with no agreed economic policy; two happy, if accidental, preconditions that would be used to justify the most colossal economic change in New Zealand's history. The country was within days of defaulting on international loans; New Zealand's overseas diplomats were asked how much foreign cash they could raise on their credit cards. An urgent devaluation was needed to stem the outflows. But Robert Muldoon, the stubborn, outgoing conservative Prime Minister, rejected the advice of the Treasury and Lange to devalue. In the demure world of New Zealand politics there had never been anything as astonishingly electric as this. In the end, Muldoon departed, scowling, having been strong-armed into a devaluation.
It was to be the first crack in New Zealand's towering wall of economic seclusion and state control. This was a muted land where, until the mid-1950s, it was illegal for farmers to permit livestock to enjoy copulation within sight of roads. Seekers of alternatives to New Zealand's famous butter had, until the 1970s, to get a doctor's prescription for margarine. Anyone wanting to subscribe to a foreign magazine had to get permission from the government. Muldoon was a brilliant populist but committed to a choking state intervention. He controlled rents, director's fees — even dividends. His government froze wages and prices by decree.
The man who would destroy that protectionist shield was Lange's Finance Minister Roger Douglas, a diminutive, dogged accountant who unleashed free-market policies with such pace that they blindsided most New Zealanders — including Lange. Douglas floated the New Zealand dollar, wooed foreign banks, wiped away controls on credit, foreign-exchange transactions and import tariffs. The once sacrosanct farmers lost their state subsidies.
The effect was akin to a department-store-sale-day stampede. Masses seized the early — and oftentimes false — fruits of Douglas' promarket policies. More than 40% of all adults ended up owning shares on the back of newly available credit; many in fresh and often questionable enterprises.
Though the left of the Labour Party cringed at the extremes of the Douglas policies, they were caught up in advancing their social agenda and remained largely silent on the economy. The Americans were astounded when Lange banned U.S. nuclear ships — and, by extension (because Washington neither confirms nor denies a military ship's weaponry), the U.S. Navy. Homosexuality was decriminalized and Maori allowed to seek state compensation for grievances over land or access to resources dating back to 1840.
Despite the turmoil, Lange, riding a peculiar mix of populism — the false allure of easy money and New Zealanders' delight at defying powerful allies — was re-elected in 1987. It irked him that the Labour Party almost won the country's wealthiest urban seat, not because they lost but because it showed how far to the right the party had swung. But he continued to support the Douglas experiment until the fearful stock-market crash that October. The New Zealand market dropped the furthest in the world; its recovery took the longest.
The shock caused Lange to argue that it was "time for a cup of tea" and to rein Douglas in — but not before tens of thousands of people lost their jobs. Eventually, Douglas, fuming, walked out of Cabinet. Lange, worn out, depressed and drinking heavily, resigned in 1989. It was a sad end to Labour's great economic experiment. According to conventional economic wisdom, New Zealand had headed down the path of righteousness. But while the old, closed economy held no hope for the future, the gains had been oversold; economic growth remained, for the most part, slower than that of the rest of the developed world; productivity and living standards barely moved for years.
Lange was later to portray himself as an innocent spectator to the economic revolution, and in a biography published shortly before his death from kidney failure in 2005, described much of Douglas' policies as bloody-minded. But his attempts to distance himself from the changes are disingenuous — he had been Prime Minister, after all. And there was always the uncomfortable retort of the free marketers — that to have done nothing would have invited economic death by strangulation.
Lange came to see himself as the accidental Prime Minister. "One minute I was a clapped-out, two-guinea, legal-aid lawyer and the next minute I was in parliament," he later said. He was carried on to "the new front line of politics" by his "ability on television to convey confidence and assurance without saying anything." Wrong. David Russell Lange always had something to say.
Journalist Bernard Lagan covered the Lange Labour government between 1984 and 1987 for the Dominion newspaper in Wellington