Via Ken Miles, I noticed this piece by Michael James who argues that the conservative parties in Britain and New Zealand are ‘victims of their own successes’. Money quote

The irony is clear. The Labour parties have appropriated the electoral benefits of the economic stability and growth flowing from the economic reforms introduced in the 1980s and early ’90s: in Britain by the Conservative governments of Margaret Thatcher and John Major; and in New Zealand first by a reforming Labour government centred on Roger Douglas, and then by a National government centred on Ruth Richardson.

Ken points out that the NZ experience of micro reform was not exactly as prosperous as this quote implies. And James himself concedes that the Tories’ macroeconomic mismanagement in the early 90s contributed to their loss of office.

Nevertheless, there’s an important element of truth in James’ argument, though not as much as he wants to claim.

Update There’s a great discussion in the comments thread – at least as well worth reading as the post itself. In response, I’ve expanded a very short allusion to Walsh and Keating as the Australian equivalents of Douglas and Prebble into a longer and, I hope, more balanced assessment.

By 1980, the existing social democratic settlement in the advanced countries was clearly in crisis. Steadily growing demands for publicly provided services and transfer payments had run into resolute resistance to continued increases in effective tax rates. Meanwhile, economic growth, traditionally the solvent for such difficulties, had slowed to a crawl. This episode is often referred to as the ‘fiscal crisis of the state’, a termed coined in the early 1970s by American Marxist James O’Connor

In most of the English-speaking countries, the result was the election of free-market governments that sought to roll back the growth of governments and restore the dominance of markets. New Zealand and Australia were unusual in that the governments that began this task were Labo(u)r governments. The New Zealand Labour government, dominated by economic ministers who were, or became, dogmatic free-marketeers, was “more Thatcherite than Thatcher” in many respects, and was succeeded by an equally radical National Party government that embraced issues dodged by Labour, such as an attack on trade unions.

By contrast, the corresponding figures in the Australian government, Walsh and Keating did not convert entirely to free-market views and, in any case never gained full control of the government. Walsh combined violent hostility to the public sector with a continued adherence to policies of income redistribution. He quit Cabinet in disgust after the 1990 election largely because he felt that Prime Minister Hawke was insufficiently hawkish on public spending. Keating was smart enough to change his political spots* when resistance to free-market reform turned into a full-scale revolt against ‘economic rationalism’ after the 1989-92 recession. As a result, of these differences, the reform policies adopted in Australia were less extreme than in the other English speaking countries and their adverse consequences for income distribution were at least party offset by progressive changes in tax and social welfare policy. In fact, the Australian Labor government anticipated, in important respects, the “Third Way” policies now being pursued by Blair. As I’ve noted elsewhere the Howard government has been inconsistent with spasmodic surges of free-market reform interrupting long periods in which complacency and old-style pork barrel-politics. Nevertheless, free-market ideas were as dominant among the Australian political and economic elite as anywhere in the world until fairly recently.

The problem for the free-marketeers in all this was that they overestimated their mandate. People wanted the budget brought under control and an end to the crises of the 1970s. But they had no desire to dismantle the welfare state or even to scrap public enterprises like Telstra and the Commonwealth Bank. Electorates correctly judged that the hard decisions needed to balance the budget were more likely to made by people who were reflexively hostile to public spending than by people who instinctively supported it. The more general policy program of deregulation, and privatisation was never embraced, and neither was the claim of greatly improved economic performance. As Keneth Miles notes, the good performance of recent years does no more than catch up ground lost in the 1980s.

Hence, now that budget balance has been restored and social democrats have embraced sound fiscal policy, the free marketeers are indeed victims of their own success. They’ve delivered on the salable part of their policy package, and the electors don’t want the rest. Rather they want social democrats who will repair the collateral damage to services like health and education.

Although this story has been repeated through much of the English-speaking world, the archetypal example is Jeff Kennett. Nearly everyone agrees that the Cain-Kirner government had to go and that at least some of what Kennett did was necessary, but hardly anyone wants him, or his party, back.

* While it met Keating’s political needs at the time, his shift to focus on cultural issues after becoming PM encouraged rancorous debate on those issues. We are still dealing with the consequences.