Date

3 take-home messages 1.  NZ has been in a state of denial and faces a serious reckoning 2.  Neoliberal ‘orthodoxy’ of the past 3 decades is increasingly discredit internationally 3.  Transforming paradigms requires systemic change to the state through popular demand, political will, ideology & values & dismantling institutional barriers to change that support a new socially embedded economic paradigm

1. State of denial Shallow economy based on farm and FIRE •  Dairy commodity exports •  Property speculation •  Insurance in Canterbury reconstruction •  Immigration All feed into and out of FIRE Social realities of FIRE: debt & savings Capital, government, households locked in What happens in recession or crisis?

Triggers for recent crises

Claessens & Kodres, The Regulatory Responses to the Global Financial Crisis: Some Uncomfortable Questions, March 2014,

4 common causes since the 1970s: •  A credit boom and rapid financial expansion; •  Rapidly rising asset prices, especially housing; •  Financial ‘innovations’ that rely on favourable economic conditions; •  Financial liberalisation and innovation. 4 causes new to the GFC: •  A sharp rise in household debt and defaults; •  High leverage backed by illiquid assets; •  The growth of complex derivatives in the shadow banking system; •  The depth of international financial integration. New Zealand ticks almost every box.

2. Key pillars of orthodoxy Murray Horn: institutional design to address commitment problem, slippage under new govts BRT: Problem of “despotic democracy” •  Inflation targeted monetary policy (RBA) •  Obsession with public debt (FRA) •  Contractual state and shadow elites (PFA) •  Risk tolerant regulation and responsibilisation (RM) •  International treaties (WTO, FTAs, TPPA) Paradigm change must be systemic not siloed or rhetorical Strategies to overcome and replace embedding mechanisms

3. pre-requisites for a progressive postneoliberal era 1. 

a new socially just economic model;

2.  momentum around an alternative ideological orthodoxy and ethical platform; 3.  rethinking and reconstructing an active and democratically accountable state; 4.  dismantling and reframing the policy and regulatory paradigm of neoliberalism; 5.  the political will to embark on radical change; and 6.  popular demand, backed by a sense of urgency, for transformation.