responding to the economic crisis

just watched a really sweet interview on channel 7, with findlay mcdonald interviewing hon margaret wilson. as anyone who knows me will tell you, i'm a big fan of margaret, well before i met her. i didn't follow politics much at the time she was president of the labour party, but the work she did in establishing the waikato university law school was what won my admiration.

since then, of course, she's been a pioneer and had so many "firsts" that it's hard to count them. throughout her whole career, she has maintained her dignity, her integrity, and above all, her sense of humour. she's a woman who has not been recognised nearly enough in this country, and i'm sad to see her leave politics.

however, she hasn't left off activism, and i heard her speak earlier in the year at a seminar hosted by the waikato law school titled "responding to the economic crisis: a question of law, policy or politics". the speakers were margaret, prof jane kelsey & roger kerr. here are some notes i took from margaret's speech, which are probably disjointed, but i hope they make some sense and accurately reflect what she was trying to say!

the financial crisis led to the economic crisis, and nz's response has been pretty laid back. although we've avoided the worst excesses of the sub-prime debacle, there has been a knock-on effect.

one core question is whether or not there is a need for increased regulation of the financial sector. neoliberalism has resulted in a lack of deregulation, and nz saw this happening particularly in the 1980s and 1990s. the theory around deregulation was that economic prosperity would be best achieved from market forces.

but that thinking was then shifted to social policy. notions of community and society were no longer relevant. the one area that could not be controlled were the courts, so instead judges were accused of judicial activism when they made decisions that went against neoliberal policies. social and economic change are part of a democratic process, and it is not the role of the courts to be agents of social and economic change. polarisation on the issue of free market versus regulation should not be the role of the law.

there has always been regulation, there is no argument about that. the argument is over the nature and type of regulation that should be implemented. any attempt to move from minimal regulation leads to a lot of negativity. the neoliberal framework is still present as the basis of advice - privatisation has now been reinvented as PPPs.

but without the state to bail out the financial sector, we'd all be worse off. taxpayer money was used, although few benefitted. greed and the belief that the banks' self-interest would provide a corrective mechanism were also factors in the financial crisis.

in the UK, there has been much soul-searching. before the crisis, many had raised concerns: journalists, employees, academics. but they had not been listened to because financial institutions had been acting within the law.

proper analysis is required to address the cause of the crisis. there is a role for the market and a role for the state to regulate. it's very difficult to find an effective rules-based framework, because the costs of enforcement are prohibitive. the nz commerce commission has been under constant attack by players with significant amounts of money.

equality of information is required. the highest costs of litigation are the costs of discovery. there is a lack of transparency. conflicts of interest should be declared. a small cadre run nz businesses.

what is needed is a principled rather than a rules-based approach, which would lead to a lack of certainty. but then the current system has not given us certainty either. all participants must take responsibility for the good management of that system. an effective economy has checks & balances, information flows & cultures, accountability and responsibility. accountability can only happen when there is relevant and reliable information that has been independently prepared.

sufficient political pressure is required from those who have been adversely affected by the crisis if we are to see change in nz. there is a role for the law, that is not the issue. ideology must be put to one side. maintenance of trust is required by those who maintain the system.