While the economy burns – the conflagration fuelled by the mounting failures of monetary policy – some politicians prefer to fiddle. The Opposition promise us several weeks of focus on David Benson-Pope and the minutiae of what they hope will turn into a minor scandal. In the meantime, all they can offer on the burning issue of the day is the view that there is nothing to be done but sit back and wait for the worst to happen.
National’s Finance spokesperson, Bill English, should have been a World War One general. His is exactly the mindset that committed thousands of soldiers to the trenches and refused to countenance any alternative. Like so many politicians, he prefers to chase a short-term political gain – by hoping to embarrass the government of the day – rather than address the real long-term issues. So committed is he to this view that he would oppose not only any new thinking but the very idea of discussing the issues at all.
The refusal to contemplate any economic policy option other than one that is demonstrably failing is, in other words, to take a political rather than an economic stance. There are those on the right who believe with religious fervour that markets are always right and that government intervention, however urgent the need for it may seem, will always be counter-productive. Those who venture to disagree, and who challenge what is now established as the current orthodoxy, are labelled as extremists.
But those rigidly adhering to that orthodoxy and refusing to budge in the face of mounting evidence are the real extremists. The adherents of Rogernomics and the denizens of the Business Roundtable have rightly been dismissed from the nation’s counsels on most issues, but they maintain their inviolable position as the guardians of economic policy rectitude because they have sold us on the ludicrous idea that the market must be obeyed, whatever its failings, when it comes to macro-economic policy. No one is allowed to question the dangerously ill-founded assumption that the only issue that matters is inflation, and that it can only be controlled by a single unelected official given a single ineffective and potentially destructive instrument and unchallengeable powers to use it.
The view that the market must always prevail is of recent origin and has never before been given an extended trial in practice. Hitherto, it has usually been seen as the preserve of extremists. It was only when international capital was freed to roam the world at will and thereby escaped the political constraints of what we used to call democracy that we have been brainwashed into accepting that there is no alternative to such an extreme view.
What is astonishing is that so many of those who claim to be representing business can be heard parroting the same dangerous nonsense. As they watch the policies they profess to support destroying their businesses before their very eyes, we can only conclude that this is a remarkable triumph of political obscurantism over economic rationality.
Markets are like elephants – immensely powerful, and valuable. We would all be hugely worse off without both of them. There is nothing else as effective at doing their job. But they work best when they are constructive, disciplined and working well with other factors.
From time to time, an elephant will override these considerations, throw off the shackles and run amok. A rogue elephant can do enormous damage.
So, too, with markets. A rogue market can be immensely destructive. To allow a rogue market – or elephant – not only to carry on doing that damage, but to give it priority over all other considerations, is to take an irrational and extreme view which can be justified only by prejudice and not by argument.
Yet that is where we now are. Only someone with a closed mind could fail to see that our current monetary policy is not only failing in its purpose but is doing great damage to our economic prospects. Any serious politician – especially one with a realistic hope of exercising power – should be joining in the search for better options.

Bryan Gould
24 July 2007.