Robert Muldoon, campaigning in 1975.

Source: Central Press/Hulton Archive/Getty Images

Feisty, Protectionist Populism? New Zealand Tried That

Tyler Cowen is a Bloomberg View columnist. He is a professor of economics at George Mason University and writes for the blog Marginal Revolution. His books include “Average Is Over: Powering America Beyond the Age of the Great Stagnation.”
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What would you think of a Western democratic leader who was populist, obsessed with the balance of trade, especially effective on television, feisty and combative with the press, and able to take over his country’s right-wing party and swing it in a more interventionist direction?

Meet Robert Muldoon, prime minister of New Zealand from 1975 to 1984. For all the comparisons of President Donald Trump to Mussolini or various unsavory Latin American leaders, Muldoon is a clearer parallel case.

Some of the similarities are striking. Muldoon often made rude or unusually frank comments about foreign leaders (including U.S. President Jimmy Carter and the Australian prime minister), and his diplomats worked hard to undo them. When Muldoon spoke, he so often made the issue about him. His slogan was “New Zealand -- The Way You Want It.”

His most significant initiative was called “Think Big,” and, yes, it was designed to make New Zealand great again. It was based on a lot of infrastructure and fossil fuels investment, including natural gas, and it was intended to stimulate the country’s exports and remedy the trade deficit. Because New Zealand’s parliamentary system of government has fewer checks and balances than the American system, Muldoon got more done than Trump likely will.

Yet this bout of industrial policy worsened the already precarious fiscal position of the government, and Muldoon’s public-sector investments did not impress. Muldoon’s biographer, Barry Gustafson, noted that the prime minister ended up being criticized for his “apparently dogmatic arrogance of executive power”; Gustafson also tells us Muldoon “was often reluctant to take expert advice.”

Like Trump, Muldoon was at first skeptical about his country’s NAFTA deal -- yes, it was called exactly that, the New Zealand Australia Free Trade Agreement. Muldoon did renegotiate the treaty, although his ministers persuaded him to accept a free-trade-friendly update, called CER (Closer Economic Relations). Trump may or may not follow through with the second part of that parallel.

Australia aside, Muldoon preferred protectionism and had little patience for the academic arguments against it. He was no friend of free-market thinking, and when Milton and Rose Friedman visited New Zealand, the prime minister refused to meet with them.

Muldoon favored easy money; it remains to be seen whether Trump will do the same. In New Zealand, price-inflation rates ended up over 15 percent on Muldoon’s watch. He then pushed for a wage and price freeze, which worsened the economy further.

Like Trump, Muldoon faced some controversial race issues. The all-white South African rugby team was scheduled to tour New Zealand in 1981, and even after extensive protests Muldoon refused to ban the team. Muldoon’s critics called him a racist, and charged that his intentions in the matter were not entirely benign. Muldoon also continued his predecessor’s policy of arresting and deporting Pacific Islanders who had overstayed their visas.

It was his philosophy not to bother to appeal to his opponents. The more critics he generated, the more his supporters -- known as “Rob’s Mob” -- loved him.

To be sure, significant differences between Muldoon and Trump can be seen. Muldoon assumed office with political experience in Parliament and the cabinet, and, consistent with his background in accounting, he was renowned for his mastery of detail. For all his bullying, he was not regarded as a threat to democracy in the manner that Trump’s critics have alleged. Muldoon called for tougher policies toward the Soviet Union, and didn’t give his family a Trump-like role as advisers.

Arguably, Muldoon was not as outrageous as Trump. Still, he once punched demonstrators, and stripped naked at a cocktail party. Twitter remained beyond his grasp.

How did it all end? The economy became so bad that Muldoon’s National Party lost the 1984 election to Labour, the traditional left-wing party (he had called the snap election in a drunken fit of pique). Labour, however, turned its back on its history and pushed through free-market reforms, backed by significant business interests. After a stock market crash and some further volatility, the New Zealand economy finally got its act together in the 1990s. It remains to be seen if, post-Trump, the U.S. Democratic Party might end up following a similar course.

One lesson from the comparison is that a leader like Muldoon can be fairly popular, as he stayed in power from 1975 to 1984, winning three terms despite mistakes, antagonisms and policy failures. He was a plain-speaker who related well to many Kiwi voters, and he was masterful at defusing or rechanneling opposition within his own party.

After Muldoon was voted out of office, he started a popular radio talk show, “Lilies and Other Things,” which dealt with gardening, politics and the economy, all the while maintaining his fiery tone. He also played a vampire -- Count Robula -- on a late-night TV horror show, and he narrated “The Rocky Horror Picture Show.” Not exactly “The Apprentice,” but with this we have come full circle.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

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Tyler Cowen at tcowen2@bloomberg.net

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