Hooton on why Labour is veering hard left

The history of politics in not just New Zealand, but in most countries is that oppositions veer towards the centre. That is where votes are to be won.

Labour has embarked on a policy programme that can only be called radical. They are campaigning to get rid of current monetary policy and interfere in the exchange rate. They are proposing nationalisation of the energy generation sector. They are promising to pay beneficiary families the same at working families for child support (despite the extra costs of working). Their policy programme is resembling what the Greens have been pushing for the last decade, rather than what Clark and Cullen did in Government.

So why have they headed hard left? Matthew Hooton explains in NBR:

The most famous theory in political science is the median voter model.

Developed in 1929 by Stanford economics professor Harold Hotelling, it provides strategic guidance to politicians, anticipates their policy positions and predicts election results.

Broadly, it suggests that, in any two-candidate election, both are best to adopt policy to please the median, middle-of-the-road voter, and that the candidate closest to the median will win.

Indeed.

In politics, the model’s predictive power is proven not just by vast screeds of algebra by microeconomists, game theorists and political scientists, but – unlike much social-science theory – by real-world observation.

Even with apparent exceptions, like Baroness Thatcher’s three election wins, she was indeed closer to the median than failed prime minister Lord Callaghan in 1979, Soviet appeaser Michael Foot in 1983, and even Lord Kinnock in 1987.

UK Labour finally won power when they abandoned the very socialist policies that NZ Labour is now embracing.

So why the lurch to the left?

Do the maths again, but assume three major players, and you get a different result.  Suddenly, there is an incentive to differentiate and diverge. …

Similarly, in politics, the model suggests that, in three-party systems, parties will no longer all cuddle up to the median voter but some will offer more radical policy choices.  It’s argued, as with consumer markets, that this leads to a more lively democracy.

The release of the Labour/Green electricity policy suggests something like this is happening in New Zealand.

The Greens are now clearly established as a permanent third party, with the other small parties melting away.  Professor Hotelling and his academic heirs could have told us this would likely lead to something like the electricity policy, which has already wiped hundreds of millions from the Crown balance sheet, including the SOE portfolio and the ACC and Superannuation funds, and from KiwiSaver accounts.

This explains why Labour has adopted so many Green party policies.

It is no good Labour/Green saying the policy is not radical by arguing that something like it has been implemented elsewhere.  That would be like National saying a 15% flat tax is not radical in a New Zealand context by pointing to Hong Kong.

Exactly. As pointed out previously, the model they cite has generally been adopted in countries moving from a totally nationalised power industry to one with some competition. It has never been used in a country which already has 14 competitive generating companies.

Here’s a competition for readers. See if you can identify all the Labour Party policies that they have stolen from the Greens? Abolishing youth rates was Greens policy, and resisted by Labour initially. As was massive hikes in the minimum wage, and extending paid parental leave.

We also have their lurch to the left on monetary policy, and their nationalisation agenda and the extending Working for Families credits to beneficiary families.

What others ones are there?