New Zealand Economic Collapse

New Zealand Economic Collapse

By Harriet, Editor-At-Large Australia

***This article originally appeared over at

Back in 1984 I lived in New Zeal and during the time the country’s economy collapsed. I was told by someone working very close to the incoming government that the country technically became bankrupt over the weekend after the 1984 elections. This meant the incoming government had no money in its coffers to do anything but stagger from day to day hoping that the news of the country’s bankruptcy wouldn’t hit the media.


nzmapWe were, of course, told of dire financial problems. Over the following few weeks the country was advised that we must restructure the economy to meet the IMF (International Monetary Fund) requirements so all spending had to be cut. The previous government, despite being the supposedly right wing party, was strongly socialist believing in the government driving the economy. As a result there were huge numbers employed by the government in forestry, the electrical production and delivery systems, the railways, the coal mines, the road construction and maintenance and government even had their own printing company to put out government information and propaganda. This was expensive and the “think big” employment programs of the 1970s lead the country to bankruptcy.


One night the new government withdrew all subsidies from the farmers. We had a plant nursery and about 60% of our turnover was from servicing the farmers. Overnight the farmers closed up their check books and stopped buying anything. Within weeks the forestry employees lost their jobs. They had bought about 20% of our stock. The local town used to service the farmers and the forestry workers and all the small businesses cash-flows were similarly effected further impacting on each others cash flow as the money ceased to flow through the community. Other rural areas had the same problems and as the coal mines were shut down and the railway employees lost their jobs things became dire. Many rural businesses sunk without trace and rural communities suffered.


What made life so difficult was that socially it seemed that we were picked off one at a time. People in jobs made those who lost them feel like there was something wrong with them. This particular person lost their job as they “were not up to scratch”, or they had a psychological problem, or had some other socially undesirable characteristic. While we saw the structural dynamic behind mass unemployment it still felt like each person was individually at fault. 


We were picked off one working unit at a time as each local office or workplace was closed down. The government started at the far ends of the rural and remote communities first where there was no media to hear our complaints. After about two years of “restructuring” the rural sector out of jobs the mass restructuring of the cities began.


Some people were able to reapply for their own jobs again in the SOEs – the State Owned Enterprises, as they came to be named, as they were readied for a fire sale. But over about 5 years about 30% of the working population lost their jobs at least once, and some lost them many times. 


We had lived on five acres in the country. We had grown our own food and could have stayed but the psychological pain was enormous. Our business couldn’t survive and we couldn’t afford to pay for fencing – no fencing, no way of protecting your food from roaming animals. 


The local rural community got nasty. People got picked on socially. This was particularly so when newcomers – those who had moved in to the community in the last 25 years, still had jobs and the old timers lost theirs. Male violence against women sky rocketed. But it was all private violence. It didn’t spill out into the streets. When a woman was raped or beaten up in the home, it was understood to be her fault, not the males. 


It was not a nice place to be and we, along with many others went to the city. There was still the promise of work in the cities, though it didn’t eventuate to much. There we looked after each other much more. We were all in the same boat. There was probably violence hidden behind closed doors, but I didn’t hear about it. We struggled from week to week, sought work where we could get it and took the chance to get an education when work wasn’t available. 


We were much too concerned with collecting wood and working out how to buy coal to keep warm to complain publicly and rioting would have been unthinkable. In fact the whole country restructured its economy without rioting in the streets. We worked hard at making do and doing what we could to help ourselves and help others. It was really hard – psychologically more than anything else.


So we had no rioting and no public violence though it was turned inwards on ourselves. We all ate most of the time and ate huge amounts of potatoes and carrots. We shared. We helped each other where we could. We did sometimes go cold. The children had to go to school with holes in their shoes. They didn’t have the clothes I would have liked and during growth spurts they looked as their clothes had shrunk. As I look back now I don’t know why we didn’t go bankrupt personally, but somehow we made it through. All this with mortgage interest at 18% and inflation was similar.


It was hard, hard, hard. But we didn’t think to bug out to the country – we went from the country to the city instead. We went to where we hoped we could find work. We went to where the resources were.


I do wonder from time to time why New Zealand didn’t become overtly violent and crime ridden as Argentina and Russia did. Perhaps it had to do with the basic community psyche. I’m sure someone could come up with an explanation.


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  1. You clearly had a different kind of people in the cities of New Zealand at that time than we have in our cities in the U.S. today. The city is NOT the place to be, post-IHTF, IMHO. Entitlement people are going to be very, very angry. Oh, wait! They already are. And they don’t even have a reason – yet.

  2. Thank you for your post. I think that some of the advantages that NZ has are 1) like you said, the psyche, 2) being an island might contribute to that psyche of “already isolated so we have to fend for ourselves”, 3) having lived in Alaska where items take longer to arrive we had more of a “self reliant” mentality where we didn’t wait for others to come help us and I’m thinking that was the mentality in NZ as well. However, I’m thinking that if/when something happens in the U.S. it will cause a world wide episode. As the saying goes, “when America sneezes the rest of the world catches a cold”. I think that there will be some countries/groups that, when they see the U.S. falling, will try to take advantage of the situation. And don’t forget the “haves/have nots” mind set being promoted by the government and others along with the “Race” inequality mindset. I think that when things do happen we’ll see that many, unprepared, people will do that which is best for them and their family, no matter how it effects others…..just my 3 cents worth.

  3. Thomas, I no longer live in NZ so only see it from afar though I have family still there. 12 years after the collapse NZ didn’t have work for older people so we came to Australia. I understand that the government has become much leaner with no new money into government departments for years. The government ministers have got heavy and demanded that the employees come up with innovative ways to deliver better number and quality of services to the people with gradually increasing KPIs. This has had flow on effects. One of the rules, I understand from family, is that people drawing an unemployment benefit/pension was that they had to have regular drug tests as they had to be work ready at all times. If their drug test came back positive their weekly money was cut in half. So if they wanted to get the government out of their lives and take recreational drugs they had to get a job.

    Servant heart I think I would be a little more charitable than you. When you are brought up to a sense of entitlement as we were it is hard to let it go. Then people get picked on one at a time. I see this happening in the US now. It is very easy to say that this unemployed person should be able to get a job, or that they could if they only cleaned themselves up, stopped taking drugs, improved their mental health, or just sorted themselves out. But it isn’t that simple. I think the social judgement was the hardest thing to endure. We all felt we should have been able to get a job. But when you are applying for 10 or more jobs a week for over a year and nothing eventuates one tends to give up – and most people give up when they see people better presented, more qualified and further up the social hierarchy NOT get the jobs despite all those applications, then why bother? It IS very difficult when it basically an economic situation out of your control. What happened during the collapse was that WE became the OTHER, the ones that the well off, or just lucky used to judge. It wasn’t nice at all.

    @Myke, I think you are very right in that things in the US is very different in many ways. NZ didn’t have a gun culture though it did have a culture of private and institutionalised violence. New Zealand did have the have/have not mindset – or developed it during the collapse. I think it is inevitable when you have heavy judgemental attitudes. We did have race issues and addressed those by becoming bicultural with the indigenous people (Maori) becoming equal partners in the country. This was difficult for a while but it seems to have worked well. I will be interested to see how much of a cold we catch when the US sneezes. I expect us to have a recession, with a collapse of the stock market and jobs hard to get but I don’t expect the riots that you will get. In other words we are not expecting a collapse here.

  4. I am facing a potential job loss here in the US. I do NOT have a sense of entitlement,and if I have to take a minimum wage job to get through I will…but I can’t diasgree with the idea of drug testing in order to get government benefits in order to gain assistance in the meantime…too many out there taking advantage of the safety net that was put in place to help those in need…I have ‘taken advantage’ of the system to obtain a college degree when I was a single mother looking to better her children’s lives…and am still a tax paying citizen since then…I ‘used’ the system to my advantage, I used it the way it was meant to be used…

    Off my high horse, TY Harriet for sharing your experience. I worry about my potential job loss as I am also an older worker. My degree works both for and against me…they can hire younger workers for much less money than they would have to pay me…

  5. I applaud that you would be “a little more charitable” than myself, Harriet. I understand your pain, and I am sorry for it. What happened to you in New Zealand is NOT what is happening here, right now, today, in the Untied States (misspelling intentional).

    I have worked with these people for many years; I know them well enough to know what they’re thinking and why, and I can tell you, under the current administration of racism, division of the country, drive toward socialism, and general hatred, it is not about any of the things you think it’s about. They ARE angry, they don’t have a just cause, they don’t care, and they’re waiting for a chance to explode. It’s coming.

  6. Servantheart. What is happening in the US and what happened in NZ has both similarities and differences. Similarities in that individuals are being picked off one at a time and being judged by the more fortunate. Different in that public violence is much more overt in the US.

    I think we need to distinguish between a sense of entitlement which is what we were educated to have and overt public violence when we don’t get what we have been lead to expect. The sense of entitlement has been taught. Being violent and not valuing either our own possessions or respecting the possessions of others and thereby thinking one can take what one wants without paying for them is another thing altogether. The former only diminishes the individual and is therefore noone else’s business. Violence and theft impacts on others and so is wrong. So yes, I will keep my charitable feelings towards those who feel entitled though I do object to any consequential theft and violence.

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