Dishonouring the Contract

How the Settler City re-grew its Walls

(Chapter 17 of The Utopia Thieves)

AS is well known, the comparatively solidaristic policies of the post-World War II decades unravelled in the 1980s.

Much more so in the English-speaking countries, than in comparably prosperous nations such as Continental Europe or East Asia.

In fact we could say that the resulting neoliberalism, as it has come to be known, was made in the USA and exported to other parts of the globe. Often, with a degree of coercion via US-controlled institutions such as the International Monetary Fund.

The rest of the world adopted neoliberalism to the extent that it was vulnerable to pressure from US-controlled institutions; more so in the case of Latin America, less so in the case of Continental Europe and prosperous East Asia.

Though neoliberalism was very largely made in the USA, it still pays to keep looking at the other English-speaking New World countries such as New Zealand, to see whether they shared commonalities with America’s great social unravelling.

And in particular, whether migrations of colour to the industrial cities were associated with a backlash against the social contract.

Conventionally, the high inflation of the 1970s gets the blame for the shift to more austere policy settings, popularly known as monetarism at first and, then, as, neoliberalism. In other words, the slashing of government expenditure in an attempt to wring excess money out of the system. Though if the monetarists had been serious about that, they wouldn’t have cut taxes at the same time.

In reality, the inflation of the 1970s was a pretext for the shrinking of the state, and the cutting of taxes: which was perhaps the true goal of those who urged the withering of the state.

There had been a lot of inflation after WWII as well. But it hadn’t turned President Eisenhower into a fiscal hawk. Instead, his attitude is captured in a famous quote from a 1954 letter to his brother Edgar:

Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes you can do these things. Among them are H. L. Hunt (you possibly know his background), a few other Texas oil millionaires, and an occasional politician or business man from other areas. Their number is negligible and they are stupid.

(H. L. Hunt was to the politics of the 1950s what the Koch Brothers were in more recent times, their influence no longer so negligible of course.)

In fact, both in the immediate aftermath of World War II, and in the 1970s as well, it was easy to point to passing shocks that had triggered or worsened the inflation of the day, but that would soon abate. In the late 1940s, the issue was one of readjustment to a peacetime economy. In the 1970s, an equivalent shock was supplied by a huge rise in oil prices triggered by Middle Eastern upheavals and made worse by the peaking of US domestic oil production in 1970/71.

Excessive, untaxed spending on the Vietnam War had also got the inflationary ball rolling before that. Military spending is especially inflationary because nothing immediately useful is being produced. If the government pays people to build more houses than the private sector is willing to supply, the price of houses will decline. But if the government pays people to blow things up or just march around all day, this actually contributes to scarcity as well as an increase in the money supply, or in other words to both sides of the famous formula of ‘too much money chasing too few goods’

In hindsight, the post-World War II inflation eventually faded away around the time that Eisenhower was writing that letter to his brother. And, as we now know, the price of oil also declined once more in the 1980s, as new oilfields and new methods of drilling were put into production.

And although it seemed to last forever at the time, the Vietnam War did eventually end as well, more promptly than the forever wars of the present.

So, why did inflationary times trigger the demise of the social contract in the USA, New Zealand and many other countries in the 1970s and 1980s, when it had not done so in the immediate aftermath of World War II?

Hard to avoid is the theory put forward by a great many American authors, to the effect that the great, post-World War II migration of rural folk of colour to formerly white industrial cities strained the consensus to breaking point.

That too many Archie Bunker types, beneficiaries of an activist state in their youth though inclined, in middle age, to see their elevation into the middle class as the product of their own hard work (which it was, of course, to some extent too), did not see why their taxes should be paid forward to support the new cohort of urban immigrants.

Immigrants who were not only visibly different-looking but also more youthful on average, and thus equally in need of the sort of help to get established that the mostly white troops who fought in World War II had got, back in the day.

Politicians like Richard Nixon and Ronald Reagan pandered to Bunker-ism. Indeed, Nixon and Reagan were later shown by declassified recordings to be quite racist themselves.

The net result was that, instead of extending the welcome mat, the white cities pulled up the drawbridge.

These American developments had close parallels in New Zealand, where the almost exactly equivalent migration was that of formerly rural Māori, and their ethnic cousins from the tropical Pacific as well, to the New Zealand metropolis.

The cover of the June 1959 issue of Te Ao Hou / The New World, published by the New Zealand Department of Maori Affairs, a magazine that was, in its day, quite a forceful vehicle for Māori advancement and often critical of the ruling powers in spite of the fact that it was published by a government department. Crown copyright reserved.

While many indigenous populations are small compared to white majorities, in New Zealand the total number of Māori and Pacific Islanders is quite large, amounting to about a quarter of the total national population. As such, the urbanisation of the Māori and the Pacific Islanders was very noticeable, all the more so because it was extensive. Of the Māori, according to the current online Encyclopaedia of New Zealand, Te Ara,

In the 50 years between 1936 and 1986, the Māori population changed from 83% rural to 83% urban, one of the fastest rates of urbanisation in the world. As a result, many Pākehā came into close contact with Māori for the first time.

Indeed, the greatest part of the fifty-year urbanisation of the Māori was compressed into the span of a single generation, between 1955 and 1980.

As for the Pacific Islanders, also known as Pasifika, virtually all the Pasifika who reside in New Zealand do so in the cities. And some of the smaller island communities even have more of their number in just one New Zealand city, namely Auckland, than back on the home island.

The urbanisation of the Maori and Pasifika populations brought great progress toward equality. On page 474 of his Paradise Reforged, James Belich quotes another historian Keith Sorrenson, thus:

In 1961, the average income of Maori males was 89.8% that of non-Maori males.

Belich then goes on to comment, himself, that:

Historians sometimes city such figures to demonstrate persisting Maori disadvantage, but they surely represent a massive improvement on the situation 30 years before. Added to this, Maori from 1945 at last became fully eligible for the benefits of the welfare state. They were quite generous at the time, and you did not have to be unemployed or sick to get them. In the 1950s, the family benefit [a universal child allowance abolished in 1991] must have been a real boost to large Maori families, increasing incomes by around 50 per cent. In terms of cash if nothing else, the period 1945–75 was something of a golden age for Maori. The era of Maori protest and activism that began around 1970 did so at a time when Maori were economically better off than they had been for a century.

By 1970, when the following advertisement was made, the larger cities of New Zealand’s North Island, Wellington and, even more so, Auckland, had become noticeably multicultural, in ways that involved a large indigenous presence alongside other recent immigrant groups.

Regrettably, such progress toward healing the wounds of the nineteenth century and creating a more inclusive version of modern, urban, society would not be sustained for very much longer.

The Family Benefit, for one thing, was initially paid out with the intention of increasing a Pākehā population that was still deemed to be too small at the time the Benefit was introduced in the 1930s (‘natalism’), and thus curing settler underpopulation as well as settler poverty.

The originally-intended recipients of the Family Benefit. A still from the final moments of Housing in New Zealand, 1946.

But the Family Benefit was abolished in 1991, as it became clear that indigenous populations were now the ones with the largest families and as it became clear, also, that the Pākehā population was growing older on average, more likely to have paid off its mortgage, and less likely to be in need of the Family Benefit in any case.

A stark difference in demographic composition between Pākehā and indigenous groups had become noticeable by the 1970s: the former increasingly middle-aged on average, its median age pushing forty, the latter still with a triangular and pointed population pyramid dominated by younger age groups, their median age closer to twenty.

Commentators in that decade, such as the sociologist Cluny Macpherson and the public servant Nau Puriri, argued that New Zealand was potentially at risk of becoming a more divided society in the future, insofar as age-group demographics, ethnicity and the ownership of assets were all now lined up on opposite sides of a common social seam.

Viewed positively in an earlier era when the Pākehā had a pointy population pyramid and many young people themselves — for indeed, until the 1960s, New Zealand had been a young person’s country in all the major ethnicities — the Family Benefit was, by 1991, accused of by leading Pākehā politicians, and pundits, of encouraging irresponsible breeding of the kind that supposedly made poverty worse in the long run.

In the face of large Māori families and the ageing of the Pākehā, the shade of the Reverend Malthus was thus invoked.

The Family Benefit was later partially revived later in the form of Working For Families: which was, however, no longer available to families where the both parents had lost their jobs, in the belief that those who have lost their jobs need to be discouraged further from breeding by making them even poorer.

The fate of the Family Benefit is in many ways indicative of the wider sea change, a shift from natalism for Pākehā to Malthusianism for the Māori.

The political representatives of the majority saw ethnic minorities benefiting from the institutions of the Settler Contract. But instead of extending and entrenching the contract, they ultimately tore up the contract (for everyone), in ways that included pulling the plug on industrial development and on affordable housing schemes as well.

This did not harm the by-now older and more established Pākehā population of the cities as much as it affected the city’s younger, less secure urban migrants of colour.

As it would seem, New Zealand government policy always was designed with the best interests of the British and European settler in mind! As the settlers grew older, so New Zealand changed from a young person’s country to an old person’s country.

This might have happened anyway, even if the population was homogeneous. However, it is just as likely that a mono-ethnic Pākehā New Zealand, faced with its own ageing, might have gone all out to encourage its dwindling stock of young people to have more babies and to find its young families jobs and houses, in a similar fashion to the 1930s all over again. It seems likely, instead, that the combination of two major populations with widely differing demographics contributed to a pulling-up of the drawbridge against a tide of youthful ‘invaders’.

In the next chapter, I’ll go on to describe how this happened, in more detail.

References on Māori urbanisation: Quote: Mark Derby, ‘Māori–Pākehā relations — Māori urban migration’, Te Ara — the Encyclopedia of New Zealand, (accessed 18 May 2021). Subsequent statistic: See ‘Paul Meredith, ‘Urban Māori — Urbanisation’, Te Ara — the Encyclopedia of New Zealand’, (accessed 18 May 2021).

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I am an urban historian from New Zealand with a special interest in New World cities. Somewhere along the line I picked up a PhD on planning and economics.

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Chris Harris

I am an urban historian from New Zealand with a special interest in New World cities. Somewhere along the line I picked up a PhD on planning and economics.