Wage and price freeze

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In June 1982, faced with rampant inflation brought about by years of interventionist economic mismanagement — much of it his own — New Zealand Prime Minister Robert Muldoon bet the farm[1] on the most radical intervention a guy could make short of nationalising the means of production altogether: He banned inflation. By executive fiat, Muldoon announced a total wage and price freeze. Henceforth it would be illegal to increase wages or prices in New Zealand.[2]

Overnight, he said, inflation would be fixed! Easy, right? Things stayed this way for two and a half years until Muldoon was, at last, thrown out of office, by which time the economy was so demoralised David Lange’s incoming Labour government, had no choice but to implement the sweeping reforms the economy needed. Not before Muldoon precipitated a constitutional crisis— and a dramatic run on the New Zealand dollar — by publicly refusing the new administration’s instruction to devalue the Kiwi. There was so little money left that Lange instructed New Zealand’s international diplomatic staff around the world to max out their credit cards so there would be money to pay the bills. Lange’s book David Lange: My Life covering the period is a ripsnorting read.

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  1. Literally: in 1982, New Zealand was basically one big farm, with 70 million sheeple. I mean sheep. In fact, 1982 was peak sheep for New Zealand, with 70.3 million of the buggers. These days, there are 29.5 million, according to NZ’s official statistics folk.
  2. Where was the minister of finance in all of this, you might ask? Right there. Muldoon was the Minister of Finance, too.