A racist attack on two mosques left 51 people dead. A deadly volcanic eruption. The coronavirus pandemic. Over nearly six years in office, Prime Minister Jacinda Ardern of New Zealand skillfully weathered one sudden catastrophe after another and cruised to reelection in 2020. But in the background, New Zealand’s long-standing economic issues — like expensive housing and a high cost of living — continued to simmer.
With national elections less than nine months away and days after her shocking resignation, the future of Ardern’s liberal Labour Party will hinge on how voters perceive she and her government tackled those problems. And with economic momentum falling, interest rates rising and inflation cutting into household budgets, critics, including those in the opposing center-right National Party, will seek to place the blame at her door.
The weight of those problems is expected to fall on Chris Hipkins, the current education and policing minister, who was nominated at a caucus Saturday to lead the party and, thus, the country. The nomination is expected to be formally endorsed Sunday.
“The government’s legacy seems, depending on who you talk to, to either be completely abysmal or the most golden, amazing thing ever,” said Brad Olsen, the principal economist at Infometrics, a consulting firm. “The truth is a bit more between those two marks.”
On Thursday, when Ardern announced her plan to step down, among her detractors was Ben Buist, 49. Speaking in downtown Christchurch, New Zealand, he told of struggling with the country’s cost-of-living crisis and trying to get affordable housing.
“Where’re all the houses she said she’d build?” he said, referring to a flagship campaign promise to construct 100,000 new homes, a pledge that helped bring Ardern to power. Only a fraction of those houses were built during her tenure.
When Ardern notched her surprise upset victory in 2017, New Zealand’s economy was much in the middle, globally speaking, said Brian Easton, an independent economist in the country. “And it is still, today — except the world economy is functioning less well, and so is New Zealand’s,” he said.
The country has a small, open, and not especially competitive economy. Its moniker — the “shaky isles” — is accurate: at the mercy of global events, highly susceptible to changes in the Chinese economy, and at constant risk of natural disaster because it is situated on multiple earthquake fault lines.
As Ardern prepares to step down next month, critics say little has changed economically. Relative to income, New Zealand is the 12th most expensive country in the world to live in, with expensive housing a major concern. Private debt — which includes household debt and student loans — sits at about 147% of the gross domestic product, compared with 154% in the United States and 133% in Australia.
Addressing child poverty, which Ardern promised to make a personal priority, is trending downward but remains higher than in comparable economies, especially for single-parent households. Inequality remains stubbornly unchanged, with the top 10% of New Zealanders still holding approximately half of the country’s household net worth.
Ardern’s opponents point to an abundance of new problems and what they see as inadequate solutions for the old ones. But economists say that, especially on questions of inflation and the threat of a downturn, governments do not always hold the answer.
“There’s always that kind of tracking temptation to draw politics into the economy, but the economy doesn’t really care who’s in power,” said Shamubeel Eaqub, an economist based in Auckland, New Zealand’s largest city. “The cycle of the economy is not the job of the government. That is just plain silly.”
But that will be cold comfort to voters squeezed by pocketbook concerns. Ardern’s government has tried to claim credit for record-low unemployment without taking responsibility for inflation, instead pointing out that, at 7.2%, the rate is primarily in line with that of comparable economies.
“The average Kiwi doesn’t care if our inflation is lower than what it is in the United States or the United Kingdom; they just care that it’s hitting them,” Olsen said. “A lot of the time, most people don’t actually care what the root cause is; they just want to see it fixed.”
As of December, polls showed support for Labour was at 33%, compared with 38% for the National Party.
Ardern campaigned on a platform of “transformational change” that many pundits say she has not delivered. She has ruled out potentially powerful policy levers such as imposing a capital gains tax and raising the retirement age.
Most of the government’s economic policies have come not directly from Ardern but from Grant Robertson, the country’s deputy prime minister and finance minister. What progress in transforming the economy has been made has mostly been in more unflashy areas, where it could take years or even decades to see their beneficial effects, Eaqub said.
In housing policy, for instance, Ardern’s government has overhauled a long-standing law to promote the construction of apartments and essentially ban zoning for single-family homes in large cities.
“With the benefit of hindsight, I think the reforms that are in housing are going to be seen as transformational,” Eaqub said.
But in the short term, homeowners in New Zealand have more pressing concerns. Home prices in New Zealand fell 12% last year, after surging for years. Previous governments — both Labour and the center-right National Party — had also failed to rein in the galloping housing prices, a problem that dated back to the early 2000s. For overleveraged borrowers, especially those who must tighten their budgets as interest rates rise, the threat of further home price declines is deeply worrisome.
“There’s a legacy of people paying too much for their housing,” Easton said. “Particularly with low-interest rates now rising, it means that there are now people who are really struggling with paying off their housing debt.”
Some analysts credit Ardern’s government on the housing front, saying her administration still led a historic effort that succeeded in actually building more housing, said Morgan Godfery, a political commentator and senior lecturer at the University of Otago in Dunedin, New Zealand.
“Her government has built more houses than any other government since the 1970s,” he said. “These are achievements that have passed without much comment.”
Perhaps Ardern’s greatest legacy, economic and otherwise, was her government’s quick-fire response to the coronavirus pandemic, both in terms of the public health response and the economic support offered to New Zealanders and businesses.
“New Zealand came out better than most. We had stronger economic growth, and lower unemployment rates,” Eaqub said. “But we’re experiencing now the same issues as other countries. And the underlying issues in our economy are coming through.”
Whoever wins the planned October election will have to tackle the same hurdles faced by successive governments, including Ardern’s.
Housing, inequality, poverty, and health care were issues that kept cropping up and could not be ignored by leaders, said Olsen of Infometrics.
“I just don’t think that’s an option,” he said.
Which Leaders Resign, Like Jacinda Ardern? Often, the System Decides.
When Jacinda Ardern announced this week that she would step down as New Zealand’s prime minister, her decision caught the world by surprise. She called leading a country “the most privileged job anyone could ever have,” but said she would leave office by February.
It was particularly striking to see a leader voluntarily relinquish power at a moment when the world’s strongmen — and even some elected presidents — are clinging ferociously to theirs.
Jair Bolsonaro of Brazil, for instance, has disputed the election results that recently removed him from office, with some of his supporters storming the country’s legislature in an apparent mimicry of the United States’ own attempted insurrection in 2021.
Ardern framed her resignation as a personal decision based on no longer having “enough in the tank” to fulfill the responsibilities of being prime minister. Some supporters have also praised her move as embodying the democratic ideals on which she spoke passionately.
But what separates leaders who step down from those who do not often turn less on that leader’s ideology or personal life than on the simple nature of their political system.
In parliamentary systems such as New Zealand’s, it is the norm for leaders to step down when it is thought that doing so will best serve their party’s electoral prospects. Sometimes such a resignation is voluntary, and sometimes it comes amid quiet internal pressure from party members.
Usually, it is a mix of both.
Although Ardern has said she is stepping down for personal reasons, her party is facing its worst poll numbers in years and a national election in October.
Parties in parliamentary systems often nudge a leader to step down in such circumstances because they can elevate a new prime minister from within their ranks to win back voters before the next election. (In New Zealand, another member of Ardern’s Labour Party was nominated Saturday to take over as prime minister.)
In such situations, the party’s incentive is to keep this process quiet, so as not to air internal divisions or project political weakness. This often creates the appearance of a graceful and voluntary resignation.
Angela Merkel, Germany’s longtime chancellor, stepped down voluntarily in 2021, also several months before national elections in which her party faced difficult poll numbers. She presented the choice as hers, preserving her political stature and her party’s show of unity. Her party carefully orchestrated Merkel’s handoff to a hand-picked successor. But the party nonetheless lost power in that year’s election.
And because any intraparty maneuvering in parliamentary systems typically plays out mostly behind closed doors, such leaders might not appear to be clinging to power even when they fight to do so. For instance, Justin Trudeau, Canada’s prime minister since 2015, has repeatedly survived grumbling from within his party amid sliding poll numbers.
Still, internal party disputes over leadership do sometimes explode into the open. In Britain, for instance, Boris Johnson as prime minister feuded openly with challengers within his party. But Britain operates a bit differently from most parliamentary systems: Its parties hold public leadership primaries open to rank-and-file members. And the country’s intraparty politics have grown especially acrimonious amid the tumult of Brexit.
In most parliamentary systems, prime ministers, unlike presidents, are elected by their party’s lawmakers. Those lawmakers typically also have the power to replace them at will, or at least to trigger votes that might remove them. As a result, power handoffs, even chaotic ones, are overwhelmingly likely to proceed peacefully.
“The vast majority of the stable democracies in the world today are parliamentary regimes, where executive power is generated by legislative majorities and depends on such majorities for survival,” Juan Linz, a prominent political scientist who died in 2013, once wrote.
Presidential democracies, Linz and others have found, are unusually likely to collapse into coups or other violence. Scholars have identified several reasons for this. One is that these systems are set up in a way that makes removing a leader far more difficult and gives it higher stakes, while also effectively discouraging leaders from stepping down voluntarily. The separation of legislative and executive branches means that a ruling party cannot simply change out an unpopular leader with a replacement as it can in parliamentary systems.
Rather, that party must use the legislature to pry the president from office via public impeachment proceedings. Even in the rare instances when this succeeds, it tends to open deep and damaging fissures within the president’s party, as well as grinding the government to a halt, which is why lawmakers rarely do it.
Even when they do, it can bring a constitutional crisis or worse. Peru, for instance, has been mired in chaos ever since its president dissolved the legislature in December to prevent it from holding an impeachment vote, which led to that president’s removal from office and weeks of nationwide unrest.
Presidents also know that resigning or declining to run for reelection would hurt their party’s prospects of holding power. Party allies in the legislature know this, too, giving them powerful incentive to urge even a president they see as dangerous to the country to stay in office.
These disincentives from stepping down voluntarily don’t just discourage presidents from retiring, as Ardern did, or turning over power, as Merkel did. They also apply to presidents who lose power in an election or impeachment.
Donald Trump’s efforts to hold onto power after losing the 2020 U.S. presidential election may have been shocking and unprecedented for the country, but they were well in line with the sorts of crises that play out in presidential systems worldwide.
But the deterrents to stepping down in a presidential democracy pale in comparison to those in an autocracy — especially one in which power is concentrated around a single strongman leader.
It is not just that autocracies grant their paramount leaders a level of power that makes them often unwilling to step down while empowering them to remove any threats to their rule.
Power transitions are uncertain moments in any authoritarian system, inviting power grabs and bureaucratic infighting. This gives everyone invested in that system’s survival a reason to keep the leader in power, even if they are seen as imperious or corrupt.
(BEGIN OPTIONAL TRIM.)
Autocracies built around an institutionalized power center — a vast ruling party, for example, or a family monarchy or a military dictatorship — are typically better able to force and to survive a leadership transition.
Those leaders, after all, derive their power from the institution that elevated them, which also makes them subject to it. And those institutions typically have the ability to install a replacement.
Communist states such as the Soviet Union, Vietnam, and China, for instance, have all outlived most other dictatorships in part of their ruling party’s capacity to manage power transfers that might have felled other systems.
That makes leaders in such countries perhaps a bit more inclined to step down voluntarily, knowing that their system has a good chance of surviving and of protecting them in retirement. China’s last leader, for instance, stepped down voluntarily in 2013, even helping to hand off power to his replacement, Xi Jinping.
But Xi has steered China toward a sort of autocracy in which leadership transfers are often dangerous and voluntary retirements rare: what scholars call a “personalist” system, built around a single leader, colloquially known as strongman rule.
Other examples include Vladimir Putin’s Russia, Recep Tayyip Erdogan’s Turkey, and Nicolás Maduro’s Venezuela.
Such leaders tend to make themselves into a kind of keystone at the center of the political system, holding it all together. They also have a habit of vanquishing potential rivals, leaving their government, by design, less able to nudge them out or to elevate a viable replacement.
This makes stepping down extremely dangerous even when such a leader might wish to do so.
Since the end of the Cold War, 2 out of 3 personalist dictatorships have collapsed outright on their leader’s departure from office, according to research by the political scientist Erica Frantz.
As a result, dictators who step down voluntarily often find themselves quickly imprisoned or even killed amid the tumult surrounding their government’s collapse. So few ever do, instead waiting to die on the throne.
So while Ardern can step down without having to worry about anything graver than her party’s electoral prospects, the ruling power centers in a place such as Russia remain all but stuck with a leader who has plunged their country into disaster, as in Ukraine.
It is a reminder that although the world’s dictators have presented their systems as bulwarks of stability in contrast with unruly democracies, it is arguably stability that is among democracy’s greatest advantages.
This article originally appeared in The New York Times.
Oman Observer is now on the WhatsApp channel. Click here
