There’s unlikely to be much in the way of tax reform. With only the possibility of a 2.5% increase in GST, probably some minor tinkering with depreciation rules, and no indication of spending cuts, there could only be very minor reductions to income and corporate tax rates. The rejection of the introduction of new taxes, notably on land, is good, though for public choice rather than public finance reasons. There was some empty rhetoric about welfare reform, but major changes to the god-awful Working for Families were ruled out.
One thing really pissed me off though: the suggestion of unspecified reforms to liquor licensing rules to address the Problem of Binge Drinking. This means that beer is likely to get more expensive and less conveniently available so the government seems like they’re doing something. Not cool, John.
Alan Bollard repeats the common claim that the difference in economic performance between Australia and New Zealand is due to Australia’s abundance of natural resources:
Speaking on TVNZ’s Q+A programme yesterday, Alan Bollard said Australia had been “blessed by God sprinkling minerals” and had handled its economy well. He said New Zealand would do better to make the most of the “crumbs that come off the Australian table”.
He said it was up to the Government what its own goals were, but he did not believe catching up with Australia was possible.
I haven’t watched the show, but I’m assuming Bollard is arguing that changes in commodity prices favourable to Australia explains the fact that living standards across the ditch are around a third higher. This is just not true. The 2025 Taskforce (led by Don Brash, who does understand economics) does a good job of summarizing the evidence.
While movements in terms of trade have made Australians richer in recent years, most of its improved performance came well before any significant and sustained changes in commodity prices. Further, New Zealand has fallen in income relative to other OECD countries which should have been hurt by changing commodity prices.
Bollard seems to be stuck in a materialist mindset when it comes to economic performance. While resource endowments do matter, assuming that New Zealand’s relative lack of minerals destines those living here to a permanently lower level of income than Australians is absurd. As the Taksforce points out, many high performing countries such as Taiwan and Ireland are extremely resource-poor. Many extremely poor African countries are also very rich in minerals. People become richer when the institutional environment allows them to cooperate for mutual advantage, not when there are lots of shiny things to take out of the ground.
New Zealand’s economic stagnation has nothing to do with resource endowments or commodity prices and everything to do with poor institutions. Australia’s economic reforms since the 1980s have been much more constant and thoroughgoing than ours, and have not produced the same destructive regime uncertainty.
The 2008 Health and Lifestyles Survey compiled nationwide interviews from the Health Sponsorship Council of 1608 people, including 422 smokers, and has just been published in the NZ Medical Journal.
It found 49.8 per cent of people agreed cigarettes should no longer be sold in New Zealand in 10 years, 30.3 per cent disagreed and 19.9 per cent neither agreed nor disagreed. Of the smokers surveyed, 26.2 per cent agreed and 55.3 per cent disagreed. The study also showed public support for plain, unbranded cigarette packets and fewer tobacco retailers. …
One of the study’s authors, Dr George Thomson, from Otago University, Wellington, called on the Government to take action.
“There’s now a need for politicians to embrace and act on the idea of a foreseeable and planned end to tobacco sales through a predicable timetable by 2020. The public wants more defined action to reduce smoking, and not a series of incremental steps.”
I can’t find much information on the survey from a quick googling, but I strongly suspect they asked the prohibition question in a leading way, with a variety of anti-smoking priming questions beforehand. The other surveys they’ve conducted don’t seem particularly neutral. My worry is that misleading survey results like this could trigger anavailability cascade which makes people more likely to express support for prohibition.
Of course, I could be completely wrong: maybe half of New Zealand really is that meddlesome.
Many hat tips; most recently Daniel Aguilar via email, which gave me the impetus to post.
I hope Russ Roberts and the econstories crew will consider a rap video of Tullock explaining why government performs poorly. I imagine a hype-man (Charles Rowley?) yelling “Trapzoid, motherfuckers!” somewhere in the chorus.
Federated Farmers’ Rangitikei-Manawatu president Gordon McKellar said a land-based tax would be “a pretty dumb idea”.
The projected profit for a typical 220 hectare Manawatu beef or sheep farm would be about $21,000 for the next financial year but a land tax on the same property could be as much as $24,000 if buildings were included.
If buildings were included, though, we’d be talking about a property tax rather than a land tax. The rationale is to tax something which we don’t need to worry about discouraging: you can’t make more land.
As I’ve said before, I would be very much in favour of replacing current taxes with land taxes, for both moral and economic reasons. Public choice concerns, as they often do, make things more complicated.
Reading the online version of my local paper today, I was struck by the differences between New Zealand and the United States. The top story – so I presume it’s on the front-page of the dead tree version – has the headline “Armed police brought in to arrest man in Christchurch.”
This obviously wouldn’t be newsworthy in United States or other countries with highly militarized police forces. American officers routinely carry pistols and, if TV shows like Cops are any indication, are willing to get them out at every opportunity. Down here, the police don’t carry firearms and the use of the Armed Offenders Squad is relatively rare.
I think this is a major factor in the general professionalism and reasonableness of New Zealand cops. While there are bound to be a few sociopaths in any police force, police brutality and arrogance seem much less common here than in the States.
Compare and contrast:
To my knowledge, no reliable measures of police misconduct exist, but I don’t think this is just denominator-blindness: pointing guns at, tasing, pepper-spraying, or handcuffing people not posing any immediate threat seems to be common practice in the US, but is very rare here.
Guns and tasers give cops a greater sense of authority and dominance. It’s a cliché, but power does corrupt. I challenge anyone to watch video of the Stanford Prison Experiment and maintain that it’s possible to give person power over another without it being abused:
A bunch of normal young guys were randomly assigned to be either prisoners or guards in a mock prison. The experiment was due to run for a week, but had to be called off early after the guards became increasingly cruel – with situations eerily similar to those in Abu Ghraib – and the prisoners increasingly accepted the dominance of the guards. Normal people became either sociopaths or cowering messes depending simply on the roles they were assigned.
There are frequent calls to arm the New Zealand police, especially after an officer is killed or injured on the job, and the use of tasers is becoming more common. Needless to say, I think this is a very bad idea. Arming the police might make them slightly more capable of fighting genuine crime, but it’s almost certain to make them into a group to be feared by innocent New Zealanders.
Opposition to an armed police force isn’t based on nostalgia, as some would claim, but an understanding of human psychology. Citizens should not be afraid of their police, and police should definitely not be pointing guns at citizens without a very good reason for doing so.
Immigration restrictions are about the most harmful policies around. Resulting almost entirely from the bigotry of voters (voters are much nastier than people) and a false Malthusian worldview , they prevent the poor and ambitious from seeking a better life in a freer country, while also depriving the host country of valuable new people.
Given that I think civil disobedience is an important way of limiting government power, I’ve always been a bit disappointed that nobody tries to sneak into New Zealand. Border Angels and others assisting illegal immigrants enter a country safely are putting themselves at great personal risk to do extremely valuable humanitarian work. I’d love to help out with such things, but there are no opportunities to do so on an isolated group of islands.
The government seems to think that more people will attempt to enter New Zealand illegally in the future as technology makes long ocean voyages cheaper. Apparently, the authorities are working on new ways of keeping the riff-raff out as New Zealand becomes increasingly “targeted” by the “global people-smuggling crisis.”
Sounds to me like decent New Zealanders unwilling to keep migrants out (i.e. forcibly prevent people from entering our patch of land to peacefully trade with the locals) need work on new ways of helping new migrants enter and settle in the country despite the inhumanity of government policy.
My apologies for the lack of posting here. I’ll keep the blog open, but I doubt the frequency of posting will increase any time soon. If you just can’t get enough of me, head over to Fr33Agents.com, where I blog more often along with some other fine people. You can also see what I find interesting by following my shared items in Google Reader.
I am a Master’s Student in Political Science at the University of Canterbury, New Zealand. My research interests include libertarian political philosophy, constitutional political economy, and the economics of anarchy.
