FOOD FOR THOUGHT

I’ve been enjoying a fine smorgasbord of speakers and ideas at the Centre for Independent Studies’ Consilium in Coolum. A highlight has been a session titled ‘The Language of Denial: Freedom of Speech in an Age of Political Correctness’, featuring James Allan, super smart Canadian law professor formerly at Otago and now at the University of Queensland.  Janet Albrechtsen, columnist with The Australian and a regular guest speaker at Business Roundtable events, Brendan O’Neill, editor of The UK’s Spiked, and Thilo Sarrazin, author of Germany Abolishes Itself (the publication of which forced him to resign from his role as a Bundesbank director).

The session covered the chilling effects on free expression of political correctness in such matters as the science behind climate change, immigration, religion, the plight of Australia’s Aboriginal people, the justification of ‘hate speech’ laws, and the problems posed by the newfound prominence of Islam in Western society.  While Australia’s problems in this regard are greater and more complex than ours, there are plenty of lessons here for New Zealand. 

Less edifying was a session titled ‘An Uncertain Harvest: Investigating Global Food Security’. Malthus seemed to have a couple of seats at the table in a round of agonizing about food security and whether the world can feed its population in the 21st century.

I made the point that food security is often the code word for agricultural protectionism. It has been the excuse for the common agricultural policy and protection of Japan’s rice farmers, for example. If markets are allowed to work, trading is free, and property rights and contracts are secure, it is hard to see why global supply and demand will not balance over the longer term.  As one delegate said, there’s never been a famine in a democracy.  

 

ON HOPE AND LOVE OF COUNTRY

I’m at Consilium this week in Coolum as a guest of the Centre for Independent Studies and the recipient of their Alan McGregor Fellowship.  Consilium is the CIS’ annual ideas and think fest that brings together a great cross section of Australia’s leaders of business, politics, academia, and the wider community to deliberate on the major economic, social, cultural and regional issues facing Australia and New Zealand. It’s an impressive gathering with all 150 attendees microphoned and seated around a massive oval table.

The forum opened with a dinner last night where I and former Australian PM John Howard were presented with the two annual Alan McGregor Fellowships. The late Alan McGregor AO was a former CIS chairman who played a major role in the organisation’s development and success. The awards are given to honour individuals ‘who have made a significant contribution to the advancement of the principles for which the CIS stands’ – free markets, a liberal society, and personal responsibility  I’ve enjoyed a close collaborative relationship with the CIS over more than 30 years and greatly appreciated the honour.

The awards ceremony was followed by ‘Life Under Challenging Regimes’,a conversation with Professor Ricardo Lopez Murphy, Argentine economist, and Senator David Coltart, Minister of Education, Sport, Arts and Culture, Zimbabwe, moderated by Paul Kelly, Editor-at-Large of The Australian.  David Coltart is the only white elected MP in a cabinet of 39, and represents a constituency that is 98 percent black.  He spoke of a once highly successful country devastated by a succession of fascist governments, draconian political restrictions, genocide, economic ruin and inflation beyond the believable (a hundred trillion dollar note, that even after 21 zeros were taken off it, still did not buy a loaf of bread).  Yet in the last three years, he explained, while life in Zambabwe remains fraught with risk and social turmoil, the currency has been abandoned, exchange controls and tariffs are coming down, economic growth is picking up – to over 8% last year – and there is hope that Zimbabwe could yet regain its former status as the jewel of Africa.

Ricardo Lopez Murphy was an unsuccessful candidate for the Argentinian presidency on two occasions. He told a similar story of a man committed to achieving democracy and economic prosperity for his country.

The session was, in short, a tale of two people explaining why they love their countries and stick with them, and their grounds for hope that through the restoration of the rule of law and common sense economics, these two countries will rise again.

“SENDING PROFITS ABROAD IS A GOOD THING”

Here is a nice little piece by Oliver Hartwich, a highly talented researcher at the Centre for Independent Studies in Australia.

As he notes, it’s amazing how easily Australians are persuaded by the claim that every time someone buys products of a foreign-owned company, the profits will somehow disappear and harm Australia’s prosperity.

In New Zealand, we also hear the ‘sending profits abroad’ argument in the context of the privatisation debate.

Leaving aside the likelihood that some significant part of the profits of a multinational may be reinvested in the host country, the article notes:

If the parent company however decided to transfer the profits from its Australian branch to America, it would soon find out that Australian dollars are pretty useless outside Australia and change them into US dollars.

And then it gets to the nub of the issue:

But what happens to the Australian dollars? Since Australian dollars don’t buy anything abroad, they will return to Australia to buy Australian goods and services. Maybe a US company will use them to buy Australian minerals. Perhaps US tourists will come here to spend their holidays. Or the US might import Australian-made cars.

In any case, Australian dollar profits transferred abroad return to Australia sooner rather than later because outside Australia, our dollars are just printed paper that will not get you a cup of coffee.

So the conclusion is:

This is where the ‘Australian-owned’ argument falls to pieces. For Australia’s wealth and prosperity, it does not matter where the profits from Australian businesses end up. All that matters for the Australian economy is that Australia remains a place where business transactions take place – irrespective of who owns the business.

Would that more New Zealand journalists and commentators exposed the fallacy of the ‘sending profits abroad’ argument.

NO COUNTRY FOR YOUNG MEN (OR WOMEN)

It’s always salutary to see ourselves as others see us.

Recently German-born Centre for Independent Studies researcher Oliver Hartwich wrote this piece on alcohol.

The first sentence is arresting: “Coming from a country where even petrol stations are allowed to sell alcoholic drinks as ‘essential traveller needs’, I have always found Australian alcohol practices rather bizarre”.

Imagine the outcry over any proposal to allow petrol stations to sell alcohol in New Zealand.  Anti-alcohol crusaders like Doug Sellman would have apoplexy.

I have no view on such a proposal, but shouldn’t we be willing to examine evidence from Germany?  After all, New Zealanders routinely observe that European drinking habits are better than ours.

Dr Hartwich commends competition among supermarkets in the interests of driving down prices for consumers.  The idea of imposing minimum prices on alcohol products as a means of reducing alcohol abuse makes no sense.

Recently MP Paul Quinn exposed the hypocrisy of doctors appearing before the select committee considering liquor law issues.  They wanted to ban supermarket sales yet bought their own supplies from supermarkets.

As Dr Hartwich observes, restricting the places that sell alcohol is ineffective in preventing excessive alcohol consumption.  “Licensing laws in Victoria and the ACT are more liberal than in NSW.  However, binge drinking or alcoholism appears no worse in Melbourne or Canberra than in Sydney.”

Parliament is debating a proposal to increase the purchase age to 20.  This would align New Zealand with only 11 other countries.  Eighty-one (including Australia) have a minimum age of 18, 12 (including Belgium, Germany, Norway and Spain) set the age at 16, and 17 have no drinking age at all.

As one expatriate New Zealander said to me, the proposed move would do nothing to attract young expatriates back: it would be a signal that New Zealand is ‘no country for young men’ (or women).

Alcoholism and alcohol abuse are serious problems.  But as this submission by the Business Roundtable argued, heavy-handed regulation as proposed by the Law Commission is not the way to deal with them.

New Zealand’s Great Regression

Luke Malpass, of the Centre for Independent Studies, has written a sobering, but informative and well-written, article about New Zealand for the Journal of the American Enterprise Institute. He summarises the current state of the economy, and political landscape, before examining how we got to this point – with a particular focus on the reforms of the 1980s and early ‘90s.

A colourful piece, it describes New Zealand variously as a ‘Polish shipyard’ and a ‘beacon of liberalizing reform’ (before suffering from) ‘stultification’ and ‘lost policy mojo’.

The article begins with an anecdote about Ruth Richardson giving the vote of thanks at the PJ O’Rourke dinner last year (excerpts):

Delivering the vote of thanks was the Honorable Ruth Richardson, New Zealand’s indomitable former minister of finance and author of the “mother of all budgets.” Richardson had effectively dismantled the welfare state and slashed government expenditure in the early 1990s before Prime Minister Helen Clark’s Labour government reverted New Zealand to type. In her speech, Richardson noted that since her tenure, New Zealand had “lost its policy mojo” and implied that her former party (the current conservative National-led government) was about to commit “fiscal child abuse.”

 The article argues that New Zealand never fully embraced ‘reform zealotry’:

New Zealand is not in a league of international political big hitters. There are few things that Americans would know about New Zealand: maybe the Lord of the Rings films, perhaps our anti-nuclear policy, or, for the politically minded, the liberalizing reforms of the 1980s (colloquially known as “Rogernomics,” after Minister of Finance Roger Douglas). These reforms ensured that from 1984 to 1993, New Zealand was a beacon of liberalizing reform (liberalizing in the classical sense, as I will use it here) to the rest of the Western world. In reality, despite its great results and international recognition, New Zealand’s overtly ideological and doctrinaire approach to reform was an anomaly in the nation’s otherwise pragmatic path. New Zealanders never really got into reform zealotry, and although the medicine was taken, the exercise regime that would make it unnecessary in the future required a bit too much discipline. It was easier to fall back into the old habits of tax, spend, and regulate.

And so it is. New Zealanders are pleased that Helengrad (the pop culture name for New Zealand under Prime Minister Clark, 1999–2008) has fallen and the socialist government gone. But the nation also seems relatively content with a conservative government doing the same socialist things with marginally lower income tax rates. John Key’s National-led government prefers not rocking the boat—he is keeping up entitlements and continuing to tax and spend, and to clamp down on incorrect social behaviors.

Luke Malpass identifies the ‘50s and ‘60s as New Zealand’s most prosperous years, but argues that years of protectionist policies would eventually make reform a necessity:

The 1950s and ’60s were New Zealand’s “golden years”—it had the highest living standards in the world in the 1950s, largely due to postwar export industries, particularly sheep products to the United Kingdom. But hidden behind this prosperity were the seeds of a long period of decline and a slow process of the stultification of society. The nation was complacent during the good times, and successive governments combined a “she’ll be right” attitude with a misguided belief in the long-term viability of protectionist policies. It took 40 years for the consequences to hit home.    

 Then he launches into his account of New Zealand’s renowned economic reforms:

When they did, the nation responded with radical reforms in 1984. From being one of the most closed-off economies in the world, New Zealand became one of the most liberalized. When the Fourth Labour Government was elected in 1984, almost every area of the economy except the stock market was heavily regulated with tariff and quota protection import licenses and the granting of monopolies. As part of its protectionist policies, government imposed a total wage and price freeze for almost two years in 1982. The government owned about half of the economy and provided cradle-to-the-grave welfare.

I would take issue with one or two points but Luke Malpass has done a well-articulated summary of a turbulent but hugely significant and fascinating period of our history. It continues from here and is well worth reading in full. Here’s the whole article.