Dunes Symposium continued
Fran O’Sullivan has written a column on the Dunes symposium, which we both attended last week, put on by the Business Roundtable. A lot of focus was on how to lift NZ’s productivity record (and hence national income) and Fran list’s six examples of bad behaviour:
- How the current Government has ignored the lessons of the 1980s-1990s relating to public sector management, to the detriment of economic efficiency.
- Alarming incursions by Cabinet ministers who have arbitrarily encroached on private property rights in the commercial arena.
- Cabinet ministers bypassing Treasury and commissioning advice elsewhere for the re-nationalisation of the railways, without any cost-benefit analysis of whether it made economic sense to do so.
- Telling examples of how Kiwi businesses are being tied in regulatory knots by the devolution of powers to overly aggressive bodies.
- The major decline in the health sector, where the budget has increased by 54 per cent in recent years yet the amount of elective surgery has declined.
- How the Beehive leaned on bodies such as the Electricity Commission and power generators to push prices up during the recent power “crisis” so that the Whirinaki back-up plant could be pulled into action, and then hammered them to drop prices.
I touched on some of these also, in my blog post on day one.
Also on day one was a good session on “bad law making” with several MPs (including one from Labour). Three examples were given of bad laws, and what drove them:
- Dog control – a response to demand
- Anti-smacking – elitism
- Electoral Finance Act – partisan politics
The dog control was cited by all sides as the classic “bad law” where a little girl gets bitten by a dog, the public demand the Government/Parliament do something, and hence micro-chipping is proposed as that “does something” to show MPs care about little girls bit by dogs. Only ACT voted against, and hence they are at 1% because the public think they don’t care about little girls being bitten by dogs!
Some incomprehensible or bad terms which should be avoided in laws was given, such as:
- Intrinsic values
- Treaty principles
- Sustainability
- Workable competition
- Price sensitive info
- Must not abuse a dominant position
They all detract from the principle that the law should be obvious and certain.
One participant suggested that a Regulatory Responsibility Bill was needed to protect the public from “good intentions” of MPs, and that it would have a similiar effect as the Reserve Bank Act and Fiscal Responsibility Act.
The session on taxation was of course also interesting.
One senior partner in a major accounting firm talked about how he always welcomed new staff members by telling them, they had three duties – in order:
- A duty to themselves. A realisation that people work to further themselves, and that an employer needs to recognise this – that working for an employer is not the most important thing for an individual.
- A duty to New Zealand – that employees (and employers) should look at how they can contribute to New Zealand, that there was a moral obligation to contribute – not just to make money.
- A duty to the employer – this comes after the duty to yourself and New Zealand.
This might seem as a surprising position for a senior member of the Roundtable, but most of them are passionate about advocating for policies which will result in a better NZ, and that pushing for better tax policies, is part of this. That pushing for better tax policies, is not about pushing for more or less tax, but a more efficient and equitable tax system.
He defined the efficiency of a tax system as how to collect maximum revenue at minimum cost, and that the current system was a long way off this. The equity side can be met through a combination of tax and welfare.
Day Two also saw a debate between the Victoria and Auckland University Debating Clubs on the moot that Australia is the luckier country. Auckland affirmed and Victoria negated.
Auckland were somewhat helped by Roger Kerr introducing the topic with some slides which basically showed how Australia was kicking NZ’s arse in most areas. This didn’t stop Victoria University from a spirited defence of NZ.
In debating you often have to argue a proposition you don’t personally believe in. But never has this been funnier than seeing Christopher Bishop not just argue for how NZ in the last decade has done better than Australia, but when he starting promoting the benefits of the Swedish big state model, it was just too much for me. Maybe I could handle Bish promoting Swedish models, but not The Swedish Model. When they asked for questions at the end of the debate, I could not resist asking him if he actually believed a single word he had uttered during the debate. He could find only one sentence he stood by 
I used to take part in debating at school and university also. Back then (God that makes me feel old) you could interject at any time, so loud funny interjectors could be devastating. It did often stop the smooth flow of a debate, so I was interested in the convention that has developed where if you wish to interject you stand up, and the speaker at the rostrum either tells you to sit down, or allows your interjection. It looks bad to refuse all interjections so each speaker normally allows a few and responds quickly to them.
The way the speakers dismiss an attempted interjection is quite amusing, as they just say “No, sit down” or make a sit down signal with their hands as they continue speaking. Polly from the Vic team was the best at dismissing interjections as her “No thank you Sir” was delivered with wonderful contempt, and in a tone you would use to instruct a canine.
The honours were shared, with attendees voting that they agreed with the Auckland team, but that the Vic team had performed the best with their argument.
Also on day two, the participants heard from a National and Labour candidate who talked about and answered questions about the future faces and directions of National and Labour. Both candidates were in their 20s or early 30s and performed well, with an interesting observation that as the newer candidates were at school during the ideological big battles of the 1980s and 1990s, they expect there will be less acrimony between them as the start to move into Parliament over the next few years.
People have all sorts of pre-conceived ideas about the Business Roundtable. Some on the left try and paint it at the centre of every conspiracy theory they have. But the reality is the NZBR is quite ordinary. Like thousands of other organisations they divided into small breakout groups, and workshop on flipcharts ideas for improving public policy which get reported back into the main session. There is no secret cabal setting the agenda – in fact the senior established order at the Roundtable seem more open to new ideas and new ways to operate, than most organisations I have observed.
I don’t agree with the NZBR on every issue. Far from it. But I do think our public policy debate in NZ is much stronger for having their input, and that it will be a welcome day when people debate their ideas, not supposed agendas.
August 26th, 2008 at 6:35 am
“The dog control was cited by all sides as the classic “bad law” where a little girl gets bitten by a dog, the public demand the Government/Parliament do something, and hence micro-chipping is proposed as that “does something” to show MPs care about little girls bit by dogs. Only ACT voted against, and hence they are at 1% because the public think they don’t care about little girls being bitten by dogs!”
No, sit down!
This scenario is a case of elitist prejudice, much like you’d find in a socialist party that believes they must make all the decisions for the people because they know best. Hmmm, sounds familiar doesn’t it. But since this is coming from a group of people who think themselves better than the average socialist, it’s not very funny. It’s high school level thinking, or alternately, “committee think”.
There is nothing “bad” about the people asking for legislative solutions. In the case of dog micro chipping, the “bad” part came in once the MP’s neglected their responsiblity to examine the problem, understand the problem, research the problem, debate the problem and implement a suitable solution. Nothing to do with the request at all. If ACT think they’re on 1% because of micro chipping, I have a dose of reality for them.
August 26th, 2008 at 7:54 am
Amazing. GhostWhoWalks must still be in bed, or maybe has the flu. Where are you GWW? Kidnapped? Shall we call the police?
August 26th, 2008 at 8:47 am
Damn straight! We have far too many laws with far too much built in subjectivity on application. This allows the government of the day to direct it’s authorities to apply politically expedient responses, rather than apply the original intent of the law.
August 26th, 2008 at 8:52 am
The BRT *does* have a (historical) place in conspiracy theories actually:
http://poneke.wordpress.com/2008/01/13/loudon/
August 26th, 2008 at 9:02 am
Unfortunately, many on the left find it easier to demonise than to argue. Look at Chris Trotters last few pieces, and particularly some of his comments on them. He shows his inability to accept any argument from National, and his strong belief that they are actively evil, with secret agendas, lying to the public etc etc. It is quite amazing stuff, and based on the cheer squad he is assembling, must reflect the views of a goodly number of others on the left.
To be fair, there are plenty of commenters on here who are unable to accept that the left might have any good intentions. But not our host, from whom we would expect a little more. It is interesting that the very high volume blogs on the left (theStandard, and now Trotter) are so far into demonising, where the very high volume blogs on the right (kiwiblog, wellingtonhive) are much more measured. Kind of puts paid to the whole feral right winger story, doesn’t it.
August 26th, 2008 at 9:06 am
Well if the received wisdom is that the amendments to the Dog Control Act making micro-chipping mandatory is an example of silly law consider the following:
1) Statutory dog controls have always been unpopular – witness the ‘dog tax war’ in the Hokianga. Only 500,000 of the estimated 700,000 dogs in New Zealand are registered.
2) By and large its the irresponsible owners of unregistered dogs who cause most of the problems for territorial authority dog control officers who have to administer the statute. Ask them – they do know.
3) Irresponsible owners get away with irresponsible behaviour and non-compliance because they can know they get away with it. Enforcing compliance with the Act is problematic, because unregistered dogs more often than not can’t be tied to owners.
4) If animals are to be managed to the individual level as is required under the Dog Control Act then accurate identification of individuals becomes axiomatic.
5) Comparing unreliable 5000 year old technology (i.e. dog collars) for individual identification, when microchipping (which is accurate and reliable and irrefutably ties dogs to owners) is available and cheap, is simply no contest.
6) In jurisdictions where microchipping of dogs has been introduced ( e.g. New South Wales, Victoria), there have been significant reductions in dog attacks because of improved compliance with statutory controls. Owners know they can’t get away with being irresponsible. This experience has led other jurisdictions in Australia and elsewhere to follow suit and introduce microchipping.
7) This is why dog control officers and the Veterinary Association supported amendments to the statute allowing for microchipping coupled with the establishment of a national database.
August 26th, 2008 at 9:23 am
“Kind of puts paid to the whole feral right winger story, doesn’t it.”
Some seem to think Whale Oil is…
August 26th, 2008 at 9:30 am
The Hive is actually 8th, below No Minister and Not PC http://www.nzblogosphere.blogspot.com/
August 26th, 2008 at 9:34 am
Cool post DPF – sounds like a great session, I particularly like the idea that future MP’s maybe getting over the ideological battles of the 80′s and 90′s. Its a bit sad that NZ is lagging behind (like with every other indicator) the rest of the OECD in getting over the 80′s and 90′s. The UK and Australian labour parties long ago moved to openly back the market, unlike the ideologues here in NZ. Most of the international social democratic “left” politicial thinking these days is looking at the role of government helping to “nudge” the market to encourage good behaviour. This borrows from the work of Richard Thaler and behavioural economics thinking. An argument for voting for national this year (as opposed to labour) regardless of policies, is that the current government (labour leadership) needs to retire so to enable the necessary changing of the labour guard and bring in some new and fresh thinking (and policies).Only this way will we stop reliving the great wars of anti-vietnam, anti-nuclear, and stop the boks all of which creates an intellectual straight jacket.
On a seperate note – re dog control. The problem Murray points out is that it is irresponsible owners of unregistered dogs who cause most of the problems. Murray’s solution of microchipping is well intentioned but fails because of the obvious. If the dogs are already unregistered how does imposes more costs and compliance by microchipping encourage registration by people who are patently not responsible in the first place?
I have heard that some senior Ministers were not in favour of dog control but lost the fight to the non dog owning members of cabinet.
Was this actually a case of cat lovers (which are an environmental pest) getting one back for all the times their cat has been barked at by twinkles the labrador?
August 26th, 2008 at 9:47 am
Helen Klark should have been there (rather than attending her insufferable “Diversity” forum.) She wouldn’t be tho. Like most leftists, exceedingly terrified by ideas that don’t fit with their own narrow blinkered leftist ideology, and determined not to let any such ideas see the light of day.
August 26th, 2008 at 9:49 am
Except for the Labour, and other(?), MPs that were invited.
Like they’d invite Clark anyway.
August 26th, 2008 at 9:55 am
The point about duty is very interesting. It is actually classic Adam Smith. He argued that by pursuing private good, people actually contribute most to the public good. I think this is the same. An employee he vigorously pursues their own career development is (by and large) one who will actually do best for his/her employer. Likewise with pursuit of the public good.
August 26th, 2008 at 10:08 am
In answer to Hayek’s question “If the dogs are already unregistered how does imposing more costs and compliance by microchipping encourage registration by people who are patently not responsible in the first place?” – is simple. Microchipping allows for enforcement – dog impounded – no chip – breach of statute – dog chipped before being released – owner now able to be held responsible – or not claimed and put down.
August 26th, 2008 at 10:10 am
OK stephen, so we have:
– kiwiblog – moderate right
– public address – exclude because cannot attribute traffic to left, right and non political parts
– thestandard – feral left
– whaleoil – feral right
– frogblog – left
– notpc – moderate right
– nominister – feral right
Then a bunch that are pretty moderate below that. There really aren’t all that many left wing ones in the list, and if I add Chris in there as well, then I’d get a majority of ferals. On the right, I would argue that the moderates far outnumber the ferals.
And, for clarity, I’m classifying a blog as feral if it engages in actively disparaging the opposition’s motives, and petty name calling of politicians, in the main blog posts. So continually calling John Key “Slippery” or labelling the prime minister as Klark, or the government as Liaboure or whatever.
August 26th, 2008 at 10:24 am
Murray – Dog control officers already had those powers under the existing registration laws. A more sophisticated registration system doesn’t change the basic problem of lack of enforcement. There was no new funding for dog control officers as part of the dog control legislation, just more regulation without addressing the institutional issue of lack of enforcement (and that is a story of incentives).
PS to everyone on Kiwiblog, could you lay off labelling the PM as Klark or the government as Liaboure. I know you have no respect for them, but it is as childish as other commentators calling John key “slippery”. I see a virtue of economic liberalism is that we seek to use our rational mind to temper our emotional response.
August 26th, 2008 at 10:31 am
Frogblog is as feral as they come!
August 26th, 2008 at 10:54 am
From the opening post:
“Some incomprehensible or bad terms which should be avoided in laws was given, such as:
* Intrinsic values
* Treaty principles
* Sustainability
* Workable competition
* Price sensitive info
* Must not abuse a dominant position
They all detract from the principle that the law should be obvious and certain.”
This has been a disturbing trend recently. Politicians of almost all parties (Act being the exception) have been inserting nebulous buzzwords into legislation: partially to appease special interest groups, partially because they don’t want to touch “hard” topics and so “pass the buck” to the courts.
I hope act manages to get its “Regulatory Responsibilty Act” as part of a post election coalition/support agreement. Getting that passed (and hopefully entrenched) which would at least attenuate this despicable practice…
August 26th, 2008 at 11:19 am
Great post, DPF.
Michael Bassett’s latest effort is also a superb summing up of the country’s last couple of decades and the wrong direction of the Helen Clark government:
http://www.michaelbassett.co.nz/articleview.php
August 26th, 2008 at 11:24 am
Great post, DPF.
Michael Bassett’s latest effort is also a superb summing up of the country’s last couple of decades and the wrong direction of the Helen Clark government:
(Comment with link has gone into moderation)
August 26th, 2008 at 11:25 am
Michael Bassett:
“……..Gradually we discovered that top-down controls didn’t work because they stifled initiative; regulations on imports and exports and foreign currency transactions were easily circumvented, with the result that we had triennial spend-ups, foreign exchange crises and then devaluations of the currency every few years. Wage and price freezes to control the inevitable effects of excessive government spending created a monetary balloon; when you pinched it in one spot, the balloon bulged out elsewhere. What sensible observers were discovering was that, without market-place disciplines, all governments become rudderless on a stormy sea. Sadly, and I stress that word sadly, not everyone learnt these facts. Today we are dealing with members of the slow-learners club in the current government, people who never tried to understand the disciplines forced upon us in the 1980s and 1990s.
One further preliminary: after many years of personal political involvement, and many more researching and writing about New Zealand political history, I have gradually come to the conclusion that NOTHING does as much to improve the lives of all New Zealanders as maximizing economic growth. No social engineering, no creative tax distribution schemes, no targeted social welfare handouts, can do as much for ordinary folk as a well performing economy. In fact – and this is the hardest lesson of all to learn – any social engineering usually restrains economic growth…….”
August 26th, 2008 at 11:27 am
Michael Bassett:
“…….substantial rises in agricultural commodity prices on the world market due in large part to the huge economic growth in Asia and the gradual Eastern European emergence into the sun after years of darkness, have underpinned our decade and a half of expansion. The changes of the 80s and 90s assisted those improving prices to create relative prosperity by New Zealand standards. Yet we haven’t made the most of the opportunities that those good years afforded us. Carelessness these last few years, especially excessive government spending, has allowed inflation to rise more rapidly than is wise. Coupled with the world credit crisis that started twelve months ago, inflation has been putting prosperity at risk and making it likely that it will take time to clamber out of the current slough……..
“………First and foremost, governments must always maintain a steady, predictable investment climate with policies that are clear and defensible………”
August 26th, 2008 at 11:31 am
Michael Bassett:
“…..Restraining inflation must be very high in any government’s ambitions. Rising prices are no friends of anyone except a handful of speculators. As we saw in the 1970s and 1980s constant inflation gave an illusion of progress to many people……
“……In recent years that ceiling has been breached several times. Some inflation has been imported, but with excessive domestic spending, often in low quality areas, this government has helped to stoke inflation……..
“…..There are some areas of expenditure that are more useful than others. A study conducted by Macquarie Research Economics recently told us that for every 1% increase in the money spent on infrastructure a country can expect to lift GDP growth by 0.5%…….
“…….Count me a sceptic that anything much that is useful will come from the money being spent on public transport……
“…….Setting a taxation regime that encourages effort is another must. As Paul Goldsmith has shown in his excellent history of taxation in New Zealand, tax has been a very political issue throughout our history. The 39% top rate established as soon as the current Labour Government came to power in 1999 was based on nothing more than a feeling of envy that translated into a belief that the rich should pay more for no other reason than that they had more. There was no financial imperative driving that tax increase. The high top rate, and the slowness to lift the income level at which it applies, have led to more and more tax evasion, a bigger “black economy”, and for many, a diminution of individual effort……..”
August 26th, 2008 at 11:35 am
Michael Bassett:
“…….Closely allied to taxation is the need to control the numbers on the state’s payroll. Employees in the core public service topped 89,000 in early 1986 before the SOEs came into effect on 1 April 1987. Once they were running efficiently as stand-alone agencies and expected to make a profit like any private company, and pay a dividend to their shareholders, the core civil service dropped gradually to fewer than 30,000. For reasons that have much to do with Labour’s central belief that public employment equals good, while private employment is bad, the core public service has risen again by at least 14,000 – at a conservative estimate by nearly 2,000 new employees per annum. I am unaware of any evidence to show that a 50% increase in the number of bureaucrats has made us a 50% better society. Worse, along with more employees has gone a generous attitude towards remuneration. A form of leap-frog in wage rates has emerged with nurses and others in the health sector, all of them basically female professions you’ll note, leading the way. It is relevant that virtually none of the current Labour MPs has ever worked in the private sector…….
“……Maintaining employment laws that are fair to both employer and employee is another must. Governments should do nothing to discourage an employer taking on people at the margins. The trade unions in this country have persuaded this Labour-led government to maintain an extremely short-sighted hiring policy…….
“……Both political and industrial labour tend to represent the privileged: those already in the workforce. They don’t think about society as a whole. Sometimes, in my more pessimistic moments, I think Labour actually wants an underclass so that its political near and dear can farm them……
“…..If a government feels obliged to assist a particular group then there ought always to be a compelling reason. There are two forms of middle-class welfare costing billions that this government has introduced for no better reason than votes: student loans with the interest-free component being rorted big time, and Working For Families where the eligibility category reaches up into high income levels. The escalating student loans that are shown on the government’s balance sheet as assets, worry me. With Working for Families it’s not just the cost to the taxpayer that’s the problem. The abatement rate for this form of welfare, and that’s what it is, amounts in effect of more than 60 cents in the dollar if the earner gets extra work …..”
August 26th, 2008 at 11:39 am
Michael Bassett:
“……..Jumping into the top half of the OECD that Helen Clark claimed was her goal in 2001 was quickly dropped when Labour discovered that some economic disciplines like restraining government expenditure would have to be put in place. Labour’s approach to the economy is based on nothing more than ideology and votes. The calculations that are made in the Beehive keep assuming a high degree of ignorance on economic matters amongst the voters, something about which, of course, they are right. The taking of tax from people, and the churning of it involved in paying it back in the form of subsidies and tax credits like WFF, is extremely wasteful……..
“……….This current government is at its most vulnerable when its social policies are examined. The leading lights in it are feminists trapped on a remote beach intellectually clutching their 1970s agendas. Many of their goals are laudable. Helping people in need; giving equal rights to women etc. But some of the policies used to reach those goals are destructive for the very women who are meant to be being assisted. The present cabinet is mired in agendas that are now outdated everywhere in the world. 25 years ago a friend of mine, a fellow historian, the late Jim Holt, analysed many people on what was Labour’s left at the time. He called them “mushies”:
“A typical mushy is of middle class origin who acquired an interest in left wing or liberal causes while studying history or politics or sociology at university. He or she (they are often shes) was drawn to the Labour Party because of its stand on issues like Vietnam or the Springbok tour, or because he wished to use the party to push such issues. Mushies are generally warm to environmentalism, feminism, ban the bomb causes, and any issue that has a high moral content and a slogan that can conveniently be placed on a lapel button. They are also concerned about underdogs and hostile to establishment forces in a general way, though they live rather well themselves and collect fine paintings and wines along with values…. Their mushiness lies in their approach to economic issues…. They are almost invariably protected personally from the sorts of life situations that teach people about economic realities. Usually they work in the public sector and have little fear of either unemployment or of a fall in real income. Although well educated, they know nothing about economics and indeed have studiously avoided studying it.”
Holt had Helen Clark in mind. Back in 1981 when he wrote that he dubbed her the “princess of the mushies”. Nothing has changed much, has it. She, like them, has never known a thing about economic realities. Neither have her ministers. If there’s a social problem then they’ll establish an agency to deal with it. The thought that there might be a wrong set of economic incentives at work that is creating the problem that their agencies have to deal to, doesn’t cross their minds.
An excellent example is the DPB. They tell us that the DPB is good because it separates women from violent men who, for the most part, they have little respect for anyway. The fact that women who go on to the DPB get locked into welfare dependency where the only way they can improve their income short of work, is to have another child, is something this government won’t face up to. This is why we have an expanding underclass of people who don’t know what it is to work, and who have a huge, dangerous sense of entitlement to yours and my money. Continuing the DPB without a work requirement is entirely due to mushy agendas. No increase in the number of social workers or of social agencies, or for that matter of police, will root out problems caused by hopelessly misguided welfare policies. Today’s underclass is largely caused by the biggest fallacy of modern times: that generations of people can be separated off from the need to work, to plan, and to care for themselves. We are dealing with the adverse social results of thirty years of mushy agendas. The state can’t run peoples lives for them. What it can do, and should do, is to look after the handicapped, the sick and the destitute. We know that governments are capable of doing a good job for those who, through no fault of their own, are disadvantaged. But welfare should be a hand-up, never a hand-out to able-bodied people. Today there is a plethora of overlapping agencies all falling over each other to do good for the underclass (during working hours, that is). Many of the well-intentioned schemes governments have created or funded to deal with the underclass don’t produce encouraging results, even if they do employ lots of members of Labour Party branches. There are youth schemes, family violence courses, welfare and truancy officers, you name them, all dealing with the underclass that government policy has created. Some of them seem to make matters worse. There was an article the other day about the specialist family violence courts; thanks to them, the re-offending rates have risen above what was previously occurring, and the taxpayer, as usual, foots the bill for making things worse…….”
August 26th, 2008 at 11:42 am
Michael Bassett:
“………National is so terrified of voter reactions that they have kept responding to too many Labour initiatives and failed, or questionable policies, with “me too”. The wider public worked out some time ago that many parts of the education system need re-designing, and that they are having a particularly bad influence on boys. Me too isn’t an adequate response. The public knows that welfare policies are wrongly focused, and need major readjustment. The best that can be said for the social welfare release last week from National is that it’s timid, and might well have downsides…….
“…….The public knows that the relatively small, though steadily expanding underclass in New Zealand causes most of the police’s problems. People have long-since dropped to it that the present command structure in the Police is part of the problem, not part of the solution. They have worked out that in the government there is no will to defend the police, only suppressed pleasure that a group of testosterone-charged males keeps being humiliated. But if we don’t have an effective police force, where does law and order come from, especially when those who decide to defend themselves effectively end up by being charged. Where are National’s alternative policies to turn the effectiveness of the police around?……..
“…….I have some confidence that a change of government will be good for the economy; that’s where the great engine for human betterment is located. Lower taxes, less regulation, a re-designed RMA ought to encourage investment. However, as we have learnt over the last nine years, it is possible to have an economy performing fairly well, but to have social indicators getting steadily worse. That is where my optimism about a change of government flags.
On one point, however, I remain optimistic. If the government does change, and we get the promised referendum on MMP, it is possible that a system that constrains National from saying what it knows to be right could be thrown out. Proportional representation has lowered the quality of parliamentarians wherever it is tried, and it breeds corruption as we have seen with Winston and his big backers……..”
August 26th, 2008 at 11:56 am
Thanks Phil, and thanks too for the other day .
August 26th, 2008 at 2:01 pm
“An excellent example is the DPB. They tell us that the DPB is good because it separates women from violent men who, for the most part, they have little respect for anyway. The fact that women who go on to the DPB get locked into welfare dependency where the only way they can improve their income short of work, is to have another child, is something this government won’t face up to. This is why we have an expanding underclass of people who don’t know what it is to work, and who have a huge, dangerous sense of entitlement to yours and my money. ”
PhilBest, you might want to consider that the greater problem is the class of people earning round $30,000 per annum who have pretty much given up on having any say or share in this society where money rules and if you aint got it you can’t get it. These are people who know exactly what it is to work and rather than having a sense of entitlement have a sense of futility. I find the phrase “locked into welfare dependency” a curious one. Are you asserting that there should be no dpb? Are you asserting that the existence of the dpb makes it sensible for a woman to have kids and try to raise them on her own because she will get paid somewhere between $250 to $300 a week ($15,000 per annum)?
“Today’s underclass is largely caused by the biggest fallacy of modern times: that generations of people can be separated off from the need to work, to plan, and to care for themselves.”
That is interesting. I thought today’s underclass was cause by the stagnation of the median income (in real terms) while the mean income (again in real terms) had shot up. Shows what I know huh. What I do know is that the wealthy need the spur of greater wealth to encourage them while the poor need the rod of their own poverty and destitution.
August 26th, 2008 at 3:14 pm
No Ross, the poor need the spur of greater wealth. That means a tax system that makes it possible for:
– someone on a benefit to work part time without ending up, in real terms, worse off
– someone in the 30-50K bracket with kids, to end up better off by working smarter/harder, getting promoted, working more hours
The current system creates disincentives for these people, and for the people above them on the ladder. In short, there is little point in trying to produce more or to get ahead, because the system equalises it all. But if nobody in NZ is trying to work harder, smarter, improving their skills, then is it a surprise that our productivity growth rates are in the tank?
You are assuming that we are talking about the well off when we talk about incentives, but the biggest disincentives are further down the pay scale. We need those people to aspire to be further up the pay scale, rather than to believe that, irrespective of how smart or hard they work, it makes no difference to their family’s income at the end of the day.
That is the biggest crime of this Labour government – all those great years of growth in the economy and excess tax revenues, and it has been sunk into government services rather than programmes that allow the poor to become wealthy. That is what is locking us into a low wage, low productivity economy.
National haven’t yet been clear about how they will fix this, but I hope they will. So far they’ve given up on fixing WFF because of the lock in that particularly bad policy has created. I am hoping they won’t give up on fixing the effective marginal tax rates for those moving into the workforce.
August 26th, 2008 at 4:18 pm
Thank you, PaulL, that was well put. I strongly advocate the first twenty grand or so of income being tax free so that it is more worthwhile people working rather than being on a benefit.
I have also had the argument with Roger Nome more than once, about causes of poverty and low socio-economic mobility. Here are some of the more recent poltically-driven developments that impact disproportionately on lower income earners:
The neglect of roading and other infrastructure by government. Roading congestion. Longer times spent in traffic and on public transport. Petrol taxes and other punitive anti-car measures. The cost of housing, and zoning that drives prices up and creates the necessity for long commutes. Lack of development and economic growth.
August 26th, 2008 at 4:22 pm
I recommend, on the subject of lower income earners and socio-economic mobility, the following:
“Back to Basics” by Joel Kotkin
http://www.joelkotkin.com/Urban_Affairs/NAF_GrowthStrategy.pdf
“Scratching By: How Government Creates Poverty as we Know it” by Charles Johnson
http://www.heartland.org/pdf/22828.pdf
August 26th, 2008 at 5:06 pm
I am all in favour of the first twenty grand being tax free but I don’t think you will ever see a national party government pass that law.
In any event we can’t all be wealthy. Can we? In terms of actual necessities and actual living standards (as opposed to relative standards compared to the top 10% of our society) we are nearly all pretty well off aren’t we. It is however the relative status that concerns people as soon as their needs for shelter and food are met and it is the relative status that makes people unhappy / dissatisfied. Policies which increase the spread more rather than moving the bulk of society up together increase unhappiness.
As for incentivising people to improve themselves to that I say where is this incentivisation when our best and brightest (our doctors and engineers and vets) are excessively burdened with debt and underpaid. Why do people with B Coms end up making much more than people with BSc.s? Neither of these are advanced degrees but if had to nominate the one that is closest to something you could find in your cereal box I would have to say the B Com every time.
The truth is a lot of problems are easily soluble – third world debt for example. The monetarists have for the last 20 to 30 years obstructed first world nations from doing the one sane obvious thing – write it off.
And yet domestic legislation allows for bankruptcy and the directors of finance companies to continue their champagne lifestyles unaffected by their nominal insolvent status.
August 26th, 2008 at 10:59 pm
Ross, missing the point I think. I can very much imagine a National govt passing this change – it is absolutely up their alley.
We actually can all be wealthy, but that isn’t entirely the point. What is more the point, is that some people want more money, other people want more time with their family, other people want something else. The important thing is that if you want to get ahead, you should be able to. And our current system doesn’t allow it, and that is really really unfair.
As for burdening doctors and engineers and vets with debt – that is kind of a fascination of recent graduates. The reality is that education is a split between public and private good. Yes, it is good for the country. But you cannot deny it is not also good for the individual. So the country (taxpayers) pay part, the individual pays part. Last I saw, the individual was paying around 30-40%, which seems pretty fair to me. And sure as hell probably seems fair to the apprentice on $18K who is paying tax to fund that university education.
As for third world debt – sorry, too simplistic. Who is the debt actually owed to (is it to governments?) What incentive does it create if you write it off? What did that debt go to buy – and was it useful? Is that the best thing we could do for third world countries, and what are the problems that really are facing them? My view is that proper free trade is the biggest barrier, closely followed by governance and education. Free trade would help to solve much of that – in short wealthier people have more options, and more free trade allows third world people to become wealthier. The problem is that major blocs like the US and Europe have no real interest in it, and pay lip service to caring about the third world. When push comes to shove, allowing the poor to get wealthier involves some level of dealing with vested interests at home, and none of the major powers have any tolerance for that.
August 27th, 2008 at 10:33 am
PaulL, I agree that our current system makes it hard to get ahead. My perception is that our system allows advantage to be entrenched over time. That is the thorny issue. You have to create an environment where people can accumulate wealth and where doing so is advantageous (otherwise why work too hard at all) but also ensure that the advantages of wealth are not so overwhelming as to restrict social mobility / meritocratic advancement (otherwise, rather neatly, the same problem arises which is why work too hard at all). I work as a lawyer in general practice and I see all sorts of financially successful people. Most are working hard for their success – no argument. But because of where their families started them many (not all – just many) are working hard for a success that is so far above the success that most of the population can expect to have for working just as hard. In many ways this comes down to the old argument of capital / labour and what the appropriate apportionment of return is on those. It is far too trite to say “Well, the business owner takes the risk so he should get the reward” because that is not the argument, the argument is “how much of the reward should he get”. The failed businesses I see are usually where the entrepreneur does not have family money to back them. Oddly what this means is that where in fact the entrepreneur risks less (their family will help out / see them right if things turn custardy) they obtain better rewards (because they have grater capacity to weather a storm) than the entrepreur on their own risking it all.
I can actually deny that education is good (at least financially) for the individual. This is one of the great logic flaws around at the moment – that because education paid off financially when the costs (to the individual) were negligible, and the differentiation from general public greater (because far fewer people obtained a higher education), education will continue to pay off financially when the costs are high and the differentiation from the general public negligible. If it wasn’t for the non monetary rewards (e.g. job satisfaction) of the so called skilled jobs I think you would find very few people doing them at all.
The reason that doctors engineers and vets are a fascination with recent graduates is that they are the most obvious refutation of your assertion that education pays. Anyone can now look at a doctor and see that after five years of intense study, average debt say $70K and income of say $55K to $65K, education is not paying off. And what about the future – well looking at what GP’s are making nowadays you couldn’t be too optimistic about the future there could you (although you might argue that it couldn’t get much worse)?
Your points about debt are interesting – but tell me what incentive it provides when failed entrepreneurs go bankrupt, tell me why that is desirable for policy reasons, and then I will tell you why the same applies to inter-country debt.
Writing off the debt is not too simplistic. Debt (as anyone who has been in it knows) can be a millstone around one’s neck. Even a little knowledge of history tell us that, human nature being what it is, the moneylenders / aristocracy or faux aristocracy end up controlling everything and then society needs a bit of a reset in order to give rise to greater productivity and creativity as the populace is freed once more from the rentiers.
August 27th, 2008 at 4:47 pm
RossK, read my comments and the articles I linked to. WHAT is it that is stopping people get ahead? There is an awful lot of denial about concerning government and regulations stifling peoples initiative and ability to get onto the bottom rung of the ladder in the first place, quite apart from the disincentives of the tax and welfare structure, and the self perpetuating nature of welfarism.