About 10 years ago when ACT was on 0.2% of the vote with turmoil in the party & departure of leader, John Banks, who was being prosecuted in the High Court over Kim Dot Com's donations, a friend who worked in ACT's office in Newmarket asked me to present at their meetings & help rehabilitate it.
The party was under threat of extinction. Two other folks about my age, Jamie Whyte, who became President, & David Seymour, back from Canada, were amongst others of the "new" (non Don Brash - non John Banks) generation who the party drafted in & bet its future on. Around that time Roger Partridge & Oliver Hartwich became Chair & Exec Director of the new NZ Initiative, which arose from the defunct Business RoundTable. I attended their meetings on behalf of a founder of the RoundTable. Why is this important? Because decisions made then underlie a gaping weakness in the new Coalition and explain why it is behind in the polls today when it should be miles ahead.
During those post-John Banks times, I got to know Jamie. He had a PhD in philosophy from Cambridge University in the UK. His interest was in applying "libertarian" and "classically liberal" philosophies to real-life politics. David Seymour also held a philosophy degree, from Auckland. He was similarly attracted to those philosophies. I was not. When Jamie gave me a lecture one day about the difference between "libertarian" and "classically liberal", telling me off for calling ACT libertarian, when he said it was instead the latter, my eyes glazed over. A rift developed between me & them. ACT was founded with the aim of providing practical economic solutions, often, but not always, using the power of competitive markets, to promote prosperity for all. It was never meant to be a party for the wealthy, who wanted the top rate of tax to be cut, and their interests protected. Quite the opposite, ACT began in 1993 as the Association of Consumers & Taxpayers. Promoting abstract philosophies like "libertarianism" and "classical liberalism" had nothing to do with its formation.
Now here's the thing. As time wore on, a transformation occurred. David discovered taking sides on non-economic moral issues, like euthanasia, freedom to have guns & legalization of drugs, all with a libertarian bent, gave ACT more publicity & attracted enough votes to push it over 5%, compared to rolling our more boring economic reform plans of the type folks like me had been trying to do. But ACT (and National's) pre-election budgets became lame. They could be summarized in a line: cut what they called "waste" & use the cuts to reduce taxes. As if 3,000 years of economics could be summarized in one sentence. Libertarianism and Classical liberalism, which mean nothing to the average Kiwi, also gained some traction with National, but more behind the scenes. Prime Minister Luxon's Economic Adviser, Matt Burgess, who worked at the Initiative, adheres to these philosophies, as do the other of the PM's economic advisers, Initiative Exec Director Oliver Hartwich & Chair Roger Partridge.
And there you have it. National and ACT (and so now the NZ government, bar NZ First) acquired an empty non-economic growth policy stance. Why? It has little to do with economics & everything to do with philosophy. It is why Finance Minister Willis is lost, with no answers for the nation's stagnation. It is why she has no plan. It is why she ran to Business NZ last week asking them what to do. It is why she runs to the NZ Initiative asking them what to do. It is why the PM runs to his Economic Adviser Burgess asking what to do and gets no answers. National and ACT rejected the proposed, fully costed, shift to mandatory savings that I personally handed them a decade ago. As libertarians, they had nervous breakdowns about the word "mandatory". Consequently today nearly a quarter of Kiwis have no private savings when they retire, and of the one's that do, their Kiwi Saver balances average just $30,000. Meanwhile all Australians have retirement savings accounts, with average balances of $300,000. National and ACT blew up building wealth for low income NZ'ers. Today the PM & Willis have no idea how to raise funds to pay for the health-care & retirement of Kiwis over the age of 65. They have done so in the name of libertarianism & classical liberalism, terms that I still don't know the meaning of, along with 5 million other Kiwis.
Why did adopting a religious-style philosophy with born-again zeal cost National-ACT the chance to be 10 percentage points ahead in the polls today, after Labour nearly destroyed NZ? Because few people relate to libertarianism. It gets too few votes. In the US, those kinds of parties failed. Why? Because Americans who support smaller government & lower taxes (that is, who tend to vote Republican) don't support a Republican who promotes libertarian causes like being pro-abortion, who advocate the legalization of drugs, who are anti-family values and support freedom to do whatever you like in your personal life, and who support the right to choose when it comes to ending life (or "euthanasia"). Many Republican voters are religious & find such policy stances offensive. So we're left with a National-ACT coalition that gives free, competitive markets a bad name; which sides with big business and wants to give it freedom to do what the hell it likes; which doesn't support sensible savings policies that necessarily require some compulsion, since a market failure exists around setting aside funds rather than consuming them now. On health-care, the Coalition is also lost - since the solution involves a mix of government funding - as redistribution is required to help those who cannot afford to pay themselves - but combined with public & private provision of services & competition.
This current group of National-ACT politicians lack imagination. They're devotees of taking an impractical philosophical, religious, doctrinal approach to economics - one nobody who studies the modern subject relates to. They won't be the ones who solve our burgeoning economic problems, despite the PM's pep-talks aimed at raising staff (oops, sorry, that is "voters") morale, and Willis' determined use of her MA English & debating skills.
During those post-John Banks times, I got to know Jamie. He had a PhD in philosophy from Cambridge University in the UK. His interest was in applying "libertarian" and "classically liberal" philosophies to real-life politics. David Seymour also held a philosophy degree, from Auckland. He was similarly attracted to those philosophies. I was not. When Jamie gave me a lecture one day about the difference between "libertarian" and "classically liberal", telling me off for calling ACT libertarian, when he said it was instead the latter, my eyes glazed over. A rift developed between me & them. ACT was founded with the aim of providing practical economic solutions, often, but not always, using the power of competitive markets, to promote prosperity for all. It was never meant to be a party for the wealthy, who wanted the top rate of tax to be cut, and their interests protected. Quite the opposite, ACT began in 1993 as the Association of Consumers & Taxpayers. Promoting abstract philosophies like "libertarianism" and "classical liberalism" had nothing to do with its formation.
Now here's the thing. As time wore on, a transformation occurred. David discovered taking sides on non-economic moral issues, like euthanasia, freedom to have guns & legalization of drugs, all with a libertarian bent, gave ACT more publicity & attracted enough votes to push it over 5%, compared to rolling our more boring economic reform plans of the type folks like me had been trying to do. But ACT (and National's) pre-election budgets became lame. They could be summarized in a line: cut what they called "waste" & use the cuts to reduce taxes. As if 3,000 years of economics could be summarized in one sentence. Libertarianism and Classical liberalism, which mean nothing to the average Kiwi, also gained some traction with National, but more behind the scenes. Prime Minister Luxon's Economic Adviser, Matt Burgess, who worked at the Initiative, adheres to these philosophies, as do the other of the PM's economic advisers, Initiative Exec Director Oliver Hartwich & Chair Roger Partridge.
And there you have it. National and ACT (and so now the NZ government, bar NZ First) acquired an empty non-economic growth policy stance. Why? It has little to do with economics & everything to do with philosophy. It is why Finance Minister Willis is lost, with no answers for the nation's stagnation. It is why she has no plan. It is why she ran to Business NZ last week asking them what to do. It is why she runs to the NZ Initiative asking them what to do. It is why the PM runs to his Economic Adviser Burgess asking what to do and gets no answers. National and ACT rejected the proposed, fully costed, shift to mandatory savings that I personally handed them a decade ago. As libertarians, they had nervous breakdowns about the word "mandatory". Consequently today nearly a quarter of Kiwis have no private savings when they retire, and of the one's that do, their Kiwi Saver balances average just $30,000. Meanwhile all Australians have retirement savings accounts, with average balances of $300,000. National and ACT blew up building wealth for low income NZ'ers. Today the PM & Willis have no idea how to raise funds to pay for the health-care & retirement of Kiwis over the age of 65. They have done so in the name of libertarianism & classical liberalism, terms that I still don't know the meaning of, along with 5 million other Kiwis.
Why did adopting a religious-style philosophy with born-again zeal cost National-ACT the chance to be 10 percentage points ahead in the polls today, after Labour nearly destroyed NZ? Because few people relate to libertarianism. It gets too few votes. In the US, those kinds of parties failed. Why? Because Americans who support smaller government & lower taxes (that is, who tend to vote Republican) don't support a Republican who promotes libertarian causes like being pro-abortion, who advocate the legalization of drugs, who are anti-family values and support freedom to do whatever you like in your personal life, and who support the right to choose when it comes to ending life (or "euthanasia"). Many Republican voters are religious & find such policy stances offensive. So we're left with a National-ACT coalition that gives free, competitive markets a bad name; which sides with big business and wants to give it freedom to do what the hell it likes; which doesn't support sensible savings policies that necessarily require some compulsion, since a market failure exists around setting aside funds rather than consuming them now. On health-care, the Coalition is also lost - since the solution involves a mix of government funding - as redistribution is required to help those who cannot afford to pay themselves - but combined with public & private provision of services & competition.
This current group of National-ACT politicians lack imagination. They're devotees of taking an impractical philosophical, religious, doctrinal approach to economics - one nobody who studies the modern subject relates to. They won't be the ones who solve our burgeoning economic problems, despite the PM's pep-talks aimed at raising staff (oops, sorry, that is "voters") morale, and Willis' determined use of her MA English & debating skills.
Professor Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. He has previously worked at the Reserve Bank, Oxford University, and the London School of Economics. He runs the blog Down to Earth Kiwi from where this article was sourced.
19 comments:
The future looks bleak. We have another bunch of ideologies in the driving seat and the road is bumpy. So many commenters on this site can clearly see the issues. What motivates politicians to be so blind and bland? The Party system stymies individual decisions and there must be powerful incentives or fear to toe the Party line. We need to be revolting.
MC
What's the old saying "The peasants are revolting"? Well I'm a peasant, so I must be revolting ...
Parliament recently passed the Mount Egmont / Taranaki Maunga Collective Redress Bill, which is the third case of ‘legal person’ status. All ACT MPs voted for this Bill which embeds ‘partnership’ and ‘treaty principles’ into law. Legal person status is based on the religious concept of anthropomorphism; the illusion that God and His creation have human-like qualities.
These religious superstitions are being forced on us by the primitive Maoris. The Government – National, ACT and NZF – is facilitating that and I have wondered why. Is it because of the religious-style libertarian beliefs of ACTs leaders and advisers?
Whatever the first cause, I suggest the proximate cause of Government not doing well in the polls is that they are continuing to include Treaty provisions in legislation when they should be removing them. In so doing, we can see that they are regressing New Zealand to a third world state which we obviously do not want.
I believe that Robert is this bang on right here.
Who first said, "The only poll that matters is the one on election day"?
A lot of people seem to use polls between elections to send messages to the govt about its performance - if dissatisfied, they opt for a rival party, although in many cases they would never actually vote for it.
Quite right, there is nothing more aggravating or annoying than a politician (or anyone for that matter) who promises to do one thing and then does the polar opposite. We the people judge them by their actions, not their words - please note Mr Luxon, the pep talks are not working on us.
MP motivation: 2 terms in Parliament - not too hard. Big exit benefits. Not action required. Citizens must protest..
Roberts solutions are painfully obviously right. I agree Nicola Willis is out of her depth. Last year When explaining the tax cuts, Willis had to keep looking at her notes /charts to answer questions. Luxon on the other hand had the answers in his head.
But…. Luxon is clearly in his comfort zone. His greatest limitation is the talent pool he was handed by NZ voters and the need to be seen to promote certain demographic groups. His second biggest hurdle
Is the financial mess left by Ardern, and the third hurdle is the despicable nz media (see my promotion of demographic groups regardless of talent to explain that one)
So give Luxon time…. He will fix the talent pool problem at the next elections, and he will start implementing long term
Solutions once the economy is turned around.
At the moment his hand is weak…. It will improve in time…… give him time pls Robert.
But pls do not stop your flow of sensible solutions and pressure on Luxon to Implement them.
I could never understand what Jamie Whyte was on about, so pleased I am in good company.
I read George Friedman. His models suggest every 50ish years, there is a disruption in the order of things in the USA. He is watching Trump I think because if he is the one, he is a bit early in his model.
We had that economic disruption in the 30’s and then in the 80’s. It required some lateral thinking. This lot haven’t the vision to see it.
I agree with your general message and aggravation.. There are plenty of supporting areas as well to disrupt. I get annoyed re the negative commentary Roger Douglas gets as some right wing big B. His roots were firmly in the working man’s corner. He wanted to give them a better chance, hence his part in forming ACT.
Some people are very naive if they think that Luxon is going to change stripes -he has well and truly showed us what he will not do.
Some much for Christian values if he let's this debacle drag on without any indication whatsoever that he intends fixing it.
ACT got a fillip from the End-of-Life Choice Bill, which had cross-political support among the voters, and was no doubt popular with retirees, who almost ALWAYS vote. They're now pushing the Treaty PB so as to carve out votes from the other Coalition parties. Otherwise, with waffly economic policies as Prof McCulloch outlines, they'll just appeal to the rich-listers. And voters who prioritise pro-abortion and LGBTQI issues tend to be lefties, so not much use to ACT.
Another great article Robert. The most important sentence in it is
"This current group of National-ACT politicians lack imagination."
The latest Curia poll should seriously concern the Coalition.
Never mind the coalition anon@4.36, NZ is well and truly stuffed if the current poll comes to pass. As for Swarbrick being ahead of Seymour & Peters - just goes to show the intelligence of the average punter. Labour well and truly succeeded in dumbing down NZ.
And Mark Hanley, given how besotted you are, you should apply for a job on the spineless one's PR team (if you're not already so engaged?), for he's going to need all the help he can get to see out his first and last term. When it's over, he'll need to run and hide, just like Ardern.
Ah ha, Robert you have explained a lot which I was puzzled about - Luxon (and National’s) economic “policies”.
Suddenly, it all makes sense. Philosophical positions, belief systems, and advisers. They most likely also influence support for co-governance and the Net Zero nonsense.
Once you understand the person and the factors which have shaped them, you can make intelligent assumptions about what their next moves will be in key areas.
I have always thought National, and to a lesser extent Act, were not the right people to lead the country towards a prosperous and united future. Now I know why.
Thank you for your insights Prof Rob.
In view of the polls and the showing of wide support for the Treaty Bill, Luxon must regret his bet both ways stance. Those millions poured into Insurrection Coordination Centrs (marae) are money frittered. I note the maori economy is doing well. This includes expernditure on te reo and consultant advice on whale music for kauri trees. Hardly comparable with the GDP of Asian countries.
One hopes, Juliet, you're not thinking Labour, the Greens, and TPM are your answer? They are even worse, and the proof is there for all to see given what we are now having to endure.
In the UK at this present moment, they have a Labour Govt, that gained their majority on the basis of the vote by the people. Now "people" will say that their majority was down on election day - so - the people put Labour bums on the Treasury seats not " polls/indications/MSM opines etc/et all".
The biggest swing in the UK was against the Tories, the Lib/Dems actually did better by gaining more seats.
Reform had issues with some intended candidates, so did ACT in our last GE.
If you are" keeping up with the News (sadly not shown on TVNZ & TV3/Stuff) is the UK has issues with Labour Cabinet Ministers (the best example 2 x females who have no ideas what to do - sounds like Nicola Willis) and the " reports show/indicate that many, especially elderly will suffer the most".
Oh and if you " think Reform are the savior's on the horizon ", Mr. Farage is a mouth all mighty, loves media attention - but does not have nor have they done so - presented any cohesive Policy.
Chloe Swarbrick has a similar approach - thanks to TVNZ Political reporters - sit an carefully watch her ' next interview '.
The sitting of MP's in Westminster is very much like NZ - when given the chance, you rise and open mouth and add to climate change.
I see Mark Hanley is " pleading give Luxon a chance", sadly if you read many posted comments here on this website, under many opines on NZ Politics and also under any video posted on YouTube - that comes from NZ - you will see many comments that read - "Luxon is a dead duck, and a one time PM".
Historical voting trends indicate - that next NZ GE - Labour will return, along with Te Party Maori and the Greens may lag/limp but could also be sent packing.
If you want a historical look at NZ GE past, go research Bob Jones, NZ Social Credit, The Millicuddy Serious Party, plus others of the same ilk -
The thing the libertarian purists forget is that socialism either gets destroyed in a big mess or gradually falls apart. We don't want the big mess so libertarians need to offer a plan to transition gradually. We have compulsion now so compulsory kiwisaver is no worse but citizens owning their future is a massive change in perspective.
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