If your team won yesterday you may be feeling a twinge of joy. If not, perhaps you are feeling a sense of disappointment. Either way, let me bring you back to an equilibrium.
Elections, with a very few consequential exceptions, do not matter.
Let’s go back to a recent moment of collective hysteria. Covid. Our feelings towards Ms Ardern are, well, complex but let me propose a counterfactual. National would have followed a very similar policy. With less spending and perhaps a less onerous second Auckland lockdown but democratic governments globally acted in near unison because they faced the same political and economic constraints.
The progressive Ardern and the classical liberal Boris Johnson responded in the same manner because that was what the politics of the moment demanded of them.
Had National won in 1984, Muldoon, or whoever his party replaced him with, would have been forced to embrace much of the same reforms Douglas undertook. The economic forces pushing deregulation were more powerful than the crumbling regulatory infrastructure Sir Robert had erected to keep the sea behind the shoreline.
Nicola Willis did not run a surplus because she was not required to. Her replacement will also fail to confront the deficit because our debt to GDP is manageable in the short-term. We will continue on the current path of permanent deficits and then we will default. By printing money. Because that is the political and economic equilibrium.
Let’s consider the fiscal parameters democratic governments can work within. If taxes are low and the economy is going well, an obvious electoral strategy is to raise taxes on the few to distribute to the many. Such a party will win power and raise taxes, and keep raising them until the point that economic activity begins to fall, employment stutters and they are voted out of office.
There is a theory, the Rahn Curve, which stipulates that as government spending increases from zero, economic activity increases as law and order improves and property rights are respected. At a certain point, academics disagree, more government spending actually reduces economic activity. I am pretty sure we are well over that point but eventually the damage is so great that things begin to fall apart.
In the Western world, all governments tax income around 35% of their country’s GDP. They provide free or heavily subsidised health and education and a welfare safety net. They all run the roads, pay for police, have an independent judiciary. All good stuff.
And currently they almost all have budget deficits that are growing because politicians have a low time horizon. It does not matter if the political class is versed in Hayek or Keynes. They all operate on the same fiscal and democratic incentives and the outcomes are always the same.
It does not matter who you elect. The outcome will be determined by the macro forces acting on those in power, or those advising them.
Let’s go back to 1975. Sir Robert Muldoon campaigned to cut migration to nearly nothing, with an unsubtle hint that those lucky few would more likely be from Scotland than Samoa. He won, and Muldoon followed up with dawn raids. New Zealand did not want to move from a bicultural to a multicultural country.
Muldoon was standing on the sea, yelling at the tide. A decade later, with little debate, Wellington began to relax immigration rules. The public were not asked but the economic and demographic imperatives made this change inevitable.
We did not vote Muldoon into office to become a hyper-regulated, quasi-socialist state either, yet that is what we got under his regime. When we voted him out, we did not vote choose to become the hot-house for unconstrained deregulation. Yet that is what we got.
Those we elect are constrained by both the limitations of the institutions of government and the wider economic and political realities which confront them.
No matter who won yesterday’s election, the fundamental infrastructure of the New Zealand state will remain unchanged. We will not run a deficit unless there is an unprecedented surge in economic activity and, if that occurs, that surplus will quickly be spent.
We will continue to run a comprehensive welfare state with free education, health, universal pensions, minimal defence spending and a growing need by Wellington for more tax revenue to pay the interest bill until the money runs out and then we will be forced into a drastic U-turn, which will be messy.
In this respect, we mirror almost every other democratic OECD nation. Because once you set the rules of the game, you can forecast the outcome.
This does not mean that governments do not matter - they do. There are many examples of poor governance leading a country into despair, ruin and war. But if you want to understand what an individual will do once in office, it is more important to understand how they obtain, and retain, power than it is to attempt to lift the veil on their character...The full article is published HERE
Damien Grant is an Auckland business owner, a member of the Taxpayers’ Union and a regular opinion contributor for Stuff, writing from a libertarian perspective.
The progressive Ardern and the classical liberal Boris Johnson responded in the same manner because that was what the politics of the moment demanded of them.
Had National won in 1984, Muldoon, or whoever his party replaced him with, would have been forced to embrace much of the same reforms Douglas undertook. The economic forces pushing deregulation were more powerful than the crumbling regulatory infrastructure Sir Robert had erected to keep the sea behind the shoreline.
Nicola Willis did not run a surplus because she was not required to. Her replacement will also fail to confront the deficit because our debt to GDP is manageable in the short-term. We will continue on the current path of permanent deficits and then we will default. By printing money. Because that is the political and economic equilibrium.
Let’s consider the fiscal parameters democratic governments can work within. If taxes are low and the economy is going well, an obvious electoral strategy is to raise taxes on the few to distribute to the many. Such a party will win power and raise taxes, and keep raising them until the point that economic activity begins to fall, employment stutters and they are voted out of office.
There is a theory, the Rahn Curve, which stipulates that as government spending increases from zero, economic activity increases as law and order improves and property rights are respected. At a certain point, academics disagree, more government spending actually reduces economic activity. I am pretty sure we are well over that point but eventually the damage is so great that things begin to fall apart.
In the Western world, all governments tax income around 35% of their country’s GDP. They provide free or heavily subsidised health and education and a welfare safety net. They all run the roads, pay for police, have an independent judiciary. All good stuff.
And currently they almost all have budget deficits that are growing because politicians have a low time horizon. It does not matter if the political class is versed in Hayek or Keynes. They all operate on the same fiscal and democratic incentives and the outcomes are always the same.
It does not matter who you elect. The outcome will be determined by the macro forces acting on those in power, or those advising them.
Let’s go back to 1975. Sir Robert Muldoon campaigned to cut migration to nearly nothing, with an unsubtle hint that those lucky few would more likely be from Scotland than Samoa. He won, and Muldoon followed up with dawn raids. New Zealand did not want to move from a bicultural to a multicultural country.
Muldoon was standing on the sea, yelling at the tide. A decade later, with little debate, Wellington began to relax immigration rules. The public were not asked but the economic and demographic imperatives made this change inevitable.
We did not vote Muldoon into office to become a hyper-regulated, quasi-socialist state either, yet that is what we got under his regime. When we voted him out, we did not vote choose to become the hot-house for unconstrained deregulation. Yet that is what we got.
Those we elect are constrained by both the limitations of the institutions of government and the wider economic and political realities which confront them.
No matter who won yesterday’s election, the fundamental infrastructure of the New Zealand state will remain unchanged. We will not run a deficit unless there is an unprecedented surge in economic activity and, if that occurs, that surplus will quickly be spent.
We will continue to run a comprehensive welfare state with free education, health, universal pensions, minimal defence spending and a growing need by Wellington for more tax revenue to pay the interest bill until the money runs out and then we will be forced into a drastic U-turn, which will be messy.
In this respect, we mirror almost every other democratic OECD nation. Because once you set the rules of the game, you can forecast the outcome.
This does not mean that governments do not matter - they do. There are many examples of poor governance leading a country into despair, ruin and war. But if you want to understand what an individual will do once in office, it is more important to understand how they obtain, and retain, power than it is to attempt to lift the veil on their character...The full article is published HERE
Damien Grant is an Auckland business owner, a member of the Taxpayers’ Union and a regular opinion contributor for Stuff, writing from a libertarian perspective.
6 comments:
The quote Junker, ex president of the European Union, speaking of governments “We all know what to do, but we don’t know how to get re=elected after we have done it” and so we’ll stumble along falling further and further into debt until the revolution, which may or may not be bloodless.
Rubbish. An individual or a leader who is unable to answer the specific media question of what interest rate their Party would expect to pay on prolific unimaginable spending , is a liability , waste and potential despotic waste.
Once upon a time I would have agreed. But that was in a time before He Puapua and the Waitangi Tribunal morphed into the Ministry of Truth and rewrote of the Treaty of Waitangi into Te Tirti, where, like 1984, the past was deleted and a new version put in place to base a constitutional takeover of NZ upon.
The agitators have been pushing this false narrative with their demands ever since
And the left parties believe this entirely. I suspect a chunk of National do as well or did. Opportunity even have a co-author of the He Puapua report as an MP.
So there is the entire future of this country, one person one vote aka democracy, at stake vs a ethnocracy. And no where in the world has race based segregation worked for all. Not even close!
That is real and that is exactly what is the problem. It's not tax, it's not hippy based law and order, it's not a motorway or a new Harbour Bridge or reduce the hospital waiting lists disagreement, it's not even the left myth of equity. This is far more than all of those combined.
So no, there is an awful lot riding on this election. Whether the very future of New Zealand will exist in 3 years time.
Bollocks - if the MSM distort the aims of the parties, the naive fall for the BS lines, then we end up with Ardern twice.
Do you really think that what she did to democracy doesn't matter ?
Explain that to your grandkids when they ask why that person who only has one drop of Maori DNA has more constitutional rights, and the grandkids taxes prop up that Maori group in perpetuity ?
I think Damien is right. In a parliamentary democracy, you have to appease the vast majority in the middle, and you can't upset the status quo until we're staring down a genuine crisis like we were in 1984. So we tinker around the edges, and sleepwalk into the next meltdown. That includes continuing low productivity, a Government that remains too large, and a steady institutionalisation of co-governance because the subject is simply too icky to debate publicly. If the public was going to stand up to race-based policies you would have seen much higher party votes for ACT and NZF. Those in the middle are content to rely on the MSM for their daily instructions, and that means doing nothing out of the ordinary.
Anon 12:02 has a very good underlying point.
Damon is about Economics.
Anon 12:02 is about Philosophy.
We, NZInc, is at a very dangerous crossroad.
Already, many of our Best & Brightest have left.
The remaining are old or unworthy, both/all are a fiscal drag on our future & it has gotten very large/ unrecoverable almost ie. look at Welfare in total or look at hospitals numbers.
Be very afraid .......
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