No Tim, you're wrong about what caused our downward slide. I have tried every which way to include in this comment a graph that I sourced some years ago from Stats NZ, showing NZ's balance of trade between 1951 and 2017. Unfortunately I haven't been able to do that -- and can no longer find this graph it on the Stats NZ website either (quel surprise). But since my original comment was basically a reply to the Halfling, I'll send it to his email address.

The graph I'm talking about shows that for the first 20-odd years of this period, NZ's balance of trade was remarkably stable at around zero. We didn't import more than we exported. We didn't export more than we imported. No obvious change to this situation occurred in 1966, when our version of NAFTA was signed with Australia. In 1973, a brief downward blip marks loss of the British market and the first global oil shock. However, by 1976 NZ's average balance of trade had returned to around zero (albeit with slightly more "noise" in the sense of fluctuations). During all of this period the value of the New Zealand dollar (NZD) was fixed and the economy was strictly controlled by the government.

In 1984 the NZD was first devalued, then floated. The figure in question shows that at this point, our balance of trade started to fluctuate wildly. For a while the average of the fluctuations was slightly positive – the value of exports (which had suddenly started delivering 20% more NZD per unit exported) was slightly greater than the value of imports (which had suddenly become 20% more expensive in NZD terms). However the newly floated NZD soon floated up again and by 1988 had reached a level even higher than before the devaluation.

Figure 1 shows that the annual average balance of trade (which can be seen by drawing a line through the middle of the annual fluctuations) then started to trend downwards. The decline stopped and tentatively reversed in about 1998, but a brief upswing towards zero was halted in 2001 when a free trade agreement with Singapore came into force. As soon as that happened, the average annual balance of trade began an even more noticeable slide downwards.

This downward trend continued till 2008, when a free trade agreement with China was signed. Since NZ had begun unilaterally removing barriers to IMPORT of goods from China in 1985, the reciprocal removal of China's import controls on our primary produce now resulted in an upward trend in our annual average balance of payments (which was particularly cheering seeing that this was the point at which the global banking crisis occurred). However, NZ then signed several more free trade agreements (with Malaysia, Hong Kong and ASEAN) and by 2012 our annual average balance of trade had begun another inexorable trend downwards. In 2017, Figure 1 shows that the annual average annual balance of trade was approximately $500 million NZD in the red (about what it was before the NZ-China FTA) and trending down (although it is possible to cherry-pick a couple of months each year in which the balance of trade briefly makes it into positive territory).

One interesting (and initially somewhat alarming) feature of NZ's balance of trade revealed by Figure 1 is its now quite extreme fluctuation. At first this is worrying in that it suggests an economy increasingly out of control. However the fact that these fluctuations are annual suggests they are probably due simply to an export trade increasingly dominated by seasonal factors. Tourism is a likely culprit, since tourist numbers are indeed seasonal (or were until covid-19 entered the picture, when they were stopped altogether by complete closure of NZ's borders). Export of perishable primary produce like fruit would also be maximal in summer, although export of other primary products should be less seasonal, given the ease of storing milk powder, frozen meat and logs. Hence, the extreme annual fluctuations in balance of trade shown by Figure 1 suggest that our export economy has (or had before 2017) become completely dominated by tourism and the export of fruit & veg.

At any rate, we now have a somewhat clearer picture of NZ's trading economy before and after the watershed year of 1984. What can be concluded from this picture? Two things stand out:

1. Before 1984 we had balanced books. Since 1984 we have fallen increasingly into debt. Actually the debt part can only be inferred from Figure 1: it is clear that since 1984 we have imported increasingly more than we export; the imbalance must have been funded by something; and the only possibilities are incurring debt or selling off assets. State asset sales were indeed a prominent ideological feature of Rogernomics, although these more or less stopped once everything was sold. It is true that the sale of privately owned land to foreigners has increased lately. However the fact that at least part of the increasing trade imbalance is funded by increasing government debt is directly shown by Figure 2, taken from Bill English's 2016 Budget.

Figure 2: New Zealand Government Net Debt (source: 2016 NZ Budget)

With regard to your comment, Tim, that people who produce things shouldn't be taxed more than 50%, one problem with that is that the richest people in our society tend not to actually PRODUCE anything. The Robber Barons who profited greatly from purchase of state owned enterprises in the 1980s mostly asset stripped those enterprises and sold them. Also, the Laffer curve certainly influenced Reaganomics, but it was not even a mathematical model, just a freehand drawing based on Laffer's intuition (or perhaps on his personal interest). It suffered a lot of criticism, was quickly labelled "trickle down economics" and (when it became abundantly clear that any benefits obtained by using it did NOT trickle down) more or less discredited. https://www.investopedia.com/terms/l/laffercurve.asp.

Anyway, I'll stop now, and send the Figure I mentioned to the halfling. All the best. Sue

Expand full comment

Interesting read. I will keep my thoughts and words short.

"Limitarianism" sounds very like a religious cult belief. Oh, for a world of moral and ethical wealth equality! Sounds like Utopia. Sounds like Control!

Even Christians know curbing ambition and hindering prosperity will not help the poor. "Blessed to be a blessing"is the philosophy.

Anyone (except perhaps Tova) can see David Seymour is not a "Libertarian" and indeed describes himself as a "classical liberal".

Expand full comment

There are so many objections to this that I hardly know where to start! Well, since the halfling says individualism is a virtue, I'll start with my own experience.

I am what's known as a Baby Boomer. I was born in Auckland near the middle of 1950 and regard myself as fortunate to have spent my childhood here, during the era that has been called "the thirty golden years of capitalism". The NZ of the 50s and 60s actually WAS a society that pretty much embodied Ingrid Robeyns' "Limitarianism". Taxation was steeply progressive -- the top rate was around 90%. So according to the halfling's view, the place should have been absolutely awful, right? OK, so this is that rara avis, and actual experimental test of an economic philosophy. Was NZ absolutely awful in the middle of the twentieth century?

Well no, actually. By any objective measure, it was a lot better than the NZ of today. And what's the evidence for that?

(1) Back in the mid 20th century there were plenty of unskilled but relatively well-paid manufacturing jobs available in NZ, which meant there was virtually no unemployment. The joke at the time was that the Prime Minister knew personally both recipients of the dole. Certainly my father, though never having attended high school (on account of having grown up during the First World War) was never without a job that paid enough to support a small family on one income -- and in my youth I was never without an after-school or holiday job to contribute to the family weal. True, for most of my childhood we did not own a car, or a television set, or even an indoor toilet. But Government-subsidised bread, milk and meat, together with a half acre section housing a productive veggie garden, orchard, ducks and chickens, meant we were never short of excellent food.

(2) Perhaps because there was no unemployment, there was virtually no crime. Nobody even dreamt of locking their doors. The only murders I can recall (the Bassett Road machine gun murders, when I was 13) caused a huge stir. As for pedophilia -- eh?? If there was any we didn't know about it. Throughout my childhood in West Auckland small gangs of free-range children happily ran wild, climbing trees and racing home-made trolleys, our whereabouts completely unknown to parents secure in the knowledge that we'd come home when we got hungry.

(3) There was also no homelessness. Citizens who couldn't afford their own land had access to an abundance of well-built State houses, at affordable rents. These were deliberately dotted throughout 'good' suburbs, to prevent the development of ghettos. The idea that there could ever be homeless people begging on the main street of Auckland was unthinkable. How far we've fallen.

(4) Completely free hospital care and essentially free education up to and including university were taken for granted. Attendance at State schools was compulsory between the ages of five and fifteen and basically focussed on making sure everyone became proficient at reading, writing and 'rithmetic (though high schools also aimed to introduce their pupils to the delights of sport, music and the performing arts).

All of this was funded by the State, from (a) steeply progressive income tax (which also made the place deliberately egalitarian – "Jack's as good as his master" was the trope of the time) and (b) strict controls on both the import of goods and the export of currency. Import tarrifs supported privately owned manufacturing industries and garnered significant income for the State. There was perhaps a little discrete graft associated with the obtaining of import licenses, but overall things worked remarkably well. The 'classical' economic idea that such a system would reduce everyone to poverty was not borne out. Rather, most people became more or less what was then regarded as middle-class. In fact, the only bad thing that could be said about life in New Zealand in the 1950s and much of the 60s was that it was, perhaps, a bit dull. But after two disastrous World Wars, everyone was more than happy to settle down to a little pleasant dullness.

Now whether one regards the NZ society of that era as good or bad probably depends largely on one's background. If you grew up in a home that equated success with the making of money, it may not have been to your taste. But I (and most everyone I know, even now) actually grew up in homes where happiness was NOT equated with having lots of money. ENOUGH money was important, but happiness was largely equated with being healthy, having friends -- and with some degree of altruism -- lending a helping hand to the neighbours when needed. So, since my childhood was a happy one, I have never regarded making money as something to aspire to.

Ayn Rand, on the other hand (https://www.britannica.com/biography/Ayn-Rand) grew up in 1900s St Petersburg, as the daugher of a prosperous Jewish pharmacist. When Ayn was 12, her father's shop was brutally confiscated by the Bolsheviks. Not surprisingly, the young Ayn felt deeply resentful about this -- in fact she never got over it and spent the rest of her life developing a philosophical system called Objectivsm. This she summarised in an appendix to Atlas Shrugged as “in essence…the concept of man as a heroic being, with his own happiness as the moral purpose of his life, with productive achievement as his noblest activity, and reason as his only absolute.”

Perhaps the main point of this already too-long comment is that mild socialism of the sort that prevailed in NZ in the mid-twentieth century is a completely different animal from the over-the-top, dogmatic communism that prevailed in the Russia of 1918. And sadly, present-day NZ, with the censorship, mandatory "vaccination" and general totalitarianism of the last few years, is MUCH more akin to 1918s Russia than 1950s NZ.

How did this happen?? Well, ever since the undemocratically imposed off-shoring of NZ's manufacturing industries by the imposition of "free trade" in the 1970s and 80s, PRODUCTIVE jobs in this country have been replaced by service jobs -- largely in tourism, and less so in the sorts of "essential services" that were allowed to keep working during covid. There are relatively few non-urban jobs in farming. But the sorts of people who used to work in manufacturing can now only get jobs in the ballooning bureaucracies of national and local government. These jobs are unproductive and unnecessary and largely consiste of telling everyone what to do, in a secret and undemocratic fashion. Such jobs can be maintained only if certain undemocratically imposed lines are toed. In fact, this is basically a new industry, the product of which is misinformation. If you're unwilling to tell lies x, y and z, you're out on the street. Anyone saddled with the unfortunate combination of ambition and basic moral fibre has left the country. And NZ is gradually sinking (in a moral rather than physical sense) !

So what's the answer? Well halfling, the answer is NOT to be found in untrumpeted importation of immigrants from countries where graft and corruption are a sine qua non, or the encouragement of ever more flourishing of the 1% 'elite', whose relentless pursuit of cash brings only untested technocracy and Randian, amoral selfishness. But Bill Gates is a philanthropist you say?? Puhlease!! Everything the B & M Gates Foundation does is aimed at making yet more money -- our Bill will never have ENOUGH of he stuff. He's already bought the WHO, which is now trying to get everyone in the world to agree to let them declare an unsubstantiated PHEIC whenever they feel like it, and on the basis of that force all of us to accept more "vaccines", which further enrich Big Pharma, whence cometh much of Bill's pelf in the first place. It's a demonic cycle ....

No, the answer is ... well it ain't neoliberalism, halfling! The free trade thing that started the rot in NZ is just one arm of the octopus of Rogernomics (aka Thatchernomics aka Reaganomics). The others were (1) privatisation: i.e. selling off to private interests at bargain basement prices most of the institutions and industries that had been built up and run by the State over the preceding half century -- piracy, in other words -- and (2) slashing the tax rate on the rich and increasing the tax rate on the poor. Well, that's "rational self-interest" forya. Grab the goodies for yrself and to hell with the hindmost. Thanks, poor chronically unhappy Ayn Rand.

No, at this point I don't know what the answer is. If it weren't for the fact that I do know a few good un's, I'd conclude that humans are just unalterably selfish -- the law of the jungle prevails and that's the way it is. But no, bugger it. We CAN BE better than that. We'd better be, because now that we have nukes, a third world war is more than likely to end the planet.

Expand full comment

I would agree that there is a fine line between individual self interest and out right narcissism and we have an increasingly narcissistic society.

No one idealogy has all the answers. Balance is key.

Very high taxation does nothing but reduce overall wealth. I don't think it's clear at what tax rate the Laffer curve peaks, but it's defintely a lot closer to a 50% rate then a 90% one.

Although I am not on a top tax band myself I don't think it's fair to expect any person or entity to pay more than 50%. I cannot see any moral or ethical argument that could support a person who does the actual work paying into society more than half of the profit of that work.

As Jean-Baptiste Colbert said “the art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.”

"Half for me, half for you" is the limit of what you can argue is fair, while avoiding loud hissing, in my opinion.

A great deal of the golden age you lived through had to do with strong commodity trading, particulary trade with the UK; in 1965 the UK accounted for just over half of our exports, by 1980 it was less than 15% due primarily to their move into a highly protectionist European market. Yet you seem to deride free trade, when it was a lack thereof that did huge damage to New Zealands economy and ended the good times you portray.

Moreover much of that trade with the UK was in wool, at the beginning of the 60's wool was around 30% of all our exports. So, the Auckland you enjoyed in the 50's and 60's was highly dependent on a single export customer and a single commodity and pretty much all of it wasn't actually made in Auckland. You were fortunate to enjoy those good times, but they obviously couldn't last, regardless of what any government in New Zealand did.

Tariffs are always a disaster. They are nothing more than a tax on consumers. Why should I pay 50% more for my car so someone in Thames can keep their unskilled factory job and when a factory in Germany or Japan can do it more efficiently, and to a better standard for less then the untariffed price?! And then get hit on the other end with a 90% tax rate that partly goes to fund those tariffs? Government should have as little role in price discovery as possible.

It's difficult to develop counterfactuals, we'll never know what happened if different polices had been enacted but I believe that Rogernomics was largely successfull with dealing with the fallout of our drastically shifted trading opportunities. That government also completely lacked the expertise or money to modernize many of the publicly owned industries.

Telecommunications were a good example.

I'm a kid of the 80's. My mother was a switchboard operator on a phone exchange in Kaitaia. This was a well paying job at the time. I can still remember cranking the phone handle to get a line and asking for my Mum directly if I wanted to talk to her. You could also pick up the phone and listen to other peoples conversations. When it rained the phone often didn't work. When lightning flashed the bell rung!! Funny analogue times......

I can remember when it was all nationalized to form Telecom. I can rememebr being on the protests to save my Mums job. Because she lost that job, I grew up on a benefit which was hardly unsusal in Kaitaia. In spite of what I "lost" it was obviously the right thing for the country. And I still managed to go to university.

Within a year of privatisation the switchboards were gone. The cost of communication in New Zealand collapsed and the quality greatly increased. Why should the rest of society pay for my Mums job with expensive phonecalls and crappy connections and service?

It was the right thing to do for the whole. We are unquestionably better off for it and cheaper and more reliable communication gives huge benefits to society.

My only wish is that governments had more courage to do painfull things.....but it seems politics have become a career and no one wants to lose their job, or there option of the next cushy international political role.

You're bang on about Gates though. In 2006 when he announced he was moving out of Microsoft to work full time for his "philanthropic" organisation, he was worth 52 billion.

Currently his personal worth is 127 billion. I'm pretty sure he is some sort of sociopath megalomaniac who uses "philanthropy" as a tool to avoid criticism. I'm sure I'm not the only one who recalls how he was despised in the early 2000's.

In any case it appears that becoming a "philanthropist" is a great way to double your money!

Perhaps we should start philanthropy degrees in Universities?

Expand full comment

Good piece. Nice identification that rational self-interest opposes the explicit altruism of limitarianism – and that Mr Seymour is not a libertarian.

Be aware though that The Atlas Society (TAS) is not The Atlas Network. Two different organisations. The former is explicitly set up to promote Ayn Rand and Objectivism; the latter to "provide training, networking, and grants for libertarian, free-market, and conservative groups around the world." Not the same.

Expand full comment

The same

Expand full comment