It's so easy to ignore a price you don't pay

Anyone who has read some of Linda McQuaig's past work, among others, will know about New Zealand and its erstwhile role as the poster child of market-fundamentalist reforms, a veritable laboratory of the slashing and burning that became so popular in the 90s.  Well, Tyler Cowen of Marginal Revolution is a bigwig at the Mercatus Center, a Washington DC libertodroidal thinktank. He wistfully opines about scenarios pertaining the New Zealand's upcoming elections, daydreaming, apparently, about when NZ will return to the good old days when governments even more happily than now cut welfare rates to starvation levels---welfare recipients are there because they like it, don't you know---and bandied about words like labour market flexibilty, code, of course, for being able to threaten the proles with...umm...having to go on starvation-level welfare if they didn't accept their place.  Or something. 

One fascinating tidbit is the hostility of him and some of his commenters towards proportional representation.  He writes, in code:

Further reforms were thwarted by a move to proportional representation in the early 1990s, which gave minority parties undue influence and weakened threads of accountability.

Decoding this, it means that he's annoyed that unpopular reforms can't be implemented because proportional systems more closely reflect the popular vote.  Obviously, the "small" parties have to come up with more than half the seats to block his precious reforms.  Indeed, he notice some of contradiction here:

New Zealand policymakers were well ahead of public attitudes, and managed so many reforms only because the country's (previous) Parliamentary system had few checks and balances.

See the contempt for democracy here?

But something more interesting emerges from the comments.  From one of Tyler Cowen's supporters,

I also see another reason for the lack of recent reforms and that is politicans who strongly support reforms and will follow through with the reforms regardless of the short-term political consequences. When the going gets tough and a majority people of a populace are against certain reforms, many politicans wimp out despite the potential long-term gains for reform. I don't see this as a major factor, but unless you have a politican(s) driven to reform the economy regardless of short-term political damage it is very difficult to do so, maintaining the status quo is so much easier.

So this commenter agrees that democracy is an obstacle.  But note what he leaves out: why people might be against the reforms.   In fact, the whole notion of the human cost of reforms only appears fairly far down in the thread, and it is most clear in this post, which finally grounds the ideology back in reality:

I think that the human and social cost of the reforms cannot be overstated. We went from a society with a high degree of equality to one with skyrocketing inequality, homelessness, beggars on the streets, and where pawnshops and foodbanks became growth industries. We went from a society where the government assisted those in need to one where it abandoned them. We had people living in garages because they could not afford to pay the new market rents on state housing, and third world diseases in the poorer areas because people could not afford user fees on doctor's visits and prescriptions. We had a government which deliberately and knowingly cut benefits to below starvation levels (yes, really; they did a study on the cost of living, took the amount where people could barely afford to stay alive, and cut it by 10%) - at the same time as the government pursued strategic unemployment to keep wages down. And then, having put the boot in to those on benefits, the Employment Contracts Act did the same to workers, leading to pay cuts of up to 30%. And all of this was done over people's heads, with policies rammed through sometimes overnight to prevent public opposition from forming.

In other words, democracy was circumvented in order to ram through provisions that manage to undercut social solidarity.  Bravo!  You have to be smoking pretty bad libertodroid crack to imagine this as a happy outcome.  Unfortunately, we all have to smoke the crack now, since that's all that might save us from the consequences of oil-producer capacity depletion.

Comments

[podraza]

Despite all of what you've written here, the consenus seems to be that these reforms have helped NZ, and that they are now better off because of them. Do you dispute this?

[Mandos]

Let me put it this way: I question whether the reforms have helped NZ as much as people have said they do, and as discussed in the thread on Marginal Revolutions, whether the measurement of improvement is the correct one, given that NZ now also has a lot of ills that it didn't have prior to the reforms.

[Tobi]

Perhaps I can give a first hand account. I grew up during the reforms in NZ. My father had previously paid up to 60% tax on his income, and had contributed full to the national superannuation fund and all of the social welfare systems. My sister is 10 yrs older than me and went to through university for free in the late 80's before the universities were "reformed". On leaving university unemployment levels were peaking, and she eventually left for the UK (never to return, 10 years on she is still there, and has settled there for good it seems). By the time I went to university my father had retired. I received full state support, and despite working and saving (since I was 14 yrs old) right through university, I left with a student loans debt of $30,000. (Of which $8,000 was interest that had accrued while I was studying, at a rate of 7.8% p/a x compounded daily). Upon graduation I spent 15 months working part-time anywhere and everywhere and applying for real work fruitlessly. Eventually I left to work in Japan, where three of my classmates were living. I later moved on to London and we had a reunion of my university house (college dorm) in central London, including the house chancellor (dorm master?). In a survey from my school old boy's association, 6 years after leaving school 85% of school graduates were living and working overseas. As far as I know more than half of them are still overseas.

That's what NZ gets for it's economic reforms. Social diaspora. With negative natural population growth of -2.6% per year, we must currently have at least 50,000+ new immigrants and returning citizens a year to balance the 48,000 residents and citizens who leave every year, otherwise our population will decrease. These figures do not include students and tourists. These may not sound like large no.s of people, but with a resident population of only 4 million people, we don't have a very full country to begin with. 38, 000 emmigrants a year is of 1% of the whole population leaving EVERY YEAR. Statistically around 50% of emmigrants born in NZ eventually return. In perspective, this would mean 1.6m Canadians leaving Canada every 5 years, and a new population of 1.7m Canadians arriving over every 5 years. Long-term I think these kinds of migration levels have a negative economic effect, as well as undermining social and political stability. It's also a bloody shame to see people fleeing such a beautiful, rich and rewarding country because of economic reasons, especially when it's not uneducated, poorer groups who are leaving, but motivated individuals who have studied for an education, and who are the most likely of groups to contribute to the country's development were there a place for them to do so. The reforms have made class division a part of NZ society, and many people on the dividing line (such as my family, and graduates from my small, beautiful by quiet home town) are going overseas to try to get ahead, with ideas of clearing their student debts with higher incomes overseas and saving enough money to start a business or buy a home when they return.
That is a result of the reforms.

[Mandos]

Thank you Tobi for your contribution even though I've been leaving this blog terribly neglected.