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NZ paradox, Unknown-knowns, Laboured campaign

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by April 21, 2017 General

Insights 14: 21 April 2017

Latest publication

The Overseas Catch: The state of recreational fisheries management abroad

Latest article

Dr Randall Bess: Recreational fisheries face future quotas

Immigration

Dr Eric Crampton: NZ has a golden chance to attract more skilled migrants

The New Zealand Paradox

Roger Partridge | Chairman | roger.partridge@nzinitiative.org.nz

A weighty package from the Cato Institute, the US think tank, landed on my desk shortly before Easter. It contained an impressive 300-page tome called The Human Freedom Index 2016.

Now spanning almost a decade, the HFI is a broad measure of personal, civil and economic freedom. Using data from sources including the OECD, the World Justice Project and the Fraser Institute, it ranks 159 countries, rating each on a scale of 0 to 10.

Analysing areas as diverse as the rule of law, freedom of religion, relationship freedom, and business regulation, the HFI takes account of literally dozens of distinct indicators of personal and economic freedom. And as a sober reminder that freedoms we might take for granted are not universal, there are categories for disappearance, access to the internet, and press killings.

The index paints a rosy picture of New Zealand. Overall we place third, bettered only by Hong Kong and Switzerland, and ahead of Australia and the UK (6th=), the United States (23rd), Japan (32nd) and Singapore (40th). And we are one of only two countries scoring in the top ten on both economic and personal freedom.

But there is a puzzle in the results for us in New Zealand. The findings suggest there is a strong relationship between the level of freedom and levels of income, with the most free countries enjoying significantly greater income-per-person than those that are less free.

Unfortunately, our results prove this is not an invariable rule. Despite our medal-winning position on the freedom leaderboard, we languish in 19th place in the OECD’s rankings of GDP per capita. Freedom may be a pre-requisite for prosperity, but it is not a guarantee.

Quite why our economy underperforms its freedom ranking has perplexed economists since the mid-1990s. Indeed, they have even quantified the problem and given it a name: the New Zealand productivity paradox, and it sees our per-capita incomes 20% below OECD predictions.

Our small size and geographic isolation feature predominantly as explanations of the anomaly. Unfortunately, there is little we can do about either of these.

But there is still plenty we can do to lift the prosperity of ordinary New Zealanders. Restoring education to the world-class status it once enjoyed is the obvious place to start. Fixing our broken housing market must be a close second. While neither may solve our prosperity paradox, they will help us bypass it.

And in the meantime, we should take pride in having created one of the freest nations on earth.

The unknown-knowns of government officials

Dr Randall Bess | Research Fellow | randall.bess@nzinitiative.org.nz

Former US Secretary of Defense, Donald Rumsfeld, is famous for his reference to known-knowns, known-unknowns and unknown-unknowns.

In other words, there are things we know we know, things we know we don’t know, and things we don’t know we don’t know.

A seasoned government official might sympathise with Mr Rumsfeld, knowing that as policy reform enters the public arena, there are untold opportunities for known-unknowns and unknown-unknowns to appear, surprising a government used to working with known-knowns.

In contrast, most academics thrive on pursuing known-unknowns, if not unknown-unknowns. It is their role to push the boundaries of what we know.

For example, last year academics at the University of Auckland and overseas released evidence of historical discarding of fish and misreporting catches in New Zealand waters. Their work showed the problems could be more widespread than previously known.

These same academics have requested the Ministry for Primary Industries (MPI) release more than 100 reports on alleged discarding and misreporting. MPI refused their request, along with a more refined request for 14 named reports.

The academics assert MPI’s refusal to release these reports obstructs their ability to come to grips with the problems. They have filed a complaint with the Ombudsman whose role is to investigate, amongst other things, decisions made by Ministers and department officials subject to the Official Information Act (OIA).

The purpose of the OIA (paraphrased) is to increase the availability of official information to the people of New Zealand to enable more effective participation in law and policy making. It also aims to promote the accountability of Ministers and department officials while protecting official information, with the public interest and personal privacy in mind.

In this situation, MPI asserts that it has already released large amounts of information, referring to its support last year for Michael Heron QC’s independent review of MPI’s handling of three investigation reports.

But, these reports had been leaked, not willingly released to the public. MPI was caught out and was facing a public outcry. It had few options besides supporting an independent review.

This situation is indicative of a fourth category that has arisen since Rumsfeld. There are unknown-knowns, things we refuse to acknowledge we know. Stated another way, government officials may know things they don’t want us to know they know.

The Initiative eagerly awaits the Ombudsman’s decision on whether to investigate the academics’ complaint, and if investigated, any resulting recommendations.

Labouring over Labour’s labour campaign

Jason Krupp | Research Fellow | jason.krupp@nzinitiative.org.nz

One of the joys of working at the Initiative is writing for the weekly Insights newsletter. As a think tanker it allows you to pick from a veritable smorgasbord of worthy topics and opine on them (hopefully in an insightful manner).

Amid the array of topics, none is more enjoyable than lampooning the foibles of policy, be it Bill Gates’s tax on robots or National’s predator eradication targets that rely on yet-to-be-invented technologies.

Now it is Labour’s turn to star in the silly spotlight. The party recently launched the “what number baby born were you?” website, a carbon copy of a UK Labour campaign, aimed at bulking up its mailing list ahead of the election.

That is all well and good, but the website claims that “Since Labour founded our public health system in 1938, its incredible staff have delivered more than 4 million babies.” Unless I’m reading this wrong, it seems Labour is more or less claiming credit for every child born in New Zealand between now and 1938?

It relies heavily on the presumption that without the introduction of the public health system these four million people would not have otherwise been born. This just doesn’t hold water.

The US public health system is anemic compared to New Zealand’s and yet the Americans seem to have no trouble increasing their population the old fashioned way. Indeed, Africa is the world’s second most populous continent, and you’d be hard pressed to find anything resembling New Zealand’s public health system among its 54 constituent countries.

But, for argument’s sake, let’s take Labour’s claim at face value.

If true, by extension, this campaign implies the party is also responsible for the wonderful things these babies went on to do as grownups. But this logic cuts both ways.

To illustrate, consider that Labour has been trying very hard to paint Nick Smith as the architect of New Zealand’s housing crisis. But since the Minister was born in 1964, we must conclude that at the end of the day Labour is responsible for his birth, and hence the housing crisis. Erk!

As a fairly new father my advice to Labour would be to give credit where credit is due: to the women who went through actual labour to give birth to the four million babies born in New Zealand since 1938. Bravo to them.

On The Record

Recreational fisheries face future quotas, Dr Randall Bess, The National Business Review, 21 April 2017.

NZ has a golden chance to attract more skilled migrants, Dr Eric Crampton, NZ Herald, 21 April 2017.

Visa tweaks ‘won’t hurt growth’, NZ Herald, 20 April 2017.

Employers not unhappy, Newsroom Newsletter, 20 April 2017.

The dilemma of immigration: We need it, but we want it curbed as well, Stuff, 19 April 2017.

Dr Randall Bess introduces The Overseas Catch, Dr Randall Bess, The AM Show, 19 April 2017.

The Overseas Catch on Breakfast, Dr Randall Bess, TV1, 19 April 2017

Recreational fishing abroad, Newstalk ZB, 19 April 2017

New Zealand lagging behind with fishing future, Newsie, 19 April 2017.

Immigration changes will protect Kiwi workers, says BusinessNZ, NZ Herald, 19 April 2017.

NZers among the lowest taxed in the OECD, Radio New Zealand, 18 April 2017.

Targeted rates could be applied more widely at local government level, Jason Krupp, Interest.co.nz, 18 April 2017.

All Things Considered

Graph of the week: Are French pollsters cheating?

Humans made bananas perfect, but soon they’ll be gone.

‘Dear Mr. Singer’: The strange letter that cost a CEO his job.

Dragon’s blood may contain a new antibiotic.

Give women the freedom to fix poverty.

Tourism is driving the new Space Race.

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