One of the key distinctions between our political parties is the extent to which they support and understand the benefits of free markets - where activity does not require the regulatory intervention of the state. Until the Lange Government was elected in 1984 New Zealand's economy largely reflected the dogma's of post Depression Keynesian prescriptives. There was a generally held view that Governments could regulate at will. Muldoon was the last baron of that era. He will be forever remembered for his initiatives on carless days, payroll taxes, SMPs,fixed exchange rates, import licencing, the "Think Big" energy projects in Taranaki and home mortgage rates that went to 25%. The release from such draconian intervention and with the Baby Boomer generation in charge the introduction of freed markets markets produced its own brand of chaos. After three years of indulgence the sharemarket crash of 1987 reminded everyone that Nirvana is always a myth - markets are never free if the majority of society suffer as a result of their failure. Once isolated in the backwaters in the South Pacific, New Zealand, now awash in the vagaries of international trade winds, had to grow up quickly, or founder. In large measure we have succeeded. We have become much more diversified. We no longer hang on to the coattails of the Home Countries. Our focus is now very much towards Asia and the Pacific rim. Nonetheless there are still remnants of the old guard to be found clinging on to memories of the good old days when pubs closed at 6pm and shops all weekend, where immigrants were welcomed if they were of European origin, and tax rates of 66% deterred any form of enterprising spirit. Times have changed. In 2008 New Zealand was the first country in the world to sign a free trade agreement with China. Since that time trade has doubled from $4B to $8B - making China our second largest trading partner and one of three other countries with whom we enjoy a trade surplus. The other two are Australia and the United Kingdom. It hardly seems to be coincidental that we enjoy trade surpluses with these two countries as well. Given free access to international markets Kiwi businesses thrive. Little wonder our Government would dearly love to have a free trade agreement with the US! Politicians love to interfere with money distributions but there is substantive evidence, that left alone, the majority of citizens can make decisions that are admirable for all. Markets are a risk, but surely we have now matured and understand how they can operate to everyone's advantage? |
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