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17
February 2008
Everyone
Pays
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Last
week renowned economist and author Thomas Sowell published a
column in which he shed light on the origins of Fascism.
He explained that ‘real’ Fascism was introduced into Italy
after the First World War by Benito Mussolini and was popular
with the political ‘left’. He said, “Fascists
were completely against individualism in general and
especially against individualism in a free market economy.
Their agenda included minimum wage laws, government
restrictions on profit-making, progressive taxation of
capital, and ‘rigidly secular’ schools. Unlike the
Communists, the Fascists did not seek government ownership of
the means of production. They just wanted
the government to call the shots as to how businesses would be
run.”
He describes how Fascism’s
industrial policies attracted the
political ‘left’ but public opinion eventually forced them
to back off. “In
short, during the 1920s and the early 1930s, Fascism was not
only looked on favorably by the left but recognized as having
kindred ideas, agendas and assumptions. Only after Hitler and
Mussolini disgraced themselves, mainly by their brutal
military aggressions in the 1930s, did the left distance
themselves from these international pariahs”.
(To read “Who is Fascist?”
click
here >>>)
Sowell’s comments have a familiar ring. Since Labour became
the government in 1999, more than 3,000 new regulations and
almost 1,000 new laws have been introduced. At any moment in
time it is highly likely that any one of us is breaking some
obscure law and those in business almost certainly are.
The
enlisting of recruits charged with the responsibility of
administering and monitoring these new laws has undoubtedly
been a factor in the dramatic rise in the number of public
servants over that period from 29,000 to 46,000 today.
These
new laws and regulations put enormous strain on small
businesses, many of whom are struggling just to keep their
heads above water. The cost of jumping through the hoops set
by government, filling in their forms and acting as their tax
collector has been estimated to be $3,000 per employee per
year. Complying with the tax code alone costs businesses $1.5
billion.
Not
only is this cost a burden, but our best and brightest
business leaders - those very people we depend upon to create
economic wealth - are hog-tied in red tape and
“compliance” meetings. With small business being the
engine room of economic growth, this loss of productivity has
a far-reaching effect on us all. Everyone pays, through higher
prices, less innovation and fewer choices.
Richard
Epstein, the James Parker Hall Distinguished Service Professor
of Law at Chicago University and the Peter and Kirsten Bedford
Senior Fellow at the Hoover Institution,
is this week’s NZCPR Guest Commentator. He explains, “It
is now eighteen years since I first visited New Zealand. That
period of time is long enough to document the early rise in
growth during the period between 1992-2000, followed by the
much more anemic growth in the period between 2000 and 2006.
The rate of economic growth was about 2.7% in the first period
and 1.3% in the second. The point of the divide is no
accident, for the year 2000 marks the rise of the current
Labour government to power”.
In
his article ‘Declining Productivity a Way of Life’,
Richard explains that the deregulation of the labour markets,
which occurred in the early nineties through the introduction
of the Employment Contracts Act, was largely responsible for
the increase in productivity.
He
concludes his article with a caution. “Productivity can
suffer the death of a thousand cuts.
The policies that lead to prosperity in periods of
downturn are the only
policies that will keep productivity going forward once the
downturn is ended. There
are no once-and-for-all fixes in dealing with economic
systems.
The good
work of the Employment Contract Act cannot survive
indefinitely after its demise.
Legal reforms do not depreciate instantly if they are
not maintained, but depreciate they do.
There is never a period of time when any nation can
coast on its laurels and assume that the problem of production
has taken care of itself so that the larger task of income
distribution can begin”. (To read his article click
here >>>)
Clearly
government has a role in passing laws to enable the efficient
provision of core public services, the maintenance of
essential infrastructure, and the proper functioning of
society’s basic institutions: the rule of law, the
protection of private property and the freedom to contract.
Problems arise when governments introduce unnecessary laws and
regulations for political purposes rather than the public
good.
Too
many laws, like the micro-chipping of dogs and the
“crack-down” on graffiti, are made so the government can
be seen to be ‘doing something’. These
sorts of regulations restrict freedom, impose direct costs on
the public, are largely ineffective, and often delay any real
solutions being implemented.
But
worse still, once a bureaucracy has been set up to administer
the new law, other new laws are likely to follow - like the
new Dog Control Bill that is presently in front of a Select
Committee (submissions close Feb 29). This follow-on from the
dog microchipping law blames dog breeds for bad behavior
rather than owners. This is akin to blaming cars for accidents
instead of drivers!
Sometimes
laws are passed that appear very heavy-handed. This was
certainly the case a few years ago when Labour decided to
introduce legislation to punish all landlords for the problems
caused by a few. Fortunately, landlords responded by putting
in massive numbers of submissions and Select Committee members
were forced to admit that draconian law changes were
unnecessary.
Labour
is now using this ‘sledgehammer to crack a nut’ approach
to real estate agents. Having ignored repeated calls by the
industry to authorise tougher penalties for disciplinary
measures – something only the Minister had the power to do
– the government has decided to impose draconian state
control through the Real Estate Agents Bill (submissions
close Feb 29).
Regrettably,
the driving force behind Labour’s plethora of law changes is
ideology.
Take
the case of the Housing Affordability Bill (submissions close
Feb 29). While the government claims that the compulsory
acquisition of property will solve the house affordability
crisis, research shows that such schemes which confiscate
property rights and cause government-related costs to be
passed on to other home buyers, are a massive failure. In the
US they reduced housing supply by an average of 10 percent,
and increased house prices by 20 percent. If government really
wants to help make homes more affordable, lower taxes and
lower interest rates would go a long way to achieving that
goal! (See “Housing Affordability Crisis, click
here >>>)
The
Electricity Industry Reform Bill (submissions close Feb 29) is
another triumph of ideology over common sense. Labour’s
obsession with global warming has led them to set an
impossible target of 90 percent renewable energy by 2030, to
impose a ten-year moratorium on new thermal generation - in
spite of low lake levels - and to dramatically over-estimate
energy efficiency reductions.
Most
of us want to know that when we click the switch the lights
will come on, and when we open the power bill the charges will
be reasonable. But with the Government’s energy strategy in
a dangerously chaotic state - amid claims of political
interference in the Electricity Commission - blackouts and
price hikes are definitely on the cards. (See “New
Zealand’s Energy Strategy”, click
here >>>)
The
Climate Change Bill (submissions close Feb 29) is a radical
piece of legislation which will impose critical economic risks
on New Zealand. According to economic consultants Castalia,
Labour’s experimental emissions trading scheme will create
substantial economic uncertainty. By exposing New Zealand
businesses to volatile world market carbon prices, our
government is planning to impose costs on business and the
country that no other government is prepared to do. In the
words of Castalia, “The overall thrust of the Bill is clear:
the Crown wishes to transfer all risks associated with the
implementation of climate change policy to business and
households”. (For further information click
here >>>)
The
Bills described, along with a number of others, were passed
under urgency before Christmas. Submissions close on February
29th. Full details on the Bills can be found on the
NZCPR website – click
here >>>. Information on preparing a submission
can be found here
>>>.
If
you are concerned about these new laws, I cannot urge you
strongly enough to have your say. Submissions do not have to
be complex. In fact the simpler and more straight forward they
are the more likely they are to be read! Further, with the
current regime having restricted our freedom of speech for the
whole of election year, we should make good use of this
opportunity to say what we think about these proposed new laws
– while we still have the chance!
The poll
this week asks:
Do you believe Labour’s regulation agenda has been good for
New Zealand? Go
to Poll >>>
If you
would like to comment on this issue please click
>>>
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