New Zealand is like a wayward teen
Can you fix the economy?
The time has come for a change. Some tough decisions need to be made if we are to thrive in the coming years.
Many of our problems stem from our short election cycle. Political parties are focused on balancing the implementation of policies that support their ideology with ensuring that they remain popular with the public and special interest groups.
Furthermore, we have no vision for our country, no idea what we should like to look like in 50 years time. We simply float through life like a wayward teenager. And much like a teenager our decisions often seem to be based on what we consider logical reasoning that supports what we want to do, rather than empirical evidence or best practice.
If the New Zealand economy is to progress, I think we should:
1. Stop making decisions just because they support one's agenda or because they are popular. Make decisions because they are in New Zealand's best interests. This may mean implementing unpopular policies like raising the retirement age.
2. Make economic decisions that are supported by verifiable economic evidence, not gut logic. Follow the world's best practice. Most economic policies, such as charter schools, are not new so why implement them if results worldwide are mixed at best?
We could focus on:
Quitting neo liberalism: We know that it doesn't work. Stop implementing policies like asset sales that provide advantages to the wealthy only in the vain hope that their prosperity will trickle down. It simply doesn't happen. There is no evidence to support it. Instead of top-down policies provide bottom-up, such as tax breaks for small business start-ups.
Increasing the retirement age: Obviously this is an extremely unpopular policy, however it's necessary. The 65-plus age group is projected to make up over one quarter of New Zealand's population during the 2030s, meaning more people are going to have to be supported by fewer people than before. Many predict that it is already too late but anything we can do in this respect now will help.
Stop destroying our comparative advantage: New Zealand has not been blessed with copious minerals, we are not strategically placed and are not large enough to have any significant impact on the global economy. However we do have something that other countries do not; we have our beautiful scenery and a good tourism infrastructure. But we're destroying it. We need to stop the systematic degradation of our environment immediately. Efforts need to be made now to ensure we still reap its rewards in years to come.
Capital gains tax: Again, extremely unpopular, but necessary if we are to direct investment towards other sectors and away from the bloated property market. Our property market is artificially inflated and poses a significant risk. There are also social benefits to capital gains tax in that it will stabilise house prices and provide first time home owners with greater potential to purchase their first home.
Increase the election term: Parties need to work collaboratively to determine a long term strategy, focusing on common ground for a few key policy areas such as the knowledge economy, development of innovative technology, and our environment. This should be an open and transparent process. Once we have agreed on a high level strategic direction for our country we need to synergise policies to work towards those goals.
For example, tailor our education system so that it supports environmental sustainability and innovation. We know what countries top the list of best education system every year. Copy them, and incorporate subject matter that supports our strategic direction.
Provide economic incentives to business that support the strategic direction. Stop funding infrastructure that does not support the strategy (e.g. more roads) and start funding infrastructure that does (e.g. another data cable across the Pacific).
There is no denying that we are in a better situation than most countries. But there are many things that we could be doing better and not much is to be gained by comparing ourselves with those worse off than us. I believe that like others our country will face a number of hard decisions and how we do in the future will be largely due to how we rise to meet those challenges now.
Someone once said: "A society grows great when old men plant trees whose shade they know they shall never sit in."
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