Robert MacCulloch
Robert MacCulloch is a native of New Zealand and worked at the Reserve Bank of NZ before he travelled to the UK to complete a PhD in Economics at Oxford University.
The Treaty debate is great. We’ve just found out, courtesy of our King’s Counsels, what has broken the economic back of this nation. It has only just been revealed, thanks to their letter to the PM, that the judiciary invented their own set of Treaty principles, the main one of interest to economists being the requirement of “equitable outcomes”, which are now part of our constitution. So much so, that the Counsels call them “settled” law, unable to be adjusted by Parliament, let alone ACT’s Seymour, the likes of whom they swat away – referring to his type as the “government-of-the-day”.
According to the lawyers, we, the little people, vote for day-to-day administrators, whereas the profound, unalterable constitutional principles governing our lives in an enduring sense must be written by a handful of law graduates with bigger minds, called judges. Most of us had heard about the “principles” before, but until the Treaty debate was opened recently, we had no idea they were embedded into our constitutional arrangements.
I know of no country that has a constitutional requirement of “outcomes”, not opportunities, being equalized amongst citizens, other than a few communist states that failed and no longer exist. The reasons are obvious to economists, but not to our judiciary. They may be proud of their “equitable outcomes” principle, but there is a principle in economics that an inexorable trade-off exists: attempts to make outcomes equal and equitable lower efficiency and productivity.
So our judiciary signed us up to being a poor country – but that's okay with them, provided we’re all the same. They probably thought they were only talking about “equitable outcomes” between two ethnic groups, but that is not how it works in practice. How do you compare two groups? Do you use mathematical averages? But that ignores within-group inequality. What happens if there is high inequality within one ethnic group, but the average outcome is the same as the other? What happens if every member of ethnic group A becomes better off than every member of ethnic group B, except for one very wealthy member of group B who makes the average outcome of that group higher? Do you redistribute? None of it makes sense.
Because equalizing outcomes is a hopeless quest and consigns nations to a lack of prosperity and dynamism, economists focus more on equality – or freedom – of opportunity, of equal rights. And so do most declarations of independence and constitutions – except for, it now turns out, New Zealand’s. Many nations have affirmative action programs. But they are nothing to do with having constitutional requirements of achieving equality in outcomes. For that reason, such programs are often even charged with being unconstitutional.
Again, our judiciary seem not have the foggiest idea of the practicalities of the problem. Once you put equitable outcomes, not opportunities, in a constitution, you’re requiring governments to raise massive tax revenues to achieve equalization. You’re shifting taxation powers from elected officials to judges. Let’s at least be grateful to our King’s Counsels for explaining why NZ’s standard of living has been falling, harming the livelihoods of all ethnicities.
This article was originally published by Down to Earth Kiwi.
