Inspired by this post on compulsory superannuation, here is a post on “compulsory work” (eg slavery).
Without compulsory work New Zealand is destined to become an economic backwater. Our relative standard of living, particularly when compared to Australia, will continue to decline.
Two important actions can reverse our long term economic decline, effective labour market regulation and compulsory work.
Compulsory work had been an unmitigated success in the New World and has helped transform their economy. While NZ academics can argue about whether or not it has increased their overall savings rate, it is clear that it has improved the amount that is produced in the economy.
Moving back away from the sarcasm let me say:
- Compulsory superannuation is the love child of fund managers – as they can’t see past the idea that “more savings = more funds = more investment”.
- Even those that do see past self interest only think of “GDP”. However, the goal of policy is to maximise welfare not output – if people want to consume they should be allowed. Forcing people to save is abhorrent.
- Yes compulsory saving leads to more saving, and possibly to more investment (at least to lower borrowing). But it does this by making people credit constrained – implying that people can’t smooth consumption over time and have lower lifetime satisfaction.
To me, compulsory superannuation/saving schemes are very wrong. The people trying to push them need to learn that the purpose of policy isn’t to increase GDP or fatten their wallet, it is to ensure that we have a society where welfare is maximised.