So it seems that Stuff has decided that now it’s outsourcing its journalism to the public, it might as well try to do it with other people’s discipines as well – that combined with not knowing what economics is has led to the question “how do we fix the economy”
The first solution has been released, and in true communist/NZ Inc style thought the solutions boil down to saying people shouldn’t be allowed the things they actually want and picking winners.
Now to be honest I do not blame the author of the piece – he was doing exactly what was asked of him, to frame the economy in the way he wanted it to be. To “fix” the ways that the economy wasn’t doing what he values.
But that isn’t the way social groups should work. We aren’t a dictatorship, we shouldn’t have a body of “enlightened individuals” telling us how and what to consume. The fact is if households are willing to sacrifice other opportunities and income to live the “kiwi dream” they should be allowed to.
Goals such as “catching Australia”, being “more productive”, battling perceived “inequalities” of somethings – these are arbitrary goals that do not express the trade-offs we face as a set of people. The real goal should be to create an environment where the individuals in society can make the best use of the scarce set of resources we have at our disposal, in order to satisfy their preferences.
New Zealand is not a machine, its a community of individuals – an economy isn’t something to be “fixed” it is a combination of institutions, relationships, and people … and any “issue” has to do with concerns about these relationships, not overarching goals to pick winners or tell people what to consume because, in our arrogance, we think we are smarter than they are.
Sidenote: If Stuff does believe the economy can be “fixed” like a machine are they going to ask similar questions about physical disciplines – is the next assignment going to be “how would you cure cancer”, followed by “how would you build a perpetual motion machine” and “how would you derive the theory of everything“.
Update: So after having a computer scientist say we should give up the kiwi dream and focus on IT in the first article, now we have someone involved in commercial and residential property saying we should cut interest rates and accept house price inflation to fix the economy. Even as an economist, I find the level of blatent self interest surprising – and relatively humorus . Maybe I should write one in saying we need more economic research into the economy by economic consultants, so we can make more informed decisions and
transfer resources to me … I mean and make the right decisions.
Update 2: Wow, so we should ban people from below median income from borrowing. Simultaneously violating the rights of those who are poor, and making it impossible for people to realistically smooth consumption over their lifecycle – and that is “assuming the best” and ignoring that it will lead to expensive black market credit for the poor, which will just make them worse off than they are now.
As well as illustrating how widely spread economic illiteracy, this exercise has shown me just how much people from every part of the political spectrum want to run other peoples lives. And I don’t just mean economic illiteracy in the sense of not understanding the subtles of the literature – I mean economic illiteracy in terms of not understanding the basics of how other people in society are different and face different trade-offs.
Guess what, some people on below median incomes borrow because … they are fairly certain they will earn more in the future. In fact if you look at the data that is where a large amount of the housing borrowing takes place, as you would expect if you had spent some time trying to understand the issue. Such as by studying 100 level economics.
In fact the only reason I’m willing to publicly be so rude about this recommendation is that I find the treatment of consumers and the poor of this piece to be morally abhorent. I don’t care who you are, if you attack the poor for being poor I have no time or patience to discuss your confusion with kid gloves.