The ‘gummint’ should do something!

In an excellent article Deborah Coddington wrote:

“…encouraging voters to look to gummint for the good life is a futile exercise. No one in their right mind would willingly assign their choice of car, design of house, style of dress, or gardening habits to their local MP.

To preserve the New Zealand Quality of Life, it’s to ourselves we should look, not a bunch of representatives in one or another political party.”

I agree. Too often every perceived problem is met with an outcry for the government – or my preferred, gummint – to do something.

As a broad statement I think the business of the government is to set the boundaries for social and economic activity and to provide public/welfare services that we want/won’t pay for left on our own.

Policies lead to changes in behaviour. If the policies are very narrow and specific, unintended consequences pop up somewhere else, like a bad 1980s waterbed (eg as James wrote). But that is what we risk if we ask the gummint to regulate and intervene for all perceived problems.

In an obliquely related but nice article about central banking and transparency on the BBC website, Linda Yueh describes:

“…Goodhart’s Law says that a variable that is used as a policy target quickly loses its reliability as an objective indicator.”

Politics is about compromise. But sometimes they pull in opposite directions. Observe the current debate on housing affordability. In practice, the goal is for the politicians to drive ever higher prices for existing home owners, but falling house prices for first home buyers.

Thanks to this twin and opposing objectives we are seeing a mess of policy announcements, ranging from subsidizing first home buyers, to lowering development contributions, but very little tie back to the root causes (which I suspect rest with arcane urban planning policy).

In reality the analysis and discussion need to be about preferences, technology and resource constraints. Only by understanding fundamental drivers can we formulate lasting policy solutions.

  • “Only by understanding fundamental drivers can we formulate lasting policy solutions.”


  • VMC

    I think you have a very limited view of what governments are for, and I cannot think of any serious thinker on this topic who would agree with you. To take an example, governments are responsible for providing defense and police services (and it doesn’t matter whether you are on the right or the left of politics, all governments that are competent do these things). And defense and police services are not part of social or economic activity and they are not welfare services. Without any effort I would imagine that most people could think of a dozen other key responsibilities of governments, also. But, then, I never did think much of Deborah Coddington either.

    • I suspect that “boundaries” mean a very different thing to Shaz and me than they may imply when you’ve spotted them here – which is understandable.

      Remember, the endowment of resources constitutes a boundary in this sense – and competition law constitutes a further boundary. When I read what Shamubeel was saying, it sounded like he was stating “from where we are, we need to make sure we have some idea of what a policy is trying to achieve and why to make sensible policy”.

      In this way, he is more discussing the margin of change from the status quo, not the argument of what we should do given no government!

      Language is a pain though, oft times I feel like I’ve said the same thing twice – but the two things will be taken in very different ways!

      • VMC

        I wonder if you are correct there ( it sounded like he was stating “from where we are, we need to make sure we have some idea of what a policy is trying to achieve and why to make sensible policy”.) – lets hope he comes back and explains. Some, like Deborah C, argue that there are areas that governments should have no policy in, while you have argued that S.E. is really saying we just need to be clear about what (any?) policy is seeking to achieve. I suspect there is a wide gap between the two. As I say, lets hope the author elaborates.

        • I hope I’m right – as that is always fun. But as you say, Shamubeel will be the best judge of what he meant 🙂

          • Shamubeel Eaqub

            The language should have been far more precise. When I say boundaries, I mean rules and regulations. Matt and I wont agree on exactly how much rules and regulations is optimal, but neither of us believe that the government should be entirely hands off.

            There are very good reasons why we need to price externalities etc.

            But if a policy is to be successful, it needs to start from and react to fundamental drivers.

  • Bill Patterson

    I agree with the substance of this but “gummint” reminds me of “dey turk err jurbz!” (they took our jobs), from an episode of south park about alien immigrants from the future who work for next to nothing. That pronounciation (and it devolves to just “durka durrrrrr!”) always struck me as a way to emphasize the stupidity of racist rednecks, and I can’t help but see “gummint” as a similar thing. It just makes the author look like an elitist twit. Perhaps I’m unfairly reading into it but libertarians are often quite happy to admit they don’t like democracy because it means the unenlightened masses have too much say.

    • Shamubeel Eaqub

      Not sure what to reply to this. I dont think I am an elitist twit, but I could certainly be in someone’s opinion.

      The point, which perhaps didnt get through, is that there are so many demands on politics that quality policy making is being sacrificed. The demands, as for example in housing affordability, are legitimate. But the policy reactions have to be much more measured and directed at the fundamental drivers. Otherwise we end up with a mess of policies, that dont solve the problem, but may lead to new ones.

      • Bill Patterson

        I agree, I even started out my previous comment saying I agree, I just don’t like the “gummint” part. My interpretation is that it’s a swipe at people who can barely speak properly, let alone form a sound opinion of appropriate public policy. There are alternative interpretations, but the tone of the Coddington article doesn’t suggest to me that they are correct. For example:

        “when it comes to government-speak. “Grow the economy” means “spend more taxpayers’ money”; “develop the country” is licence to get involved in business ventures about which they have few clues – broadcasting, airlines, railways, venture finance. And “protect the environment” is an excuse to spend public millions on buying up private land which the taxpayers themselves are then excluded from using. Meanwhile, private property rights are breached with impunity.”

        Is this satire? Thankfully we have her to translate this foreign language. The idea that anyone would consider this stuff arguable isn’t even on the table, let alone be democratically popular. But what can we expect when 18% of school leavers are illiterate? And for heavens sake the political parties just pander to those fools.

        Let me point out again I agree with your post, it’s much more reasonable.

    • Reading it myself, and with my hats on, I don’t see it as a criticism of the masses – economists love the idea of price, as they see it as an additional bow in helping the masses express democratic preferences.

      Instead I read it as a critique of those faux intellectuals who turn up in the paper saying “I’ve decided there is a problem, and we should do something!”. This type of attention seeking and determination to pick random problems until you get one that lands offers misinformation for the public, and as a result deserves to be treated in a demeaning way.

      Contrary to how we look, economists have a lot of respect for individuals – hence why we decided to study a social science. We just get frustrated at misinformation and institutions that work to provide misinformation or restrict choice.

      • Bill Patterson

        Yeah I certainly didn’t mean to be hating on economists if that’s how it came off – or libertarians, I have certain sympathies with their issues. Shamubeel’s post I’m very supportive of. Those faux intellectuals do need to be called out.
        I can understand the consistent frustration with the distortion of issues, I just found the Coddington article cringe-worthy.