Monday, March 08, 2010

This is how it should be done

Left Outside may think that I write "utter bilge" but then that is because he is insane. Not because he thinks that I write bilge—he is entitled to his opinion—but because he is one of those who think that the ridiculous socialist democratic experiment that continues to be wrought upon this country can, in any way, carry on.

This is what gets me about those on the "decent" left*: they somehow seem to think—in a way that is almost comically deluded—that our government can keep on spending nearly £200 billion more than it takes in tax; they continue to think that, somehow, yet more money can be squeezed out of the very tiny number of very rich people to prop up the left's ailing socialist state; to these morons, the state can just happily carry on spending vast amounts of money and employing huge numbers of pointless bureaucrats without there being any bad consequences.

Worse still are those on the left who think that all of this can continue and for us to see an increase in civil liberties. They are, to a man and woman, absolutely barking.

Being a charitable Devil, I like to imagine—in my more sanguine moments—that all of the above occurs simply because they cannot see another way through. Which is why I like to link to articles like this one by ex-New Zealand minister Maurice P. McTigue. The whole thing is so good that I would love to quote it in full—instead, I shall simply highlight some particularly striking passages, starting with McTigue's illustration of the plight that led to New Zealand's wholesale rehabilitation.
New Zealand’s per capita income in the period prior to the late 1950s was right around number three in the world, behind the United States and Canada. But by 1984, its per capita income had sunk to 27th in the world, alongside Portugal and Turkey. Not only that, but our unemployment rate was 11.6 percent, we’d had 23 successive years of deficits (sometimes ranging as high as 40 percent of GDP), our debt had grown to 65 percent of GDP, and our credit ratings were continually being downgraded. Government spending was a full 44 percent of GDP, investment capital was exiting in huge quantities, and government controls and micromanagement were pervasive at every level of the economy. We had foreign exchange controls that meant I couldn’t buy a subscription to The Economist magazine without the permission of the Minister of Finance. I couldn’t buy shares in a foreign company without surrendering my citizenship. There were price controls on all goods and services, on all shops and on all service industries. There were wage controls and wage freezes. I couldn’t pay my employees more—or pay them bonuses—if I wanted to. There were import controls on the goods that I could bring into the country. There were massive levels of subsidies on industries in order to keep them viable. Young people were leaving in droves.

So, New Zealand was in an even worse state than this country currently is—nearer, in fact, to how it was in the seventies. So, what to do?
When a reform government was elected in 1984, it identified three problems: too much spending, too much taxing and too much government. The question was how to cut spending and taxes and diminish government’s role in the economy. Well, the first thing you have to do in this situation is to figure out what you’re getting for dollars spent. Towards this end, we implemented a new policy whereby money wouldn’t simply be allocated to government agencies; instead, there would be a purchase contract with the senior executives of those agencies that clearly delineated what was expected in return for the money. Those who headed up government agencies were now chosen on the basis of a worldwide search and received term contracts—five years with a possible extension of another three years. The only ground for their removal was non-performance, so a newly-elected government couldn’t simply throw them out as had happened with civil servants under the old system. And of course, with those kinds of incentives, agency heads—like CEOs in the private sector—made certain that the next tier of people had very clear objectives that they were expected to achieve as well.

The first purchase that we made from every agency was policy advice. That policy advice was meant to produce a vigorous debate between the government and the agency heads about how to achieve goals like reducing hunger and homelessness. This didn’t mean, by the way, how government could feed or house more people—that’s not important. What’s important is the extent to which hunger and homelessness are actually reduced. In other words, we made it clear that what’s important is not how many people are on welfare, but how many people get off welfare and into independent living.

As we started to work through this process, we also asked some fundamental questions of the agencies. The first question was, “What are you doing?” The second question was, “What should you be doing?” Based on the answers, we then said, “Eliminate what you shouldn’t be doing”—that is, if you are doing something that clearly is not a responsibility of the government, stop doing it. Then we asked the final question: “Who should be paying—the taxpayer, the user, the consumer, or the industry?” We asked this because, in many instances, the taxpayers were subsidizing things that did not benefit them. And if you take the cost of services away from actual consumers and users, you promote overuse and devalue whatever it is that you’re doing.

When we started this process with the Department of Transportation, it had 5,600 employees. When we finished, it had 53. When we started with the Forest Service, it had 17,000 employees. When we finished, it had 17. When we applied it to the Ministry of Works, it had 28,000 employees. I used to be Minister of Works, and ended up being the only employee. In the latter case, most of what the department did was construction and engineering, and there are plenty of people who can do that without government involvement. And if you say to me, “But you killed all those jobs!”—well, that’s just not true. The government stopped employing people in those jobs, but the need for the jobs didn’t disappear. I visited some of the forestry workers some months after they’d lost their government jobs, and they were quite happy. They told me that they were now earning about three times what they used to earn—on top of which, they were surprised to learn that they could do about 60 percent more than they used to! The same lesson applies to the other jobs I mentioned.

McTigue then goes into some detail about the abolition of the farming subsidies, which I shall encourage you to read for yourselves. He then moves on to education—an area of particular interest for me.
New Zealand had an education system that was failing as well. It was failing about 30 percent of its children—especially those in lower socio-economic areas. We had put more and more money into education for 20 years, and achieved worse and worse results.

It cost us twice as much to get a poorer result than we did 20 years previously with much less money. So we decided to rethink what we were doing here as well. The first thing we did was to identify where the dollars were going that we were pouring into education. We hired international consultants (because we didn’t trust our own departments to do it), and they reported that for every dollar we were spending on education, 70 cents was being swallowed up by administration.

Right now, the Local Education Authorities are swallowing about one pound in every three that the UK government spends on education. On administration.
Once we heard this, we immediately eliminated all of the Boards of Education in the country. Every single school came under the control of a board of trustees elected by the parents of the children at that school, and by nobody else. We gave schools a block of money based on the number of students that went to them, with no strings attached. At the same time, we told the parents that they had an absolute right to choose where their children would go to school. It is absolutely obnoxious to me that anybody would tell parents that they must send their children to a bad school. We converted 4,500 schools to this new system all on the same day.

Excellent. This is, of course, very similar to the voucher system that I have proposed for years. The one question that has vexed me is whether people should be allowed to use their vouchers to fund private education—surely you'd get a mass exodus away from the public schools?
But we went even further: We made it possible for privately owned schools to be funded in exactly the same way as publicly owned schools, giving parents the ability to spend their education dollars wherever they chose. Again, everybody predicted that there would be a major exodus of students from the public to the private schools, because the private schools showed an academic advantage of 14 to 15 percent. It didn’t happen, however, because the differential between schools disappeared in about 18-24 months. Why? Because all of a sudden teachers realized that if they lost their students, they would lose their funding; and if they lost their funding, they would lose their jobs. Eighty-five percent of our students went to public schools at the beginning of this process. That fell to only about 84 percent over the first year or so of our reforms. But three years later, 87 percent of the students were going to public schools.

OK, that's good—but the numbers of children attending the public schools is not the point of the exercise. The point of all of this is to educate—so, how did they do?
More importantly, we moved from being about 14 or 15 percent below our international peers to being about 14 or 15 percent above our international peers in terms of educational attainment.

Ah. So a massive success then. Excellent!

And the left's reason for opposing similar measures in the UK is... Well, perhaps Left Outside will enlighten me. Because, according to him, I "will never change the world in anyway you want": that loss, of course, is not mine but the children—those who he claims to represent—whose futures will be ruined by his filthy bigotry.

Still, at least the left can claim that taxing people is a great thing, eh? You know, hitting the rich as hard as possible so that the poor can be supported...?
When we in New Zealand looked at our revenue gathering process, we found the system extremely complicated in a way that distorted business as well as private decisions. So we asked ourselves some questions: Was our tax system concerned with collecting revenue? Was it concerned with collecting revenue and also delivering social services? Or was it concerned with collecting revenue, delivering social services and changing behavior, all three? We decided that the social services and behavioral components didn’t have any place in a rational system of taxation. So we resolved that we would have only two mechanisms for gathering revenue—a tax on income and a tax on consumption—and that we would simplify those mechanisms and lower the rates as much as we possibly could. We lowered the high income tax rate from 66 to 33 percent, and set that flat rate for high-income earners. In addition, we brought the low end down from 38 to 19 percent, which became the flat rate for low-income earners. We then set a consumption tax rate of 10 percent and eliminated all other taxes—capital gains taxes, property taxes, etc. We carefully designed this system to produce exactly the same revenue as we were getting before and presented it to the public as a zero sum game. But what actually happened was that we received 20 percent more revenue than before. Why? We hadn’t allowed for the increase in voluntary compliance. If tax rates are low, taxpayers won’t employ high priced lawyers and accountants to find loopholes. Indeed, every country that I’ve looked at in the world that has dramatically simplified and lowered its tax rates has ended up with more revenue, not less.

Oh dear, poor lefties.

But what about regulation? Nosemonkey, for one, points out that even if we left the EU, we would still have to have lots of regulations and, as such, the benefits would be negligible. How can one cut swathes through forty years (and more) of government regulation?
What about regulations? The regulatory power is customarily delegated to non-elected officials who then constrain the people’s liberties with little or no accountability. These regulations are extremely difficult to eliminate once they are in place. But we found a way: We simply rewrote the statutes on which they were based. For instance, we rewrote the environmental laws, transforming them into the Resource Management Act—reducing a law that was 25 inches thick to 348 pages. We rewrote the tax code, all of the farm acts, and the occupational safety and health acts. To do this, we brought our brightest brains together and told them to pretend that there was no pre-existing law and that they should create for us the best possible environment for industry to thrive. We then marketed it in terms of what it would save in taxes. These new laws, in effect, repealed the old, which meant that all existing regulations died—the whole lot, every single one.

There is a lot more for you to peruse over at the Hillsdale College site—and I really recommend that you read the whole article. For your humble Devil, it is incredibly inspiring for two main reasons.

The first, inevitably, is that it demonstrates that those measures for which I have argued actually work in the real world.

The second is that McTigue and his colleagues recognised that there was a problem—something that the vast majority of people in Britain still have not—and they then had the foresight to understand the solutions, and the conviction and the courage to carry them out.

McTigue makes the whole thing sound laughably easy—which I am sure that it was not—and fun, which I think that it might have been. And, at the end of the whole exercise, that government had measurably improved the lives of its citizens—by getting the fuck out of their lives.

This example shows that one can change the world (or, at least, your own small part of it) and that to change it in the way that I would do so is precisely the way change that is needed.

The New Zealanders voted for less government, and they got more freedom and more prosperity.

There is always hope.

* By which I mean, of course, those who aren't actively Communists.


Lola said...

I was only saying to Mrs Lola, the other day, that if I was not married to her, and if the Fuckwit Broon got re-elected, I'd be off to NZ like a shot.

Great post DK. Should be compulsory reading.

microdave said...

"The second is that McTigue and his colleagues recognised that there was a problem—something that the vast majority of people in Britain still have not—and they then had the foresight to understand the solutions, and the conviction and the courage to carry them out."

And therein lies our problem - It seems that most of our fellow countrymen/women still don't think there is a problem, and even if they did who can we turn to to solve it? Certainly not iDave.

And of course the New Zealanders aren't having their strings pulled by the EU & Common Purpose....

Great post though!

Anonymous said...

I found that the most demoralizing and depressing post I've ever read.

Because it will never happen in the UK.

A question. Population of NZ 4.25 million.

Population of UK 60 million.

Does size matter? Or are ideas like those described insensitive of size?

Tomrat said...


Fear not! It is always darkest before the dawn; we have been collectively crawling like Nebuchadnezzar in animalistic insanity for too long; we need only look for the thing which humbles us as a nation to realise how we should change.

For now it is up to us to be honest about ourselves; it is all our faults that nothing changes, because the path of least resistance is too tempting.

I think the 1984 NZ election will provide us with the turning pont in what caused the recant from madness; I'll read up on the events leading there.

Roger Thornhill said...


Unlike City States who so often are held up as beacons. NZ has dense cities but also large areas of sparse wilderness.

It is about the size of Scotland in terms of population.

So if you can fix NZ, you can probably fix Scotland. If you can fix Scotland, I think most people would suggest that you could fix England, Wales and NI.

Culturally NZ is similar too, so we are not trying to map a Mediterranean or Chinese solution, a Napoleonic or Totalitarian situation. No, this is a a (majority) Anglo Saxon/Celtic, Common Law onto similar environment.

microdave said...

But as I said earlier NZ doesn't have the EU to contend with.....

Gobshite said...

A real life Politician that makes real and positive change?

It cheered me up to know that such people exist, and that such undertakings are possible.

Those that do not follow history, are doomed to repeat it. And by 'those', I mean Lefty twats.

Anonymous said...

Unfortunately this was all followed in NZ by nine years of a Labour Government which aped the UK Labour Governments Policies, bringing back the nanny state, increasing controls, massively increasing beaurocracy in government and health services. They introduced the UK style education where everyone is a winner. Exams were dummed down, there was a huge increase in universities and degree courses but a lowering of standards for admission. The education services continued to fail students with teachers more interested in their pay levels than in education. The proportion of failing students remains virtually unchanged.In the first seven years of the Labour Government the numbers of core public sector employees increased by 44%.
So, yes, we had it good for a while but then we went and elected a socialist government and replicated the nanny knows best British system.
And yes, we've now got our own, ever increasing, trenche of benefit claimants who 'know their rights'. In fact, we've now got everytihng that you have over there. We were just a bit late starting.
Last year we chucked them out and elected a National Party (equivalent to Conservative) Government - they were going to reduce beaurocracy, sort out the health service, be tough on crime, etc. etc. etc. but it looks like they're just another bunch of venal, do nothing,time servers.
And if you serve your time here as an MP for six years, you get a pension for life and free global travel for life, so its well worth sitting in parliament and not speaking out of turn - how is it in the UK, do your ex MPs get a pension.
We may be twelve thousand miles away but in the words of the song - 'The Internationale (socialist labour party)unites the human race'

P.S someone said to me the other day of Gordon Brown: "If I wanted a Prime Minister he's the one I'd get.
Is this some sort of pun?

Anonymous said...

OK so I can't spell dumbed
but then I didn't have a NZ education I had a UK one and emmigrated here six years ago to escape, can you believe it, the terrible state that had become of Britain.
cheers from Wanganui, North Island, New Zealand

MaxG said...

You missed out the best bit - it was a Labour Government which introduced these reforms, and the National Government which preceded it which was surely the most Socialist government NZ has ever had (even including the unlamented Clark government).

If only the current National government would pursue the same path...

Pete (also) in Wanganui, formerly in Dunbar.

wv throve - how do they do that?

Jiks said...

It is encouraging to hear common sense does or has existed somewhere at some point. So I guess there is hope even for these benighted isles etc...

Ian Bennett said...

"Right now, the Local Education Authorities are swallowing about one pound in every three that the UK government spends on education."

To that figure, you can add however much the Learning and Skills Council is swallowing; yet another pointless layer of quangocracy.

(I know it's not called the LSC now, but it wasn't abolished as promised, it was just renamed.)

Anonymous said...

The British don't think there is a problem yet because they are not paying for it yet.

When they start paying for the debt that has been ramped up, then we will see an entirely reaction.

Anonymous said...

Impressive reference case, DK. Great post.

Ted Treen said...

Will no-one rid me of this turbulent PM?

(Well it worked for Henry II)

CC Truckston said...

Because of the entrenched government bureaucracy in both the UK and the US, emulating the New Zealand reforms will be exceedingly difficult, even if the majority of elected officials wish to do so, which they do not. The objective of government is to accumulate power, and instituting reforms that give more liberty and freedom to citizens necessarily limit governmental power. Where both the population of a nation and its government are small, officials are closer to the people, and the apparatus of government is less unweildy. Thus, the effect of what politicians do to citizens is less anonymous, and the pressure for reform correspondingly greater. And when the politicians then undertake reform, it is less difficult to change governmental structure. Achieving such reforms in nations of 60 million and 300 million populations, with staggeringly large and powerful national governments, alas, most likely will require revolutions.

James Higham said...

You don't write bilge, DK. All that you write is to the point and fisks well.

It's just that you ignore the important issues at times.

Unknown said...

Great great post......the proof is in the pudding as they say.

The problem is that most left leaning peeps seem to lack the abiltiy to see the world as it is and instead choose to impose how they want the world to be so that thier place in it is made more important. Don't understand the world so they try and make it conform to their narrow frustrated thinking.

John Demetriou said...

Excellent article, DK. More of this sort of thing is in order.


MU said...

LO has responded with a whole lot of.. nothing really, other than "The left exists."


"But there are entirely mainstream reasons to think that higher taxes on the wealthy increase revenue."

He then comes out with more fresh insanity:

"The size of Labour’s state has not led to authoritarianism"

What. The. Fuck.

One of the commentators then has a dig at McTigue:

"On the other hand McTigue’s prescription seems at odds with Libertarianism, with his talk of a progressive tax system and burdensome regulation such as the surely unnecessary 348 page Resource Management Act (unnecessary because the free market will sort everything out, won’t it?)"

Completely missing the fucking point that it was a massive reduction in regulation..

These people are absolutely nuts

James Higham said...

Jiks said...

It is encouraging to hear common sense does or has existed somewhere at some point. So I guess there is hope even for these benighted isles etc...

No, Jiks, there is no hope whilst heads of the Tories and LPUK refuse to give the people a voice.

It is not blog etiquette to leave links in comments but Old game, New name might reward your scrutiny.

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fatandbaldandmadashell said...


To echo others on this comment string, before we can implement a solution we must first have a significant majority of people that recognize their is a big problem.

I find it amazing that unions, labour and others seem to think our deficit is somehow self-funding. They borrow 'for investment' in the good times and 'to support the recovery' in the bad.

No-one in the media has ever asked the question... ' er, when do we NOT borrow?'

Roger Thornhill said...

@James Higham,

What's this "refuse to give" assertion?

Anonymous said...

This post has one of the best first sentences I have ever read.

Eat your heart out Gabriel Garcia Marquez;eat your heart out Leo Tolstoy;eat your heart out Jane Austen.

Many of my friends and acquaintances do not visit your kitchen; so when I use that line I will allow them to think it's my own.

Anonymous said...

"This is what gets me about those on the "decent" left*:"

What gets me about the "decent" and to some extent the indecent left is that they all seem to be well off enough not to be affected by any of the barking mad policies or ideas that they propose.

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