Thursday, February 17, 2011

Can't see the wood for the trees

It seems that—as they did over the piss-poor Book Trustthe Coalition are about to show just how easily a collection of ball-less, dickless government ministers can be brow-beaten by a bunch of pious, holier-than-thou, rent-seeking lunatics.
Ministers are preparing to ditch controversial plans to sell thousands of acres of state-owned woodland in England, the BBC understands.

Which just goes to show how the flexible the Coalition's convictions are. Let us contrast their lack of action over the forests with the decisive measures taken by the New Zealand Labour government of 1984 (and you are going to hear a lot about this because the parallels are excellent)—as recounted by ex-NZ-minister Maurice P McTigue in his 2004 lecture to Hillsdale College. [Emphasis mine, on the grounds of relevance.]
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.

I do recommend reading the entire speech—several times. I wish Cameron would.

But the paragraphs immediately following the one above are very much worth highlighting, especially in view of the fact that the Tories are aiming, in five years, only to reduce the deficit to zero—not actually to pay off any debt.
Some of the things that government was doing simply didn’t belong in the government. So we sold off telecommunications, airlines, irrigation schemes, computing services, government printing offices, insurance companies, banks, securities, mortgages, railways, bus services, hotels, shipping lines, agricultural advisory services, etc. In the main, when we sold those things off, their productivity went up and the cost of their services went down, translating into major gains for the economy. Furthermore, we decided that other agencies should be run as profit-making and tax-paying enterprises by government. For instance, the air traffic control system was made into a stand-alone company, given instructions that it had to make an acceptable rate of return and pay taxes, and told that it couldn’t get any investment capital from its owner (the government). We did that with about 35 agencies. Together, these used to cost us about one billion dollars per year; now they produced about one billion dollars per year in revenues and taxes.

We achieved an overall reduction of 66 percent in the size of government, measured by the number of employees. The government’s share of GDP dropped from 44 to 27 percent. We were now running surpluses, and we established a policy never to leave dollars on the table: We knew that if we didn’t get rid of this money, some clown would spend it. So we used most of the surplus to pay off debt, and debt went from 63 percent down to 17 percent of GDP. We used the remainder of the surplus each year for tax relief. We reduced income tax rates by half and eliminated incidental taxes. As a result of these policies, revenue increased by 20 percent. Yes, Ronald Reagan was right: lower tax rates do produce more revenue.

I've said it before and I'll say it again—this is the way that you produce better services and reduce both taxes and debt.

Stuff you and your Big Society, Dave: try showing us that you can take some responsibility for what needs to be done, and maybe we'll have a go at it too.


Anonymous said...

It didnt last long, the NZ govt' is borrowing NZD 300 million a week now

Anonymous said...

Sorry, neither holier-than-thou nor a "rent-seeking lunatic" here. Soundly libertarian in fact, and I'm damn glad that the forests were not sold off to the highest bidder. It never belonged to the government in the first place; they can, at best, be considered custodians of it, even though we never consented to that, and for the most part (when they're not, you know, selling off chunks of it) do a pretty good job of it. There's a lot of shit government shouldn't be doing (I'd happily reduce it down to common law courts and nothing else), but managing the forests is probably the least objectionable of them.

FlipC said...

Yes indeedy the New Zealand economy is the model to emulate... just like the Eire model um was.

Francis Urquhart said...

An important lesson in how to reduce the Civil Service, although first we need to reduce their salaries in order to make it viable. I shall order a consultation exercise before I decide what to do.

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