The New Zealand Initiative

Insights
Issue 19/2013 - 31 May 2013

In this issue:
• No need to be afraid of Chinese migration | Oliver Hartwich
• Social democrats | Luke Malpass
• Why householders can't win | Bryce Wilkinson
• All things considered ...
• On the record

No need to be afraid of Chinese migration

Dr Oliver Hartwich | Executive Director | oliver.hartwich@nzinitiative.org.nz
When New Zealand First leader Winston Peters delivered his ‘Supercity of Sin’ sspeech last Friday, it was a frontal assault on Chinese migration.

Despite his protestations that he and his party were not anti-China, or even anti-migration, the dog-whistling was all too clear. Mr Peters deliberately put Chinese migration in the context of prostitution, corruption, and drug and people trafficking – as if all of Auckland’s (and New Zealand’s) problems were an imported disease.

It is easy to point out how ridiculous such insinuations are. All it takes is a glimpse at crime statistics, and David Farrar’s Kiwiblog did just that:

What Winston will never tell you is that overall Chinese New Zealanders commit far, far fewer crimes than other New Zealanders … The Asian crime rate is 52 apprehensions per 10,000 population. Caucasians are five times higher at 254, Pacific 10 times higher at 545, and Maori sadly at around 25 times the rate at 1,240.

The picture is the same, not just for the general crime rate, but also for different types of crime: sexual crimes, burglaries, and robberies. Unless Asian criminals are simply better at evading justice, it is clear that they are less, not more, criminally inclined than other New Zealand residents of different ethnicities.

However, there are better reasons to be positive about Chinese migration than Asians just being more law-abiding people. As they say, you can be free of any vices without possessing a single virtue.

As it turns out, there is a lot that is virtuous about the Chinese.

Economic historian Niall Ferguson argues that the Protestant work ethic, which once made the West rich, has migrated eastwards. Asian countries are showing a greater passion for discipline, effort, and achievement than the old, industrialised world.

Nowhere is this more apparent than in the education results of Asian migrants. A few years ago, a study published in the American Sociological Review examined the Programme for International Student Assessment (PISA) scores of migrant children. It found that Chinese students in New Zealand performed better at maths than students from any other country.

Similar results were reported from other Western countries. Generally speaking, children of Asian descent were better than other migrants, and often also better than the native population, in educational achievement.

Far from demonising Chinese immigration in populist fear campaigns, New Zealand should be celebrating the opportunities and potential that Asian migrants bring to this country.
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Social democrats

Luke Malpass | Research Fellow | luke.malpass@nzinitiative.org.nz
It is a difficult time for social democrats. Since the fall of the Berlin Wall and liberalisation programmes here and abroad, old school socialists and social democrats have struggled to come to terms with the changing tides of time. The more recent collapse of the Anthony Giddens inspired ‘third-way’ Clintonism and Blairism have added to these woes.

The political third way represented by these leaders is what former Clinton adviser Dick Morris called triangulation: a fancy term for the political practice of screwing your enemies by selling out your friends. It was politics, not ideology.

It was therefore interesting to read Professor Elizabeth Rata’s recent speech to the New Zealand Fabian society. (One of the few times you will hear about the Fabians from me!).

Rata argued that New Zealand’s old-fashioned social democratic egalitarianism, and its attendant commitment to redistributive justice and a concern for the wellbeing of the ordinary fellow, is being replaced by a new cultural identity politics. Commitment to fair shares is being traded in for correct identity on the amorphous ground of ‘culture’. She is concerned about universalism being lost to a set of different tribes. The key group Rata was concerned with in this address was Māori, but the principle can be extended to many other groups.

This was interesting because it gave voice to a concern that has been plaguing (primarily, but not exclusively) the political left for some time. Since the collapse of a clear-cut economics of social democratic belief, the way to garner votes is to get a collection of identity politics groups, or groups concerned with increasing the social dividends to their constituencies.

The difficulty with this is that it may work as a political strategy for a while, but is profoundly anti-egalitarian because it prioritises who you are over what you do as a person. Surely this is the antithesis of social democratic or indeed egalitarian thought: that who you are by dint of birth should not affect your treatment by state or society.

And herein lies the rub for modern social democrats: without a modern commitment to fair shares, politics becomes little more than an exercise in knitting together groups of patronage, in a manner that rejects claims to universalism. No wonder the political left loves MMP so much – it entrenches tribes of support at the expense of the median voter and the common good.
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Why householders can't win

Dr Bryce Wilkinson | Senior Fellow | bryce.wilkinson@nzinitiative.org.nz
By now, householders must be used to being exhorted by politicians, economists, and international agencies to save more.

Yet, some policies encourage them to borrow in order to save or invest.

This is one likely effect of Kiwisaver subsidies. For some years, government led by example by contributing to the New Zealand Super Fund. These contributions were funded by not reducing government borrowing.

Some argue that higher household savings would reduce the balance of payments deficits directly, take the heat off the housing market, reduce the foreign capital inflow, and lower the exchange rate and interest rates, thereby promoting investment and economic growth.

Not so fast. Economics 101, circa 1970, posited that counterintuitively, a spontaneous increase in the propensity of citizens to save could reduce national aggregate savings. Here is why: Less consumer spending means less business turnover. Investment spending falls. The two combine to lower national income. Households have less money to spend and save. Unemployment rises. Aggregate savings could fall.

These are not the outcomes that those exhorting higher household savings have in mind.

Sure enough, after 2008, concerns that household spending was too low to sustain economic activity induced the IMF and many others to call on politicians to sustain government spending, at least until consumer spending confidence returned.

These calls for continued government spending, after decades of excess, must be among the most congenial public spending rationales offered to politicians.

Between fiscal years 2001 and 2009, core Crown spending per capita, excluding losses and finance costs, rose 31% faster than inflation and population growth. In 2008–09, spending was the highest in the history of New Zealand on this measure (around $15,750 in today’s dollars).

On the Budget 2013 figures, it will be fractionally below $15,000 in fiscal year 2015. This is still 23% higher than in fiscal year 2001. Government spending in 2015 will still be higher than in fiscal year 2008 on this measure. This is not fiscal austerity.

The public policy message for households is that they can’t win. They are apparently expected to save more, consume more, and pay more in taxes to close fiscal deficits.

Higher per capita incomes could achieve that. But this requires productivity growth. That’s a shame. Budget 2013’s productivity growth forecasts are dire. That is what this policy debate should focus on.

All things considered ...

• Graph of the Week: This week it is something slightly different. The OECD’s new Better Life Index is out. Set your own parameters and make up your own graph.
• New Zealand is set to provide a breakfast in schools programme. Dr Eric Campton reviewed the evidence of the efficacy of such a policy. It’s not great.
• It’s the RMA’s fault. Why doesn’t New Zealand have an Ikea? Especially when they are making epic, gnome-based televisual ads with no obvious connection to their products.
• Of course, the British public are complaining about this development. Apparently, smashing a few gnomes will encourage anti-social behaviour. Really?
• Because humans have to eat too. Good on Labour MP the Hon Damien O’Connor for standing up for his constituents and trying to get some mining going on the west coast.
• Agree or disagree with him, David Runciman is a good writer and thinker. Here he produces a lengthy and interesting review of Charles Moore’s biography of Baroness Thatcher.
• The Germans are testing an ingenious new way of fighting graffiti: miniature strike drones that can fly around train stations trying to catch taggers.
• Fearful that the Australian proles might be breaking free of leftist orthodoxy and ignoring British advice, The Guardian has just launched its new Australian edition. We look forward to bringing you plenty of white middle class angst and handwringing.
• And finally, the government has announced that a new appointment has been made to the Board of Sport New Zealand. But what is Sport New Zealand? It was formerly SPARC, which was formerly the Hillary Commission. It funds sports and athletes. Just why do these quangos need to keep being rebranded?

On the record
• Lessons for the teaching profession, Rose Patterson, The National Business Review, 31 May 2013
• The currency union that'd drag Australia south, Dr Oliver Hartwich, Business Spectator, 30 May 2013
• Economics: The Euro a load of [non]sense?, The watercooler, 27 May 2013
• Low pay a national disgrace, Fairfax Media, 26 May 2013
• Avoid a monetary block, says economist, Fairfax Media, 25 May 2013
ends

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