Desperate. That's the word to describe Alan Bollard. I pointed out a few weeks ago how one control leads to another; how one element of government meddling leads to another, and then another, and then another. Bollard's recent behaviour and the reasons for it offers a model case study.
This morning's second recent intervention in the currency market in an effort to get the exchange rate down follows on from his desperate call over the weekend for a capital gains tax to get housing prices down, which follows his earlier intervention last week to get the exchange rate down, which followed his raising of interest rates the previous week which helped pump the exchange rate up ...
This is a desperate man. If people are worried about addictions, then this addiction to meddling and its escalation should be an object worthy of study. This escalation happens everywhere that markets are dislocated or hampered by controls. Those controls always breed new controls.
One control is introduced to 'correct' something that's making some legislator unhappy, following which economic imbalances occur; new controls are pretty quickly called for to try to correct them, following which more are introduced to correct the dislocations that occurred from those controls, and so on. Control follows control, as dislocation follows imbalance.
The history of government controls is like the story of the Emperor's New Clothes in reverse: New controls are added all the time in order to fix the problems caused by previous controls, but no one is listening to the little boy who is saying, "Why not just take off the controls altogether, and then you won't need to make up new ones."
The New Zealand history is no different to elsewhere.
Controls on land use and central bank control of the money were introduced to "stabilise" land use and to stabilise prices. They haven't, have they.
The controls on land use have seen land prices explode, and the price paid for housing has headed through the roof. Ever-increasing and ever-higher interest rates were introduced in an effort to squelch booming housing prices (and to strangle the rest of the economy). When that didn't work, we saw the mortgage levy proposed; we saw the de facto cartelisation of NZ's 'big five' banks; we saw a decree that more affordable homes be built ... all measures desperately calculated to fix the symptoms of exploding housing costs while ignoring the regulatory causes.
And now we're seeing ever more desperate measures proposed and taken to avoid the consequences of controls that shouldn't be there in the first place.
As I've asked before, things are spiralling out of control for reasons that are all too obvious, so why is no one listening to the little boy who is saying, "Why not just take off the controls altogether, and then you won't need to make up new ones?"
The Emperor is still naked. But he's getting more desperate every day.