In this timely Guest Post, Peter Osborne questions the conventional wisdom that “the gummint” must rebuild Christchurch, and suggests instead it remove its shackles that restrain New Zealanders rebuilding themselves. It involves something sometimes called an Enterprise Zone . . .
Thought is already being given to the recovery of Christchurch, and the repercussions that this disaster will have on the New Zealand economy.
The direction taken now will set the tone for generations to come. Rather than proceed with the standard taxpayer bailout for Christchurch, we should pause and question whether this is efficient or even effective.
Rather than provide an adrenalin shot, bailouts have proven to be expensive placebos.
The situation with Christchurch has thrown us all into a higher level of vulnerability. Even before the earthquake, New Zealand industry had slowed and looked to be settling into stagnation. We were already feeling the pressure of higher costs across the board, and with events in the Middle East rising fuel prices will compound our problems.
New Zealanders can ill afford increasing taxes or forced levies to help its second biggest city back on its feet, as if it were just another welfare case. Such a drain of individual resources would finish us off as a first world nation, and deny the industry and expertise contained and presently lying shackled within the city itself.
The Prime Minister has already hinted how “the government” is going to inject some financial life into Christchurch’s recovery. However, in actuality, this makes it a taxpayer-sponsored injection—taking money from one group trying to build their own economic recovery to sacrifice to another trying to build an earthquake recovery.
It is a recipe for long-term and possibly permanent stagnation. It is also quite possible that many New Zealanders will regret having being so generous in voluntarily donating money and resources in the last few days, when the government will force them to pay again further down the road.
If we factor in the reality that Christchurch is already experiencing an exodus, be it more from trauma than economic strife, the struggle for recovery is compounded.
It is my opinion that for the good of Christchurch and New Zealand, our government must readdress their thinking on state-mandated economic “stimulus.” It has already failed everywhere it has been tried, and with the unique problems that Christchurch faces not only will it fail again there but it will take the rest of New Zealand with it.
If we are to make the best of a bad situation I can only see that government take a massive rethink and consider that neither rebuilding nor recovery requires any sacrifices from anybody. What that requires is that government reconfigure itself more into a moral boosting and motivating force only.
As we have already seen, when put to the test, New Zealanders are very resourceful and are very quick to help when others are suffering. In the long term, this is our chance to shine. We do not need our government to shine at our expense.
Rather than simply expanding the machinery of wealth redistribution to another round of “soak the rich,” and rather than expanding and raising again all the existing hurdles to growth and economic progress, I say it would be far better to remove hurdles altogether, and allow wealth to transfer freely and voluntarily.
What I’m talking about is making Christchurch an Enterprise Zone instead of a ward of the state.
- Christchurch must attract resources. Grant Christchurch a complete 3-year tax-free status, to be extended at discretion. Do this and the problem of attracting resources will disappear. The object is to change our view away from a coercive patch job to a freewheeling environment of entrepreneurial opportunity.
- Christchurch must have thousands of new and rebuilt homes. Our government should make immediate steps to remove the bureaucratic hurdles that have stifled growth and rebuilding, and made building affordable houses completely unaffordable. This includes the existing regulatory system of permits and inspections.
Let those who own their own property determine between them and their insurance company what they wish their building standards to be. Such a system can be set up very quickly as it already exists in reports.
Building is productive. Letting things lie idle while waiting for permission from people who have no genuine interest is not.
- Cantabrians don’t needs the grey ones breathing down their backs. Make Christchurch an ETS and RMA free zone.
- Cantabrians don’t need to be told where and how they will rebuild their city—they don’t need another centrally-planed “worker’s paradise.” Bus town planners out of Christchurch permanently and allow the city to reinvent itself spontaneously. This would be a wonder to see.
- Cantabrians don’t need barriers to employment. Remove the minimum wage. In a situation like Christchurch’s it is better to be earning something than nothing at all. And it is better to be achieving something with the diminished resources available than achieving nothing at all.
We must trust that consenting adults can come to their own voluntary financial agreements.
We have two polar directions in which to take things from here: either central planning, or the unleashing of “spontaneous order.” I fear however that vested interests will instead prevail and take us down a road to third world status. For all concerned this would be a grievous mistake for which all New Zealanders will pay dearly now, as will generations that follow.
After every tragedy our preconceptions about human nature are re-evaluated. We realise the benevolence and strength of the average human being—and we’ve seen the power of voluntary cooperation even in the face of disaster, and of overbearing authority.
If the disaster experienced by Christchurch has bought out the reality of the average Kiwi, then we have already begun moving forward.
PS: What Peter is talking about in essence is this: Instead of impoverishing New Zealanders by rebuilding Christchurch from the top down in the image of the central planners (Galt forbid!), let’s unleash the power of spontaneous order and produce a new city the likes of which no-one presently thinks possible. The sort of spontaneous order John Stossel talks about here: