Given the political acrimony in America today, anyone can be forgiven if they fantasize about fleeing to an island paradise where their preferred philosophical version of government is in place. Increasingly, for free market advocates, New Zealand is looking like that paradise.
Dan Mitchell writes that New Zealand’s free market reforms deserve praise, and that its reforms are the unsung success story of the world.
Dan continues:
But just in case you don’t have a spare hour to watch the full video, I can tell you that it explains how New Zealand made a radical shift to free markets in key areas such as agriculture, trade, fisheries, and industry.
I wrote about New Zealand’s shift to a property rights-based fisheries system, which is a remarkable success. But I’m even more impressed that the country, which has a very significant agricultural sector, decided to eliminate all subsidies. I fantasize about similar reforms in the United States.
To give you an idea of New Zealand’s overall deregulatory success, it is now ranked first in the World Bank’s Doing Business.
As a fiscal policy wonk, my one complaint is that the video doesn’t give much attention to tax and budget policy.
Which is an unfortunate oversight because there’s a very positive story to tell. In the early 1990s, the government basically imposed a nominal spending freeze. And during that five-year period, the burden of government spending fell by more than 10-percentage points of GDP.
And because policy makers dealt with the underlying disease of too much spending, that also meant eliminating the symptom of red ink. In other words, a big deficit became a big surplus.
The same thing also has been happening this decade. Outlays have been increasing by an average of less than 2 percent annually. And because this complies with my Golden Rule, that means a shrinking burden of spending.
Read more from Dan here.
