Academic journal article The American Journal of Economics and Sociology

New Zealand

Academic journal article The American Journal of Economics and Sociology

New Zealand

Article excerpt

ROBERT D. KEALL [*]

NEW ZEALAND IS a "small country at the world's end," [1] its closest significant neighbor being Australia, more than a thousand miles distant. Its population of over 3.5 million mainly occupies two narrow islands with a combined area somewhat larger than Great Britain, lying diagonally in the South Pacific roughly midway between the Tropic of Capricorn and the Antarctic Circle.

For scenic beauty and variety, the nation has few if any rivals. In the north, lush, semi-tropical vegetation and thermal geysers may be found; in the south, alps, glaciers, fjords, lakes, forests, and rolling heathland; while attractive cities grace both islands. Because they are narrow, the sea is never far away.

Its fertile soil and temperate climate make the land eminently suitable for agricultural and pastoral pursuits, but, although the chief source of export earnings, they employ only about ten percent of the workforce; this may be attributed both to advanced technology (including mechanization) and to the fact that pastoral production, by its very nature, has never been labor-intensive.

Most New Zealanders are descended from settlers from the British Isles who came after 1850, seeking greater opportunity. Between 10 and 12 percent are of Maori extraction. The Maoris are a Polynesian people who arrived a few centuries before the Europeans. Never conquered, in 1840 their chiefs signed the Treaty of Waitangi, acknowledging Queen Victoria as ruler. New Zealand became a self-governing colony of Britain in 1852, and was granted dominion status within the empire in 1907. It is now an independent Commonwealth nation, recognizing the British monarch, represented by a governor general, as chief of state. It has a unicameral parliamentary government, headed by a prime minister.

Historically, New Zealand was long known for its advanced social legislation. It pioneered female suffrage, and was among the first countries to adopt social security, old age pensions, and universal health care. A measure of land-value taxation was introduced even before the publication of Henry George's Progress and Poverty in 1879.

As has been noted, New Zealand's export production provides jobs for only about 10 percent of its workforce, yet full employment has long been an overriding political goal. In seeking to achieve this goal, successive governments up until the mid-1980s subsidized inefficient industries, restricted imports, and maintained a vast corps of public servants. They also progressively increased expenditure on welfare. These policies, together with compulsory union membership and mandatory arbitration of labor-management disputes, helped to insulate the economy from market discipline, and kept wages artificially high. All this was accompanied by a degree of state regulation "unparalleled in most other Western economies." [2] The mix of inefficient subsidized enterprises, non-market-oriented capital investment, union monopoly, cumbersome over-regulation, and a "safety net" so high as to discourage initiative for work and training, helped to produce an ill-prepared, poorly motivated labor force and a low rate of per cap ita economic output. [3]

For some three decades after World War II, this program, initiated by Labour but continued and expanded by the National (Conservative) Muldoon government, seemed to work: New Zealand enjoyed one of the highest living standards on earth. As long as tax revenue from exports fueled government spending, the illusion of prosperity could be sustained. But eventually, with the development of synthetic fibers to compete with wool, the rise of West Germany and Japan as economic superpowers, the erection of European Common Market barriers against New Zealand exports followed by Britain's decision to join the Common Market, the oil shocks of 1973 and 1979, etc., the terms of trade turned against New Zealand. For a while, the government was able to stave off the inevitable by overseas borrowing, but only for a while. …

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