29 April 1996 Ten roads to Arcadia

Social comment unsupported by scientific methodology does a disservice to the public, says a top New Zealand plant scientist who is "fed up" with sweeping and unsubstantiated claims by self-appointed gurus and "instant experts".

Dr David Jackson of Christchurch, a past winner of Lincoln University's prestigious Bledisloe Medal for outstanding contributions to New Zealand primary industry and a pioneer of cool climate grape growing in New Zealand, says the scientific principle of an even-handed approach to evidence is breached daily by social commentators.

"The public is served a constant diet of invalid conclusions dressed up as 'facts', something scientists would be absolutely pilloried for.

"The hallmarks of genuine enquiry – the cautious sifting of evidence and its subjection to rigorous statistical and other analysis – are hardly ever to be seen.

"Last year, for example, Paul Johnson, hailed as a ‘distinguished English journalist and historian’ claimed that 10 years ago in New Zealand a Labour minister of genius (Roger Douglas) induced a fundamental change of heart in the country which brought about a modern Arcadia.

"In similar vein, economist Michael Carter, asked in an article in The Press, 'Who would want to go back to New Zealand the way it was, and argued that economic reform had rescued us from dull, grey backwardness.'

"Both these commentators, like so many others, itemised the negative aspects of the past and the positive aspects of the present and came to the not-surprising conclusion that we have made remarkable progress – progress originally initiated by the reforms of Roger Douglas and his Labour Government colleagues.

"Now the reforms may in fact have led us to some sort of Arcadia but, as even a third-rate scientist will point out, arguments such as Johnson's and Carter's go no way to proving the case.

"Why not? Because they show one side only and omit opposing evidence!

"To illustrate the point, let's take 10 popular arguments culled from the above writers and others and see how they stack up against some simple statements and questions."

1) "We have put into place structural changes that will ensure the economic recovery is soundly based and permanent!" But have we, and if we have, how do we know? From the early 1940s to the mid-seventies we had a period of almost zero unemployment and general prosperity which covered a time span of about 35 years. This was as structurally sound as we are likely to get in any economic era. Our current "economic recovery" goes nowhere near to achieving such success and that it could last as long is pure conjecture.

2) "We cannot go back to the past, we cannot be economic dinosaurs!" But why not? In fact the economic system we are now promoting dates from Adam Smith, David Ricardo and other 18/19 Century economists. Keynes and others persuaded us to move away from this philosophy in the years before the Second World War. So which system should we not go back to to prove we are not dinosaurs?

3) "The economic recovery has been a long time coming, but it is now with us and because of essential structural changes we can look forward to greater and sustained prosperity." This is in fact pure speculation. We have been on an economic down-swing for a long time and inevitably down-swings reverse. We have simply no evidence that the reversal was due to current policies or that it will indeed be sustained.

4) "Deregulation has freed up so many things which have benefitted industry and the population at large." While not denying that many of these are welcome, we cannot be sure that they would not have occurred under a more socialistic regime. Some casinos, for instance, are, it might be thought, of dubious merit.

5) "Exchange and import controls were stifling initiative and preventing efficiency in industry." This may or not be the case, but we have to remember why they were introduced which was to reduce overseas debt and stop us living beyond our means. Controls prevented cheap imports from flooding the country and preserved our record of full employment. It seemed to work and before we conclude that it was bad for NZ, we have to ask ourselves whether the present conditions are any better. I suspect that, particularly for the poor, this would be difficult to substantiate.

6) "Subsidies were distorting the market and providing false messages for farmers and others." Once again it is necessary to remind ourselves why subsidies were introduced. Essentially they were to even out fluctuations in the market so that farmers did not go through cycles of boom and bust. This evening-out process prevented too many going broke through no fault of their own and preserved long-term profitability and employment. The fact that, under Muldoon, subsidies got rather out of control, does not mean the principle is wrong or inappropriate; in many cases they did the job they were supposed to do. The evidence against the concept of subsidies is not clear-cut or even convincing.

7) "Many Government enterprises were inefficient and needed overhaul; privatisation or accountability for State-Owned Enterprises has increased efficiency." The first assertion may have some truth. But to say that the present reforms alone have been responsible for improvement is not possible since we do not know what a more socialistic regime would have done over the last few years. Many, myself included, have found a massive decrease in efficiency in many Government and State-Owned Enterprises.

8) "Asset sales have reduced debt and help to reduce taxes." Certainly asset sales have reduced some of our debt and theoretically the sale of some non-productive assets might reduce taxes. Once again we need to remind ourselves why Government did originally take control of certain activities. Basically it was to provide a service which could not be guaranteed by private enterprise. The old Post Office gave us a service which has not been adequately replaced in its restructured form(s); the old Broadcasting Service was just that, a service which intelligently provided programmes for all tastes at a reasonable cost. Evidence for public benefit from asset sales is, we have to say, unproven.

9) "Deregulation provides incentives to undertake such things as the gaining of the Americas cup." We must not belittle the efforts of those who strove to win the cup, and we can be sure that its defence will bring many dollars to the country. But we cannot be sure that the cup would not have been won in a less market-driven economy and we must not over-rate its importance for our national psyche. As a New Zealander I would feel greater pride in having a reasonably egalitarian, lawful and poverty-free society than winning the Americas cup, the World cup or any such prestigious sporting event.

10) "Socialism is dead and we would be crazy to attempt to resurrect it." Socialism is best thought of as a tendency to use the State for the benefit of the community at large. Most democracies have a mixed economy, which is strong and resilient and is a much better option than either a pure capitalist or a pure socialist state. Thus in the sixties we were not socialists in New Zealand but our economy and our politics was somewhat more left leaning or socialistic than it is at the moment. No one has, to my knowledge, shown in reasoned argument that such a situation is intrinsically inferior to a more right-leaning economy.

We can see that for each point supporting the current more-market economy, counter arguments or assertions can quite easily be found which make us question their veracity. This is the beginning of scientific enquiry.

The nature of economics and politics make the assembly of hard facts difficult, but this does not preclude us from considering all sides of the issue and making reasoned judgement based on the information available. Lack of hard facts is no excuse for biased and one-sided statements.

The hidden joys of socialism.

Having questioned the arguments that the modern economic approach has the positive benefits that are often claimed, let’s consider ten arguments which could be used to suggest that the approach used in the more socialistic 1960s created a better society for New Zealanders than the market-driven, deregulated 1990s. As a scientist I will not say that they prove they were better but that they must be seriously considered before we can make a decision whether to continue down the economic road we are currently treading.

1) In 1965 the registered unemployed was 0.1% of the work force, in 1995 it was at least sixty times as high. With facts such as these it is difficult to argue that present policies are succeeding.

2) We once took pride in NZ as an egalitarian society. Now, of the OECD nations, NZ and UK have the dubious honour of being the two countries where the gap between rich and poor is increasing the most.

3) Poverty was very prevalent in the years preceding the Second World War, but it almost disappeared from 1940 to the 1970s only to return in the late seventies and continue until the present day. Can it be coincidence that this change occurred simultaneously with the promotion of a market-led economy? That there could be a causal link must be very seriously considered.

4) New Zealand had a health service which ensured that all who needed it had access to appropriate health care. Now in the 1990s many parents cannot afford medical care for themselves and their children and many old and infirm are inadequately cared for. Health professionals seem to be generally dissatisfied at reforms which have been instituted, reforms which reflect the current market philosophy.

5) Education has been reorganised and key decisions are being taken by amateurs rather than professionals. Schools in rich areas are advantaged, those in poor districts disadvantaged. Teachers complain at the enormous amount of paper work which seems to have priority over teaching. Many are leaving the profession.

6) The TV service which was commendable for a small country has been trivialised with the advent of competition. Commercials which ran only three or four nights a week are now on every night, the interruptions are unacceptably prolonged and, in addition, announcers tell us incessantly of the programmes ahead. Much NZ content, including the news and current affairs, are embarrassingly bad.

7) Despite some belated recognition of Maori issues, race relations have deteriorated, Maori and Pacific Islanders have suffered disproportionally in the economic downturn.

8) Crime levels hit new records each year. The days when people did not lock their doors and women could walk the streets in safety have long since gone.

9) New Zealand has sold so many of its assets that it is difficult to know if we still own the country. Even if in some cases asset sales have been sensible it has happened mostly without debate and, generally, without the approval of the public.

10) Despite the much-heralded economic recovery it has done little for the disadvantaged. Indeed it is not a recovery but a partial return to the greater prosperity in the days when we were not afraid to be mildly socialistic.

In conclusion I believe I have shown that counter arguments to the idea that current economic management is superior are not difficult to find. Neither is it difficult to support the proposition that New Zealand in the 1960s was a better place to live than it is in the 1990s. I am not arguing that this proves the current methods are wrong or the old ideas were superior, but it is vitally important to present these arguments which, if my assessment is correct, are less commonly heard than those supporting present economic philosophy. The scientific method demands we are unbiased in consideration of evidence, and it is not unreasonable to expect that a similar approach be adopted when considering issues as important as politics and the economy.