NZ Inc: Good marketing, bad for society

By Matt Nolan 12/06/2013

Indeed, as Brennan McDonald states here (Update: and with more discussion here):

The phrase NZ Inc is so nauseating. Please stop using it. New Zealand is a collection of individuals, firms, government agencies, councils, charities, families, iwi and a whole lot of other fluid groups that change their composition and goals frequently.

Update:  Paul Walker also discusses here.

This comes back to this post I popped up about something Mai Chen wrote.

The lack of discussion of trade-offs, or comparisons of counterfactuals, is a perplexing feature of this sort of writing [eg NZ Inc] for an economist – and makes the statement mentioned above absolutely useless for policy analysis.

The phrase “NZ Inc” is marketing for businesses who can benefit from the government taking on risk for them.  Given that the government is linked to the taxpayer, it is the taxpayer taking on risk for them.

Now, all political parties have fallen for this trap, and I’ve spent far too many long hours arguing the point with them.  They will say “isn’t being aspirational a good in itself” and I say yes.  Then they say “shouldn’t we make aspirational policy” and I say, no that is stupid.

Sometimes I’ll be told we need “measurable goals”.  And by sometimes I mean someone tells me that at least once a week.  There is only “one goal” for “society” – meeting the social contract and maximising the “social good”.  Can you measure that, can any of us measure that?

We have elections, and we have plenty of clear measures of other types of outcomes, but the only way we can figure if we are “meeting that” is to honestly describe trade-offs between things and then have society vote (even though this is not perfect, given Arrow’s Impossibility Theorem).

This NZ Inc and measurable goals business INVOLVES presuming what we want.  Which just means it is vested interest groups passing off what is in their interest as in the “national good”.

Discussing, measuring, and debating trade-offs is hard!  But if we actually care about people in society we would actually do this.  And we would use a relatively broad principle for understanding it – such as the long-term benefit of the consumer, rather than the maximisation of some random indicator (like GDP, or export volumes) which just happens to coincide with the interests of the individual selling it to us ;)

Note:  People think I’m being pedantic with all this.  I am not, and if you think this point is a “pedantic point about policy” then I would suggest reading a bit more about normative economics – and how crazy complicated the “real world” actually is in terms of the trade-offs we face.  People that are trying to simplify it to sell their own policy aren’t always doing it out of the goodness of their heart … and even when they are, their experience blinds them to the impact these policies have on others.  True story.