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The 'Freedom' Word In New Zealand

WORLD FREEDOM SUMMIT
THE 'FREEDOM' WORD IN NEW ZEALAND
ROGER KERR
EXECUTIVE DIRECTOR ROTORUA

NEW ZEALAND BUSINESS ROUNDTABLE 23 JULY 2004

THE 'FREEDOM' WORD IN NEW ZEALAND

In a speech to a conference in early 2000, Sir Ronald Trotter, the first chairman of the New Zealand Business Roundtable in its current form, said something that struck me as interesting. Commenting on political speeches marking the new millennium, Sir Ron reflected:

The main theme of President Clinton’s millennium address was that “The sun will always rise on America as long as each new generation lights the fire of freedom”. Any US president would have said the same thing. By contrast the word ‘freedom’ did not feature in Helen Clark’s millennium address. The prime minister spoke of poverty, equality, security, identity, justice, fair play and the environment, all of which I can relate to. But never once did she speak of freedom. I suspect that the value of freedom might also have been overlooked if Jenny Shipley had been giving the address.

This is curious. Arguably freedom is the highest human value. We all abhor slavery. We understand the evil and horror of totalitarian regimes. Yet National Party prime minister Sid Holland told a reporter in the 1950s, “The hardest thing to sell in this country is freedom”.

Why is this? Freedom does seem to be valued more highly in the United States than elsewhere. Why do appeals to freedom resonate with Americans whereas in New Zealand and Australia most of our politicians, like European ones, hardly ever refer to it? The question is germane if it throws some light on what makes America, despite its flaws, such a successful society.

So I propose to explore the use of the ‘freedom’ word in political discourse, and attitudes to freedom more generally, in New Zealand and in countries we relate to. I will give my best shot at answering the questions I posed, but I don’t believe I know all the answers. I would welcome additional insights.

First, I should note that the significance of different attachments to freedom should be kept in perspective. The value Americans place on individual freedom has not prevented the federal government from expanding far beyond the scope envisaged in the US constitution. Government consumes at least a third of the national income, and while Americans’ tax tolerance is low, they have come to view Social Security and Medicare as ‘entitlements’, that is, things to which they have property rights. There is a good deal of linguistic inflation in American political rhetoric about freedom. As President Reagan told the students at Moscow State University, “We Americans make no secret of our belief in freedom. In fact, it’s something of a national pastime”. Also, and somewhat confusingly, those in America who prefer more rather than less government intervention are conventionally described as ‘liberals’.

Conversely, since the 1990s New Zealand has ranked high for economic freedom, even though this does not necessarily impress many New Zealanders. Even Roger Douglas tended to justify his reform policies in terms of traditional Labour values like opposition to privilege. Rhetoric is not an infallible guide to political reality.

The comparison between the United States on the one hand, and New Zealand and Australia on the other, is the more intriguing in that all three are countries of new settlement that share a common mother country. But they were founded in widely different circumstances, which helps explain contrasting political rhetoric. In the United States, the first English settlers were Puritans in search of religious freedom. In the eighteenth century, the American colonists won their independence by force of arms, inspired by ideas about representation and limited government in the work of John Locke. When they formed their own federal government they were influenced by a strong ‘separation of powers’ reading of the English constitution set out in Montesquieu’s Spirit of the Laws. In the nineteenth century, the opening of the West occurred with minimal government involvement, and the spirit of freedom was maintained by the immigration drive of the late nineteenth and early twentieth centuries, when many immigrants were fleeing not just poverty but repression and discrimination too. Jewish immigration was perhaps especially important in this context, as it was to be again in the 1930s.

The free settlers of Australia and New Zealand, in contrast, were not consciously turning their backs on the home country. When independence came it was legislated for them by Westminster, and the sense of separation was greatly mitigated by membership of the British Empire. Nevertheless, many of the settlers were seeking freedom from aspects of life in Britain, notably the frustrations of the class system.

There were many indications that in the decades after European settlement New Zealanders valued freedom and independence from the state. Our national anthem speaks about “freedom’s ramparts on the sea” and defending “our free land”. Investigating nineteenth century welfare arrangements in Welfare Before the State, David Thomson found an ethic of self-reliance that was even stronger than in Britain, with civil society and land ownership, rather than the state, being the main means of supporting those in need. New Zealanders responded quickly to threats to freedom around the world, joining forces with Australia and Britain in World War I and other theatres. Maori were heavily involved in these enterprises.

And even if New Zealand’s attachment to freedom was not as entrenched as in the United States, the progressive moves away from limited government – which is the prerequisite for individual freedom – in that country can be traced back a long way. In a famous passage in Democracy in America, Alexis de Tocqueville recognised that government is always the greatest threat to liberty:

After having … successively taken each member of the community in its powerful grasp and fashioned him at will, the supreme power then extends its arm over the whole community. It covers the surface of society with a network of small complicated rules, minute and uniform, through which the most original minds and the most energetic characters cannot penetrate, to rise above the crowd. The will of man is not shattered, but softened, bent, and guided; men are seldom forced by it to act, but they are constantly restrained from acting. Such a power does not destroy, but it prevents existence; it does not tyrannize, but it compresses, enervates, extinguishes, and stupefies a people, till each nation is reduced to nothing better than a flock of timid and industrious animals, of which the government is the shepherd.

It has often struck me that de Tocqueville’s reference to sheep is an accurate metaphor for our experience. New Zealand never lurched into full-blown socialism with its attendant loss of freedoms. We never had a serious communist party – a contrast even with Australia. Yet by the early twentieth century, as another Frenchman, André Siegfried, observed on a visit to the country, New Zealand was deeply into “socialism without doctrines”.

The best account of New Zealand’s moves away from the attachment to freedom and independence of the early settlers is Michael Bassett’s The State in New Zealand – 1840-1984. Bassett describes what might be called the growth of pragmatic socialism which, like poison ivy, extended its tendrils into virtually every nook and cranny of New Zealand life.

Initially, this took the form of opening up the country, with state involvement in such things as roading, railways and electricity. By the turn of the twentieth century, when collectivist ideas had gained considerable currency in the English-speaking world, New Zealand was adopting features of Bismarck Germany’s industrial relations and social security arrangements. Bassett goes on to document how the state became such an active and interventionist player in New Zealand life, subsidising industries and regulating the economy and protecting citizens from the cradle to the grave. At the time of his visit in 1934, George Bernard Shaw was delighted to observe:

The extraordinary thing is that New Zealand, which is leading the rest of the world in Communism, does not know it is Communist.

It didn’t much matter what political party was office. When it was formed, the National Party saw itself as “offering the only alternative to Socialism and Communism”, and standing for “the freedom and independence of the individual” and “private enterprise”. Yet despite brief episodes of deregulation in the 1950s and 1960s, National governments generally added to the maze of controls and interventions. A 1974 speech by a one-time National prime minister, Jack Marshall, regarded as a liberal within the party, epitomises its utter confusion. Variants of the words ‘freedom’ and ‘liberty’ appear no fewer than 32 times in a 7-page statement, yet Marshall ends up saying:

Over the whole field of national development we favour the concept of indicative planning, with the state providing targets, guidelines and incentives.

For many, the high point of National Party interventionism was the action of Marshall’s successor as prime minister, Robert Muldoon, in ordering a party of deaf mute Japanese climbers off Mt Cook out of concern for their safety.

By 1984, the tide of paternalism, welfarism and interventionism had run its course. The government elected in that year had to move in the direction of much greater economic freedom in order to rescue a barely functioning economy.

New Zealand’s post-1984 economic liberalisation is well known. This is not the place to discuss the strengths and weaknesses of the programme. Suffice it to say that it was far from perfect, but the bottom line is that today we have a much more efficient and resilient economy that continues to perform well.

But for my present purposes, I want to bring out a little noticed feature of the programme. Most of the rhetoric used to defend it was based around economic imperatives: promoting stability, better resource allocation, efficiency, flexibility and so forth. As noted, Roger Douglas also spoke about removing privileges. But even though economic freedoms were being greatly expanded, politicians seldom appealed to the general notion of freedom to make their case.

Former senior OECD official David Henderson was the first to alert me to the wider linkages. Some years ago he pointed out that while economic freedom was indeed a means to greater prosperity, the lack of it could also have effects on people’s lives that were not very different from political repression. An example was freedom to travel. The Soviet Union severely curtailed by direct means the rights of its citizens to travel abroad. But when countries like Britain and New Zealand applied tight exchange controls that limited funds for overseas travel, the net result was not all that different.

I suspect that direct personal experiences often account for many people’s changes of view about the world. This was the case for me when I was sent as a young diplomat to join the New Zealand mission in Brussels for the UK/EEC negotiations. My first discovery on setting up house was that I could ship furniture from Germany or Denmark without an import licence. Then I found that when I wanted to travel across a Belgian border in the weekend, all I had to do was change money at a bank or bureau de change. These freedoms were unthinkable in New Zealand at that time. You had to buy British postal notes to subscribe for British magazines, and to deal with the Reserve Bank if you wanted to buy Australian shares (no other foreign share trading was permissible). Not knowing much about economics in those days, I asked Max Bradford (who was then working for the International Monetary Fund and went on to be a cabinet minister) when he was staying with us one time whether New Zealand could ever abolish exchange controls. He explained that was just not possible. Fortunately, he was wrong; exchange controls were scrapped in 1984 and are unlikely to return.

David Henderson’s point is spelt out in a forthcoming book which the Business Roundtable is publishing. In it he writes:

It is wrong to contrast an economic system which provides for material wants and purchases with a social system which enables other and loftier goals to be fulfilled. It is not just for its contribution to material welfare that economic freedom is to be valued. The freedom of people and lawful associations of all kinds to spend their money and dispose of their property as they wish; to choose their lifestyles, occupations, lines of business and places of work; to trade and remit funds freely across political boundaries, and within them, to travel without restriction and choose where to live and operate; to decide how and where to invest their time and resources; to determine for themselves what products and services to produce and sell, and on what terms; and to enter without restriction into voluntary arrangements and contracts for mutual benefit – all these are means not only to higher consumption of goods and services but also to a fuller, more creative, more co-operative and more interactive life. The effect of economic freedom is precisely ‘to enrich human relationships and achieve individual and group aspirations’.

I talked about foreign exchange controls. Another economic measure that may greatly restrict freedom is taxation. The African-American economist Walter Williams has made the point that a working definition of slavery is that you work all year and you do not have the right to the property derived from your labour. On that basis, those New Zealanders who are taxed on their income at the top 39 percent rate and who pay GST at 12.5 percent when they spend it end up paying nearly half their income to the government: in Williams’ terms, they are half slave and half free. This is
not an argument against all taxes, but we should note their impact on personal freedom as well as the damage that high taxes do to economic growth.

It’s true that the worldwide economic liberalisation of the last 25 years was driven mainly by events (the failures of government intervention: catastrophic in the communist countries, disappointing in the west) rather than ideas or any great attachment to freedom as a value in its own right. Hence, the economic reform agenda is a pragmatic consensus shared by almost all serious political parties, not the manifestation of some ‘neoliberal’ ideology as the anti-capitalists would argue.

But what David Henderson’s insight brings out is that there are a range of policy improvements that can be justified not only on the grounds that they make the economy work better, or produce fairer outcomes, but that they expand personal freedoms as well. This should be counted as perhaps the most important point in their favour.

Politicians can make a number of other arguments about freedom that would be attractive to many people.

To begin with, an appeal to personal responsibility is not hard to make. We should not need the state to tell us how to behave. Another thing I learned in Belgium was that it has no minimum age limit for off-premise sales of alcohol, and the limit is 16 years for on-premise sales of beer and wine. As a rule young people in that country are socialised into drinking by their parents, and drinking behaviour is generally very civilised. Perhaps politicians don’t like talking of freedom because it is thought of as advocating selfish or irresponsible behaviour. But as the Belgium example indicates, personal responsibility can and must go hand in hand with freedom.

This ties in to the issue of morality. As government expands, people come to believe that our only moral obligation is to obey the law and that it’s morally acceptable to do anything the law does not explicitly forbid. Yet people are not really making moral choices if they merely submit to legal compulsion; indeed, in some circumstances (such as under repressive regimes) it can be morally right to disobey the law. Perhaps there is a need to talk more about civil society – a sphere in which people can be encouraged to make moral choices and to help others by voluntary effort, rather than being dictated in their choices and actions by the state. A civil society will allow people wide freedom of action, but will have a self-supporting system of social sanctions that encourage individual morality, applaud civic-minded initiatives and attach a degree of sanction to selfish behaviour.

The point that has to be made here is that freedom is not licence or the absence of all constraint. Freedom requires rules. It is certainly valid to define freedom in a technical sense as non-coercion or non-intervention – the freedom to do as you please provided you respect the like freedoms of others. But this definition by itself is no guide to the rules that should apply in a social order based on freedom.

In a sound legal system, assault, fraud, trespass and other coercive acts are forbidden. And they are forbidden by the common law – an absence of state regulation does not mean an absence of law. We have seen this confusion in securities markets in New Zealand. Given the body of law governing property, contracts and torts that has built up over centuries, it is wrong to think that not having heavy-handed statutory regulation ever meant that our markets were ‘Wild West’. Indeed, by replacing a system of private property rights by what is often a system of fundamentally arbitrary determinations, such regulation commonly undermines the normal rule of law.

It follows that the key battleground is over what rules should apply. People who believe that employers systematically exploit workers want to remove some common law legal rights – such as the freedom to contract at will – in order to save workers from exploitation. But as the Cambridge economist Joan Robinson once said on this point, the only thing worse than exploiting people is not exploiting them at all. Regrettably, the costs and risks created by modern labour laws sometimes mean just that outcome for marginal workers.

Much consumer regulation has nullified the personal responsibility associated with caveat emptor. People cannot be deprived of the freedom to make mistakes without generating many indirect and unintended consequences. Similarly, much safety regulation seeks to deny people choices relating to risk, yet there are inevitably trade-offs between risk and various forms of reward. We should not suppress these choices lightly: Patrick Henry did not say ‘Give me absolute safety or give me death’. In the passage I quoted, De Tocqueville foresaw with astonishing prescience the likely growth of government from what were then its tiny origins, and its propensity to turn a free and spirited people into stupefied animals.

Politicians also need to contest the neo-socialist strategy of confusing freedom with wealth. Money provides more options, but this does not mean that those with more money are more free. Enjoying welfare rights or so-called ‘positive freedoms’ is code for having more wealth or education or leisure – in sum, a richer life. But then why not dispense with the code and talk about these things in plain language rather then cryptically? A key problem with welfare rights is that they have to be coupled with obligations on others to provide them. Coercing people in the name of freedom is an oxymoron.

What is the outlook for freedom? It is true that political freedoms and respect for basic human rights are steadily spreading around the world. But despite the progress made in freeing up the economy in New Zealand in the 1980s and early 1990s, we have since seen complacency and backsliding, and the task of expanding the attachment to freedom and choice is still a massive one. The same is true of many other countries. With the exception of welfare reform in the United States in the 1990s, there has only been limited progress in generalising from the experience of economic reform to reform of health, education and welfare services. Spending on these services continues to increase – by massive amounts in this year’s New Zealand budget, putting even middle income people into the welfare category – yet improvements in health, education and welfare indicators are few and far between.

Experience suggests that welfare reform will come only as a result of disappointment with state welfare. This may be slow, partly because the success of economic reform makes it possible to mitigate and mask welfare state failure to some extent with ever-growing welfare spending, however inefficient and insidious to moral behaviour it is. But this can’t go on for ever, especially as the ageing of populations puts ever-rising pressure on the welfare state budget.

Around the world, interest is slowly gathering in extending ‘choice’ policies in response to the stubbornly mediocre performance of state education and health services and failures to improve public sector productivity. At the same time, there are many sources of resistance to the extension of choice. One line of argument is that people aren’t interested in choice: they just want higher public spending to provide better services. This opens up an opportunity to argue that the alternatives are bogus: only competition and choice can produce the high-quality services people want. This is clear from our experience of economic reform and the consequent better performance of our economies. Freedom and better social outcomes go hand in hand.

Milton Friedman once said that he would be willing to sacrifice quite a lot of prosperity if that were necessary to preserve the present level of freedom. But he recognised that most people valued freedom less than he did, and that freedom would survive only if it led to prosperity. I suspect that is true even for most Americans, despite their greater predilection for the rhetoric of freedom. Since people’s values don’t change quickly or in ways we can easily control (and liberals are opposed to brainwashing or social engineering anyway), we are unlikely to see much change in the trade-offs people make in their minds about freedom, fairness and prosperity. But we can talk confidently about freedom being a necessary condition of prosperity, in social services as in the economy generally. It is necessary to generalise from the latter to the former. As and when welfare state failure makes that more evident, people may come to value freedom more highly. And we can also point out that, more often than not, fairness goes hand in hand with freedom and prosperity as well, especially when conceived as fair opportunities not equal outcomes.

So while I agree with Friedman, I am cautiously optimistic that freedom can be elevated – or restored – to the status of a higher value in New Zealand politics. Too much public policy today is being determined on the basis of materialistic and technocratic assessments of costs and benefits by a growing army of so-called policy analysts. For these calculations the data are often unreliable, the methodology not robust and in some cases the job simply cannot be done. In its favour, the process is said to be non-ideological but this too is wrong – ideology and values inevitably underlie any such evaluations.

I think we should be more willing to say some things are good in and of themselves, and one such thing is freedom. The point was well made in the passage by David Henderson that I quoted earlier. It was also made in a recent pastoral letter by the Roman Catholic bishops of New York State which strongly supported choice in education. Empirical studies of school choice programmes have often, but not always, found evidence of benefits in terms of education achievement. But while the empirical evidence is useful to buttress the case, the bishops argued that the main argument for school choice is a moral one:

While a system of parental choice and school competition would have a positive effect in improving schools, this argument is beside the point. The purpose of a system of parental choice is to enable parents – all parents – to exercise their inherent right and responsibility to direct the upbringing and education of their children. Even if all schools were high performing, the rationale for a system of parental choice remains. The freedom to choose the education best suited for one’s children is a basic right of all parents, regardless of income.

I think the New York bishops are correct. Freedom is not the only human value but it is a paramount one. It is an end in itself, not just a means to an end (such as a more productive economy). Freedom requires limited government, which was lost in the ‘socialist century’ just passed. Politicians should not devalue the ‘freedom’ word by linguistic inflation, but nor should they choke at using it. I hope more in our political classes will rise to the challenge.

ENDS

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