It is New Zealand culture and politics that keeps us poor.
We despise profit seeking as selfish and destructive.
We admire rent seeking as noble and just.
We run down what prospers us. We whoop up what keeps us poor.
We have it back to front. That’s why we don’t prosper.
What could possibly be nobler than profit seeking? It means applying what we have to the best use possible to satisfy what other people want and are prepared to pay for. In everyday life it doesn’t get better than that.
Profit seeking is done without force. No one is compelled to buy. It’s your choice what to buy, or not buy, or whether to buy at all.
It’s your buying decisions that determine what business is up; and what business is down. It doesn’t get more democratic (“rule by the ‘simple” people”) than the free market.
Profit seeking enriches us all. The constant search for better and better ways to use resources increases productivity and boosts wages. It’s that increased productivity that boosts wages across the board, not unions nor labour laws.
Successful profit seekers make money by the truckload. But the money they make is but a sad fraction of the wealth they create.
Bill Gates’ billions pale in comparison to the wealth generated by his Microsoft software: software that’s in nearly every business, home and workplace in the prosperous world.
Or Google. Our eyes water at Larry Page and Sergey Brin’s mega billions but again their wealth is a very small fraction of the total wealth they created for us all. Just think how many times we use Google each day at work, at home, on the smart phone, and try to imagine your life without it.
Wealth doesn’t trickle down from profit seeking; it pours down in buckets.
To prosper, we need a culture and a politics that both admire and respect profit seeking, whether it be in property, farming, finance, retail or whatever.
Rent seeking is the opposite of profit seeking. It’s the seeking of favours, not from the “simple” people, but from government.
Rent seeking doesn’t create wealth, it just shuffles it around. One person’s gain is always another’s loss. Any gain that government handouts must first be taken from someone else.
Worse, resources get chewed up rent seeking. People spend time and money lobbying both to seek rent – and to defend it. Rent seeking doesn’t just redistribute wealth; it destroys it.
It’s rational to rent seek wherever government has valuable resources up for grabs.
The Maori Council water claim at the Waitangi Tribunal is classic rent seeking. This is politics, not law. The claim would have no chance at common law. It relies on the Treaty of Waitangi Act passed in 1975 and the many amendments since. It’s entirely political.
So a great deal of energy, time and resources will be soaked up in a fight about who owns water. Some political deal will be hatched. And then the claims will flare up all over again over another valuable resource, and on and on it goes.
It’s entirely negative sum: no wealth is created but much is consumed in the process. What’s astonishing is that we allow such rent seeking to get dressed up as a noble fight for historical justice. Bollocks. It’s a greedy political fight for money without having to produce anything for it.
That’s the behaviour that keeps us all poor. It comes from government failing in its job of ensuring secure property rights. Property rights that had been secure for years are tossed up for grabs through legislation like the Treaty of Waitangi Act and the Resource Management Act.
To prosper our culture must respect profit seeking as the engine of prosperity and our politics must secure property rights, not forever toss them up in the air for political grabs.
Pictured top of article: Maori Party co-leader Pita Sharples with National leader John Key at the signing of the parties' confidence and supply accord.
This article is tagged with the following keywords. Find out more about MyNBR Tags
- Trump slams Amazon, again, wiping $US5b from its market cap
- Poll result: Should English stand down National’s Ohariu candidate?
- More questions emerge about Sam Ovens’ rags to riches story
- Labour tops $500K in post-Ardern donations, two big-note contributions revealed
- Rising wholesale power prices squeeze NZ producer margins in June quarter
Most listened to
- Craigs Investment Partners' Mark Lister discusses whether Fletcher Building can recover from its troubled year
- NBR's Jenny Ruth on the end of a fractious era for Abano
- Richard Dellabarca discusses a new investment framework for investment framework for the Seed Co-investment Fund
- Democracy means politicians give people what they want, not what they need. Rodney Hide thinks that's a shame.
- Bill Ralston on first debate moderator's Mike Hosking's bias, and broader bias in the media
- NBR Radio: best of the week ended August 11, with Grant Walker