NZ reforms

If it had not been for Lord of the Rings being filmed there, some of us would not know anything about New Zealand. Go here to see the natural diversity of this beautiful island-nation.

 Around the time that they were ending farm subsidies (Monday's and Tuesday's posts), they were making other really significant reforms.

The Dept. of Transportation had 5,600 employees,  which they shrunk down to 53 employees. The same thing was done to 35 agencies. Those agencies cost New Zealanders $l billion before the reforms, but after the reforms they made about a billion in revenues and taxes.

There were lots of reforms and they resulted in more prosperity and more freedom for those kiwis. Go here to find out how they did it.

Subsidies cut

(cont'd from yesterday's post)

It was a shock when New Zealand suddenly stopped giving subsidies to farmers for growing what the experts told them to. They knew it would be hard on farmers to adjust to a more free economy, and it really was.

But only 1% of farmers took the government's offer of an "exit grant," two-thirds of their former farm income if they wanted to give up on farming.

“Having been through pain, we can say going cold turkey was the right thing—although frankly I don’t think any other country would do that and I wouldn’t expect them to either, because the social pain would be too much to bear,” says an official. 

“But here, we’ve developed a newfound sense of resourcefulness that has encouraged farmers to look after their own interests. For many farmers, I think they underestimate just how good they are, just how successful they can be without government support.”

They don't claim to know that this can work for every nation, but the Federated Farmers of New Zealand says “In our experience, farmers do not want subsidies back. Most farmers want government out of their lives and do not want to be beholden to it.”

Subsidy gone

New Zealand's government used to subsidize farm production. That is, it paid farmers to grow what the government wanted them to grow. A subsidy is money or financial favor. In the 1980's, subsidies were discontinued. Farmers would have to make their own decisions.

There have been good results:  "Since the reforms, New Zealand farmers have cut costs, diversified their land use, and developed new products," like 2200 dairy products compared to the 35 they used to produce.

  

photo: radionz.co.nz

But there is a bad result. Certain bureaucrats (the ones who used to tell farmers what to grow and how much they would be paid) have lost their jobs. They will have to get a new job, maybe making something that people want. So the government overall has lost some power over the people, who are now more free to create and innovate.

 Wait . . that's a good result.

(cont'd tomorrow)