Does government even work?
We were promised transformation and we got KiwiBuild, but that’s just one example of a deeper problem
Not long ago, the Minister of Housing, Megan Woods, posted a video proudly announcing that the Government’s Progressive Home Ownership Scheme had housed a grand total of 12 families. While this is great news for those families, it’s somewhat underwhelming on the face of it. After all, the scheme was started in July last year with $45 million, after being announced in 2019, and first promised in 2017. That’s a slow train coming, so slow that it made me wonder: does Government even work?
We often turn to the Government to solve our problems, but it’s not always obvious that Government has the answers. Housing is a good example, and not only because of Woods’ announcement. KiwiBuild was massively hyped in the lead-up to the 2017 election as the solution to our housing woes, but quickly became a by-word for policy failure; a journalist last year reported that, “The Government's former flagship housing policy is so far behind schedule it will take more than 400 years to reach its initial target of 100,000 homes.” And despite years of jawboning and handwringing, house price inflation continues at heroic levels and fewer and fewer young adults can get on the housing ladder.
Source: Stats NZ, “Housing in Aotearoa: 2020,” (Wellington: 2020)
Nor is housing the only example. For as long as I can remember—and I first became interested in policy and politics nearly 20 years ago—governments of all persuasions have made solemn pronouncements about the need to improve New Zealand’s anaemic productivity growth. Despite this, the Productivity Commission recently described our economy as being “like a car stuck in first gear.” And this is the case even though, to quote a 2020 briefing from the Ministry of Business, Innovation, and Employment, “The causes of New Zealand’s poor productivity performance are well understood.”
Then there’s education. Take this quote from a New Zealand Initiative report:
“Despite a 32% real rise in spending per pupil since 2001, all major international assessments of pupil performance – PISA, PIRLS and TIMMS – have charted New Zealand’s decline to educational mediocrity.”
For example, here’s their graph of PISA results in maths for 15 year olds:
Source: B. Lipson, New Zealand’s Education Delusion: How bad ideas ruined a once world-leading school system (Wellington: New Zealand Initiative, 2020)
At the same time, successive governments have invested heavily in modern or innovative learning environments, despite question-marks over their effectiveness, provoking one academic to ask, “Was it really the furniture that created New Zealand’s long tail of educational under-achievement in the first place?”
I won’t go on and multiply examples, because it’s probably time to confess that the libertarian-flavoured headline question is somewhat tongue-in-cheek, for three main reasons. First, government does many important and valuable things, from creating public goods like roads, to policing to keep us safe, and propping up a pandemic-stricken economy. No-one but government can do these jobs safely and effectively. Second, it’s always possible that things would have been worse in any of the examples I’ve given if it weren’t for the Government’s intervention. Policy may be playing an important role in preventing an even steeper decline in the face of larger forces. Third, the kinds of problems that government tries to solve are often what are called “wicked” problems—complex, contradictory, with multiple causal factors. There are no simple answers to these problems—for example, the effects of pre-natal ‘P’ on babies in the womb are difficult to reverse when those children enter school, no matter how enlightened or evidence-based your education policies.
But the headline isn’t entirely meant as a joke, because the examples remind us that there are real limits to what Government can achieve. Some of those limits might be self-imposed, like being in thrall to an ideology that says “progressive” classrooms are better than “traditional” ones. But many limits are at least partially out of the Government’s control, like whether voters are actually willing to back their preferred solution, or completely out of their control, like whether there’s a global pandemic that crushes economic growth. But the fact that much is beyond the Government’s control is the rule, not the exception, and that fact should always temper Government ambition and voter credulity when promises are being made.
Even more fundamentally, society is by its very nature diverse and complex, and the state is one actor among many. Even non-wicked social problems are by no means easy to solve, and even more to the point, the government may not even be the right institution to try and solve them. For example, entrepreneurial energy, the kind that might catalyse productivity growth, is typically not dispensed by government programmes. These points aren’t meant as a critique of any particular government—in fact, they point to a truth about government as an institution, beyond the vagaries of political cycles and political leanings.
So in a day and age when Government promises us “transformation” but gives us KiwiBuild, it can be a good thing to cultivate a bit of healthy scepticism about what the state can do for us. Not only might that protect us from false hope and wasting resources, it might mean we start casting around for other, better solutions to some of our problems. Who knows; that little bit of scepticism might just be transformative.