There is no magical growth formula

A common theme in the economics and policy blogosphere is that almost every blogger has their own story about which policy settings will produce a magical elixir of economic growth without corresponding trade-offs attached.

The recent passing of Lee Kuan Yew, founder of Singapore, should give pause to those who think that democracy and human rights matter when it comes to economic growth. Hint – they don’t matter nearly as much as many bleeding heart types think they do. They might be helpful, but capitalism cares about profit maximisation not avoiding micro-aggressions.

This means that when attempting to copy-and-paste the policy settings that have worked for unique groups of people and firms in unique geo-political circumstances, you run into a brick wall because you are unlikely to capture all of the bits of specialised knowledge that exist several network nodes away from policy analysts and commentators.

There is no magical growth formula. Based on New Zealand’s policy settings, we should conceivably be leading the world in economic growth. But we’re not, and our current economic performance is due more to population growth and the Christchurch earthquake recovery than some sort of inherent South Pacific economic machine that only turns on when right wing governments rule.

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