Market-oriented social engineering.

The political Right regularly accuses the Left of engaging in social engineering. Be it pushing such unnatural constructs as union and civil rights, health awareness and environmental concerns, the Right claims that the Left is out to control how people behave and even think. For freedom-loving individualists, this is anathema.

Consider my surprise, then, when I saw the Prime Minister saying that one of the reasons for the $2000 dollar “kiwi-first” purchase option with loyalty premium for Mighty River Power shares was to “change the investment psychology” of New Zealanders. It seems Kiwis put money into real estate and bonds, but not the stock market. Mr. Key thinks that his countrymen and women should diversify their portfolios into stocks, and the asset sales option is one way of promoting that. After all, it is not really prudent to have too many eggs in one basket.

I can see his logic. As a money trader and speculator, stock manipulation comes natural to Mr. Key. Sell short, hold, think long…he has the field covered. And truth be told, in a market environment such as NZ’s, it may not be unreasonable to urge people to spread their savings around. Higher rates of savings are traditionally linked to higher standards of living and growth, so by market logic such a move is both collectively and individually optimal.

What I find notable is the PM’s admission that the Mighty River Power stock purchase proposal is a deliberate attempt to alter the way Kiwis think about investment. In other words, it is a social engineering project that proposes to transform the psychological disposition of Kiwis when looking at their investment options.

But if that is the intention, how is that different from campaigns to get people to stop smoking, not drink and drive, use public transport, practice safe sex, license and desex their pets or stop littering? Are these not all examples of what the Right claims is undue interference by government on the rights of individuals to freely choose how to live their lives? Even if one admits that the share purchase option is not compulsory and still a matter of free choice (as are some of the examples just mentioned), is not the intention of the National government and Mr. Key to engage in exactly the type of social engineering–to include psychological indoctrination–that the Right accuses the Left of championing for its nefarious totalitarian purposes? Mr. Key has admitted that there is a social engineering intent to the proposal, so how is that good when other social engineering experiments are considered by the political Right to be bad? Or are some types of social engineering more acceptable to freedom-loving market individualists than others?

If the latter is true, than even the Right has to admit that social engineering projects embarked upon by governments are not always contrary to the small-governance/more market/individual choice principles that ideologically underpin Right thought. And if that is the case, then how can social engineering experiments be totalitarian, collectivist and fundamentally anti-democratic at their core?

Pardon me if I see a little contradiction here…

13 thoughts on “Market-oriented social engineering.

  1. The difference is, of course, that Key’s “engineering” is merely using incentives, rather than the coercive power of the State.

  2. I think you’re confusing “Right”, “libertarian”, and “National party” thought. The Right are much more likely to drop their interest in individual freedoms when it suits them (e.g. if they’re likely to receive subsidies for investing in an asset, or if a party they happen to like is proposing a freedom-restriction) than are Libertarians. Libertarians are much more likely to see subsidies (but also state control of assets) as interfering with freedom, regardless of the personal benefit to such subsidies (or control of assets).

    On the other hand, the National party wants to sell state assets (for a variety of reasons, depending on who you’re listening to and when you’re listening to them). One of the major impediments to those sales has been voter-opposition to the possibility/likelihood of foreign ownership. National likely sees these subsidies as a cheap way to allay voters’ fears.

    The contradiction only exists if you characterize libertarians as Right-wing (an oversimplification) or National party voters/sympathizers as libertarians (which is highly unlikely).

  3. MacDr: I noted in the post that some of my examples were non-coercive or non-compulsory. It is the government intention that I am speaking to.

    James: I realize that the notion of “Right” is over-simplified here. I use it generically for two reasons: 1) because the small government/individualist belief system encapsulates a dominant strand of thought in Western democratic thinking; and 2) National uses the individualist/freedom/choice mantra when it suits it to do so.

  4. The actions and policies of government are always social-engineering. They cannot help but be so as they always change the way society operates. It’s always a question of if that social-engineering is acceptable to the populace. National and Act have managed to actually make rational decisions necessary to maintain our society (ie, efficient light bulbs) be viewed in a negative light and thus the social-engineering that they partake of is damaging to NZ.

  5. MacDoctor: “incentives”

    Didn’t you mean, bribery? Remember when Key said NZ has “a growth problem, not a debt problem” Then he scared us about NZ “borrowing $200m a week” yet saw fit to approve pork-barrel holiday highways with poor BCR’s.

    And Brian Gaynor has previously said the NZX is alredy skewed towards inward-looking ex-Govt monopolies more than other comparable sharemarkets. It’s garage inventors we need on the sharemarket, not state monopolies.

    If anything could be described as social engineering, it’d have to be the Govt’s Three D’s Strategy (Divert, Divide, Dehumanise). Case in point: Paula Bennett’s welfare policy (or lack of it)

    Making s**t up and frightening the public into dangerously illiberal measures is worse than plain-jane regulation – hell, it’s straight out of Orwell’s 1984. Crank it up to 11, and you get people like Anders Breivik.

    PS. To Pablo: Can you add me to the blogroll thanks?

  6. Draco:

    I have to disagree with your comment that actions of government are “always” social engineering. If a government follows a course of action initiated at the behest of the electorate or citizenry, say, by imposing a moratorium on fracking or seabed mining after a citizen referendum on the matter, then it is not a case of social engineering but of government responsiveness to the will of the people. At worst we might call that “societal” engineering since it derives from a popular mandate rather than a government edict from above.

    On the other hand, when the government engages in projects that are designed to alter the behavior or thinking of the population without significant input from the public on the matter in question, then that can be properly labeled “social” engineering. It is trying to shape public behavior or thought in a way that conforms to its preferred ideological vision rather than to the will of the people as expressed through proper and representative consultation.

    I do agree that most governments engage in social engineering projects, often as a matter of course. My focus here is on the apparent disparity between the Right (and National’s) anti-social engineering rhetoric in the past and its current stance on changing the investment behavior of ordinary Kiwis.

  7. “If a government follows a course of action initiated at the behest of the electorate or citizenry, say, by imposing a moratorium on fracking or seabed mining after a citizen referendum on the matter, then it is not a case of social engineering but of government responsiveness to the will of the people. ”

    Pablo, do you think that winning an election ever grants such a mandate, or is it only derived from subsequent referendums?

  8. Hugh:

    If the government campaigns on specific promises with regard to changing behavior in well defined policy areas (say, passive smoking legislation), and wins 60 percent of the vote, then it has a popular mandate to undertake the policy changes required to alter public behavior. If it does not, then referenda are a means of establishing whether such exists. The costs of running referenda on behavioral change issues, to say nothing of those of the changes themselves, will ensure that governments think seriously before undertaking societal engineering experiments based on popular mandates.

    Of course, none of that is deemed applicable or practicable by those who govern NZ. Hence the turn to social engineering, admitted or not.

  9. And here’s an interesting piece from a researcher for the libertarian Cato Institute, basically saying Silicon Valley is meritocracy done right, and that Wall Street is plutocracy masquerading as meritocracy.

  10. Hugh:
    For most of our history the government hasn’t even had 50% of the vote.

    Using modern technology and communications running referendums should be very very cheap. Counted in the cents per voter rather than the dollars per voter it costs now.

  11. @Draco: The only exceptions I can find are the post-Watersider’s Holland government and some of the post-1996 coalition governments. From what I can tell the post-2005 Labour/NZ First/UF coalition got the closest with nearly 58%.

  12. Draco: I did not want to belabor the obvious with Hugh, but he obviously does not get the point of my threshold definition.

    Hugh: Duh! That is why referenda and plebiscites matter–and not just for social engineering projects.

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