Bryan Caplan and David Henderson  

Further Kiwiana

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Patri Friedman asks in the comments for info on the desirability of New Zealand for libertarian expatting; C.L asks about the cost of living. I’ll see what I can do on both fronts, beneath the fold.

Patri’s especially concerned about taxes, drugs, guns and culture. Let’s take them each in turn.

Taxes: High but relatively uncomplicated. The top marginal tax rate of 39% kicks in at income of $60K. The 33% rate hits at $38K. All income up to $38K is taxed at 19.5%. There’s an additional 1.3% ACC levy imposed at all levels. The ACC is NZ’s second-best solution to tort law reform. If you’re in an accident, ACC compensates you for it and suing for damages beyond ACC’s compensation is difficult. So you have to assume more risk, but that’s not necessarily a bad thing. Tort law in the States has made everyone paranoid about allowing anyone to do anything for fear of being sued; here, far fewer such worries. Note too that there are no state-level income taxes: it’s a unitary system. If your only earnings are wage income, taxes are so simple you don’t even have to file. The payroll deduction takes care of everything. There’s a 12.5% GST charged on everything – no exceptions. Of course, this is eminently more rational than Canada’s hodgepodge attempt at a GST. But it’s pricey.

There hasn’t been a capital gains tax but there are worrying signs on the horizon: so much so that anyone considering moving here with substantial foreign-based assets should really hold off until IRD has sorted out whether it’s going to tax unrealised gains on foreign investments. The way the bill currently stands, anyone with more than $50,000 in foreign assets will be taxed on unrealised capital gains. This, of course, would massively penalise anyone coming here with substantial IRAs or 401(k)s. If you’re thinking of moving here, check first whether the bill’s been passed. It currently looks like the bill will either be softened or dumped. Stay tuned.

Drugs: For the most part, the drug laws here are pretty similar to those in the States. “Party pills” remain legal (BZP); I think you can also buy NOx for non-dental uses. Because we don’t have the same civil asset forfeiture rules, incentives for police forces to become overly exuberant in the application of those rules are attenuated. Nevertheless, a report on sentencing notes just under 13,000 drug convictions per year on average (see Table 2.10 in the linked document). US District Courts in 2002 reported 27,000 drug convictions, so we have way more per capita drug convictions. NORML will also have more info for you. I’ve not found any of these constraints binding on me so I haven’t really much noticed. I don't see many stories in the press of botched drug raids, but maybe I haven't been paying attention. I’m also no expert on crime stats – this is just the result of some quick Googling on my part. If I’m comparing apples and oranges here, somebody please let me know. My read is that if drugs are an important part of your preferred consumption bundle, this isn’t the best place to move.

Guns: More regulated than in the States. You need a possession licence to buy a gun. You have to have specific permissions to own handguns and either have to be a member of a shooting club or a collector. All firearms are subject to storage requirements that make them basically useless for speedy self-defence if you follow the rules. Full details are available in the Arms Code.

Culture: Far more free than in the States. The bars in most towns are not subject to closing laws – they open and close subject to demand. Nitrous Oxide bars were in vogue a year or so ago. I’m essentially anti-social and have little clue what goes on. But other folks seem to have a lot of fun. Prostitution’s legal: there are a half dozen or more brothels I notice when driving around downtown; one is above a very good cheese shoppe. Liquor laws are generally pretty relaxed: they’re a matter of city by-law rather than criminal code. In Christchurch, open liquor’s generally allowed except downtown or at the popular beaches on weekends. I live at one of the less popular beaches; a bottle of wine at the beach there is acceptable anytime. I think open liquor in vehicles is also permitted so long as the driver is sober, but dig up the rules for yourself before trying it. Obscenity regulation on TV / radio is much less strict. Deadwood airs unedited after 8:30 PM; most HBO series wind up airing unedited on broadcast about a year after they air in the States. An interview with model Nicky Watson on NZ's version of 20/20 last week included a segment that would have drawn fines in the States. Most of the time, radio stations play the unedited versions of songs. There’s far less popular tolerance of “political correctness” than you’d find in the States.

Would you find yourself freer or more constrained here? Depends on your optimal consumption bundle. I feel less constrained here than I did in the States. I’m more constrained with respect to firearms ownership than I’d like, but am still less constrained overall.

C.L. asks about cost of living. Most things here are much more expensive than in the States, even after making the currency correction. If you’re currently in DC and own a house, you could likely come out OK – housing is pricey, but certainly not as pricey as in DC. Mortgage interest rates range upwards from 7.5% -- bring over the money to buy a house, and keep in mind that housing quality is much worse on average than in the States. If you’re not making more here in nominal dollars than you’re currently making in DC, you’ll be poorer here. If your NZ salary in $US terms is less than your current US salary, you can still be better off depending again on what your preferred consumption bundle would be. I found in moving here that I could no longer afford the consumption bundle I was used to in the States. That consumption bundle involved a lot of travel, electronics, Netflix, Dish Network, frequent updating of computers, chuck steak, a 2-br condo in Reston a 20 minute drive from the metro and a 35-40 minute drive to school, a Honda Civic bought new and a 30-year old Buick Skylark. I reoptimised given the change in relative prices. My new consumption bundle involves a decent but (c)older house with pool about a 4 minute walk from a beach and 20-25 minute drive from work, lots of concerts and theatre, lots of hiking, penguin viewing, less frequent updating of computers, lamb chops, some caving, drives in the mountains in a 10 year old Rav-4 or a 10 year old Mazda sedan. New cars are expensive; used cars are cheap. Were I to move back to the States, there’s no way I could afford to replicate there my current consumption bundle. Which bundle is better? I prefer our current consumption bundle, but I may be self-deceiving. I strongly recommend that you check out the NZ prices of things you think critical to your consumption bundle as well as of things that might not be a big part of your current DC bundle but could be here. Essentially, goods from non-traded sectors here are cheaper than in the US except where those services in the US are provided by migrant labour. If you’re not easily able to respond to changes in relative prices, don’t make the move.


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COMMENTS (14 to date)
dearieme writes:

We recently returned to Britain after 6 months in Christchurch. Some of the small things that delighted us included the quality of (1) the fruit (e.g. cherries, raspberries, dried apricots) (2) wine (3) cheese (4) seasonal vegetables e.g. asparagus (5) fish. We found the Kiwis very friendly, helpful people. The standard of driving left a bit to be desired, though. Still, we shall return: Christchurch is a wonderful spot.

Freeman writes:

"If you’re in an accident, ACC compensates you for it and suing for damages beyond ACC’s compensation is difficult."

They do this here in South Africa, as well, and it's TERRIBLE. Because there's no individual liability for auto accidents, people drive like complete maniacs, and every day, there are terrible accidents on major highways involving dozens of people.

It's such a naked case of tragedy of the commons!

conchis writes:

Freeman: in NZ you'd still be liable for the damage caused to others' cars, and, if a careless driving case could be sustained, to prosecution as well (short of manslaughter, I think the punishments are limited to fines and loss of license, but I could be wrong). Is the SA system different?

Jacqueline writes:

Doesn't New Zealand have several restrictions on freedom of speech and freedom of the press, especially for political speech?

Toby writes:

Jacqueline: I grew up in NZ and paid attention to politics. Protests, speaking out against the government, TV satire, etc. were all extremely common -- I would say that political satire was one of the main forms of entertainment at that time.

I never heard of anyone being arrested for saying saying something they weren't supposed to or wearing a shirt with an "offensive" slogan.

Kurt writes:

What about vitamin suppliments and "alternative" health care choices?

I have a friend who specializes in chelation therapy (mostly done by varying amounts of alpha-lipoic acid) for mercury and other heavy metal toxicity. Can you do this in NZ?

Australia bans supplements and most other European countries regulate them such that they are as expensive as prescription drugs. What is the story in NZ about this?

Eric Crampton writes:

Freeman asks about the tragedy of the commons with ACC. I haven't noticed it, or at least I've not noticed any difference between here and anywhere else I've lived (Winnipeg, Ottawa, DC, Bonn). The cops will still ticket you for reckless driving; you can lose your licence. And, of course, nature is less forgiving here. There usually aren't safety barriers between you and a nice long drop off the side of the road.

Jacqueline asks about restrictions on political speech. There are significant campaign finance restrictions. But, you have to adjust for differences between NZ and the US in terms of GDP (US economy = about 127 times NZ economy (PPP adjusted GDP). An NZ party contesting all electorates would face a spending limit of $2.38 million. Ramp it up to adjust for differences in the size of the economy, and note that there are 8 parties in all...total campaign spending isn't a ton less than in the States. I'll soon put up a proper posting on such things.

Eric Crampton writes:

Kurt: I have absolutely no clue. I wouldn't even really know where to look beyond Google to find out. I know some outfit just got in trouble for selling some kind of liquid ozone therapy that was portrayed as having serious health risks. http://www.stuff.co.nz/stuff/0,2106,3731022a7144,00.html

Patri Friedman writes:

Thanks for the info. I think I'd want to get the "word on the street" about drugs if I ended up looking into it seriously. 40% tax sounds about the same as federal + state in the US. But no tax on capital gains would be a big win, even if I had to pay a one-time tax on entry.

Guns aren't actually a significant part of my personal consumption bundle, so taxes/culture/drugs are more important.

What about hired help - cook/housekeeper/nanny? Is there cheap labor availabe for such jobs?

Daniel writes:

I don't think the US district courts drug number is the best figure to use. Most convictions for drug related offenses in the US happen in state courts.

W.M writes:

Every country has good points and bad points but in NZ the good points outweigh the bad points and I suggest is better than conditions in the US as far as libertarians are concerned. But they should stay away from a very nasty group that attacks all libertarians not associated with them --- very, very nasty people. But I do recommend Business Roundtable or the ACT Party for people who want to be politically active. But they ought to stay away from the Libertarianz Party (yes they spell it with the z thinking it cute).

Russell Nelson writes:

Nature is not forgiving in Oregon either. Most roads don't have guardrails; a twitch of the steering wheel means death on mountain roads.

Eric Crampton writes:

Patri: definitely go for the "word on the street" re drugs. I have absolutely no clue. I'd have some guesses as to which of my students could hook me up if needed, but I'm not gonna go asking :>

Hired help is more expensive for unskilled labour but cheaper for skilled labour. No immigration from Mexico. Dentists are cheap; nannies are pricey. See http://www.anniesnannies.co.nz/ . At least it seems pricey to me. I have no clue what things run in the States. $11/hr minimum is cited at the link above.

Tracy W writes:

NZ drivers are not as good as UK drivers. Christchurch drivers are particularly nuts. On the other hand, Christchurch drivers are not quite as bad as Boston drivers.

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