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Dr Graham Scott Speech to ACT Tamaki Midwinter Dinner; Monday, 27 June 2005; 7pm. (as reported in www.scoop.co.nz)

Dr Graham Scott, former Secretary of the New Zealand Treasury, 1986-93, spoke at an event run by the ACT, a liberalist political party in New Zealand, and made some highly interesting statements about his and ACTS’ philosophy and political economy.

Those familiar with the ideas of Adam Smith will recognise from where Dr Scott is coming. I give an edited sample below, part direct quotes and part paraphrases, from his speech as reported by “Scoop Independent News” (www.scoop.co.nz) and I strongly recommend you to visit “Scoop” and read his remarkable speech in full.

First, he sets out his own philosophical stance: “Throughout my career I have found myself at the liberal end of the spectrum of economic thought with the occasional excursion into other approaches.”

Specifically, he said: “I have been influenced by philosophical liberalism beyond just economics. By this I mean the philosophy whose roots are in the Scottish Enlightenment – Adam Smith, Locke, Hume, Hutcheson and the Englishmen who followed them, and also the Scots and others who influenced the design of the radically new institutions of government in the US after the revolution. If you want to read one book about these people, read “How the Scots Invented the Modern World” by Arthur Herman.”

Naturally, I suggest you read for yourself Smith’s “Wealth of Nations” and his “Moral Sentiments” (check Amazon’s economy prices for the “Liberty Fund” definitive editions from “Oxford University Press”). If not already aware of it, read my "Adam Smith's Lost Legacy" and appreciate Dr Scott's views in context.

Scott talks sense borne of his great experience of being at the heart of government and makes the valid point that “real life government” is not about “my favourite eighteenth century philosopher [being] better than yours.” Government is about finding a way to make it work to advance national welfare and is often compromised by people wanting government to do too much through its undoubted coercive powers.

“Liberals, he says, “take a more modest and sceptical view and worry that certain expansions of the realm of the state are as likely to service the special interest as the public interest and that the dead weight of the state can undermine prosperity.”

Scott’s experience has produced a scepticism about the ability of governments to be able to fix everything that goes wrong. ‘Governments just cannot correct all the market failures that arise. As another economist once said of government’s attempts to correct all the market failures, “just because a fish cannot fly does not mean a rhinoceros can do better”.’ Governments should do less ambitious and do what they have to do to a high standard of excellence.

Instead of administering all things from the centre, governments should build up rational and effective management systems in the public sector “to support efficient and decentralised management” or “let private markets seek out better solutions in some areas; or even partner with the private sector productively.”

Smith expressed the same doubts about governments in his day and also about private commissioners. He did not come down on one side of the other, as can be seen in Book V of “Wealth of Nations”. He left it open which form of management to use in the daily operations of publicly funded projects, clearly preferring utility to dogma.

Of Scott’s ambitions for the ACT in the coming years, he ses them as a conscience of the public trust in the spending of their taxation funds:

“I would like ACT’s liberal vision, principles, values and policies to be there always, to resist ambitious politicians with self important pronouncements about their ‘leadership’ and grandiloquent visions of social engineering or nation-building either from the right or the left. I would like there to be in Parliament a party always to resist the proposition that when we have a problem then the ‘gummint’ must take charge; to resist excessive taxation and the nationalisation of commercial businesses, the exclusion of the private sector from the provision of public services and threats to the security of private property.”

I think most readers of Adam Smith would agree with that.

Dr Scott also adds a personal note with which most of use should concur:

“I would like there to be in the Parliament a party to stand against racism whenever it raises its ugly head; to welcome migrants as fellow Kiwis and to keep the instruments of government open, simple, transparent, available to all regardless of their connections and free from bias. I would like there to be in the Parliament a party always to respect the diversity of all New Zealanders as our faces change.”

New Zealand is a recent immigrant country, but then most countries in the world were immigrant founded too. Some have been around for millennia and experienced waves of new immigration long ago, and they tend to forget sometimes that their ancestors found their welcomes from the existing descendants of earlier migrations somewhat less than warm or friendly.

Read the original speech in full: www.scoop.co.nz (with thanks to Scoop for making Dr Scott's speech widely available).