Eric Crampton: Why is NZ so helpless when it comes to funding infrastructure?

Dr Eric Crampton
13 July, 2023

Experimental psychology was a bit wild in the 1960s. Scientists would run experiments on beagles, giving them painful shocks. If a beagle learned it could not avoid a painful shock, because the experimenters designed things that way, the pup would stop trying. Even if the experimenters later made it easy to avoid the shock, the beagle had learned helplessness.

Over the past few months, I’ve been reading about how New Zealand’s communities used to be able to get things done.

A century ago, if a community wanted a town hall, or improved pipes, or flood protection works, they could just get on with it.

Changes to local government in 1989, and to local government debt financing in 1995, blocked the mechanisms that communities once used to pay for projects that they considered important.

Councils took over a lot of the functions that communities once provided on their own.

Once councils started getting near their debt limits, funding and financing even basic infrastructure got hard.

And I wonder if we’ve learned a bit of helplessness as consequence.

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