Imagine what might happen if there was a centre-left coalition.
They believe we can just pass a law saying all wages have to be paid above a certain amount. Anyone who was working below that amount would get a pay rise.
They believe we can attain real economic growth by simply printing more money.
Everyone could then buy a new house, car and what not.
They believe the Government can spend millions of dollars on all sorts of wonderful programs, without affecting the private sector negatively, as hey, it’s not like taxes come from it.
Unfortunately that is all fantasy.
But according to other political parties, it seems that there is no reason why you cannot legislate your way to prosperity.
ACT thinks differently.
We understand that wages are determined by supply and demand.
We understand that minimum wages price some workers - usually the young and inexperienced - out of the market. The minimum wage diminishes their opportunity for a head start.
We understand that printing money results in inflation - an invisible tax on savings, which is the key to capital formation.
Not only will printing money fail to stimulate economic growth in the long run, it may also cause recessions and the misallocation of resources in our economy due to the distorted price signals.
We understand that welfare programs, implemented with the best of intentions, can have detrimental outcomes: increased dependence on handouts, high marginal tax rates which remove the incentive to work and the occasional abuse of taxpayers’ dollars.
Furthermore, with the recent crisis in Greece, we understand what happens when the Government goes bankrupt.
Governments cannot spend so carelessly. That’s why ACT advocates for smaller government that operates within a disciplined budget and low taxes, which will not crowd out the private sector and prohibit the creation of wealth.
If we look at other issues such as the "manufacturing crisis”- other parties were quick to blame the current Government and their so called "hands off" approach - as if the Government has not dug its hands into our economy deep enough.
It appears that not only do they lack understanding in sound economic theory, but some economic facts too.
Out of its 33 members, the OECD (Organisation for Economic Co-operation and Development) rated New Zealand the second most restrictive in terms of Foreign Direct Investment regulations.
Foreign Direct Investment plays a crucial role in our modern economy. Not only does it contribute to job creation, real income growth and raising our standard of living, but also many other positive externalities such as technology and skilled-labour training.
This is why ACT wants to remove unnecessary regulation and red tape that does nothing except make it harder to do business.
I do not wish to demonise other political parties, because as I mentioned before they do have the good intentions. Unfortunately, as they say, the road to hell is also paved with them.
One of the main insights of economics is that it demonstrates to men how little they really know about what they imagine they can design.
I believe only ACT's policies, founded on sound economic principals, understands this.
Speech by Peter Jiang to 2013 ACT Annual Conference, The Farm, Kaukapakapa, Saturday, February 23 2013.