John Key and David Cunliffe: Opponents of the Free Market

There has been a furious beat-up in the NZ press lately about Australia’s Coles and Woolworths supermarkets dropping NZ-sourced product lines as part of energetic ‘Buy Australia’ marketing campaigns by both companies. These companies evidently believe their customers have a latent preference for Australian-made goods and have decided to adjust their product mix accordingly – which is a good illustration of what smart companies do.

Unfortunately the leaders of NZ’s two largest political parties (and I suspect most others as well) don’t believe it’s ok for people to make their own decisions about what they buy and from whom.

3News reports the Prime Minister’s view:

Yesterday, Prime Minister John Key said the issue was against the spirit of trade relations with New Zealand.

“Even if it’s legally not [a breach of CER], it’s arguably a breach of the spirit of CER, and we’re going to be raising that with Tony Abbott,” he said.

“The whole spirit of CER is an integrated Australasian market, and we feel that the big companies in Australia should actually observe that.

No, it’s not in any way a breach of the spirit of CER (Closer Economic Relations). CER is about the way government’s treat products from each country, not consumers or companies. If anything, the spirit of CER is to encourage free markets, not to denigrate them. Key wants an ‘integrated market’ but seems confused (especially for a former currency trader) about what a ‘market’ actually is – the collective action of multiple people and organizations pursuing their own interests through the free exchange of goods, services and money – it has nothing to do with uniformity.

But if Key is confused, Opposition leader David Cunliffe is positively deluded. The NZ Herald reports:

Labour leader David Cunliffe said Mr Key had not negotiated hard enough and that the campaign was a contravention of CER because each country was required to treat the other’s products the same as their own.

No, it is plainly not a contravention of CER, because CER places no requirement on the behavior of private individuals or organizations. CER’s requirements on ‘each country’ are requirements on their governments. There is simply no negotiation to be had. New Zealand companies would not expect the New Zealand government to be interfering with their own commercial decisions. It’s unreasonable to think that the Australian government should interfere with the decisions Australian companies make.

One might have hoped that New Zealand had leaders who could take a more principled, or at least reality-based, view on such matters.

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