A recent Herald article, Cunliffe says no more deregulation, included the following objection to the government’s proposal to remove some of the “roadblocks” to wealth creation:
… removing “roadblocks” was essentially more deregulation, when the country had one of the least regulated economies in the world”
Here the word ‘deregulation’ is used to mean the absence of government regulation of a limiting, specific, or detailed nature. However, the term ‘least regulated’ in the second half of the sentence invokes the concept of ‘unregulated’ in the sense of the absence of any form of regulation of activity.
In practice, less reliance on specific, intrusive regulation by government necessitates greater reliance on other forms of regulation. This is not necessarily a choice between more and less regulation. For example, removing an entity’s statutory monopoly privileges and exposing it to open competition could expose it to a highly salutary form of regulation.
The best form of regulation, as a general proposition, is provided by arrangements that allow buyers to shop around. As Adam Smith (1776) famously pointed out, the butcher, the baker and the candlestick maker are obliged to provide us with the goods of a quality that we want to buy at a price that we are prepared to pay, not because of the kindness of their hearts, but because they need repeat business.
Of course, any notion of regulation by competition without government underpinning is chimerical. Competition will not work well without governments doing their part in ensuring well-defined property rights that are accessibly enforceable, through informal and formal channels. Formal channels involve the competing courts, mediators and arbitrators invoking private law (including the common law) and statutory laws and regulations. There must be sanctions against theft, coercion and fraud. Far from being a state of lawlessness, the rule of law is fundamental to an efficient system of voluntary exchange.
The assertion above that New Zealand has “one of the least regulated economies in the world” presumably refers to the fact that New Zealand has ranked very highly internationally for economic freedom since around 1990 (and remarkably poorly in 1984). If so, it confuses a measure of ‘well regulated’, from the perspective of facilitating a system centred on voluntary exchanges, with the notion of ‘unregulated by anyone or anything’. (See here and here for two introductions to the concept of economic freedom. For more of an explanation of the role of the rule of law see the Business Roundtable monograph by Richard Epstein here. His book Simple Rules for a Complex World, provides a detailed exposition of the need for both government and private law for a well ordered society, but with each having its place.)