The economists and New Zealand population: problems and policies 1900–1980s

ABSTRACT

We examine contrasting modalities of economic thought by economists on population problems and policies in NZ, 1900–1980s. Since the early 1900s, NZ economists have been concerned with interactions between economic and demographic outcomes. During the inter-war period, Malthusian concerns became muted because NZ's population growth rate slowed appreciably in the 1930s. A ‘laissez-faire’ position was articulated among some economists in terms of external migration flows; others debated the implications of a stationary population. The post-WWII era ushered in a doctrine of ‘stable population Keynesianism’ based on optimistic neo-Malthusianism that perspective clashed with contemporary views on population expansion and the promotion of immigration coextensive with the policy of planned industrialization. An intellectual void became apparent in the early 1980s, perhaps because concern with the dynamics of population change in a small, liberalized, open economy seemed misplaced. Lessons are drawn from this intellectual history that may inform modern debate on population policy, broadly conceived.

KEYWORDS:

• New Zealand
• population policy
• migration
• history of thought

Acknowledgement

We are grateful to two referees for their comments on an earlier version. We thank Riko Stevens for excellent research assistance.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. The landmark statements by policy-makers on this matter are Burke (1986) and Birch (1989). For an account of the history of immigration regulations in New Zealand, see http://www.teara.govt.nz/en/immigration-regulation.

2. The references are to Braae and Gallacher (1983) and the then forthcoming work of Poot, Nana, and Philpott (1988).

3. The discussion of these matters on the relevant pages of the text is perfunctory. The chapter by Chapple, Harris, and Silverstone (1996) reports data on aggregate labour supply. The extensive work of Jacques Poot and others in the period from 1987 to 1995 is not cited at all.

4. Again, in this publication the pioneering work of Poot from 1986 is ignored. More recently, we note more serious research by economists on the subject of population. See, for example, Bryant (2003), Poot (2005), Moody (2006), Maré, Morten, and Stillman (2007), Hodgson and Poot (2010), Reddell (2013a) and Fry (2014).

5. We will privilege work by NZ academic economists including some expatriates, and work by economists published by quasi-government authorities and research organizations. Biographical information on many of the NZ economists mentioned may be found in King (2007) and Blyth (2004, 2008).

6. Reeves (1902, p. 276) agreed, noting that NZ's death rate was ‘the lowest in the world’ and was doubtless assisted by the pension scheme, thereby possibly undermining its long-term viability.

7. He suggests that trying to find a statistical ‘index of optimum population density’ would likely prove impossible (p.10).

8. He might well have appealed to the work of Neale (1923, p. 454) who identified a ‘secular downward trend of the birth-rate’ in NZ.

9. Fleming and Jackson (1988, pp. 50--51) consider the matter briefly in a review of the NZ literature. Tocker (1937, pp. 244--245) discusses the optimum concept but adds nothing new; he draws the same skeptical conclusions as Murphy a decade earlier.

10. Belshaw (1929, pp. 78--79) came to a similar conclusion on the positive economic effects of urbanization in NZ.

11. Cf. Souter (1939, p. 15), Fisher's successor at Otago: ‘transformation from farm into nation unquestionably demands progressively increasing diversification of skills, interests and occupations, if external economies…are to be given proper scope’.

12. Billing (1935, p. 173) cites Condliffe's work for the League of Nations on the economic effects of a ‘population which is approaching economic maturity’. Neale (1934) remained agnostic on the economic outlook for the case of a stationary population.

13. A referee reminds us that the desire for a larger population was partly the result of strategic concerns following the Pacific War.

14. In retrospect, Belshaw was right to expect that the downward trend in NZ fertility, noticed by Neale from the late 1920s, would not continue. Tocker (1945, p. 142) was skeptical, requesting some ‘real evidence’ that what he called ‘baby bonuses’ had any effect on birth rates.

15. Belshaw (1954c, p. 541) labelled this phenomenon, ‘the population dilemma’, which ‘consists in the tendency for improvements in productive power to be absorbed in population increase’.

16. He recognized that the size of the returns to scale parameter in the aggregate production function was of critical (empirical) importance for this conclusion. He relied on estimates for NZ provided by the Otago economist John Williams (see Williams, 1945) for the manufacturing sector (Belshaw, 1955, p. 3).

17. In the international literature, there are strong parallels between Belshaw's views and those of Spengler in the US. See e.g. Spengler (1956).

18. Hawke (1985, p. 189) proposes that such optimism was supported variously on the grounds of bolstering defence capability, beneficial cultural developments such as ‘ballet and opera’, and having a more cosmopolitan population etc. See too Holmes (1966a, pp. 19–20). Gould (1982, p. 62) referred to the power of manufacturers ‘pressing the State’ for more workers, which accords with our perspective.

19. Sutch (1966a, p. 4) also noticed the construction industry and contractors’ groups in that sector publicizing the case for more migrants. Gould (1964, p. 79) argued that a ‘larger population’ was not needed to develop significant unutilized resources.

20. Two economists, Low and Castle, were major contributors to this report. Fleming and Jackson (1988, pp. 54–55) outline the background to this report and note its methodological links to the contemporary modelling work of Mishan and Needleman in the UK. Fleming and Jackson argue quite correctly that the MEC application used a ‘long-run model for the derivation of short-run results’ (p. 55).

21. We are also reminded of the strong points of complementarity between Sutch's thinking on NZ development – especially the demography-technology nexus – and the work of Chenery and Syrquin (1975) in the more formal economics of development literature. For fuller exposition of Sutch's work during this period, see Endres (1986).

22. A referee pointed out that Sutch was right that a constant ratio of workforce to population made no sense given the long-run increase in female labour force participation; additionally, the youthful age structure of immigrants decreased the total dependency ratio.

23. Those reports, following the 1966 report on immigration already mentioned, included the Holmes-directed MEC (1970, pp. 10–11, 1971, p. 11) highlighting emigration losses and skill shortages, and the Brownlie-directed reports (1973a, 1973b, 1975) which also treated contemporary population issues.

24. Philpott (1971, p. 32) acted as commentator on Rosenberg's (1971) paper. He held to the BGH line. Peter Lane's (1970) contribution was exceedingly rare for the time: he proposed greater acceptance of wider income-earning differentials in NZ as a more effective response.

25. Again presumably, Hawke did not mean to include the Sutch-Rosenberg case in his remark that ‘[r]esistance to the economic case was fed mostly by fallacious arguments and prejudice’ (1985, p. 190).

26. His words: ‘if …New Zealand's population had grown at a substantially lower rate—say 40 percent, instead of by 80-odd per cent—there would be no balance of payments problem at the present time’. And ‘rapid population growth up to 1975 has a lot to answer for in any discussion of New Zealand's economic difficulties’ (p. 226).

27. The NZPC (e.g. 1979, pp.101–106) began making projections of population change in later reports. More valuable economic policy-relevant work was begun by the NZPC's Population Monitoring Group (1984), on the cusp of revolutionary policy reforms in the 1980s.

28. Poot and his research collaborators have been exceedingly careful to outline the full limitations of their CGE methodology and results. The elimination of major, ongoing structural changes in the NZ economy is an important assumption. See e.g. Poot and Cochrane (2005, p. 38).

29. The recent work of Reddell (e.g. 2013a, 2013b) seems broadly to be reviving this now much neglected line of economic thought.

30. Also relevant in this field are the scientific illusions of much modern empirical work in macroeconomics that Summers (1991) warned economists about.