New Zealand’s markets before reform

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Today, New Zealand is often invoked as an example of the benefits pro-market reforms can create. But before these reforms began to be enacted back in 1984, the story was quite different:

Do you like margarine?

Margarine had to be an unappetizing off-white color, for it was deemed that yellow margarine would pose undue competition for butter producers.

How about an affordable TV?

For the sake of employment, the government required television sets to be assembled locally. When [Alan] Gibbs went to Japan to negotiate a price for components, he was greeted with disbelief. Because of the ways the production lines were set up, the Japanese television makers could supply the separate component only by placing workers at the end of the assembly line to take apart the completed televisions. Gibbs’s firm had to pay 5 percent more for the pieces than it would have for the whole television set. The parts were shipped to New Zealand, reassembled in a specially built factory, and sold for twice the world price.

From kiwi John McMillan’s “Reinventing the Bazaar.” See a previous post from the same book.

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