Reader mailbag

It's a pleasure to speak to you -- I am a longtime follower of your blog and I was hoping you had time to answer a few questions about moving to New Zealand. I have been considering it for a long time, but more so after your blog post about libertarians moving to more free countries.

As a way of introduction, I am a second year law student at [reasonably prestigious Boston-area university name redacted], and an active libertarian in [usual suspect libertarian organisations for lawyers redacted].

My biggest concern about moving to New Zealand is the currency and central bank. While the Fed has wreaked havoc on the US economy, I noticed that the Kiwi money supply has also increased significantly. I was hoping that you could shed some light on the strength of the central bank in New Zealand and if they lean towards austerity (like Germany or Australia). In many ways, I feel the move would be going from the pot to the frying pan. At least in the US, it's the "devil I know."

In addition, I was wondering if you had any resources that you relied on for making the transition, such as job websites or other informational websites.

Any advice or personal experiences you'd be willing to share would be very helpful!

Thank you so much in advance.

I replied:

The currency and the central bank would be the least of my worries if I were considering making your move. The RBNZ is far from perfect, but it's one of the better ones out there. They follow a reasonable inflation targeting regime that looks through one-off things like changes to the goods and services tax. Inflation targeting in a small open economy means the exchange rate's a bit volatile, but exchange rate movements also make inflation targeting a bit less onerous for the overall economy: if inflation pressures are strong, a hike in the interest rate bumps up the exchange rate which reduces the prices of our imports and pulls back the CPI without having to beat down the domestic economy quite as strongly. Or at least that's my read on it - I'm hardly a monetary or macro economist.

My bigger worries, were I in your shoes would be

1) Law here is an undergrad degree, not a postgrad degree, and the Bar doesn't do a lot to restrict entry. That's good policy overall, but it keeps lawyer salaries down. I'm also not sure how easy it is to practise in New Zealand with a foreign degree. Your best niche would probably be commercial law focusing on firms here in NZ trading with US firms. But I'd also expect that a fair number of US expat lawyers are in the same area.

2) The standard of living here is lower than the States. You will be poorer here than you would be in the States; the relative gap for lawyers at the top of the distribution would be very very large. The next few years in NZ are going to be a bit uncomfortable: the government's very likely to start some reasonably large spending cuts to get the deficit under control. But the positive is that they're likely to do this. Nobody in the States seems likely to do a damned thing until the system's about to explode. Here, it will take big cuts to programmes that were only enacted around 2005. Prior to that, we had no real structural issues. Since 2005, we implemented an idiotic version of EITC that's very expensive both in terms of deadweight cost and real spending. The government's also taken a hankering to bailing out things. I'm expecting changes in the next term for National, but they're pretty weak.

3) New Zealand is more free than the US, but the absolute time trend isn't great. I don't think we're set for any appreciable decline relative to the US, but we will decline in absolute terms.

4) It is damned far from home. A flight home to see your family will cost you about 50 hours travel round trip plus a substantial chunk of money. We're booking flights now for Winnipeg - it will cost $11K NZ for two adults, a 3-year old, and an in-lap infant. Skype is great, email is great. But face to face is hard to do. I have massively reduced the number of conferences I attend. I attend fewer than my University would be willing to pay for me to attend. The flights kill me.

5) Housing's overpriced, but not more so than in a lot of US cities. Mortgages are expensive - high interest rates.

I didn't bother pointing out the earthquakes as I reckon we can take them as read. Have I missed anything?

A move to New Zealand increases your experienced level of freedom, depending on which freedoms matter most to you. It's also a good choice for pacifists. It's no utopia, but it beats a whole lot of the alternatives. In fact, it recently ranked third in a wholly unscientific ranking of places to which one might wish to flee.