? Economic Reform History? During the late 1970s and early 1980s, New Zealand had internal and external pressures, and the public was calling for the government to adjust and stabilize the economy by dealing with the fiscal crisis. New Zealand has had dramatic changes with its economic reform and has had problems enforcing it. Before 1996, New Zealand was characterized by a political regime of economically interventionism and protectionism. The government had control of foreign exchange, and made the New Zealand dollar to become overvalued. Instead of trying to improve the current situation, the government increased spending in public programs which in return deepened the country’s fiscal deficit. New Zealand had a closed-economy that imposed high trade barriers, which hinder foreign companies from entering the country and making any kind of investments. The big change in economic reform began in 1993. The economy became more open and non-interventionist. ? Parties? The country is nominated by 2 political parties, the Labour Party and the National Party. The Labour Party supported an interventionist economy, however in 1984 the party initiated a reform to fight this long traditions and make a positive change to benefit New Zealand’s economy. However, the efforts of improving the economy gave a downturn. In 1987, it was obvious that the Labour Party deepened the problems of the country leading it to a 6 year recession. In 1990, the National Party took over and instead of changing the economic reform that was making the public unhappy, it decided to keep on doing what the Labour Party was doing. The unhappiness of the public as well as the unhappiness of other politicians made a called out for a new party that would hear what the public wants and work to change the economics of the country. In 1984, a former supporter of the National Party; Bob Jones, launched the New Zealand Party. The party advocated for education, law, order, environmental conservation, and dismantling armed forces. This new party attracted supporters of economic adjustment who were not being heard by the other 2 major parties. Won as much as 20% in pre-election polls. ? New Zealand had a plurality rule ? (explain how it had a different electoral formula and the implications of being under this system) (draw back to the fact that whoever won, did not represent the other half of the voters or so) (the 2 major parties did not represent the whole public, voters had to choose a party that was not perfectly aligned to their opinions)Prior to 1996, New Zealand had a First-past-the-post system. As a result, New Zealand was a two party system. Voters could only express a preference for the prime minister and cabinet by voting for their preferred party’s candidates in their individual districts. This system lead to disproportionate representation. One of the problems explained in insert first reading author presented that Plurality systems tend to manufacture majorities, New Zealand was not an exception to this. The system manufactures majorities of parliamentary seats even when no party wins a majority of votes due to the small vote shares won by third parties. ? Outrage ? Voters began to be outraged this was due to their lack of representation in the parliament and because of laws that were made by big politicians without accounting other parties. Due to the lack of representation, there was a voter outrage. Due to the external shocks (oil shock, UK farm restrictions) think big, gdp, etc. Cabinet members from third parties have also being outraged. Their outrage originates from the pressure they have while in the cabinet. If a member does not support the cabinet’s decisions publicly they would be expected to resign or they will be dismissed. Rules that have to be followed by cabinet members were created by a small group of politicians from the 2 leading parties. Therefore, the rules do not account for the opinions of third parties. Which then creates instability in decision-making. However the outrage of voters and cabinet members can be solved if the balance within the cabinet changes. A few more votes, can generate a new dominant party in the cabinet that can reverse policies and better accommodate them to others. ? Problems? For example, the middle class lack representation in the parliament. They had concerns about the economic stability of the country, as well as the high unemployment rates and the doubtful solutions the government was implementing, through increasing spending on social services and infrastructure.While good things were happening, they only benefited a few people in the country. Such as farmers and manufacturers. Farmers were getting subsidies and since they constituted the biggest export market of the country. However, there were more negatives things happening such as oil shocks and the British market closing to New Zealand’s farmers. Which lead the country into a deep crisis. If the government downsized state-owned industries, ease trade barriers, and other regulations. And reorient trade relations. But Muldoon (from the National Party); the prime minister at that time, started a project called “Think Big”. the main expectation of the program was to maintain full employment through the improvement of infrastructure. However, the program actually caused the increase of fiscal deficit, public debt, inflation. Wage and prices froze, while GDP was at a low of 0.2 per year. ? Plurality? Under the plurality system, first-post-the-past the individual who obtained the majority of votes would take all the power. Due to the system there can be only one winner who takes all the power and represents the people who voted for him, however the people who did not vote for that candidate is left without a representation in the parliament. An important factor of the system is the district magnitude, which denotes the number of candidates to be elected in the district. The magnitude of the district has a strong effect on the degree of disproportionality of representation for the voters.? MMP? The public has two votes, the first vote is for the voter to select their favorite political party and the second vote is for their preference for local representative. The first vote dictates the percentage of seats each party obtains in the parliament. This system has as a purpose to translate the votes into a proportional representation of the public’s preference. While the system is not perfect, it does a better job than plurality to represent the public. MMP has 2 restrictions, and if this are modified they can make the electoral system more effective or more ineffective. The district magnitude and the electoral threshold of New Zealand are impeding the elector system to be more effective in representing the public. The electoral threshold is of 5%, for a party to gain a seat in the parliament they have to at least obtain 5% of votes or to win the individual elections. The current electoral threshold is a barrier for small parties, and make proportional representation difficult to achieve .The district magnitude can increase the chances of obtaining greater proportionality and to be favorable for small parties. Lijphart argues that having a larger district compensates for any disproportionalitiesNew Zealand’s change of electoral system to MMP, can be more effective in representing both majorities and minorities if the magnitude of the district is increased by lowering the electoral threshold..