Our previous blog about the Treaty of Waitangi Sovereignty Debate spurred much comment on social media sites. Many readers insist that they know "the truth" - the truth about why sovereignty was ceded - or the truth as to why it was not ceded (which is why these "truths" have become more like "beliefs", in my view). I challenge those holding strong views - on both sides - to consider their answer to the following puzzle, which I can't figure out myself:
If I strike a deal whereby the other party promises me that I will retain possession & ownership of my existing assets & treasures, and in exchange I promise to grant that other party powers of Sovereignty, of Statehood, of Government, where does that leave us? Here's the puzzle: a sovereign authority / state / government, has the power to tax. That's the distinguishing feature which defines such entities (together with a monopoly over the use of violence). Once I act as your sovereign / state / government, I become empowered to pass asset tax laws, which mean that I can slowly - or quickly - take the property you were promised, back from you. I only need to introduce a tax on assets at, say, 2% of their value, annually. In a few decades, most of your assets can be appropriated back to me.
What this means to an economist is that guaranteeing to one party they can hold onto their assets & treasures, in exchange for granting sovereign, government, or state powers to another party, creates a contradictory, paradoxical quagmire. Whether you prefer the English or Māori version of the Treaty, it makes no difference - there remains the same unresolvable murkiness concerning what both parties thought they were signing up to.
Though Opposition Leader Hipkins thinks he may have cleverly wriggled out of this debate by arguing sovereignty / statehood / powers of government were not ceded in the Treaty, but have been since, he cannot have it both ways. Why? As just one example, we know he wants to introduce capital & asset taxes in NZ and also know he won't levy such taxes on Māori Authority / Iwi assets. What that means is he unambiguously does not accept the NZ Parliament - right now - holds the key power defining what it is to be the sovereign / state / government. That power is the right to levy taxes on all assets, including those promised to be retained by others in Treaties. Therefore, Mr Hipkins does not accept the ruling authority of his own Parliament. He is openly discussing confiscating the wealth of hard-working non-Māori Kiwis through the capital and asset taxes that he's lining up for next election, thereby asserting his powers of sovereignty / statehood / government over them, but not over Māori.
My interpretation of this situation is that the Treaty, from the viewpoint of an economist, is a self-contradictory document. It was drawn up by folks who, on both sides, did not much, for whatever reason, contemplate the paradoxes it created. It is simply impossible for me to be given the rights to hold onto what I consider to be "my assets" in perpetuity, while at the same time handing you powers to govern over those assets - which means you can take them back through taxation. Its looking to me like the Treaty was not the deal it pretended to be. The economics of it is opaque. What the parties agreed to baffles this economist. That's why we may need to start over again, and stop having endless arguments trying to interpret the uninterpretable.
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