Thursday, November 16, 2017

A Year of Trump

You have to admit it, even if you detest Donald Trump and everything he stands for, the last year of US politics has been the most interesting since...well, probably since Teddy Roosevelt was in the White House (and I think there are many parallels between that earlier renegade Republican and Trump). I still find myself laughing aloud at Trump's tweets, the utter bewilderment and denial of Hillary Clinton that she lost to him, and most especially the mainstream media's continued outrage that they have lost control of the political narrative.

Trump hasn't achieved a lot in terms of policy - Obamacare is still in place, the wall hasn't been built, and the tax cuts he wants are bogged down in the congressional swamp - but doing nothing isn't a bad thing for a politician because it means he hasn't stuffed anything up, which is more than you can say for the preceding four presidents. The earnest ingenues in the new coalition government here in New Zealand should take a leaf from Trump's book and work on their golf game rather than pursuing their utopian dreams.

Much is made of Trump's low approval ratings but I wouldn't dismiss his prospects of re-election in 2020 just yet, assuming he decides to run. Three years is an eternity in politics and events may overtake the narrative as they did with George W Bush in 2001. The U.S. economy is finally rebounding, and if you add to that some tax cuts, a major foreign policy success, and a Democratic Party that continues to be its own worst enemy, and we could well see Trump win a second term.

There is much I dislike about Trump and his policies but it would be almost worth putting up with another few years of his cronyism, xenophobia and simplistic economics just to see the mainstream media's reaction to (as Australian rugby star George Gregan once said about the All Blacks losing the Rugby World Cup) "four more years."

Thursday, November 9, 2017

Is the NZ Government the result of a personal grudge?

We learned this week that Winston Peters, the 'kingmaker' in the recent coalition negotiations to form the New Zealand government, is suing four National Party members of parliament, including former prime minister Bill English and deputy Paula Bennett, over the leaking of information that he had been overpaid his state pension for seven years. Peters' lawsuit seems to be a fishing expedition with journalists, National Party officials and even the chief executive of the Ministry of Social Development (the government agency responsible for payment of the pension) being served papers.

The most concerning thing about this matter is not the overpayment itself or the speculative nature of Peters' legal action, but the fact that it reveals an obvious conflict of interest in the coalition negotiations. Peters swore an affidavit in support of his legal action the day before the election, meaning that he was involved in the lawsuit when he sat down to negotiate a possible coalition agreement with the very National Party leadership that he was suing. He should have declared this conflict of interest before the election so that voters could have taken the matter into account or, at the very least, prior to the coalition negotiations getting underway. Ideally he should have recused himself from the coalition discussions and decision-making of his party.

In view of this, it is unsurprising that Peters chose the Labour Party as his coalition partner. I have written before about how Labour and New Zealand First don’t even have a plurality in the new parliament and the fact that the National Party, which has more seats than Labour and New Zealand First combined, would be part of a government under any electoral process other than our shambolic MMP system.

The fact that Peters didn't declare his conflict of interest begs the question whether he entered the negotiations in good faith and whether he had any intention of forming a coalition with National. It makes a mockery of the coalition negotiations and casts further doubt on the legitimacy of the new coalition government. Peters may have a legitimate grievance over the leaking of his confidential superannuation details but that doesn't justify him holding the country to ransom and making decisions of constitutional importance on the basis of a personal grudge. The fact that this is even a possibility raises serious concerns about the health of our democracy.

Tuesday, November 7, 2017

100 years of failure and there are still naive Marxists

On this day, one hundred years ago, the Bolsheviks under Vladimir Lenin overthrew the Russian provisional government of Alexander Kerensky, thus ushering in the most brutal political system the modern world has known. Many left-wing commentators continue to laud this as the day the Russians overthrew the repressive Czar, but that event actually happened in March 1917. Lenin and his cohorts seized power in a coup and imposed a totalitarian dictatorship that would last for three quarters of a century and that would kill at least 20 million people of its own people.

Leftists of all persuasions defend Communism on the basis that the political philosophy has never been truly implemented. They also claim that Lenin had noble intentions and that he was innocent of the slaughter that followed. Let us deal with the second of these claims first. Lenin was not a good guy. He overthrew a democratically-elected government and quickly imposed the totalitarianism that would characterise the Soviet regime until its demise. He established the Cheka secret police, the Gulags, secret arrest and detention without trial, summary executions and the mass killings of recalcitrant peasants, workers and soldiers. He also began the mass starvations of the Kulaks (the so-called 'rich' peasants) that was to reach its nadir under Stalin, particularly in the Ukraine.

The first line of defence of Communism for today's leftists - that it has never really been tried - is equally false. Every form of Communism, or even staunch socialism - Marxism, Leninism, Stalinism, Maoism, Juche, and the latest, Chavism - has caused widespread misery for its subjects. Genocide is not an aberration of Communism, it is a characteristic of it. Communism and socialism are based on the philosophical concepts of idealism and materialism, which support the Marxist belief in determinism - that is, that human beings are not individually responsible for their actions and are merely components of the collective species-being. This justifies the sacrifice of any individual to the collective will (that will, of course, being determined by a small leadership elite). Is it any wonder that people who believe this end up killing anyone who stands in their way?

Today's left-wingers believe that their political system is better than any that went before because they control it, but what makes them think they are better than all the fellow travellers who went before them? It is naive arrogance, that is all. Were they ever to find themselves in a position to make good on their beliefs, they wouldn't last five minutes - because there will always be a Stalin or a Mao standing behind them, only too ready and willing to put a bullet in the backs of their heads as they contemplate their benevolent revolution!

Thursday, November 2, 2017

NZ coalition agreement's best clause

Tucked in the very bottom of the coalition agreement between the New Zealand Labour Party and New Zealand First to form the new New Zealand government is a small, incongruous clause that could be missed on first reading. It says the parties agree to "Record a Cabinet minute regarding the lack of process followed prior to the National-led government’s sponsorship of UNSC2334."

United Nations Security Council resolution 2334 condemns Israeli settlements in the occupied Palestinian territories and I have written before about why I was so disgusted by my government's sponsorship of it. The Israelis claimed that New Zealand was pressured by the outgoing Obama administration into fronting the resolution (with the US abstaining, presumably so that the Democratic Party did not suffer blowback from the powerful American Jewish lobby). The fact that the new government's coalition agreement acknowledges that due process was not followed suggests that there may be substance to this claim.

New Zealand's stance is in contrast to Australian Prime Minister Malcom Turnbull's lauding of his country's strong relationship with Israel on his recent trip to that country. Turnbull took the opportunity during his visit to celebrate the extraordinarily courage of Australian (and New Zealand) cavalry during the Battle of Beersheba one hundred years ago.

It takes a degree of political courage to stand with Israel today. I am sure the clause in the coalition agreement would not have been welcomed by everyone in the Labour Party caucus and certainly not within the Green Party, their other political partner. I imagine that both the New Zealand First leader, Winston Peters, and deputy leader, Ron Mark (a former soldier who served in the Middle East), had a part to play in insisting on the inclusion of the clause, and for that I salute them.

Tuesday, October 31, 2017

Three years is plenty to screw up New Zealand

One of the more interesting pieces of work I've done recently is preparing a briefing for clients on the impact on their business of New Zealand's new coalition government. I went through the details of the coalition agreements between Labour, New Zealand First and the Greens and also, with a fine-tooth comb, through their manifestos. I believe I now have a pretty good understanding of all of their promises.

The total cost of new spending over the next few years is more than $15 billion. It is not obvious how they are going to pay for it, with only a few hundred million of new revenue identified. The source of the money, of course, will be new taxes and borrowing (i.e. deferred taxes) - they just weren't honest enough to admit it in the election campaign. They have revealed only that they intend to cancel the previous National Government's proposed tax cuts for next year and that they will establish a Tax Working Group to look at the tax system. The latter sounds to me like a surreptitious means of justifying the higher taxes the coalition will require to fund all that extra spending.

The other shocking aspect of my analysis is the sheer number of new policy initiatives and laws the Labour-led government plans to introduce. I have written before of how there are ordinarily about five hundred pieces of legislation winding their way through Parliament's processes. Expect this to increase substantially. If we are not already one of the most regulated countries in the world, we are about to become so. 

I believe the coalition government won't last more than three years (and possibly considerably less). Unfortunately, three years is plenty to screw up New Zealand, given that they seem to be seriously commited to the task.

Thursday, October 26, 2017

In Defence of Capitalism

The newly-elected (if you can call her grapple for power ‘elected’) New Zealand prime minister, Jacinda Arden, has criticised capitalism in her first interview. She said, "If you have hundreds of thousands of children living in homes without enough to survive, that's a blatant failure." The statement is simply untrue. There are not hundreds of thousands of children in New Zealand "without enough to survive." New Zealand has one of the most generous welfare systems in the world and no child is dying from deprivation unless it is caused by the criminal neglect of parents or caregivers, which is thankfully rare in our society. 

Ardern is employing the classic statists' ploy of creating a strawman issue to knock it down with the perennial solution - more taxes, more state control and more power for herself. The truth is, the natural state of humanity is subsistence living. Human beings lived in abject poverty for most of their existence. That began to change early in the 19th Century and today fewer than ten percent of the world's population still lives in historical levels of poverty, a dramatic fall as shown in the following graph. This trend is, of course, against an exponentially growing world population so the absolute numbers of people better off is a double-exponential graph.

What caused this dramatic change over the past two hundred years? It was a combination of events that we collectively call the industrial revolution, but that was the outcome rather than the cause. Historians disagree on the number and precise definition of the factors, but most are in general agreement about the nature of them. They include greater individual freedom, acceptance of the concept of intrinsic rights, and respect for the rule of law and property rights (and the importance of the latter is well-documented by respected Peruvian economist Hernando de Soto). These things provided the foundations of functioning free markets that allowed people to produce more than they could individually consume and to exchange and invest the surplus to produce even more. It meant the value of an individual's labour grew as the wealth that could be generated from that labour grew. The fact that it reduced the proportion of the world's population living in poverty at the same time as the population was growing exponentially meant that the increase in wealth was widespread and was not confined to a small elite.

The problem with defending capitalism is there is no generally accepted definition of what it means. Jacinda Ardern undoubtedly uses the Marxist definition, which is something like the exploitation of labour to provide a return to those who control the monetary resources. Marxists see the economy as a zero sum game and believe any return on capital is money taken from the pockets of workers. This is demonstrably nonsensical - capital enables us to leverage the very limited physical capacity of human beings to produce far more than the sum of individual workers' efforts. A person cannot produce a car or an iPhone, or even a pencil, on his own. Capital is the multiplier that enables people to produce these things, and in far greater numbers and for far greater reward than they could without capital's leverage effect. But capitalism is about more than capital (which is, incidentally, why I am not a fan of the term). Capitalism is the economic, political and social system that enables us to make the most valuable and productive choices with our resources, including our individual labour. It enables us to use our lives to the greatest value. The critical element is individual freedom - the freedom to make personal choices.

The arrogance of politicians like Jacinda Ardern is that they believe they are smarter than the countless people in a free market who make decisions about what is of most value to them, their families and their communities. They think they understand the incredibly complex system that is the modern economy better than the collective knowledge of all the people within it. In Ardern's case, this is spite of the fact that she has never had a full-time job outside of politics. She talks about housing as if she believes that she can create more, and more affordable, houses than all the builders, architects, materials suppliers and contractors in the market. She believes she can make better purchase decisions than all the buyers could make, and better financing decisions than all the bankers, if left to their own devices. The truth is that it is the interference of successive governments in the key market areas of building, land use and mortgage lending that has caused the current housing shortages and excessive prices, and Ardern's further interference will undoubtedly make those problems worse.

You would think a 37-year-old who had never held a truly productive job in her life would have a little more humility than to criticise the economic system that has lifted the vast majority of the world's population out of poverty.

Thursday, October 19, 2017

Good luck with that, Jacinda

The people have spoken - well, a minority of them anyway. We have a coalition government that doesn't even have a plurality of the votes. After a month of dithering, the leader of the New Zealand First Party, Winston Peters, who lost his own electoral seat in last month's election and whose party was reduced to 7% of the vote, decided to form a coalition with the New Zealand Labour Party. Combined, the two parties won 44.1% of the party votes - less than the National Party's 44.4% - and yet they have been able to form a government because the Green Party, with 6.3% of the vote, is prepared to support them on 'confidence and supply' (i.e. on budget votes). 

It is not as if the partners to the polyamorous affair have much in common. New Zealand First is a nationalist, protectionist, anti-immigration party and its leader moulds himself on Robert Muldoon, the authoritarian New Zealand prime minister from 1975 to 1984 who took the country to the verge of bankruptcy. Labour is a classic, left-of-centre social democratic party, and the Greens are a typical 'watermelon' alliance of environmentalists and Marxists.

The new prime minister, Jacinda Ardern, is not only New Zealand's youngest premier in over a hundred years, she is the least experienced, having never held a full-time job outside of politics and never having held even an executive position in government. She will need to rule over a rag-tag coalition with less mandate than National to govern and to keep the oldest political fox of them all, Winston Peters, from eating all her chickens. I give it less than twelve months until her government disintegrates and we have another election.

In the meantime, I wish Jacinda Ardern and her coalition good luck and implore them not to stuff up our great little country too much before the big kids take over again.