Thursday, October 23, 2014

Is It Possible to Create New Wealth?

My fellow blogger, Lindsay Mitchell, directed readers of her posts to the maiden speech of newly elected ACT Party MP, David Seymour. I found the speech a little weird, to be honest, but that was more about Seymour's use of language than what he was trying to say. In the speech he posed an interesting question - is it possible for anybody to create new wealth?

If anyone has any doubts about the answer, they need only look at the graph below, which shows that as the population of the world has increased exponentially, income per person has increased at a much greater exponential rate [source].

Human Population Growth and Income Per Person Over the Past 2000 Years

Clearly wealth is not a zero-sum game. This is contrary to the dire predictions of those who believe in Malthusian catastrophe and the theory of limits to growth popularised in modern times by the doomsayers at the Club of Rome.

A zero-sum game view of wealth is the primary economic frame of reference for the political left-wing. Socialists believe that the wealth I accumulate I take from others. Clearly their view is not supported by the facts as the second graph below (ibid) illustrates - as global wealth has continued to increase exponentially over the past few decades, the number of people below the global poverty measure (in absolute terms, not just proportionately) has dramatically decreased. Note that this decrease coincided with the period of greatest economic liberalisation and retrenchment of the state in more than a century.

Poverty is Rapidly Declining, The Economist June 2013
So why do Socialists continue to claim that my gain is someone else's loss? Some of them just may be gullible fools and we can excuse their stupidity. The rest are frauds - they know better but advocate their doctrine out of a petty and spiteful view of humanity. These are the truly dangerous ones. Like the monstrous Ellsworth M. Toohey in Ayn Rand's novel The Fountainhead, the frauds claim to represent the poor and oppressed but actually are pursuing far less noble interests. They can't create wealth themselves so want to deny anyone else the opportunity to do so, preferring that everyone is poor than some people other than themselves are wealthy. Of course, they see themselves as running their utopian, egalitarian world, enjoying the benefits of wealth and power without ever having to earn it.

One of the reasons David Seymour is in Parliament, and we have a pragmatic, centrist government rather than a diehard Socialist one, is that in the recent general election New Zealanders rejected the politics of envy. They voted for politicians that they thought would allow new wealth to be created so that they themselves can enjoy the benefits of that growth. In other words, they recognised that a rising tide raises everyone's boat.

Sunday, October 19, 2014

Self-Determination, Nationalism and Maori Treaty Rights

The New Zealand election campaign brought with it the usual xenophobia from looney right-wing parties such as New Zealand First and Conservative, and at the same time we heard that the Government is to guarantee the Maori tribe Tuhoe some degree of self-determination under a settlement of their Treaty of Waitangi land claim.  All this was against a background of the Scottish vote on independence from Britain and the territorial gains by the so-called Islamic State in Iraq and Syria (ISIS), and it got me thinking about self-determination and how far it should be taken as a matter of rights.

I am a keen student of American history and I am particularly interested in the Civil War, that most ignominious conflict in US history. At a political level the US Civil War was about self-determination - the right of the states to determine their own laws versus the right of the US federal government to impose overarching laws on the states. Of course, it was also about the morality of slavery but that was in many ways secondary as a cause of the conflict to the issue of 'states rights'.

My views on self-determination come from my libertarian politics and the Objectivist philosophy on which those political views are based. I believe that individuals are inherently sovereign and that governments are (to borrow a phrase from an important American document on the subject) "instituted among Men, deriving their just powers from the consent of the governed." This means that self-determination, if it means anything at all, must apply at the individual level - in other words I should be able to determine how I am governed. But many would say that individual self-determination is impossible, or at least in practice it would amount to anarchy. After all, how can the individual self-determination of 4.5 million New Zealanders (or 300 million Americans for that matter) possibly be compatible with good government?

The answer is, it depends on what you mean by "good government". The American founders defined the ideal as government that protects the rights of its citizens, that is the rights to life, liberty and the pursuit of happiness. To those good men, government had no other function than to protect the individual rights of its citizens. Good government is, by their definition, the collective expression of the self-determined and voluntary will of the people to protect their rights. They understood rights as being inherent in man and that the rights of one individual could not infringe upon the rights of another (their heinous error in not applying rights to slaves notwithstanding). They accepted that in order to maintain individual rights, governments must act to prevent individuals abrogating the rights of others and should arbitrate in disputes over rights between individuals. In other words, they understood that as long as governments only protect individual rights and do nothing else, there is no inconsistency between individual self-determination and collective government.

Taken to its logical conclusion, self-determination means that any group of individuals should be able to decide to opt out of any existing governing structure (be it nation, city or neighbourhood) and set up an alternative. This is, of course, exactly what the American founders did. Which brings me back to the Tuhoe, the Scots and ISIS. The problem with all of these groups' aspirations for greater self-determination is that none of them wants to protect individual rights. Tuhoe want to impose a traditional form of Maori government, wherein political power was seized by the strongest and most brutal members of the tribe, and women, slaves and outsiders had no rights at all. The Scots independence campaigners wanted to retain and enhance their socialist economy wherein taxpayers are forced to part with an ever-larger portion of the fruits of their labour to pay for whatever the government wants to spend it on. And the Islamic State rebels want to impose Sharia law wherein women and 'infidels' are second class citizens and no one is free to choose what religion they practice, who they marry and what they say. In all of these cases the alternative form of government is less protective of individual rights than the one they are seeking to replace. That is not self-determination in my book.

I have no truck with nationalism. All nation states are artificial constructs, no matter how old or grand they are, and there is nothing inherently good in one national structure versus another. I'm all for tearing down anachronistic national or empirical structures where they do not serve the citizens they should be serving. I believe that smaller, more local government is generally better at protecting individual rights because it is easier to hold accountable than larger, more geographically spread government. But self-determination is not worthy of the name unless it protects individual rights.

Sunday, September 21, 2014

Common Sense of the New Zealand Voter Prevails

The general election in New Zealand produced a result that is both extraordinary and comforting. It is extraordinary because the National Party won a third term in government with an overall majority of seats and an increase in votes - the first time a third term government has increased its vote since Richard 'King Dick' Seddon's government in 1899. The left-wing Labour and Green parties both saw their vote decrease over the 2011 election. The race-based Maori Party also saw its vote decrease and the Internet-Mana Party, Kim Dotcom's personal political vehicle for ensuring he maintains his legal sanctuary in New Zealand, was wiped out.

It was comforting because New Zealand voters ignored all of the distractions from left-wing commentators and the mainstream media to ensure the current government's middle-of-the-road economic policies would continue. Voters saw the distractions, including allegations that the National Government has abused the powers of the security services to target New Zealanders and its political enemies, as disingenuous, rightly questioning the motives of those who were making the allegations.

I was hoping for the libertarian ACT Party to do better and particularly that its leader, Jamie Whyte, would make it into Parliament, but nevertheless I am well satisfied with the result. Had the outcome of the election been radically different, with a Labour-Greens coalition introducing new punitive taxes and other economically damaging policies, I would be seriously reconsidering whether I would continue to call New Zealand home. But that is not necessary, at least for another three years, and for that I am grateful for the common sense of the New Zealand voter.

Thursday, September 18, 2014

Kiwiwit's Easy Guide to Voting

I imagine the whole world knows there is a general election in New Zealand this Saturday, given I have seen articles about our ridiculous election campaign in the Wall Street Journal, New York Times, The Times, The Daily Telegraph and many other international publications over the last month.  Many other bloggers are publishing their voting guides, giving their careful assessment of candidates in each electorate. My voting guide is much simpler. It has three easy principles that the discerning libertarian voter can apply to ensure New Zealand ends up with the best of the bad bunch:

1) Don't vote for the looneys. That includes all Conservative, Green and New Zealand First party candidates.

2) Vote for the ACT candidate if you have one in your electorate. If you don't, vote for the National candidate. Yes, I know, voting for that bunch of unprincipled wimps in the National Party sticks in my craw as well, but as bad as they are, the others are worse.

3) Give your party vote to ACT.

Simple really.  And remember the old Democratic Party slogan, vote early and often!

Tuesday, September 16, 2014

Moment of Truth for Dotcom Will Come Saturday

When the Dotcom case first hit the news in New Zealand, I had some sympathy for the corpulent German. New Zealand law enforcement agencies, acting upon the instructions of US authorities, had grossly abused their legal powers and Dotcom's rights as a New Zealand resident by subjecting him to a humiliating arrest and confiscation of assets - all in pursuit of criminal copyright charges that even the US courts have been extremely reluctant to enforce in any case where a service provider like Dotcom's Mega-upload business has been the defendant. But any sympathy I might have had for Dotcom has evaporated as he has attempted to use his considerable wealth to pervert the New Zealand electoral process in his own interests.

I didn't watch the coverage of Dotcom's so-called 'Moment of Truth' rally last night in Auckland but I've read accounts of those who were there. The Mega-man was expected to reveal damning evidence showing that Prime Minister John Key knew about him before the New Zealand authorities acted on the US arrest warrant. Furthermore, he claimed that he was lured to New Zealand with the express purpose of the New Zealand Government extraditing him to the United States. Unfortunately for Mr Dotcom's credibility he revealed no evidence to support these claims. The only credible allegations were those by Edward Snowden (who joined by video from Russia) and journalist Glenn Greenwald that the New Zealand Government has been engaging in mass surveillance of its citizens. John Key has categorically denied these allegations and has released declassified documents that he claims support his denial.

Anyone who reads this blog knows that I am more than a little suspicious of our modern security state. The security capabilities that are meant to be directed at external threats are often used for internal surveillance and any legal constraints on their misuse are inadequate or ignored. The use of New Zealand's security agencies to enforce the copyright infringement case against Kim Dotcom is proof of this. However, the New Zealand courts have already shown a willingness to uphold Dotcom's legal rights and there is every likelihood that they will eventually dismiss the extradition case against him. But that is not enough for the the former Herr Schmitz.

I believe anyone should be able to exercise their rights to free speech by putting their money where their political mouthpiece is, but I think no one should have any illusions about what Dotcom is trying to do here. This has been a torrid election campaign with the left-wing opposition engaging in what has looked like increasingly desperate tactics to topple the Key Government. The latest polls show the National Party's support as holding at around 50% and it seems likely that, come the election next Saturday, New Zealanders will respond to Dotcom's cynical misuse of our electoral process by denying him and his political allies any representation in Parliament. 

Friday, September 12, 2014

Scottish Yes Vote the End of 'Great' Britain

While here in New Zealand we wrestle with the choices of who is the least bad political party in a crowded general election field, on the other side of the world a more crucial vote is about to take place. I am writing, of course, about the Scottish referendum on independence, which, if you believe the polls, is going down to wire.

Like most distant international observers, at first I regarded this referendum as something of a sham. Early indications were that the 'No' vote would win by the best part of 20 percentage points and that the Scots would soon get back to complaining about the weather and their lack of success on the football turf. My reaction to the latest poll, which has the 'Yes' vote one point ahead, initially was shocked disappointment. Britain is the country in which I have lived the most years of my life after New Zealand and I have a immense fondness for the place.  But on consideration, another part of me concludes that 'Great' Britain died a long time ago and the dismembering of the corpse is overdue.

Britain today is a country that ignores mass child abuse in the name of tolerance. It is a country where you can be arrested for quoting its greatest prime minister. And it is a country that chose to launch the Olympic Games with a celebration of a moribund public health system in which people are much less likely to survive cancer than in other countries. In other words, it is not a country its citizens should be particularly proud of. However, does that justify the Scots seceding?

The problem for the Scots is that the things they want to preserve by becoming independent are the things that have caused Britain to decline from its former glory. They want more National Health System, more welfare and more government interference in their social and economic lives. They think they are a more caring society than the rest of Britain and they want even more of it. The problem for the Scots is that England, or more specifically the Southeast of England, pays the bill and they delude themselves that North Sea oil will continue to pay for their already over-extended Socialist economy. Nothing could be further from the truth. North Sea oil is already starting to run out and without it the Scottish economy will look more like that of Greece or Portugal.

But in my view the worst thing about a Yes vote in the referendum is that it is a point of no return. Britain seemed like a lost cause once before - in the 1970s - but Maggie Thatcher dragged it kicking and screaming back into a position of world political and economic leadership. I have liked to think that the decline since Thatcher was just one more good prime minister away from being reversed. A Yes vote will lock in that decline and Britain will never be Great again. Personally I feel that is a very great shame.

Tuesday, August 26, 2014

The True Cost of Election Bribes

We have an election campaign underway in New Zealand. You would need to be a blind and deaf hermit to miss all the bullshit the media have been spouting about it. But in between the wall-to-wall coverage of the petty name-calling and downright lies, we are beginning to see some policy announcements from the parties and almost every one of them is trying to bribe voters with promises of more government spending. Even the so-called centre-right National Party thinks it can bribe first home buyers into voting for it (and Not PC gives a very good account of why that is a silly idea in this blog post). 

Unfortunately, many voters are too gullible to question where the money for these bribes comes from. Every dollar has to come from some hardworking taxpayer's pocket. In fact, every dollar of government spending means that around $1.25 has to come from a taxpayer because there is a transaction cost in collecting and spending the money. It costs to run the tax department and it costs to run all the government agencies that spend the loot the government extorts from taxpayers - and despite the ease of the task, they're none too efficient at spending the money because they have no incentive to be efficient (unlike businesses who have to compete with other businesses to be ever more efficient at producing the products and services they produce). 

But, in reality, it's even worse than that. The true cost of the government spending one dollar is much higher because the taxpayer's $1.25 probably would have been invested in a business (either directly by buying shares or indirectly via a bank) and that $1.25 of capital might have enabled the business to produce an additional $20 worth of products or services. That $20 worth of revenue to the company would have been spent on, say, $10 in wages, $5 of supplies and $3 in rent. And the workers that earned the wages would have spent their additional $10 on food at the supermarket or put it towards an Air New Zealand flight to see grandma, and the supplier would have spent some of his $5 on wages, and the landlord would have spent some of his $3 on paying a contractor to get the roof fixed, and so on and so forth.

Now you start to see the true cost of that one dollar the government is promising to spend on you. Talk about cutting off your nose to spite your face.