Thursday, December 22, 2011

2011 in Review

2011 has been an interesting year.

Early in the year we had the second severe earthquake in Christchurch and this one killed nearly two hundred and left the city with massive destruction. The earthquake was instructive not so much in terms of what it taught us about the impact of such a seismic event on buildings and lives (which was pretty predictable) but in what it taught us about the behaviour of our Government in such a situation. The dust had barely settled before they had deployed troops and armoured personnel carriers on the streets of Christchurch and were arresting and prosecuting property owners for attempting to gain access to their own properties. Clearly John Key's Government has no respect for individual liberty and property rights.

A month after the Christchurch earthquake, Japan suffered a much more devastating one combined with a tsunami that killed more than fifteen thousand people. In spite of its much greater impact, Japan is well advanced with its reconstruction effort.  In the meantime, our national and local governments continue to dither and obstruct those who want to rebuild their lives in Christchurch.

During the year it became blatantly obvious that "spend and hope" economic policies were never going to lift the Western world out of recession. Certainly it is hard to see how more of the same medicine that caused the crisis will cure it. In New Zealand our Government is spending $18B this year more than it takes in revenue, despite increasing consumption taxes and many government charges. Our minister of finance promises we will return to government fiscal surpluses by 2014 but given his projections are based on 4% economic growth and our current rate is about 1%, this seems like very wishful thinking.  In the meantime, various ignoramuses camped in parks around the world, under the "Occupy Wall Street" banner, have chosen to scapegoat bankers as the cause of all the world's problems in a slanderous campaign that is reminiscent of the Protocols of the Elders of Zion that the Nazis used to rally political support in the 1930s.

Governments around the world continued to erode the rights of their citizens with ever more instrusive security and surveillance laws in the name of the so-called War Against Terror.  The least you can say for the panjandrums involved is that they are relatively indiscriminate in their abuse of citizens, as this report of the US TSA's actions attests.  The US Government finally killed Osama Bin Laden but if the Al Qaeda leader's aim was to destroy the liberties that Westerners enjoy, then he has certainly achieved what he set out to do.

Late in the year we had an election and New Zealanders chose to re-elect John Key's National Government in coalition with a motley bunch that including a former National Party minister who was standing for a party whose principles he clearly does not believe in, a former Labour Party minister who jumps in bed with whichever party will give him a seat in cabinet, and a party based on the racist principle that Maori deserve preferential treatment in our society.  I cannot see John Key's appeal as he and his government seem to me to be entirely without any political principles.

The political finale of the year was the death of Kim Jong Il, the nutcase who has ruled North Korea since the death of his father who was the previous nutcase leader of that country. Kim Jong Il managed to annoint his third son as his successor, the sole selection criteria apparently being that the third one was the only of his sons who was not mentally handicapped or gay. It is a sad indictment on humanity that we still have such tyrants as leaders of a significant number of countries.

And finally, we have this incident to greet us a few days before Christmas - an horrific crime against a defenseless 5 year old girl in a New Zealand campground.  It is no surprise that locals report the perpetrator may be a member of the Mongrel Mob - a predominantly Maori gang whom the authorities treat as a welfare organisation rather than the violent, drug-running, raping bunch of thugs it really is.

On that depressing note, I wish you all a very safe and pleasant Christmas and all the best for 2012.

Friday, December 9, 2011

The Morality of Welfare

This blog incorporates the comments I posted on Karl du Fresne's blog this week. Karl posted about a documentary that aired on TV3 during the last week of the New Zealand general election campaign (and of course TV3's timing was not coincidental - it was just part of their on-going pro-Labour, pro-Greens editorial campaign). I didn't see the documentary but in Karl's view it was "very one-sided", presenting the "message...that the welfare state has failed our poor."

This sort of overtly left-wing polemic always tries to cast the rest of us (i.e. those other than the 'deserving poor') as uncaring and immoral. How could we in good conscience possibly let one child anywhere go hungry? It never asks the same question of the parents and extended families of such children, assuming that they must be victims of circumstances like their children.

Those who oppose further extension to the already ubiquitous welfare state, and who oppose further taxation increases to pay for it, are often put on the back foot by such arguments. They seldom challenge the de facto position that there is no moral argument that could possibly be put forward to justify less state intervention in the welfare of poor children.

Well, I am not afraid of entering the moral debate on the side of the oppressed taxpayer. My comments on Karl's blog follow.

I guess you could call the welfare state 'compulsory altruism', if that is not too much of an oxymoron. The system of taxation and redistribution through welfare is enforced by the state's exclusive legal mandate to use violence (and if you don't believe this, then let's make taxation voluntary tomorrow and see what happens).

So, the moral argument in regards to welfare is whether it is right for the state to threaten and use violence against some people to force them to support others (whether such people are deserving or not may change the weight of the argument but not the principle).

I believe that a rational, moral society is one where families and communities look after those less fortunate than themselves. I also believe that a rational, moral society is one where no man or woman is forced to work for the benefit of another (or another's children).

I don't believe these two things are mutually exclusive, but so long as the taxation and welfare system is based on the threat of violence, it will lack any real moral mandate in my view, no matter how many heart-rending documentaries appear on TV.

Forcing people to work for someone else's benefit is slavery. The needs of others do not justify this slavery no matter how compelling that need. The only choice we have is to submit to the slavery or join the ranks of those benefiting from the corrupt welfare system. The system may make most New Zealanders feel like they are part of a 'caring society' but we should not pretend it is anything other than extortion based on the threat of violence. It is certainly not moral.

Sunday, November 27, 2011

Launch of Mars Rover Trumps Political Mediocrity

I could get quite depressed at the outcome of New Zealand's general election - a triumph of mediocrity if I've ever seen it. But it is a lovely Sunday morning in Wellington and news has come through of the successful launch of NASA's Curiosity mission to Mars. This incredibly advanced robotic rover, if it lands successfully on Mars, will significantly push forward our understanding of the Red Planet and whether any form of life is, or has been, sustainable there.

Amongst the self-indulgent political squabbles, the economic problems that beset the Western world, and the trivialisation of serious issues by the media, such news sticks out like a beacon of hope. Mankind continues to push forward with the use of its intelligence to make better tools that will one day take that intelligence into deep space. This news should cheer the most cynical of us.

Tuesday, November 15, 2011

I Won't Pay!

Labour is proposing to fund its election bribes with increases in income taxes and the introduction of a capital gains tax.

I calculate that with the top income tax rate at 39%, GST at 15%, capital gains tax at 15%, ACC at around 4%, plus FBT, rates and exorbitant user pays charges for every government service, I will be paying well in excess of 50 cents in every dollar I earn to the government.

As a self-employed businessman and a member of the 17% of households who pay 97% of the income taxes in this country, I think I pay far too much tax already.

I refuse to pay any more. I will leave New Zealand or stop working altogether rather than hand over more than half of my income to the government. And I think I speak for many of the 17% of New Zealanders who already pay for everything.

So who is going to pay for these Labour Party bribes once those of us in the 17% shrug off the burden of supporting the other 83%? No one.

Think about it, Labour Party voters.

Monday, November 14, 2011

New Zealand's Mendacious Media

I have blogged before about the state of New Zealand's news media but several recent examples of the depths to which they plunge have prompted me to blog on the subject again:

1) The Wellington daily The Dominion Post opened its coverage of the election campaign by asking the party leaders what they would do if they found themselves caught short without a clean pair of underpants. Another media outlet asked which of the candidates voters would rather sleep with. They consider this appropriate coverage of a parliamentary campaign at a time when New Zealand faces some its biggest challenges - a deteriorating world economic situation, a burgeoning government spending deficit and a country struggling to recover from its biggest natural disaster in decades.

2) The Auckland Sunday paper, The Herald on Sunday, has been caught illegally taping a private meeting between the Prime Minister and a leading candidate of one of the other political parties. The Prime Minister has referred the matter to the police.

3) The Dominion Post (again!) runs on its front page a banner headline (in the sort of typeface that used to announce war being declared or man landing on the moon) announcing the drunken antics in a foreign bar of a prominent New Zealand sportsperson. I was in the country concerned at the time and the incident occasioned no comment in the local press there, so obviously it wasn't particularly serious.

I was discussing these incidents with a business colleague of mine and he told me the story of his niece, a bright young woman who was studying journalism at one of this country's universities. This young woman has decided to drop out after nearly two years of the course. Was it because she wasn't getting good marks? Was it because she couldn't cope with the workload? Or perhaps it was because she decided she didn't want to be a journalist after all?

It was none of the above. The reason she dropped out was ethical - that is, the unethical behaviour being taught and encouraged by the journalism lecturers. She was taught that any means justified the ends of a scandalous story and the advancement of the (left wing) political agenda that the lecturers supported. She had expected to learn that journalism was a noble calling to uphold the truth and to act responsibly but she was disillusioned to discover that precisely the opposite was being taught.

This is why I no longer subscribe to a daily newspaper or watch television news or listen to radio news in this country. They are almost without exception a bunch of mendacious scumbags. If you agree with my assessment, I urge you to cancel your newspaper subscription and vote on the broadcast media with your remote control. You can get all the news that matters on the Internet - news that is more timely, accurate and balanced than anything that comes out of New Zealand's mainstream media propagandists.

Saturday, October 29, 2011

Roger Kerr - the Courage of His Convictions.

I have just read that Roger Kerr has died.

This was a man with the courage of his convictions, who did not shy away from his strong belief that economic rationalism and free enterprise were the correct path for New Zealand to return to prosperity. He held the unorthodox view in today's society that most people are intelligent and capable enough to make their own decisions on how they should earn a living, care for their loved ones and others in the community, and provide for their own retirement. He believed that we would all be better off without an interfering, authoritarian government bossing us around in all areas of our lives.

Unfortunately we live in a topsy-turvy world where conventional wisdom considers an interfering, authoritarian government to be moral, and leaving people to make their own decisions on what is best for them and their communities is considered immoral. Roger was often on the wrong side of what are considered politically acceptable views in this country and was vilified for it. But he stuck to his guns to the end, posting this blog defending New Zealanders' saving record against politicians who want compulsory savings the day before he died.

Roger Kerr had the courage to espouse his views, unpopular though they may have been. I can think of no other prominent New Zealander who did it so convincingly.

I extend my deepest sympathy to his family and friends.

Tuesday, October 25, 2011

Time to Return to Reality

The New Zealand All Blacks won the Rugby World Cup on Sunday night, in case you hadn't heard. Like most New Zealanders, I watched and celebrated the win and was pleased that we were able to win it for the second time, matching South Africa and Australia in successful campaigns for the Webb Ellis Cup.

But now is the time for New Zealand to return to reality. The Rugby World Cup won't reduce the $380 million per week that the Government is borrowing to pay for its profligate expenditure (a third more than it takes in revenue). Nor will it restore New Zealand to the top ranks of OECD nations in income per capita (we currently languish at the bottom on the list). It won't help rebuild Christchurch or fund the more than $18 billion of losses sustained in the earthquakes. It won't address the disenchantment of many New Zealanders who feel they are being treated as second class citizens in a country that now treats Maori as a special elite. It won't stop our best and brightest workers emigrating to countries with better opportunities. It won't reduce our terrible youth (and older age) suicide rates. And it won't eliminate the violent crime that results in imprisonment rates that are second only to the USA.

These things will take a greater courage than that shown by the All Blacks in defending their narrow lead on Sunday night. For the All Blacks courage, without detracting from its merit, was a physical courage. Solving New Zealand's problems will require a moral courage that I'm not sure any of our current political leaders are capable of showing. Perhaps the All Blacks' win will inspire them. I certainly hope so.

Tuesday, October 11, 2011

Representation Through Taxation

I used to be a pure democrat, convinced that the concept of one man (or woman), one vote had a moral sanctity that could not be questioned by any right thinking person. But I am becoming increasingly convinced that it is our system of universal suffrage that has led to the current economic plight of most Western nations. Specifically, it is the separation of representation and taxation that is the problem in my mind.

The American Revolution was started with the catch-cry of "no taxation without representation," a protest about King George III's government levying taxes on the American colonists without granting those colonists representation in Westminster. In the West we have gone to the opposite extreme - every adult has an equal say in the election of the government irrespective of whether they pay any tax at all.

Benjamin Franklin said "democracy is two wolves and a lamb voting on what to have for lunch," and this is precisely the nature of Western democracy. In most Western countries the vast majority of the taxes are paid by a very few taxpayers (in New Zealand, the top 17% of taxpayers pay 97% of income tax and in most Western countries it is a similar ratio). This means the small minority of people who pick up the bill for almost all government spending are held to ransom by the majority who pay nothing and who continue to demand more and more.

The current prolonged economic downturn in the West is, in the opinion of an increasing number of commmentators, likely to be worse than the Great Depression. Almost all Western governments are living beyond their means, running up huge budget deficits and adding to their existing mountain of debt to fund them. The only response by governments is to spend more through so-called "quantitative easing" while calling for the productive few to pay even more taxes. The situation is unsustainable and few politicians have any alternative solutions.

I believe most leaders in the West know what is the real solution to the problem but lack the political courage to implement it. The solution, of course, is to significantly cut government spending and regulation, balance the budget and put money back into the hands of the productive few who will invest it to grow their businesses and create new jobs.

The issue with doing this is that politicians are not going to reduce expenditure and handouts to the unproductive majority while that majority determines whether they will continue to govern. Turkeys cannot be expected to vote for an early Christmas. That is why we must change the voting system if we are to change the economic behaviour of governments.

I believe the answer is a system that I call "Representation Through Taxation". I discussed this in an earlier blog and reiterate its key points below.

I would like to see a revision to our electoral system, call it a new form of proportional representation if you like, where you get to vote in proportion to the taxes you pay. Under this system, taxation could become voluntary but if you wanted to influence the political system you would have to pay taxes to, in effect, buy votes. Each $1000 you paid in taxes would buy you one electoral vote. The average of your tax contribution over the three years prior to the election would be taken to avoid stacking the votes in the last year of an electoral cycle. If you paid no taxes, you would get no votes. I see no reason why corporations shouldn't be given votes in proportion to the taxes they pay as well.

But what about those who contribute to society through unpaid voluntary work, I hear you ask? Well, it would be simple to ensure those people are recognised for their efforts too by giving them equivalent tax credits for the hours they worked in their voluntary jobs.

This is a radical change to the fundamental premise of "one man, one vote" that, I am sure, will have the left-wingers screaming from the rooftops. They will shout it down with claims that it is a return to the feudal age where the aristocracy got to determine who governed everyone - but it is not. It is system that gives everyone who contributes to society a vote proportionate to their contribution and it holds governments accountable to those who pay the bills. It is, therefore, a system that will promote economic rationalism and responsibility.

It is time those who paid the piper got to call the tune.

Friday, October 7, 2011

Steve Jobs was the "factory owner"

I think the greatest tribute I can make to Steve Jobs was to say that he was the factory owner I wrote about in the blog below. Okay, I know the iPhone and iPod manufacturing was outsourced to factories in China, but he was the man whose vision created the products and brought them to market.

He was also the man who, when it was suggested that he should give the rest of his life over to philanthropy was reported to have responded that "he could do more good focusing his energy on continuing to expand Apple than on philanthropy".

"That’s his legacy. Everything else is a distraction."

He understood, unlike Bill Gates, Warren Buffett and Ted Turner, that his products and services would do far more for mankind than any philanthropy.

It is paradoxical that so much praise for this wonderful industrialist comes at the same time as the political left wing and media vilify his kind.

The Elizabeth Warrens of this world who want to pull us all down to the same size, to make us meek and mild servants of society and the state, in effect want a world without Steve Jobs. I am pleased we still have a world that can give rise to his kind.

Wednesday, October 5, 2011

Nobody Got Rich On Their Own...

I found the recent comments of Elizabeth Warren, Democratic Senate candidate in Massachusetts and former White House financial reform adviser, to be so ridiculous that I wasn't going to bother to blog on them, but none of the responses have fully captured the reasons why her comments are so ignorant and wrong so I thought I should set out the counter arguments here.

Just to recap, if you didn't see the video, Elizabeth Warren said:

“You built a factory out there? Good for you. But I want to be clear: you moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did.

“Now look, you built a factory and it turned into something terrific, or a great idea? God bless. Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.”

The gist of what she is saying is that everyone in society pays for everything that goes into the factory owner's goods and that therefore the factory owner owes society and should pay and pay and pay.

There are several problems with this argument:

1) The factory owner is the only one who pays all of the input costs to his goods. He not only pays for all the parts and raw materials that go into his goods, he pays for the transport of getting those parts and raw materials to his factory including road user charges. He pays for the education of his workers in the higher salaries he must pay qualified staff. He pays for the fire service in the insurance levies on his buildings and plant. Perhaps the only input that he does not pay the full cost of directly in most countries is the police force, but as we know the police these days do not have protection of private property as a priority and therefore the factory owner has to pay for a private police force in the form of security guards and electronic alarm systems.

2) The factory owner is the source of all revenue that provides the tax base. He not only pays tax on his company's income and on the goods he sells (through sales and value added taxes), he pays the gross salaries of employees from which payroll taxes are taken. He pays these in addition to all the input costs mentioned above and receives little or no direct value in return for all the taxes he pays. And because almost all of the Government-provided services that Elizabeth Warren mentioned have a user-pays element in their pricing, he is actually paying for these twice.

3) His goods and services provide added value to those who purchase them and to the wider community. After all, the books and materials that are used to educate our children, the medicines that are used to cure our diseases, the fire trucks and the hoses that are used to put out our fires, the uniforms, cars and police stations used by our police - all these things are provided by factory owners.

Elizabeth Warren and her ilk want the factory owner to pay more. Why? So that she can dole more out to those in society who don't provide all the goods and services, jobs and taxes? Already, in most Western countries the vast majority of all income taxes are paid by only 10% of the population (e.g. see this US article Guess Who Really Pays the Taxes). They even pay the salaries of ungrateful, left-wing fools of politicians like Elizabeth Warren.
And she think those few people should pay more?

Sooner or later the productive few in society are going to say, enough! I think we are at that point already. Atlas is about to shrug (to use an expression of philosopher Ayn Rand who predicted precisely this). Those who carry the whole world on their shoulders will throw off the burden. And why shouldn't they?

Elizabeth Warren wants slavery. She wants the productive in society to be slaves to the unproductive. Not content with the partial slavery we already have in most Western countries, where we are forced to work a significant proportion of our time to pay taxes to the government, she want us to accept that the society owns 100% of our bodies and our time. It is not surprising that she thinks we should be grateful to society for allowing us to keep any of our incomes, for that is the attitude of a slave owner. Of course, she sees herself as the slave owner rather than the slave.

The problem with her attitude (aside from the twisted morality of it) is that no slave ever produced an iPhone (or, if you want a more 'worthy' example, an MRI scanner). Elizabeth Warren's philosophy leads to a society where there are no factories, or at least only factories that produce Trabants rather than BMWs. If you want proof of this, you only need to look at the contrast between North and South Korean today. North Korea is built on Elizabeth Warren's philosophy and it is the inevitable result.

Friday, September 23, 2011

Piss Off and Leave Us Alone

Not PC wrote a post the other day about the small-minded puritan streak coming out in the New Zealand authorities' attitudes to the Rugby World Cup celebrations. It appears officials are concerned that people are enjoying themselves too much.

Another example of this silly nanny-ism is this article about Police concern regarding the flying of All Black flags on cars. The article says the Police are worried about the "potential for carnage". For god's sake, where is their perspective? Haven't the police in this country got better things to worry about? How many people have ever been killed in this country by flags on cars? Zero, at a guess.

A word to the Government and the bureaucratic busybodies in this country who think they have the responsibility to keep us safe by killing off every pleasure we might indulge in: we don't need your protection, so piss off and leave us alone to enjoy ourselves.

Monday, September 12, 2011

Lessons of 9-11

I find myself in two minds on the 10th anniversary of the attacks on the World Trade Centre and Pentagon by lunatic Al Qaeda thugs. On the one hand, I am relieved there has not been a repeat of attacks on the scale of that terrible Tuesday and that America has achieved a semblance of justice in the deaths of Osama Bin Laden and other Al Qaeda leaders. On the other hand, I have a sense of sadness and disappointment that Osama Bin Laden and his followers have achieved what they set out to do - to have a significant impact on the freedom and lifestyle of people in America and the West.

Bin Laden's legacy is seen in every major city in America today - in the bag checks, the X-ray scans and the pat-downs that greet visitors to almost every public building or event. It is seen in the overbearing security measures imposed on every airline passenger and the requirement that we are photographed and fingerprinted like criminals when crossing borders. It is seen in laws like the US Patriot Act that give law enforcement agencies unfettered powers of arrest and imprisonment, and in the extra-judicial kidnapping, imprisonment and torture of foreign nationals in Guantanamo Bay and in countries around the world.

Indeed, if Bin Laden was right in his fundamentalist beliefs and he is now enjoying his 72 virgins (or dates, if you believe some translations of the Koran) in heaven, I would say he would be having the last laugh because he has turned Americans and other Westerners into craven people who are happy to accept greater restraints on our liberty than at any other time since World War 2.

Ten years after 9/11 there are few signs that Western governments will ever relax their intrusive security measures and restore the legal rights and freedoms that have been eroded in the name of fighting terrorism. I can't help thinking that there must be a smarter way of dealing with the threats to our society from the likes of Al Qaeda than to turn our own countries into fortresses where we can longer enjoy the all of the freedoms we used to take for granted.

Thursday, September 1, 2011

Copyright Law Short-sighted

I agree with the comments from Paul Brislen, the head of the Telecommunications Users Association of New Zealand, about The Copyright (Infringing File Sharing) Amendment Act 2011 that passed into law today. This law is ill-considered and short-sighted.

I am not in favour of copyright infringement. As an author, I would take a dim view of anyone stealing my copyrighted material and as a rule I don't steal other people's material. However, in New Zealand in particular, we face a problem of access that in my view somewhat justifies New Zealanders' casual attitude to downloading films, music and television programmes from the Internet.

We have a small and tightly controlled media with only two television networks, two or three major cinema chains, and a small distribution market for books, music and films. These industry dynamics, combined with one of the most restrictive censorship regimes in the Western world, means we simply don't get access to much of the film, television and music content that the rest of the world gets, other than through the Internet. Most of the legitimate Internet sources of content such as Netflix are restricted to US-based subscribers. So we face the choice either to limit our entertainment diet to the bland tripe served up by our small and restrictive legitimate media channels, or obtain access to the content we want through illegitimate channels.

A further issue I have with this law is its blunt, heavy-handed enforcement instrument of cutting off Internet access. This is a typically statist approach typical of the current Government. Surely if someone is stealing content the appropriate redress is restitution to the copyright holder by the offender?

I don't think this new law will be effective in addressing the problem of illegal use of copyrighted material any more than anti-drug laws have been effective in reducing marijuana use. I believe the answer is in the media companies' own hands - provide legitimate access to the material New Zealanders want at a reasonable price. If we had better choices than those currently served up by our inadequate mainstream media and entertainment distributors, I would be the first to cheer the prosecution of those who breach copyright.

Monday, August 22, 2011

The Income Divide Between "Bosses" and "Workers"

In this Saturday's The Dominion Post newspaper there was a front page article and a full-page inside article highlighting the fact that the "boss" of Telecom New Zealand receives 50 times the salary of a Telecom "worker" (as if chief executives aren't workers).

Usually I don't read The Dominion Post, despite it being the major daily newspaper for my city, Wellington. This is because over the years it has developed an overwhelmingly left-wing, statist editorial stance that permeates almost every article in it. If I want politically neutral reporting on important news and issues, I have to go elsewhere. But I made an exception this weekend and, as usual, was appalled by the lack of journalist integrity and, frankly, the stupidity of these articles on the income divide.

Firstly, the articles relied on a few superficial examples of chief executive pay packets rather than including any detailed analysis of relative income changes across the employment market over time.

Secondly, they didn't include any comparative international analysis of New Zealand incomes. On an international basis, our chief executives are comparatively lowly paid whereas our "workers" are comparatively well paid for the same jobs. It is the latter comparison that is most salient because New Zealanders compete in the international market for their jobs and incomes.

The purpose of The Dominion Post's campaign (and it is obvious it was a political campaign) was to support the calls from the Council of Trade Unions and others for further increases in the minimum wage. But such a call isn't justified by comparing "workers" incomes with chief executives. It is only justified if we can show that New Zealand workers are more productive (i.e. add greater value to the products and services they are producing) than competing international workers. Pushing up New Zealand workers incomes without a corresponding increase in value produced will only push jobs offshore.

The lack of a more intelligent analysis of this issue highlights the poor standard of journalism at The Domnion Post but is, unfortunately, par for the course for the New Zealand media.

Friday, August 19, 2011

The Berlin Wall - Lest We Forget

It has been fifty years this month since the German Democratic Republic erected the Berlin Wall.

The Wall was the physical embodiment of the Socialist belief that common good trumps individual good. It was built to preserve the Socialist regime of the GDR by physically imprisoning its population, who up until then were leaving for West Germany in increasing numbers. The Communist form of Socialism that was practised in the Soviet block, and that is still adhered to a greater or lesser extent in China, Cuba and North Korea, is the natural extension of all Socialist regimes. Socialists believe they know what is best for all of us and that individuals should not be trusted to make their own decisions about how they live and work. Ultimately this belief must lead to the use of violence by the state to restrain individuals where their individual choices conflict with those of the rulers of the state.

The only alternative to the building of Berlin Walls is a society based on the paramouncy of individual rights. In such a society the only legitimate role of the state is to prevent the initiation of violence by one individual or group against another. In such a society the state rules only by consent of the individual. In such a society, governments and laws are subservient to the rights of the individual, not the other way around.

Unfortunately, such a society doesn't exist in the world today. In all countries there is an on-going battle between those who adhere to the Socialist philosophy that 'might is right' and those who believe that individuals are best able to make their own decisions about how to live their lives.

The Berlin Wall is a fading reminder that, as Wendell Phillips (not Jefferson, as commonly thought) said, "Eternal vigilance is the price of liberty."

Wednesday, August 3, 2011

If You Are Interested in Climate Change...

...then go and listen to the very entertaining Lord Monckton speak on the subject in Auckland, Wellington and Whangarei this week. Details here.

And if you want to read an excellent book on the subject then buy James Delingpole's Watermelons (available as an eBook here).

Monday, August 1, 2011

As Good as it Gets?

I read the following in James Delingpole's blog on the The Telegraph's website today and it touched a depressing nerve:

"When Tony Blair and Gordon Brown were in charge Britain’s rapid and terrifying decline was still just about bearable. That’s because in those days you could console yourself that they would sooner or later be swept away by a Tory regime which would swiftly set about undoing all the damage they had done. But just look at the mess we’ve landed ourselves instead: I feel like a bit like a wartime Polish officer who has been rescued from the Germans, escaping execution by the skin of his teeth, only to discover that his liberators are the NKVD.

The worst of the many awful things about Cameron’s bastard Coalition is this: you know that where we are now is going to be about as good as it gets."

It is exactly how I feel about the John Key-led coalition government in New Zealand.

Friday, July 29, 2011

On Left and Right

It has been interesting watching the political left-wing around the world, and here in New Zealand, shamelessly exploiting the 76 tragic deaths in Norway to push their political dogma. They are trying to promote the line that Anders Behring Breivik was a Neo-Nazi and right-wing nationalist and therefore anyone with right-wing political beliefs is likely to commit similar heinous acts.

Let us examine the logic behind this. If Breivik was a Nazi, he was a Socialist. After all, the acronym NAZI stands for National Socialist German Workers Party (Nationalsozialistische Deutsche Arbeiterpartei in German) and Hitler professed to be a Socialist. He believed in a strong state, a mixed public-private economy and a single party political system, all hallmarks of other Socialist regimes worldwide. He had much more in common with the many left-wing dictators who survived and followed him such as Stalin, Mao Tsedong and Pol Pot, than with any of the mainstream political leaders in Western nations who would be categorised as "right of centre" today.

The problem with the term "right wing" is that it is used inconsistently to categorise political beliefs as broad as Nazism and Libertarianism. Adherents of the latter, for example, as represented in New Zealand by the members of the Libertarian Party and, to a much lesser extent, the ACT Party, subscribe to a minimalist state and maximum personal freedom (social, political, religious and economic). This could not be further from what Hitler believed than is possible.

Socialists and Nazis are cut from the same cloth - they both believe that the collective should predominate over the individual, that might is right, and that ultimately the initiation of violence is justified in pursuit of their beliefs. All the founders of Socialist philosophy and practice, including Marx, Engels, Lenin, Trotsky and Mao, had these tenets in common with Hitler.

My heart goes out to the survivors and families of the victims of Anders Behring Breivik and I think if there is one lesson to be learned from this tragedy it is that we should not tolerate any political philosophy that believes it can promote its views through the initiation of force.

Friday, July 15, 2011

Are Australians Smarter or Braver than New Zealanders?

It has been interesting following the political events in Australia this week with Julia Gillard pushing ahead with the carbon tax she promised the Australian electorate she wouldn't implement and polls indicating the Australian public are overwhelmingly against the proposal and ready to dump the Australian Labor Party for breaking its election promises.

The reaction to this political intransigence contrasts with our experience in New Zealand where the National Government last year pushed ahead with its Emissions Trading Scheme (ETS) against earlier promises, a betrayal that New Zealanders accepted with barely a whimper.

Australians have figured out that a carbon tax is a hugely expensive exercise in futility. They know that any carbon emissions savings that result from the significant increases in energy prices (and the cost of pretty much every other product and service in the economy) will be offset 100-fold by China's increase in emissions over the same period. Unlike Australians, New Zealanders seem to be too stupid to make the connection between the direct impact of the ETS on energy prices and the consequential price increases of almost everything in the economy.

Australians are smart enough to know that the science is far from settled and that actually global temperatures are not consistently tracking upwards with atmospheric carbon dioxide levels but rather have been static for the last ten years.

They are smart enough or brave enough to respond to Gillard's carbon tax proposals with, "Piss off, Mate, we're not having a bar of it!" (or words to that effect).

Australians are smart enough to know that if they don't dig minerals out of ground and sell those minerals to anyone who wants them, the only people who will suffer are Australians - unlike New Zealanders. And they are smart enough to know they need to reduce taxes to generate economic growth and create jobs - unlike New Zealanders.

The New Zealand National Government has given up on its goal of catching Australia in wages and living standards. Perhaps they have conceded that we're not smart enough or brave enough to get there.

Wednesday, June 15, 2011

It's your fault, not the law's that your pupils are dying...

The chairman of Kings College in Auckland, the school where four of its pupils have died in circumstances involving the excess consumption of alcohol in the last 18 months, has blamed the lowering of New Zealand's legal drinking age to 18 years.

Leaving aside the obvious fallacy of blaming the drinking age of 18 for the pupils' deaths (given that they were all under the age of 18) it is the complete lack of responsibility that this statement implies that makes me angry. This man is meant to be responsible, as head of the Kings College board of governors, for setting the overall rules and culture of the school and I believe it is the Kings College culture that is directly implicated in these boys' deaths.

I know some of the families of boys at this school and I often appalled at their attitudes to raising their young boys. This is a social group where parents compete buy their sons the flashest car immediately upon the boys getting their driver licences, that compete to throw the biggest teenage parties at their beach houses at Pauanui or Whangaporaoa, that not only encourage alcohol consumption from a very early age (a lot earlier than 18) but boast about their sons' expensive tastes in booze. In other words, they load the gun, put it in their sons' hands and then are surprised when the boys pull the trigger.

The school's part in all this is that they allow it to happen. It would soon stop if the school immediately suspended any boy known to have consumed alcohol at any event involving pupils from the school. The parents should take most of the blame but the school would rather continue to take fees from these irresponsible parents and implicitly condone their behaviour than throw them and their boys out of the school. The school would only need to make examples of a few boys before the parents got the message.

This is not a problem of the law. To say so is to cop out. It's about time everyone associated with this school, from the chairman of the board down, started setting an example for their boys by taking responsibility for their actions.

Saturday, May 28, 2011

New Zealand News Media - Complete Crap

When I first started blogging one of my favourite topics to rant about was the shabby New Zealand news media, but more recently I've left it alone. The reason for this is that I avoid the New Zealand news media these days - I don't subscribe to the newspapers, I don't watch television news and I don't listen to radio. I used to be a news junkie and I am still, but my primary source of news now is the Internet. I subscribe to four newspapers including the New York Times and The Telegraph, plus numerous mazagines, blogs and instant news services such as Breaking News on my iPad; I watch all the foreign news channels on Sky; and I listen to international news radio services on my computer and iPhone. I am better informed than ever before including about my own country. Ironically, the I find I get a better perspective about what is really going on in New Zealand through foreign news coverage than from any of the local sources I used to subscribe to.

This Saturday my wife bought The Dominion Post weekend edition and I read it cover-to-cover to see whether anything had changed. It hasn't. The Dominion Post is full of mind-bogglingly trivial local news, gossip about so-called "celebrities", and left-wing political propaganda masquerading as editorial commentary. There was only only one international story of note - the belated reporting of the arrest of Ratko Mladic - and little else that could be classified as real news.

I am very glad I no longer subscribe to, or watch, or listen to, the New Zealand news media. They remain complete and unadulterated crap.

Sunday, May 22, 2011

Neither Government nor Opposition Will Solve NZ's Economic Problems

We have finally seen a response to New Zealand's economic problems in the National Government's Budget (problems that were clearly illustrated in the Budget document). But it is hardly a brave and decisive response, delivering only small changes to the state's subsidies for the KiwiSaver savings scheme, slightly less generous conditions on borrowing under the Student Loans scheme (but it is still interest free) and slight adjustments to the Working for Families welfare-for-all scheme that Prime Minister John Key called "Communism by stealth" when he was Leader of the Opposition. None of these things will go far in addressing the New Zealand Government's huge operating deficit. The Government claims it will go into surplus in 2014 but this is dependent on achieving 4% p.a. growth in GDP - an unlikely prospect if the country's recent economic performance is anything to go by.

And what of the Labour Party's policies? Since the Budget Phil Goff, Leader of the Opposition, has announced that Labour will:
1) Establish a Ministry of Children
2) Restore research and development tax credits that National abolished
3) Pay for the above by bringing agriculture into the comprehensive Emissions Trading Scheme (ETS) two years earlier than planned.

Of these policies only the second is likely to have any beneficial economic effect. Establishing a Ministry of Children will be a cost with no benefits (not even to children's welfare, in my opinion) and extending the ETS earlier than planned will only increase the direct costs to the economy of this pernicious scheme, again with no benefits (given New Zealand produces just 0.2% of total global anthropogenic carbon emissions).

So neither party's policies are going to address New Zealand's slide into the sort of economic hardship of the type currently being suffered by the PIIGS countries (as discussed in this blog). This is because neither party contains any politicians with the intestinal fortitude to tackle the problem. Our politicians of all persuasions are pathetic, poll-driven, moral pygmies who would rather see our country become destitute than risk their popularity to implement the reforms that are necessary to generate economic growth.

I believe our politicians grossly underestimate New Zealanders' intelligence and integrity. I believe most New Zealanders understand our current economic plight, especially since the Christchurch earthquakes, and are willing to accept far greater austerity measures than this Government has introduced with its Budget. But it would take a leader with more courage than John Key or Phil Goff have ever shown to risk his or her political career to do what needs to be done.

Wednesday, May 18, 2011

More Contortions Than Houdini

The New Zealand Government has backed down on its initial stance on its pet broadband fibre companies being subject to Commerce Commission (which is sort of a NZ equivalent of the US SEC and FTC combined) scrutiny for monopolistic practices. So, let's untangle the story so far...

The Government is getting back into the telecommunications business supposedly because the market won't deliver what New Zealanders want at the price they need it, so they subsidize companies to provide broadband, then exempt those companies from monopolistic price scrutiny from the regulatory agency, then decide to allow scrutiny after all by agreeing to subsidize the companies even more if the regulator makes them lower prices.

Wow, that's more contortions than Houdini!

I think it is another example of the Law of Unintended Consequences.

Perhaps the Government should stay the hell out of the telecommunications market.

Thursday, May 12, 2011

Spending like there's no tomorrow

While New Zealand's Prime Minister has been telling us to prepare for an austere Budget 2011, these are the sort of pre-Budget announcements that have been coming out from ministers over the last month:

09 May 2011
Hon Nick Smith
Budget 2011: New fresh water clean-up fund
Environment Minister Nick Smith today announced the establishment of a new contestable fund to help councils and communities clean-up nationally significant water bodies polluted by poor historic management.

09 May 2011
Hon David Carter
Budget 2011: Lifting investment in irrigation
Agriculture Minister David Carter today announced an expanded irrigation fund to support the development of new water harvesting, storage and distribution infrastructure.

05 April 2011
Hon Tony Ryall
Budget 2011: $54.5m extra for mothers, babies
The Government today announced new initiatives for maternity services and to help new mothers and their babies.

04 April 2011
Hon Paula Bennett
Budget 2011: Helping young people into jobs
The Government is investing $55.2 million to get young people into jobs, Social Development and Employment Minister Paula Bennett says.

Have they not got the message? The New Zealand Government is expecting a $16B spending deficit this year - that's $4,000 overspent for every man, woman and child in the country in this year alone - and all they do is announce how they're going to spend more money? What needs to happen before they will get the message that New Zealand cannot afford to keep on spending more from the public purse - national bankruptcy of the type faced by Ireland and Greece?

Monday, May 9, 2011

Atlas Shrugged

I have just finished reading Ayn Rand's novel Atlas Shrugged, the enormous (approx. 1,100 pages) novel that outlines her philosophy through the fictitious characters of scientist John Galt, industrialist Hank Rearden and railroad executive Dagny Taggart. This was the second time I have read the novel, the first being when I was at university. It had a more profound effect on me this time.

Firstly, a criticism - it is not a literary masterpiece. It is long-winded, particularly the nearly 100 page monologue by Galt near the end, and her writing style is overwrought.

But Ayn Rand did not set out to write a literary masterpiece, she set out to espouse her philosophy, and Atlas Shrugged does this brilliantly. There can be no doubt in the reader's mind by the end of the book what Ayn Rand believed in and why she considered her philosophy the only truly moral means by which men should conduct their lives (and incidentally, in the book she continually uses the noun "man" to include all of mankind - almost as if she was anticipating and defying the feminist political correctness of the late 20th and early 21st Centuries).

The reason why Atlas Shrugged had a more profound effect on me this time is two-fold. Being older and more experienced, Atlas Shrugged resonated more with my life experience. I have seen the "moochers" and bludgers, the anti-humanist collectivists, the dishonest politicians and the businessmen who apologise for making money, and all the other tawdry characters she parades before the reader. Even the titles of the fictitious laws and government agencies that are created in the name of social good are recognizable from the perspective of the contemporary political and economic environment.

The second reason is that I am more confident that my own philosophical viewpoint is right and moral. This viewpoint has not changed since I read the novel the first time - what has changed is that I am no longer prepared to feel guilty for holding these beliefs.

I believe that every man (and woman) has the right to pursue his own interests so long as that pursuit does not directly impinge upon the rights of others to pursue their interests. I believe that no man owes any other a living. I believe that no man (or government) may morally initiate force against another and that the only moral basis for the use of force is self-defence. I believe that the vast majority of people have the ability to take care of themselves and that those who do not should be assisted by the voluntary actions of those who have an interest in caring for them (such as parents for children), not by compelling others to do so.

I do not believe that anyone should be forced to give up his life, his liberty, his work (including the rewards of his work) or his value as a human being for anyone else. This means I believe that the legitimate role of government is solely to prevent the use of force by any man or group against another. I believe that governments should be funded solely by the voluntary contributions of those they serve. I believe that governments have no place in economics - not even to issue currency, let alone to interfere in the running of legitimate businesses.

I believe these things because I believe human beings are inherently rational. In this respect, I am a humanist - I believe the only truly "human" way to live is without compulsion or compunction. My heaven is a society on earth in which free men deal with each other in a rational, voluntary manner with the only resort to force being that needed to defend against the initiation of force.

I won't apologise for believing these things. Ayn Rand got it right.

Wednesday, May 4, 2011

What Next Will They Be Asking Taxpayers to Pay For?

In this day, when almost any need by any person is considered worthy enough to demand the taxpayer pays for it, it takes a act of bludging of particular gall to shock me. The New Zealand Government willingly pays for people to travel overseas to study hip hop dancing and for wealthy yachties to indulge in their sport. But the demands of the family of Sharon Armstrong, who was arrested for trafficking cocaine in Argentina, for the taxpayer to pay for two of them to visit her, takes the cake.

This women had five kilogrammes of cocaine in a false-bottomed suitcase, which shows a premeditation of her crime that makes Shapelle Corby's profession of innocence look worthy by comparison. Now, I don't have an issue with informed adults taking drugs and, consistent with this, I don't see too much wrong with informed adults buying and selling the stuff. However, this does not translate into the slightest sympathy for people who knowingly break the anti-drug-trafficking laws of so many countries. If they take the risk, they have only themselves to blame if they are caught.

This woman and her family now expect the New Zealand taxpayer to bail her out. I think the NZ Ministry of Foreign Affairs and Trade has absolutely made the right call in rejecting the family's demand from the taxpayer. If Sharon Armstrong is guilty, she can rot in an Argentinian jail for the rest of her life as far as I am concerned. If she is not, her family can put the facts before the public (as Arthur Thomas, David Bain, Peter Ellis and many others have over the years) and let the public decide whether to voluntarily contribute to her defence.

Monday, May 2, 2011

A New Form of Proportional Representation

New Zealand, like many countries, has been living beyond its means in recent years. Our government is borrowing $300m per week to make ends meet and we are headed for an economic oblivion similar to that currently being experienced by the "PIGS" countries - Portugal, Ireland, Greece and Spain (a very appropriate acronym).

The problem is our form of democracy and in particular our Mixed Member Proportional (MMP) electoral system that gives every minor political grievance party an inordinate influence in our House of Representatives.

Benjamin Franklin said democracy was "two wolves and a lamb voting on what to have for lunch" and this is perhaps truer of 21st Century Western democracy than it was of 18th Century America. In our democracy a diminishing minority of the populace are held to ransom through the tax system by an increasing, unproductive majority.

We need to introduce fiscal responsibility to our system of government and I believe the only way to do this is to give greater political power to those who pay the bills.

I would like to see a revision to our electoral system, call it a new form of proportional representation if you like, where you get to vote in proportion to the taxes you pay. Under this system, taxation could become voluntary but if you wanted to influence the political system you would have to pay taxes to, in effect, buy votes. Each $1000 you paid in taxes would buy you one electoral vote. The average of your tax contribution over the three years prior to the election would be taken to avoid stacking the votes in the last year of an electoral cycle. If you paid no taxes, you would get no votes. I see no reason why corporations shouldn't be given votes in proportion to the taxes they pay as well.

This system would solve our nation's fiscal problems in short order and would ensure policies that promoted the economic well-being of the country.

Thursday, April 21, 2011

$12m fine adds insult to injury

Telecom New Zealand has been fined $12 million by the High Court for "misuse of market power" between 2001 and 2004. The fine relates to the prices Telecom charged for its data line "tails" (the last part of the line to a customer's premises). Already I can hear the whingers and bludgers in this country cheering from the side lines, where they always sit. Big, bad Telecom has been punished for its anti-competitive conduct, I hear them say.

Let's examine the history of Telecom. It was sold by the Labour Government in 1990 for $4.25 billion. The Government choose to sell the entire business and network to its new shareholders, principally Bell Atlantic (now Verizon) and Ameritech (now AT&T Midwest). The only significant caveat imposed on the new company in the sale by the Government was the Kiwi Share agreement by which the company was required to continue to provide fixed price local line calling across the entire country.

Over the next ten years, Telecom invested significantly in new telecommunications infrastructure in New Zealand including the largest mobile phone network, broadband internet services and establishing Xtra, the country's largest internet service provider. Anyone who remembers what telecommunications services were like under the old Government-owned Post Office telecommunications division and the short-lived, state-owned Telecom, will know that the privately-owned Telecom improved services out of sight, largely eliminated waiting times for new lines, and reduced prices significantly in real terms. Over the same period, competitors to Telecom were established and grew significantly - Clear Communications and Saturn merged into TelstraClear, Vodafone set up and became a major competitor in the mobile market, and a miriad of smaller and specialist telecommunications companies were established and prospered.

In 2001, the Labour Government began its serious assault on the company its predecessor had sold for $4.25 billion with the passing of its Telecommunications Act and the establishment of a Telecommunications Commissioner. This was followed by the 2006 announcement that the Government would require Telecom to "unbundle" its local lines from its other services. This edict, which preceded any legislation by more than six months, knocked more then $2 billion off the price of Telecom shares. Bear in mind that by this stage, the big US telecommunications companies had largely sold out of Telecom and the loss was sustained primarily by "Mom and Pop" investors in New Zealand. The announcement was very poorly handled, being leaked to the media in advance, which exacerbated the loss.

In November 2006, the Labour Government passed its Telecommunications Amendment Bill, which would force Telecom to break itself into three separate companies, with network access separated from the wholesale and retail units. The new act effectively nationalised the Telecom network without compensation for shareholders. The market's assessment of the loss resulting from this expropriation was the more than $2 billion decline in Telecom's share value. Since then, in spite of the prospect of further expropriations, Telecom has continued to invest in New Zealand's telecommunication infrastructure, building the new XT mobile network and upgrading exchanges and circuits to new fibre-based technologies.

So, having sold Telecom to its shareholders for $4.25 billion, the Government has effectively stolen its assets back without recompense, and now the High Court has imposed a fine on the company for using what were its own assets to its financial advantage. Am I the only person who sees something deeply immoral in the Government's actions?

Telecom directors and shareholders face a real dilemma. If they make money, the Government and the courts are going to cane them. And yet the Companies Act requires that the directors "act in the best interests of the company". What on earth are they expected to do? Do the Government and the New Zealand public expect Telecom to be a charity?

I guess that is exactly what people in this country expect. I continually hear this bullshit about corporate "social responsibility" as if that should be the highest goal of any company. What about survival - is that unimportant? What about making money so it can employ people, pay dividends to its investors (including all those "Mom and Pop" investors who are counting on those dividends to pay for their retirement or to send their children to university), and invest in new technology so that New Zealand has a first class telecommunications infrastructure?

Actually, I know the answer to the last part of that question - we don't need Telecom to invest because the Government is going to do it for us through its Ultrafast Broadband initiative. But haven't we proven once before in this country that the Government can't build and manage an efficient telecommunications infrastructure? Bear in mind that the Government has just announced that its sponsored broadband companies will be guaranteed immunity from the anti-competitive oversight of the Commerce Commission. Hang on, I thought that anti-competitive behaviour was the reason for the record High Court fine imposed on Telecom? So anti-competitive oversight should only apply to the nasty people at Telecom, is that what the Government is saying?

Having sold Telecom for a fair price, the Government has come back and plundered the company. The network assets belonged the company and its shareholders. There was competition in the market and any undue advantage (whatever that expression may mean) that Telecom had gained from its ownership of the tails was being eroded by the introduction by all telecommunications companies of fibre cables and wireless services.

The actions against Telecom by successive governments are outright theft. The only fair thing for the Government to do is to compensate Telecom shareholders for their losses through the expropriation. The Government should stop wasting taxpayers money and get out of the telecommunications business completely. The Telecommunications Commissioner is unnecessary and his office should be abolished. The Commerce Act only discourages true competition and should be abolished. Only then might we see New Zealand's telecommunications infrastructure become one of the world's best.

I won't hold my breath.

Monday, March 21, 2011

"I do not choose to be a common man..."

I do not choose to be a common man,
It is my right to be uncommon … if I can,
I seek opportunity … not security.
I do not wish to be a kept citizen.
Humbled and dulled by having the
State look after me.
I want to take the calculated risk;
To dream and to build.
To fail and to succeed.
I refuse to barter incentive for a dole;
I prefer the challenges of life
To the guaranteed existence;
The thrill of fulfillment
To the stale calm of Utopia.
I will not trade freedom for beneficence
Nor my dignity for a handout
I will never cower before any master
Nor bend to any threat.
It is my heritage to stand erect.
Proud and unafraid;
To think and act for myself,
To enjoy the benefit of my creations
And to face the world boldly and say:
This, with God’s help, I have done
All this is what it means
To be an Entrepreneur.

~ Excerpt from Common Sense, written in 1776 by Thomas Paine

Thursday, March 10, 2011

Secret process is no way to select a head of state

Jerry Mateparae has been chosen as New Zealand's next governor general to replace Anand Satyanand. He is a former chief of NZ defence staff and is the current head of the NZ Government Communications Security Bureau (GCSB), our electronic spying agency.

By all accounts, Jerry Mateparae is an enormously capable man with a proven track record of good leadership. Not only that, he appears to be a thoroughly decent fellow. Everything a country would want in a head of state (actually, a proxy head of state because the person who actually holds that role doesn't even live in New Zealand - more on that later).

The first issue I have with his appointment is the appointment process itself. The process is secret, carried out by a small cabal of senior public servants under the direction of the Prime Minister. While in recent years under MMP, the PM has consulted leaders of other political parties, there is no requirement to do this. I find it incredible that in the 21st Century the people of New Zealand have no say directly in the selection of their head of state.

The second issue I have is Jerry Mateparae's current role. In his role as head of GCSB he is answerable to the Prime Minister as minister in charge of the security services. In a few months time, the Prime Minister technically will be answerable to Mataparae. The Queen's representative in New Zealand may be called upon to sack the PM at some point (as the person in this role in Australia did in respect of their PM in 1975 - and let's leave aside the issue of whether it was justified or not for the sack of the argument). What prospect is there of Mateparae sacking the man who appointed him and to whom he previously reported as a public servant? Also, the governor general fulfils another important constitutional role as the final signatory on all legislation. By convention this is seen as a rubber stamp to Parliament but there is always the prospect that the governor general might strike down a particularly odious piece of legislation. Such as the Search and Surveillance Bill currently before Parliament. Again, what prospect is there of the governor general taking the side of the people of New Zealand against the Prime Minister who appointed him. And bear in mind that Mateparae would have contributed to the Search and Surveillance Bill as head of GCSB.

All of this brings me to the real problem. New Zealand is still a monarchy with the actual role of head of state being a hereditary position held by a family living on the other side of the world. The current incumbent, Elizabeth Windsor, has done a pretty reasonable job as our head of state. Her son, Charles Windsor, who will be our next head of state, is a bumbling idiot who I am sure wouldn't be in any position of leadership if he was selected on his own merits. Under our current system, no New Zealander can serve as the actual head of state, no matter what the selection criteria.

In America, every child is taught that they could grow up to be President. In New Zealand, our own children are not deemed worthy to ever aspire to our highest office. As a New Zealander, I find that situation highly offensive.

It is high time we fixed this antiquated, feudal system of determining who the head of state of New Zealand should be. We must abolish the monarchy, become a republic, and allow ourselves to elect our head of state.

Wednesday, March 2, 2011

The Economic Death Knell or the Catalyst for a Resurgent New Zealand?

Now that the dust is settling in Christchurch and the sad commemorations for those who died in it are being held, thoughts are turning to how to rebuild the city.

The debate has already divided into predictable political lines with the left and even some of those previously associated with the right advocating more centralised planning, Government intervention, and higher taxes and levies. A few lone voices are advocating letting Christchurch businesses and residents determine their own future in a more grassroots, privately led recovery.

This earthquake is probably the greatest economic calamity to befell New Zealand since World War 2. The timing could not be worse - we are at the bottom of a long downwards spiral in economic performance that has seen us drop from number 3 or 4 on the OECD table of GDP per capita in the 1950s to number 23 today. Our response to the earthquake will determine, as much as anything else, whether we climb back up the ladder or slip further down - being passed on the way by many third world nations on the ascendancy.

The last thing this country needs is more government intervention, more regulation, and more taxes and government charges. Such policies will spell the death knell of NZ's already strained economy. We need greater economic freedom and lower costs to enable our businesses and investors to build the recovery both in Christchurch and throughout the country. Any other approach will stymie the recovery in Christchurch and drag New Zealand further down to third world status.

I'm not saying there is no role for Government in the reconstruction - of course there is. But the best thing the Government can do is get out of the way and remove all impediments to investment in the new Christchurch. It should be cheerleading the recovery, not trying to control every aspect of it.

Wednesday, February 23, 2011

A Stage for Heroes to Shine

Once again an earthquake has struck Christchurch, only this time the denizens of that fair city haven't been as lucky as in September 2010 when there was no loss of life. At this stage the death toll is still to be determined but is likely to run into the hundreds. Add to that the injuries suffered by thousands and property damage suffered by ten of thousands and the impact of this disaster is immense.

The losses will be remembered for a long time but what I hope will also be remembered is the heroism - the actions of those hundreds of rescuers, some professional, some volunteers in organisations like Civil Defence and Red Cross, and others mere amateurs, who are prepared to risk their own lives to go into buildings to rescue others.

It seems heroism is something of a lost art in our 21st Century society. We actively discourage individual acts of heroism through the plethora of government regulations and agencies that are designed to ensure we are kept safe in every aspect of our lives. Sometimes we mistake self-indulgence for heroism - as in the case of the extreme sports exponents who get so much publicity for their feats.

It takes a disaster to reveal those who are truly heroic. We are seeing heroism in Christchurch today. That is the redeeming feature of disasters such as this and long may such admirable traits of humanity continue to shine.

Thursday, February 3, 2011

Why New Zealand is well on its way to Third World status

I read in Not PC's blog that the assets controlled by the NZ Government (including local government) are six times the value of the listed companies on the New Zealand stock exchange. I found this such an incredible statistic I decided to look into it myself. This discussion was in the context of Prime Minister Key proposing to look at the partial sale of shares in some state owned enterprises (SOEs) if his government is re-elected later this year. The proposal is only to sell minority stakes and is hardly a wholesale reversal of the previous Labour Government's steady nationalisation of companies such as Air New Zealand and the Tranzrail but it was enough to set the fox among the chattering chickens of the media and political commentators.

Amazingly, the statistic is true. I believe Not PC got the statistic from ACT MP Muriel Newman's blog, who in turn quoted it from former National Party leader Don Brash's last "state of the nation" speech to the Orewa Rotary club (a tradition started by 1970s/80s prime minister Muldoon). One thing you can say for Don Brash is that he does his research. My own investigations reveal that the total value of shares listed on the NZSE is currently about $56B. The total assets of the Crown in the latest Treasury financial accounts is $223B. Local government assets are approx. $98B. So the total value of all government assets is around $320B or six times the value of the shares on the stock exchange. The government has $95B invested in SOEs and investments including the government's superannuation fund, although the net asset value would be somewhat less than that. New Zealand has a total "capital stock" of about $570B, so the Government's share of that is around 56%.

It is difficult to do direct comparisons with other countries but New Zealand's figure seems to be unusually high. The US Federal Government's assets are only about US$3 trillion of a total US asset base of approx. US$200 trillion (1.5%). Okay, that doesn't include the assets of state governments but even if they are ten times the federal value they are still a much smaller proportion of national assets than New Zealand's. The last figures for Australia I could find had the Federal Government assets at about A$350B compared with a total national asset base of more than A$5 trillion (7%). Again, it doesn't include state governments but you get the picture.

When commentators look at government involvement in the economy they only tend to look at government spending as a proportion of GDP and on that measure (39%) New Zealand is on a par with other countries. But based on these asset ownership figures, our government completely dominates the economy. In fact, I'd guess we have one of the highest levels of government asset ownership in the world.

I hear the lefties saying, so what? Well, I believe that this is a significant factor in New Zealand's poor economic performance over past decades. We have slipped from number 3 or 4 on the OECD table of GDP per capita in the 1950s to number 23 today. That is an appalling decline that we should be ashamed of. In the 1950s we were ahead of Australia in GDP per capita and now they are 45% ahead of us (and unlike us they are still well above the OECD average).

So why has New Zealand done so poorly in comparison to almost every other Western nation? The asset ownership figure provides an obvious answer: our inability to grow wealth in our private sector (which, after all, is the only place wealth is ever grown). Every country that has prospered over the last few decades has done so on the back of building large numbers of significant new private sector enterprises. In Scandinavia it has been high tech industries such as mobile phones and software, in the United States it has predominantly been in IT and entertainment products, and in Australia financial services, manufacturing and mineral exploitation. What has happened to New Zealand by comparison? Well, we've destroyed all our large companies through mismanagement and heavy-handed Government intervention. Think about it. What happened to Fletcher Challenge, Carter Holt Harvey, BNZ, Watties, Brierley Investments, and pretty much all the other big companies we used to have. They have been either taken over by foreign owners or are shadows of their former selves or they don't exist at all. And don't quote Fonterra as an exception - that's a state sanctioned monopoly that hasn't progressed beyond the low-value commodity producer it has been since the 1930s.

Oh, what about all the new technology success stories, Navman, Xero, TradeMe and so on? Well, even the largest of these are small fry in comparison with a Fletcher Challenge.

But, I hear you say, no one likes big business anyway and most New Zealanders are happy with their lot. Standard of living is not all about financial measures and aren't we one of the happiest societies in the world? So let's examine what will happen if we continue to slide further down the OECD ladder.

In another decade or two, at current rates of decline, most New Zealanders won't be able to afford to travel overseas at all. The tradition of overseas experience, especially for our young people, will be beyond our reach. We won't be able to afford to pay the welfare benefits we currently pay or the generous superannuation scheme we have for our retired people. We won't be able to keep our hospitals and schools running at current levels and certainly won't be able to buy the best drugs and medical equipment. We won't be able to have all those neat technology devices we crave, like iPhones and flat screen TVs. Forget the late model motor vehicles and the fancy imported foodstuffs and seeing foreign artists perform in our stadiums, or any of the other miriad of First World luxuries we take for granted.

You don't believe me? Just take a look at Greece or Portugal or Ireland at the moment. These countries lived beyond their means for too long and are now paying the price. Some of my friends and relatives in these countries, even the well-off ones, can no longer afford to travel. Interestingly, of these three countries, in spite of their economic troubles, only Portugal is below New Zealand on the GDP tables.

So what is the solution? It's simple really; we need to double the size of our private sector without increasing (and ideally reducing) the size of the public sector. That means a massive shift of investment and expenditure from the public to private. It means providing huge incentives, through tax breaks, for investment in the private sector and cutting our public sector cloth to suit. It won't be sufficient to match other country's tax incentives, we will have to be well below them to attract the investment we need. That is the simplest and the only solution. Don Brash and his 2020 Taskforce have been saying it and most economic commentators worth their salt have been saying it. I'm sure many New Zealanders don't want to hear the message but they need to understand the consequences of not doing it. Hopefully they will wise up before we drop completely off the bottom of the OECD list. Then we will be Third World, perhaps the only country in history to suffer the ignominy of going from the mansion to the poorhouse.