Spending Taxpayer Dollars on America's Cup is Immoral [UPDATE]

I have followed the fortunes of Emirates Team New Zealand in their bid for America's Cup with mild interest.  At the time of writing, the match score is 8-8, so I don't know whether we have won or lost it.  Oracle Team USA has staged a remarkable comeback from being 6-1 down after the first week of racing and whoever wins the next race will take the trophy.

I don't care very much who wins but I do care that $36 million of New Zealand taxpayers' money has gone to fund this sporting equivalent of tilting at windmills.  The argument that it will benefit New Zealand greatly in terms of tourism and other economic activity is dubious at best and, in any event, does not justify the government using money it has extorted from hardworking New Zealanders on such a frivolous cause.  It is hard enough to accept one's taxes going as involuntary contributions to "worthy" causes such as health and welfare, but seeing them go to a bloody yacht race is outrageous.  Who the hell do the Prime Minister and Finance Minister think they are taking money off low income earners who might be struggling to pay their winter heating bills at this time to spend it on what is a billionaires folly?

Even if we win the Cup (perhaps especially if we win it), this disgraceful abuse of taxpayers' goodwill should end.

UPDATE: Having lost the Cup in this morning's final race, Team NZ head Grant Dalton casts doubt on whether New Zealand will mount another campaign.  However, that hasn't stopped our Prime Minister, John Key saying it is likely he will continue to spend taxpayers' money on this folly.  He goes on to say "New Zealanders work hard to pay their taxes and they expect the Government to be serious and careful about the way they spend their money." If only.

UPDATE2: One final comment - I have lambasted the New Zealand media in the past and in particular the worst offender - the Fairfax Group newspapers such as The Dominion Post and its website Stuff. This morning Fairfax Group plumbed the depths with their "Choke on This Team New Zealand" headline.  I would urge anyone reading this who subscribes to Fairfax Group publications to cancel their subscription immediately. They do not deserve your business.

Inside Every Socialist is Napoleon the Pig

I see the New Zealand Labour Party has elected a new leader, David Cunliffe, its third in two years. The reason for the instability at the top of New Zealand's major centre-left party is the traditional animosity between the hard-left and more moderate factions of the party.  Helen Clark, who was leader from 1993 to 2008 (and NZ prime minister from 1999 and 2008) managed to keep the two sides from each other's throats, undoubtedly because those on both sides feared her than they feared each other.

One of the candidates in the recent tussle for the leadership turned up last week to my daughter's school to talk to the senior girls.  This is the second time the school has invited a Labour MP in the last twelve months and it has not extended the invitation to anyone from any other party, so it is pretty obvious where the political inclinations of the teachers lie. The majority of them are raving left-wingers who take every opportunity to ram their facile political beliefs into the impressionable minds of their students and I have blogged about this before.  However, I am grateful for this propagandising visit because it gave me the opportunity to discuss the MP's Socialist philosophy with my daughter and to use it as the theme of this blog.

The MP, according to my daughter's account of his speech, made three main points to the students:

1. You should live your life for the benefit of others
2. Government needs to be bigger to deliver more benefits to those in need
3. He will support you if you have good ideas just so long as they are consistent with his philosophy.

Let us deal with each of these in turn.

In saying that you should live your life for the benefit of others, Socialists not only believe that people should be charitable, but that everyone should be forced to be altruistic. They believe the state should use its legal monopoly on violence to force you to live a proportion of your working life for the benefit of others by taking the product of your work through taxation.  You are forced to pay your taxes under the threat of imprisonment or worse.

Once the Socialist has decided that you should work some of your life in slavery for others, there is no logical or moral limit to how much of your life he should take - thirty percent, fifty percent or ninety-eighty percent - the only limit is a pragmatic one, i.e. how much can he take without undermining your will to work at all?  There is no limit to the demands on behalf of "those in need" and Socialists differ from Communists only in where they draw the line.

Whenever Socialists advocate enforced sacrifice in favour of those in need there is an unspoken question that always has an obvious answer.  The question is, who gets to decide? Who determines who is needy, and who defines what needy really means?  The answer, of course, is the Socialist proposing the sacrifice.  

The Labour MP's last point is telling.  He is making it clear it should be he that determines what is a "good idea" and who deserves to receive the product of work confiscated by the state.  His philosophy is not so much "from each according to his ability, to each according to his need", as "- to each according to what I determine."  It is no surprise that Socialist parties have brutal leadership contests - the lure of being the one who decides is too great for well-mannered successions.

In his novel, Animal Farm, George Orwell showed that enforced equality requires an enforcer.  This is the fatal flaw with all collectivist philosophy, whether it is modern, milk-toast democratic Socialism or hard-line Marxist-Leninism.  You cannot have an Animal Farm without a Napoleon the Pig.  Scratch the surface of any Socialist and you will find a Napoleon trying to get out. 

US Intervention in Syria Will Fail

You would think the US Government would learn. Just when they are finally managing to extract themselves from Iraq and Afghanistan, they are doing their best to involve themselves in another insoluble conflict in the Middle East. You would think that they would have learned from the events in Libya and Egypt, where the best hopes of the Obama regime for peaceful transitions to democratically elected governments have become completely unstuck, resulting in a great deal of bloodshed and misery for the people of those countries.

America's ill-judged foreign policy produces the most deliciously ironic unintended consequences.

It was recently revealed, for example, that the Central Intelligence Agency orchestrated the 1953 military coup that overthrew the government of Iranian Prime Minister Mohammad Mosaddeq.  Of course, that really worked out well for the Americans when, a quarter-century later, Ayatollah Khomeini overthrew the US puppet regime of Mohammad Reza Pahlavi and ensured Iran became America's arch enemy for the next three decades.

One could also look to the earlier example of US support for Ibn Saud's conquest of the Arabian peninsular that resulted in the establishment in 1932 of Saudi Arabia. The Saudis are the proponents of the particularly extremist Wahhabi form of Islam that inspired the brutal Taliban government in Afghanistan, which gave sanctuary to the Al Qaeda leadership that was responsible for the 9/11 attacks.  Long before 9/11, America funded, armed and trained the Afghan Mujahideen during the Soviet occupation of Afghanistan and it was these rebels that eventually seized control and became the Taliban government.

Perhaps the greatest irony is that America's good intentions to promote its founding principles of individual freedom and human rights around the world has led to the abrogation of those principles at home. Anyone who has been to America in recent years will have seen the deterioration of personal freedom in that country. America has become a surveillance state that in many ways would be the envy of Soviet bloc governments, all in the name of protecting its people from attack by the very people it has armed.

Which brings us to Syria. The Obama administration is planning to bomb Syrian government targets in retaliation for President Bashar al-Assad's alleged use of chemical weapons. I say "alleged" because at the time of writing the Americans cannot say with absolute certainty that Assad was responsible. Some commentators have speculated that the Islamist rebels could have used the weapons to provoke exactly the response against Assad that Obama is contemplating. One should not forget that these rebels have admitted committing appalling outrages of their own.  Another scenario, perhaps more likely, is that Assad has lost control of his own military leaders, one of whom chose to use the chemical weapons.

What is clear is that the situation in Syria not clear. If Obama orders cruise missiles launched at Syria, he will be throwing gasoline onto an already incendiary situation. He has admitted that he doesn't have an objective in mind for such a strike against the Assad regime. That being the case, he should not be surprised if the outcome turns out to be very much to the detriment of America's interests in the region and at home. America has done some dumb things around the world but this will surely be one of the dumbest.

New Zealanders to get it good and hard

So, the New Zealand Parliament has passed into law the odious GCSB Amendment Bill that allows the government free reign to spy on its innocent citizens.  In today's political environment, where vague threats of terrorism justify almost any repressive act of government (such as kidnapping people off the streets of friendly nations, summary executions of individuals anywhere in the world with unmanned drones, and torture to obtain confessions), it does not surprise me that the New Zealand Government wants to join in all the fun. What surprised me about the debate leading up to this law passing is the depth of support that Prime Minister John Key has for these dictatorial spying powers.  I guess it just goes to prove what I've always suspected - most New Zealanders are more interested in feeling secure (not matter how much of an illusion that might be) than freedom.  That is, of course, why we have one of the world's most extensive welfare states.

H L Mencken said, "Democracy is the theory that the common people know what they want, and deserve to get it good and hard."  Well, New Zealanders are going to get it good and hard.  As the vacuous waiter said, "Enjoy!"

A Sad Day for New Zealand

Today, if Prime Minister John Key gets his way, the GCSB Amendment Bill and Telecommunications (Interception Capability and Security) Bill, will pass their final reading in the New Zealand Parliament and become law.  For those overseas folk who have not been following the progress of these prospective laws, they have been introduced by the Prime Minister (who is also the cabinet minister in charge of the security services) because it was discovered that our Government Communications Security Bureau (NZ's equivalent of America's NSA and Britain GCHQ), had been illegally spying on New Zealand citizens and residents.

GCSB is part of the "Five Eyes" close community of anglophone government security officials that includes USA, Britain, Canada and Australia.  We know from the revelations of Edward Snowden and Bradley Manning that the United States and its intelligence allies have been circumventing their own laws by spying on their citizens without warrants or with unconstitutionally broad warrants from patsy judges.  We know, for example, that these agencies have used each other to spy on each other's citizens, thereby avoiding legal restrictions on domestic surveillance.  In the case of New Zealand, it was revealed that the GCSB was illegally spying on Kim Dotcom, a New Zealand resident, at the behest of the US authorities - as well as many other New Zealanders.  The response of our Prime Minister and Government was not to prosecute those security agency officials involved but rather to change the law to allow GCSB to spy on New Zealanders. The only oversight will be that of the Prime Minister and an official he appoints.

There is something very worrying about a government changing the law to make legal that which is has been caught doing illegally.  It completely subverts the principles of the Rule of Law and makes a mockery of the law itself.  Why would anyone have respect for the law if the government itself does not?

The Prime Minister has justified the change on two main grounds, firstly because of some vague threat from New Zealanders being trained by Al Qaeda, and secondly because he says he will apply it judiciously.  In regards to the first justification, I simply do not believe there is a credible and immediate threat to New Zealand from Al Qaeda. I am sure John Key has been told there is by US intelligence agencies but they would tell him that, wouldn't they?  In regards to the second justification, why would we trust his discretion in a matter where it is clear he knew about the law-breaking in the first place (at least in the case of Kim Dotcom)?  In any event, such grounds do not begin to justify the sort of wholesale invasion of innocent citizens' privacy we have already seen in the US and now increasingly in this country.

We live in a Westminister democracy.  The Prime Minister is accountable to Parliament, not the other way around.  These bills will pass today with a majority of one vote unless someone in the governing National Party or its allied MPs John Banks and Peter Dunne choose to vote against it.  I think it is a forlorn hope that one of them has the principles and gumption to cross the floor on the final vote.  It will be a sad day for New Zealand if none of them does.

Fonterra a Perfect Example of Crony Capitalism

New Zealand faces a number of major economic risks with the world economy continuing to experience slow or no growth, but one of the worst is our dependence on the dairy industry.  This country of just over four million people has the largest dairy export industry in the world, accounting for around one third of global cross-border dairy trade.  It provides one quarter of New Zealand's merchandise export earnings, worth nearly $15 billion last year.  This is all good, I hear you say, and you'd be right except for one thing - the entire trade is controlled by one company - Fonterra.  

Fonterra traces its history to the formation of the New Zealand Dairy Board in 1930.  It is a cooperative structure, owned by its farmer suppliers.  From its beginning, the organisation has had a statutory monopoly on the export of dairy products and ownership is restricted to its farmer suppliers.  In 2001, the Dairy Board was merged with the two dominant cooperative processing companies, NZ Dairy Group and Kiwi Dairy Company to form a monolithic, vertically-integrated organisation that controls every aspect of production and distribution of New Zealand dairy products from the farm gate to the overseas supermarket.

The monopoly has produced two negative effects, both of which were predicted by those who opposed the 2001 merger - it has led to domination of the domestic market with correspondingly high prices for New Zealand consumers, and it has created a systemic risk of market and brand failure. The latter has been demonstrated twice in the last few years, both times in the lucrative Chinese market - firstly with the horrific 2008 scandal involving Fonterra subsidiary Sanlu that led to the deaths of six babies and the hospitalisation of 54,000, and most recently with the Chinese suspension of imports of Fonterra's milk and whey powder due to botulism.  As this article in Bloomberg points out, the impact of this latest incidient is likely to go beyond Fonterra and the dairy industry. It has already led to a decline in the New Zealand Dollar and knock-on bans in other countries such as Sri Lanka.   

The failure of one company ought not to affect an entire economy.  In a competitive market, other companies with equally strong brands would be largely unaffected and would step in and fill the gap in exports caused by the failure of the offending brand.  This cannot happen with New Zealand dairy exports because of Fonterra's statutory monopoly.

Contrary to popular belief, monopoly is not the natural end-state of capitalism.  Monopolies may occur in a totally free market but only where the dominant player has some huge competitive advantage such as control of critical patents, and even then such monopolies are usually short-lived. Perhaps the greatest monopoly of the them all was John D Rockefeller's Standard Oil but even his monopoly wasn't absolute and was relatively short-lived - being confined to lighting oil in the late 19th Century. Contrary to popular belief, the end to Rockefeller's monopoly didn't come from the US antitrust Sherman Act enacted in 1906 (although this was vindictively used to break up his company) - Standard Oil's dominance was already being eroded by the innovation of electric lighting and the development of new oil products for automobile fuel.  In a free market, all monopolies are short-lived because they can never counter all the likely sources of innovation over the long term. We have seen this with Microsoft, which has not been able to extend its dominance in desktop PC software to the new markets for smartphones and tablets.

The one situation where monopolies do thrive, however, is when they are government-mandated.  The only reason Fonterra and its predecessors have monopolised the New Zealand export dairy market for so long is their legislative protection.  A free market might have produced a dozen Fonterras by now.  If you want to see the potential, you need only look at another dairy cooperative in another country that was set up at the same time - Nestle in Switzerland.  Nestle has grown without the legislative protection of Fonterra to be a highly-diversified food manufacturing company and one of the best known brands in the world.  Fonterra by comparison, has remained largely a commodity producer.  A ban on the import of Nestle milk powder products to China would have minimal effect on the whole of Nestle's business and would be virtually unnoticed in Swiss export trade figures.   

We seem to especially like government-mandated and government-owned monopolies in New Zealand. Our energy, transport and accident insurance markets are totally dominated by such structures.  We pretend that these monopolies are the best for New Zealand but we never try to assess the opportunity costs.  It is no surprise that we have no other large, internationally-competitive private sector companies of the scale of Fonterra. So much of our capital stock in tied up in these protected, crony capitalist entities that there is little incentive or appetite to make New Zealand the home of an Apple, Nokia or Ikea. Perhaps that is one of the reasons New Zealand continues to languish at the bottom of OECD income-per-capita tables. 

The Narrowing Gap Between the Forbidden and the Compulsory

I was recently talking with a friend of mine about the inexorable encroachment of the power of the state into every area of our lives and he made a very insightful comment. There have always been things that are forbidden by the government - traditional crimes against person and property such as murder and theft; and there have always been things that are compulsory as well - taking care of your own children, for example. For most of the last few hundred years, in Western nations at least, the gap between these two areas of state proscription has been large and the State did not consider it to be its business to interfere in areas as broad as where and how you work, whether you save for your retirement, whether you make provision for personal medical care, how you are educated, what you eat and drink, and what you sell to your neighbour. We regarded countries that did try to interfere in all these areas of its citizens lives to be feudal and dictatorial.

The West, led by Britain and the United States of America, valued individual liberty and rights as important foundations of their ways of life. Of course, individual liberty and rights were not absolutes and there were significant exceptions to the rule, such as slavery in the United States before Emancipation, but the general principle was that the state left people alone unless there was good reason not to.  It is this principle that has been abandoned in much of the western world today where governments consider it not only their right but their responsibility to interfere in every area of every citizen's life. The gap my friend talked about is now almost non-existent. Sure, there are a few areas of increased personal freedom such as around the removal of state sanctions against homosexual relations, but the generally the trend has been far in the other direction.

Today we face new challenges to the narrowing gap that remains. Governments across the Western world are trying to ensure we do not say or do anything that is contrary to the narrow view of acceptable behaviour as defined by the small, often unelected, elite in the executive branches of our governments.  These people claim the right (often disregarding legal and constitutional restraints on their power) to watch our every move, listen to everything we say and read everything we write. As always, they claim this is for our own good, to protect us against poorly defined threats and enemies. They often claim these powers are temporary but of course they never give them up.

In the past the mainstream media would have carried the flame of the protests against this encroachment of the state but now most in the media are apologists for it. There are a few who are prepared to stand up and act against this existential threat to free, democratic society from within. Edward Snowden is one of the few. He has exposed illegal an unconstitutional activity by the US Government against its own citizens. Americans should stand up for Edward Snowden before it is too late.