Sunday, April 13, 2008

John there IS an alternative - make the argument

So John Key has been reported by Stuff as saying that National has "ruled out" state asset sales in its next term. Why? Well don't expect any thought about it - it's simple, Key doesn't believe in much another than getting elected. Fair enough some of you will say. However, some of us want to think that he'll DO something other than not be Helen Clark and not make things worse.
Of course, Helen Clark is having him for toast on this. "Miss Clark said Mr Key's stance was "laughable" and could not be trusted." It is and I actually hope it can't. I hope he DOES engage in asset sales, because there is so much the state shouldn't do.
There are multiple reasons why the state should privatise its commercial operations, and why the abject lies spread by the left about privatisation should be confronted. Here are some:
1. Taxpayers shouldn't be forced to invest in businesses they don't want to invest in.
2. Politically appointed boards will be less competent than privately appointed boards, because politicians have incentives to meddle and make a company less profitable than it would be otherwise - which then means there is a bigger chance of a bail out.
3. The state should not be engaged in competing with the private sector. It is unfair for private competitors to fund state owned companies through taxes.
4. Private companies can more readily raise capital to invest, update and expand than state ones - this explains why Contact Energy seems more able to fund and build power stations than its competitors.
5. Businesses SHOULD be allowed to fail if they don't perform. It's part of capitalism and the world moves on, and new businesses buy the assets and provide services for people to use. This happened to TV3 in 1991, not that most of you will remember that. Australia was hardly crippled by the collapse of Ansett.
6. Privatisation can provide new expertise and capital to grow and develop businesses. Telecom and Contact Energy are two examples of this. The refusal to allow Singapore Airlines to do the same thing for Air New Zealand is one of the reasons the firm fell over.
However, arguments about better performance, getting more investment and accountability will not work with most of the public. Even arguing selling SOEs to cut public debt wont wash that much, although it is still valid. John Key could advocate privatisation of a more direct kind - give away the shares.
Imagine if National offered to give shares to every single citizen, in equal numbers to avoid arguments, in one current SOE. This would be true public ownership. Everyone would own shares, get dividends and watch the value rise and drop - and could decide whether to sell, buy more, and appreciate a little what it means to own business. Oh and the socialists could give the shares away to their favourite charity, not that they would of course.
So go on John, say you'll sell just one of the three government electricity SOEs (no monopolies here, there are around seven electricity generating firms) like Genesis - with 40% of the shares going in a public float and the rest shares distributed to all citizens. The firm buying 40% would provide the expertise and capital injection, the rest would mean all citizens could vote for directors, attend AGMs and truly own shares.
How many Labour voters would vote to get their shares? How would it change how people felt about capitalism being all shareholders? Watch how Labour and the rest of the left would say the poor would simply sell the shares - showing their contempt for their own supporters - assuming they are all stupid or that it is wrong to give them a part of the beloved state THEY can control.
Go on John, it's worth a shot. You could make privatisation NOT a dirty word.

1 comment:

Anonymous said...

"Go on John, it's worth a shot. You could make privatisation NOT a dirty word."

While it would be nice for John Key to make privatisation NOT a dirty word, it is much better to do it once National are back in government. It certainly wouldn't be worth it if Labour completely twisted it and say, "see the 1990s will be coming back if you vote National," and the polls skewed back in their favour. I would much rather get a lite National Party in government than a proper National Party in opposition.

Get lite National in for one term and then start moving slowly toward a smaller state agenda.