Idiot Savant's analysis woeful (updated)

Idiot Savant's latest post exclaims "The way the right talks, you would think that government policy was all about wealth and increasing GDP. Today, we have a stark reminder that that is not the case, in the form of the European Quality of Life Index".

Well no, some people talk about freedom as well, he chooses to select what he listens to about standard of living.

He continues "According to the index, the UK has the lowest quality of life in Western Europe...This is where NeoLiberal growth maximisation gets you: a country where no-one wants to live and everyone feels miserable. The lesson for New Zealand ought to be obvious."

So what IS the Index? Where does the data come from? How comprehensive is it? The answers are, a shonky piece of publicity, difficult to tell and not at all. Even with that, the conclusions he draws are little to do with neo-liberalism. All in all it's very woeful analysis that doesn't stack up.

The European Quality of Life Index did not come from a university, government institution, think tank or international organisation. It came from a private company that makes money running a price comparison website for consumers to choose the best value utility companies. Uswitch. Frankly, whilst it is nice for private companies to do a bit of research that they pay for, I'd like some robustness around it. So how does it fail?

1. Idiot Savant claims this is about Western Europe, yet it leaves out at least 10 other countries. Norway, Finland, Switzerland, Belgium, Luxembourg, Austria, Iceland, Cyprus, Greece and Portugal. Given it includes Poland, you might ask why not also Slovenia, Hungary and the Czech Republic. So really who knows if the UK ranks bottom?

2. The dates for data used are often missing with the sources. In some cases there are no sources (e.g. average working hours a week), others quote a date with the source but is that publication date (as some look like) or year? If years are not common across data, then it should be justified, as you are not comparing like with like.

3. GDP per capita is used, not GDP per capita adjusted by purchasing power parity, although the report looks like creating its own PPP measure. Frankly, I'd rather trust the more widely used ones. PPP matters for the same reason anyone comparing earning £ to NZ$ without looking at purchasing power makes it look like anyone living in the UK is rich.

4. Under wealth the report talks of council tax and travel expenses in the UK, but doesn't say the same for similar taxes or charges elsewhere, or housing costs. The UK may cost more than many for both, but is the highest?

So all in all, it looks a bit shabby. More shabby are the conclusions that this is about "neo-liberal" policies. Why?

1. One of the measures is "hours of sunshine", no need to explain why the UK comes out worse than France and Spain on this measure. Not a lot to do with government.

2. Education spending for the UK is similar to the average, as is France, Spain is less. So how does spending more on this matter? Finland is the interesting case as it is seen by some as a model, but it isn't included. Note Sweden spends more and has a voucher system.

3. The UK has one of the most centralised health systems of all, and the outcomes are relatively poor. The NHS is a huge central bureaucracy, compared to insurance based models in France, Germany, the Netherlands and others. However, that's been ignored as well as something "neo-liberal" when the UK is anything but.

4. One of the measures is cost of fuel, alcohol and cigarettes, all very high in the UK because of? Tax. Yes, nothing "neo-liberal here". The Netherlands and the UK have the higher fuel tax in Europe, so surprise surprise, they have they highest prices of fuel.

So what does this piece of work prove? Precious little. The data is hard to compare, but what can be compared shows that the countries with the best standard of living, have the most sunshine, spend the same or less on education, have insurance based health systems and lower taxes on commodities.

Hardly neo-liberalism vs socialism is it now, even if you do think a price-comparison website operator is a sound source for analysis.

UPDATE: Seems he has removed the link to this post from his website, doesn't like criticism does he? You'd think something ostensibly interested in free speech would allow his reliance on a pathetic piece of publicity driven research to be critiqued?

Who really wants to be car free?

The Duke of Wellington famously loathed railways because he said it would "only encourage the common people to move about needlessly". Sam Kazman of the Competitive Enterprise Institute notes the comment by Prince Charles, himself the owner of six vehicles, on a similar vein. He believed one should be "elevating the pedestrian above the car". I like underpasses too, but he didn't mean that. He certainly didn't mean it for himself.

What is always missing from the anti-car language of the environmentalist movement (and a more peculiar "public transport religion") is the value people attach to having a car. It is so often portrayed as "car addiction" or "car dependent", but the counterfactual put forward, a fanciful notion that everyone was "better off" without cars doesn't bear close examination.

Put it this way. If you live in a modern new world city, consider the locations of jobs you can access with public transport conveniently, and those you can drive to within a reasonable time. The liberating influence of the car is dismissed by the doomsayers, as is the trend of those in China and India seeking to buy cars - as if it is some whim of the ephemeral.

"Living car-free may be fine for many people during some phases of their lives, and it may be fine for some people for all of their lives, but it’s no way for most of us to live — regardless of what Prince Charles and his fellow aristocrats may think" says Sam, and he's right.

Ireland facing massive spending cuts

Ambrose Evans-Pritchard in the Daily Telegraph writes a depressing forewarning to those in countries engaging in massive debt funded state “stimulus” activities. He does so by pointing at Ireland, where the news is truly bleak. Given Ireland has a similar population to New Zealand, it is worth those who preach “borrow spend and hope” to give pause for thought.

Ireland, you see, has gone down the stimulus line. It bailed out its banks, guaranteeing all deposits. The result is a debt trap imposed upon the state. The interest is now crippling the Irish government. The Irish government is currently borrowing 300 million euro a week to cover this, at penalty interest rates for fear it will default. You see Ireland has external debt of 811% of GDP, albeit this includes substantial private debt held by financial institutions, but it also includes government guarantees of bank debt and the nationalisation of banks.

A report commissioned by the government aims to abolish the budget deficit by 2011, and recommends drastic cuts:
- 17,300 public sector jobs to go;
- 6,900 teacher jobs to go, with commensurate closure of many schools;
- Public sector pay cuts
- Welfare benefit cuts of 5%
- Child benefits to be strictly targeted
- Hospital A&E fees to be increased.

Without such drastic measures, Ireland risks defaulting on its debt, making future borrowing near impossible, forcing Ireland to cut even more drastically. The article expresses fear that other Western countries, such as the UK and the US, face similar risks. UK national debt is now over 90% of GDP, France is approaching that level, Italy is at 120%.

You see, Japan has been engaging in fiscal stimulus for well over a decade now, to no avail. Public debt is estimated to be 240% of GDP by 2015. Hasn’t quite worked has it?

The truth is that Gordon Brown, Barack Obama and Kevin Rudd have all embarked on a gamble with your childrens' taxes - fiscal stimulus is being undertaken because the short term political gain is to soften the recession - and because none of them have a political instinct for less government - and none of them are willing to take a gamble on "do nothing you can't fix it".

After all, do you think people in the British Labour Party, US Democratic Party and Australian Labor Party sit around thinking how they ought to get out of the way of people?

Oh and if you want to read the report on cutting Ireland's public spending go here, and here. You'll see it isn't half as dramatic as many are making out.

Why is Slovakia not financially bereft?

Simple.

Slovak's borrowed more prudently. Slovak banks lended more prudently.

Was it due to regulation?

No. Slovakia has a fairly deregulated economy, with flat income and company tax.

So says Slovak university students in Bratislava, who largely support the free market and are worried that the rural majority will want to go back to centrally planned socialism. This is from the BBC!

Its main challenge is the collapse in car exports, since it had a booming car assembly industry thanks to lower wages and hard working employees. So it is far from immune, and has seen economic growth plummet - but its financial sector is sound. No talk of bank bailouts at all.

The way to hell says Czech PM

That's what he thinks of the Obama print money and fiscally abuse unborn children plan to stimulate the US economy says the BBC. See, the Czech Republics knows a bit about hell, as the allies left in the strangling embrace of Stalin and Chris Trotter's beloved Soviet Union for 40 years, rolling some tanks in halfway just to remind everyone of who was boss. The Czech's know a bit about the difference between freedom and statism, which given the Czech Republic's current (6 month) Presidency of the EU is good news for the EU (for now).

Czech (outgoing) PM Mirek Topolanek considers the size of the US budget deficit and the long list of protectionist "Buy America" provisions in the print money and fiscally abuse unborn children plan to be disastrous, as it follows just the same creeping path of protectionism that damaged the global economy in the mid-late 1930s.

He also says the EU is uninterested in pursuing any more of additional stimulus package to follow the US.

Now whilst this comes on the eve of another announcement, wouldn't you think the world would be better off, with Mr Topolanek's term as PM ending, appointing him instead of Helen Clark to run a bloated corrupt and lazy UN megabureaucracy?

The Standard talks nonsense on rail and roads

Just when you thought Frogblog was the leading source of reality evasion on transport, I find I have new respect for Frogblog and that the Standard deserves the prefix "sub" that NotPC rightfully gave it last year. Frogblog recently posted on Kiwirail evidence that contradicts the Green view on things, it gave a flimsy rebuttal, but still all credit to actually looking at broader evidence.

The Standard on the other hands is the repositary of complete ignorance on the topic.

The latest post has Steve Pierson saying of Kiwirail (in a post about ACC, more on that later):

"even if it’s true in the sense that it won’t give any profit to government as a going concern, and will require the Government to put in more money, so what?"

So what? Yes Steve, taxpayers should bend over and let the government shaft them up their fundament right? An unprofitable business is no big deal to the Standard. Then again, the history of NZR in its various guises in my lifetime under state ownership was to be unprofitable from 1970 to 1982, when it was bailed out, profitable for 2 years (after contracted subsidised services), then unprofitable from 1985 to 1990, when it was bailed out again, and profitable for three years before being sold.

Then he says:

"If that were the criteria for whether owning an asset is worthwhile, we should get rid of the state highway system for a start - it costs the Government over a billion a year and there’s nearly nil revenue."

Nearly nil revenue? The government is forecast to receive $897 million from Road User Charges and nearly $1.9 billion from fuel tax (adding the $600 million currently diverted as Crown Revenue then recycled back to transport) from using all roads in the current year. 50% of vehicle kilometres travelled are on the state highway network. So around $1.4 billion a year of revenue is nearly nil?

Oh and the planned expenditure on the state highway network in the current year is $1.26 billion, of which 63% is on capital improvements.

The state highway system raises enough revenue to pay for its ongoing maintenance, with sufficient surplus that it can be used to improve the network, and there is over $100 million on top of that revenue used elsewhere (subsidising public transport).

Then we have mysticism dressed as economics:

"It’s the externalities that matter. Having a working rail system, liking a working road system, allows the economy to work much better than it otherwise could. That produces tremendous wealth, even though it doesn’t show up on Kiwirail’s balance sheet."

Externalities? Yet when the Surface Transport Cost and Charges study dug down into the marginal costs of road vs rail freight, the differences between modes varied considerably. In two out of three cases, road user charges revenue paid were in excess of all externalities, in the other case it fell short. So it is NOT cut and dry.

However, this nonsense about it producing "tremendous wealth" is pure mysticism.

Let's see the wealth creation from Labour and the railway system:
- $665 million to buy a company that couldn't pay its bills (track access charges), when its market valuation was around two-thirds of that;
- That same company needs hundreds of millions of dollars to just keep doing business over the medium term, and wont generate a profit from that.

The Standard has been a cheerleader for the rail religion for some time. It described renationalisation as such:

"The Government has acted in a way that makes economic and environmental sense. The only opposition has been from the ‘free market is always right’ lobby and National. Their childish comments about buying a train-set have fooled no-one."

Childish? Using analysis which the government itself commissioned from consultants?

Steve Pierson before that talked absolute drivel suggesting enormous demand for Kiwirail:

"Businesses are keen to take more freight off the road in the face of skyrocketing fuel prices and long-distance car travel is also getting out of reach for many; KiwiRail will provide an alternative."

Which businesses? Who is thinking of dumping their car for long distance passenger rail?

You see, the subStandard thinks it is about ideology not evidence:

"The only reason I can think of is that National/ACT doesn’t like KiwiRail and insulation because they were the Left’s iniatives. There is certainly no pragmatic reason to drop them. From both an environmental and economic stand-point investing in rail and warmer homes are the best options."

None Steve? When nobody has done a study on the economic or environmental benefits of subsidising rail? When a government pays well over the odds to buy an unprofitable business?

Dare I suggest the Standard has superseded Frogblog in abandoning evidence and preaching the religious mantra "rail must be good" - a faith based initiative if ever there was one.

Tax slavery instead of wage slavery?

Frankly what's the difference? The difference is so called wage slavery is working for money for yourself. Tax slavery is working for money for other people.

Around a week ago Idiot Savant posted on how he thought people couldn't truly be free if they had to work to pay the rent, pay for food etc. They could only truly be "free" if they could decide for themselves how to spend their time, essentially, if they didn’t need to work to have enough money to live.

He believes that employment is “wage slavery” and that the government should provide a guaranteed minimum income that would allow everyone to be housed, clothed, fed and essentially maintain some sort of basic existence (which in many developing countries would be called rich). Only then, does he believe, will people be truly free because they could do what they want with their own time. You could spend your whole life in leisure, start up business, be an artist or whatsoever. Freedom?

Well he neglects to note the obvious point that the “government” does not create money out of thin air (or rather when it does it is called inflation), and has to take the money for such an income from everyone else. The person bludging (which IS what it is) on the guaranteed minimum income may be “free”, but it enslaves everyone who DOES work for an income, or earns income by any means. What happens if half the working age population decides to take a break? Those who don’t must work and pay tax sufficient for themselves, their families and those of the “free”. That is tax slavery. By what moral measure should the existence of others force you to sustain them – and Idiot Savant wants you to do so unconditionally. Because someone having to do something for a living is slavery.

It’s not. It’s reality. If everyone sat back wanting their guaranteed minimum income, everyone would starve. Short of having been gifted (such as through inheritance) or winning a substantial sum, people have to sell their services – as a combination of mind and body – for others to exchange it for money, or goods and services. It is reality. The same reality states that if a house isn't maintained, the roof may leak, or it may catch fire, or the piles may collapse. It is not "slavery" that you need to maintain assets like this to avoid certain risks.

It is reality.

Leisure is a luxury, the wealthier and more productive people have become, the more leisure they have. The answer to more leisure is not to pay people to be unproductive, but to set people free to be as innovative and productive as they wish, within the bounds of individual rights.

That, you see, is what Idiot Savant and Chris Trotter do not understand. They are stuck in the Marxist mindset that employers have their boots at employees' necks. Perhaps when either of them have established businesses, mortgaged homes, worked extensive hours for nothing to make a business work, and then hire people, can they truly judge what it is to be an employer - and stop thinking they all look and act like Montgomery Burns.

Jobs summit outcomes?

I agree with most of what Not PC has already suggested here, here and here, as an alternative view to the Jobs Summit. These are:
- Government should get out of the way;
- Government should resist pressures for protectionism (one positive thing it COULD do is lobby hard internationally to reboot the Doha Round to make the biggest push for free trade since the 1950s);
- Production drives the economy, not consumption. Precious little government does encourages production. As Government spending takes money out of the hands of the productive, there should be further tax cuts. I'd suggest simply dropping company tax to 20%. What better signal to the world to locate to NZ?
- Abandon the minimum wage;
- Cut government salaries;
- Allow malinvestments to be liquidated;
- Restrict the Reserve Bank's ability to inflate the currency;
and so on.

However, in one respect I DO digress from PC, I do NOT believe all government spending is consumption. It is possible for government to spend money and generate more wealth than it spent. However, this really only happens in two areas:

1. Spending money on capitalising SOEs to expand. A very risky endeavour indeed. Singapore does it well, but you'd question whether NZ governments ever can do it well. Air NZ and Kiwirail being Labour's greatest dud investments.

2. Spending money collected from consumers of a government service to benefit those consumers beyond the cost of the spending. I mean roads. The private sector is almost entirely shut out of providing roads, so government taxes road users and can spend that money on improving roads to reduce delays, wasted fuel, accidents etc. For example, the widening of the highway through Paremata-Plimmerton north of Wellington generated savings in travel time, fuel etc of around $5 for every $1 spent on it. The dangerous side to this is politicians get excited about roads too much, and want to spend money on the ones that DON'T do that. Transmission Gully and the Helen Clark Memorial tunnel (aka Waterview Connection) are examples of this. Japan is littered with such bridges of the sort Henry Hazlitt referred to.

In short, if anyone is advocating spend up on projects, they need a seriously rigorous piece of economic analysis. Will the project really generate wealth based on proven demand, what is the risk contingency on this. If there is a reasonable risk it wont generate at least $2 for each $1 spent over a 20 year period then it isn't worth doing. Sadly the ideas that have come out include the insane idea for a cycleway (although if the government was rational about Kiwirail it mind find it has plenty of corridors for one) and the Green Party's rather predictable favourites.

However, regardless of the economic efficiency of government spending it does not justify it morally. Theft is still theft. I undoubtedly think I can spend your money better than you can, but it hardly justifies me doing so does it?

Finally, it is tragically notable that the leftwing commentary on the Jobs Summit has been virtually nothing about substance or policy (with the exception of the Greens. The Greens played the identity politics card and then ideas), but about identity politics. The Standard showed pictures of men, said everyone has an ideology (true), damns the cycleway (but forgets that Labour started pouring money into cycleways itself) and makes a few comments about what was said. However no new ideas. Idiot Savant goes on about men, and then damns the cycleway (yet this is Green Party policy), and goes on about identity politics again. Hand Mirror thinks it shows John Key does not value women. Apparently women can't be represented by organisations that are open to them and include them.

Not enough women, not enough people of different races. Apparently if you have a vagina or differently coloured skin it means you have different ideas. Those don't come from a brain. If you don't feel represented there, then say so - it isn't because there aren't enough women, Maori, Koreans, blondes, cross-dressers, asthmatics, pianists, vegetarians, balloon fetishists, dancers, nudists or twins - it is about ideas. The truth is that if the summit was full of leftwing women, which would surely cheer many on, the ideas are unlikely to be about getting government out of the way of the productive.

Most of those at the summit were there because it showed they were wanting to work with the government, and because they wanted some booty from the rest of you.

Like I said before, the Fourth Labour Government had an economic summit conference shortly after it was elected, and promptly ignored most of what came out of it. That seems the appropriate precedent.

UPDATE: I see the whingy 23yo unemployed woman who thought the world owed her a living at the Lange Economic Summit Conference, Jane Stevens, retains her Marxist view of the world in the Herald. Given she works for an organisation partly supported by taxpayers and ratepayers, I'm hardly surprised. Shame her passion and commitment didn't teach her that the government produces nothing, and that the free market generates wealth.

Obama subsidises home owners

CNN reports that the Obama Administration is going to spend US$75 billion to rescue property speculators whose mortgages are worth more than the value of their homes. Those who didn't enter the property market, or entered it more wisely, are subsidising those who were foolish, who thought the market would ever increase. Those who didn't take out mortgage repayment insurance will be subsidised by those who did.

The Obama administration is rewarding irresponsibility and poor decisionmaking by fleecing the children of those taxpayers. Moreso, he is inflating the property market, making it yet harder for new entrants to it. An administration that ostensibly cares about the cost of housing is pushing prices up for new home owners.

Change who can believe in?

President Obama said that those who would qualify are people the bank are not interested in - which of course, makes it ok to take from the general public to help them out. He said "no sale will return your investment". Well of course not, bad investments SHOULDN'T return you anything. Governments using their fiat money have supported the inflation of the property market as a ghost prosperity allowing people to borrow against their homes, and to encourage speculation for those wanting to make gains. It caused the problem and is unwilling to let the housing market deflate to its rightful level. It is willing to offer even more credit, so presumably people can engage in subsidised bargain hunting.

So Obamaphiles, hope your children are grateful they are paying more in taxes to pay the debt of property speculators. No humour in that is there?

NZ made? so what, promote it yourself

Unless you have the intellectual breadth of a young child, the idea that taxpayers should be forced to pay for a promotion to buy New Zealand was always banal. There is no more good reason to buy a product made in New Zealand over one made in Australia, Austria, Albania, Angola or Antigua because of where it is made, than there is for someone from Karori to buy Karori made over Khandallah made. The rational consumer should trade off price and value from any commodity. That may also include an element of preferring one producer over another, for moral reasons. This is exercised by consumers across the spectrum, because of concerns over environmental, political, religious or philosophical underpinnings of producers. Governments can't predict nor should they interfere with these billions of choices that influence producers to meet what people want. It certainly shouldn't make you pay for a campaign that is about convincing people that where something is made should influence whether it is bought - rather than price and the product itself.

So, it is positive that the new government has abandoned spending any more money on the "Buy Kiwi Made" campaign. A campaign the Greens strongly pushed, as part of their own economic nationalism agenda. Believing it is moral that all New Zealanders, consumers, producers (including importers) should subsidise advertising for New Zealand made products, on the misguided notion that buying more New Zealand made goods is good for the economy.

The truth is that buying a New Zealand made product is good for the producer - it isn't good for the competitors of that producer, or producers of other things you may have bought, or even where you may have invested or saved the money. However, to create value the money you paid for that product should be worth slightly less than the product you bought. Why buy something New Zealand made if it costs more and is poorer quality than the alternative, or simply doesn't meet your needs? After all, why is the producer of the foreign made good - who used initiative to produce something that DOES meet your needs less deserving of your dollar? The only conceivable answer to that sort of discrimination is racism. After all once you have a product you like at a good price, it is up to New Zealand producers to attract business from the foreign producers - which of course, would be easier if there was free trade.

Oh yes, the Greens oppose that too, indeed have actively supported nonsense like "food sovereignty", the latest leftwing campaign against free trade in agriculture, warmly welcomed by the bleeding parasites of the European Union's Common Agricultural Policy, and Sue Kedgley.

However, stepping back from that, this s not to say that New Zealand producers should not, voluntarily, fund a "Buy NZ Made" campaign if it wins them business. Which they do, and have done so for many years. Air New Zealand, for example, makes a deal about being from New Zealand. However, I'm not flying it back home this Christmas simply because of price - I got a better deal in business class with Scandinavian Airlines (not quite as good but I wanted to spend the extra £1,500 on something else).

You see the government campaign was "Buy Kiwi Made" and has duplicated the privately funded "Buy NZ Made" campaign. Yes there already was and still is an industry led campaign to "Buy NZ Made". Labour and the Greens duplicated it.

Sue Bradford, well renowned economic genius, could put her money where her mouth is and financially support that campaign, and leave everyone else's bank accounts alone.

However, I somehow suspect Sue Bradford's degree of direct support for the privately run "Buy NZ Made" campaign will match the regularity of Green MP's using the train to go between Wellington and Auckland.

UK economists reject big Keynesian spend up

In a letter to the Sunday Telegraph, 16 economists oppose plans by the British government to spend its way out of recession, by borrowing from future taxpayers.

The letter states:

"It is misguided for the Government to believe that it knows how much specific sectors of the economy need to shrink and which will shrink "too rapidly" in a recession. Thus the Government cannot know how to use an expansion in expenditure that would not risk seriously misallocating resources. Furthermore, public expenditure has already risen very rapidly in recent years, and a further large rise would take the role of the state in many parts of the economy to such a dominant position that it would stunt the private sector's recovery once recession is past."

Indeed, the state is too arrogant to know it doesn't know best and that what it does crowds out the private sector. Now these economists are clearly not of the small state Austrian school kind, but they do come to one conclusion:

"If this recession has features that demand more active fiscal policy, which is highly disputable, taxes should be cut. This would allow the market to determine which parts of the economy shrink and which flourish to replace them".

Indeed. Politicians of all persuasions and parties may think about that.

Oh and if you continue to believe that all of this is about the failure of free market capitalism, then you might read George Reisman's response to this (Hat Tip: Not PC)

UK sex pay gap is not about discrimination

Professor J R Shackleton in the Sunday Times writes that the so called "gender" pay gap is not an issue for public policy concern:

"What accounts for the gender pay gap? Not discrimination. For one thing, you find differences within male and female populations that employer prejudice can’t explain. As an example, although married men earn more than married women, single women earn the same or, as they get older, more than single men."

Don't see too much concern about THOSE variations do we? Furthermore:

"There are differences between ethnic groups. Black Caribbean women earn slightly more per hour than black Caribbean men, while Bangladeshi women earn a quarter more than Bangladeshi men. Or consider sexual orientation: gay men earn more per hour on average than “straight” men, while lesbians earn more than heterosexual females. How does that fit the view that labour markets are riddled with discrimination? These pay differentials arise partly from differences in the jobs people do. Few Bangladeshi women work: those who do are well educated and so have jobs where they earn more than the typical male, a third of whom work in restaurants. Gay men are relatively highly educated and concentrated in a narrow range of well-paying jobs. "

On top of that there are other factors, such as risk:

"Men are 1½ times more likely to be made redundant than women and 2½ times more likely to suffer a serious injury at work."

The UK's pay gap is higher than other European countries, but only because of a higher proportion of women in work. Bahrain, Shackleton notes "has a pay gap of about 40% – in favour of women. Very few women, only the educated members of elite families, are in paid work". I doubt whether leftwing feminists would regard that to be a role model country.

As British "Equality Minister" Harriet Harman said, her new "equality bill" will be about "empowering the resentful". Surely public policy can be on a basis of evidence and rational analysis, not the anger of aging socialist feminist politicians?

What is rich?

I was astonished a few years ago when visiting part of my family in the provincial south and discovering that it was generally thought among them all that NZ$60k per annum was high income. Given that at the time, even though I was still living in New Zealand, I was comfortably above that income, I was slightly embarrassed, for fear that said relatives (who I love dearly) would think I was living the high life, when I most certainly was not.

I never considered that paying the mortgage on a three bedroom house in Northland, Wellington, an annual overseas trip, regular domestic trips, occasionally buying new appliances and clothes to be an extravagance. Indeed, at the time I eagerly gathered airpoints so my overseas trips could be upgraded, and was remarkably frugal.

Of course the UK offers much more, although it is dangerous to do the simple NZ$-£ conversion and think one is wealthy. If I do that it seems crazy, but Purchasing Power Parity is far different between London and Wellington.

So that's why Cactus Kate's post on the pathetic SST piece on how to earn NZ$100k a year is apt. NZ$100k is not good money, it is £36k - which is only slightly more than a good teacher would earn in the UK.

New Zealand has a currency that has a poor value. This, of course, is seen as wonderful by exporters simply because it makes it easier to compete with others. This, strangely, wasn't a concern in the 1970s when the NZ$ and A$ were on a par, and when the £ and NZ$ were at a 2:1 ratio, instead of 2.5-3:1. However, the quid pro quo of a low dollar is that, in reality, your buying power is low. Buying capital goods is more difficult, travel is more difficult. The result is the quality of life is reduced because less can be bought, which is why (until the recession), tourism from the UK boomed. British tourists saw a bargain paying as little as £750 to fly to NZ (less than flying premium economy to the USA) and everything being relatively "cheap". Some were more than willing to pay double that or more to fly premium economy for what was to them the most epic flight they would ever do - which is why Air NZ has expanded premium economy on its long haul jets three times.

Which brings me back to NZ. Salaries are lower because the cost of living is lower, competition for positions is lower, and expectations are lower. I have seen an enormous difference in standards among some people I have worked with the UK compared to NZ, but I have also seen the UK have (in government in particular) absolute fools who seem to comprise an extended make work scheme. Yes, bureaucracy in the UK is occupied by many people who are less competent, intelligent and experienced than their NZ counterparts. Hardly surprising really, as outside high echelons of major departments, the public sector pays NZ levels of salary.

The Labour Party, Greens and other parties who drink yard glasses of envy whenever they meet, like to berate the "rich", painting to those, like my South Island relatives, that those who are even moderately successful should have their wages pillaged to pay for the lumpen proletariat to have schools, superannuation and health care that frankly, they can't afford in the 21st century.

UK exporters can sell goods at a high price because they are perceived to be high quality - selling them in pounds sterling. It is about time New Zealanders stop aspiring to be selling lots of what is cheap to the world, and started selling what isn't. Most of the developed world doesn't worry about their higher exchange rates, if you aim high you can earn them too!

NZ Superannuation Fund fraud

Think of a superannuation scheme or pension fund that you join - or rather, are forced to join.

Your contribution to the fund varies according to your income. The more you earn the more you pay.

What you receive from the fund depends on one thing: How long you live.

If you don't reach age 65, you'll get nothing, your inheritance will get nothing, in fact your contributions will just have gone to someone else.

If you do reach 65, you'll get - whatever the government thinks everyone who reaches that age will get. If you spent your life on welfare or low income jobs paying next to no tax you'll get the same as a successful entrepreneur who has spent many years on the top marginal tax rate.

You wouldn't choose such a fund now would you?

So why do you vote for political parties that set it up, want to maintain it and even want to use it to play political games as if it is a sovereign wealth fund it can throw at "investments" it makes.

£500 billion of socialism

Sorry kiwis, even Auntie Helen can't undo Gordon Brezhnev Brown with socialism - and certainly Gordon outdos the US Federal government.

The Sunday Telegraph reports that the UK government is going to inject £50 billion into British banks, in particular HBOS and the Royal Bank of Scotland, to save both banks, making them both majority government owned. This adds to Northern Rock and Bradford & Bingley, giving the UK government control of four of the biggest financial institutions in the country. This is despite a deal by Lloyds TSB to buy HBOS which it reports is still on track. The government is also seeking to inject funds into other banks, like Barclays and Lloyds, making the government a shareholder of them all.

United Soviet Socialist Kingdom or what? Well this is part of a £500 billion rescue package. Yes that isn't a mistaken zero. It is more than NZ$1.4 trillion. That is ten times the GDP of New Zealand. Half of it is to underwrite debt, £200 billion injection into money markets and the rest to partially nationalise banks. Compared to the US$700 billion package from Washington, given the US has five times the population of the UK, it shows new Labour is old labour once more.

Simon Heffer in the Daily Telegraph points out that with Gordon's nationalisation while painted as saving the UK from disaster "the consequences of his having done so could be catastrophic, too, because the socialist experiment rarely ends up with people feeling happier, richer and more free until it has ended."

"The liability and risk to the taxpayer is terrifying. The political cost to Labour if all this fails will be as nothing compared with the cost to the British public.This is what socialist economics brings. The intervention, or rather interference, of the state in financial and economic matters can only lead to sclerosis, the suppression of enterprise, the raising of taxes, starvation of investment, lack of innovation, technological retardation and the rise of the power of organised labour."

"The partial nationalisation of banks would provide a golden opportunity for Labour to return to the glory days of the George Brown National Plan of 1965, which saw the then Secretary of State for Economic Affairs write to every company in the country and ask them how they did their business. This included such fatuous questions as what they expected to be producing in five years' time. Protests from industrialists that that depended very much on what people were demanding in five years' time were met with incomprehension by the Labour government. "

Indeed some on the left in the US and UK are asking that, if the government can conjur up incredible sums of money to bail out banks, it can do so to build state hospitals, schools, businesses and there is no end to what the benevolent state can do.

What the great wish of Brown is that the financial sector will be buoyed and that there will be no need to guarantee debts, and government capital in banks will result in a significant return that can be privatised.

However the main discourse today is how "capitalism has failed" and how "Roosevelt saved the US in the 1930s". What is most important is for those of us who believe in freedom over statism, and markets over central planning, to ensure that this discourse is not dominated by the left. As PC says in an excellent article at Solopassion "When we see the destruction caused by the depression of the thirties and the means by which the Roosevelts of the world both extended it and then used it to permanently enthrone big government, it should be clear to anyone with eyes to see that what politicians do in the next few months will effect us all for good or ill for at least a generation."

European socialism working well then?

BBC reports "World stock markets have plunged after government bank bail-outs in the US and Europe failed to stem fears of slower global economic growth."

Confidence has been rattled, big time, and the European interventionist governments can't resolve their own banking system, after what the Economist described as schadenfreude about the US financial crisis. Europe's more left leaning governments saw it as part and parcel of Yankee wild wild west capitalism - gee how everything looks as bad or worse close to home.

Sarkozy, once seen as the Thatcher of France is no more. The Economist reports:

"In the space of three days, he twice laid into free-market capitalism. “Laissez-faire is finished,” he announced in Toulon. “The all-powerful market that is always right is finished.” It is not just rhetoric. With unemployment climbing, Mr Sarkozy has launched a scheme of state subsidies to supplement low pay, paid for by an extra 1.1% tax on capital income that dismayed his own party’s deputies. Talk of tax cuts has been shelved. " at the same time as saying "that “capitalism is the system that has enabled the extraordinary development of western civilisation,” adding firmly that “anti-capitalism offers no solution to the current crisis.”"

It's not only the USA that printed money indirectly through central banks offering excess credit.

US taxpayers saved, financial markets sink

The Democrats could have passed the bill on their own - to take US$700 billion from future taxpayers to bail out the foolish borrowings and foolish lendings by US banks, encouraged implicitly by a central bank that kept extending the money supply - but even they couldn't be convinced. Too many saw their constituents demanding why they should be forced to bail out Wall Street. Many more Republicans said the same, and reacted to the lies that this was the result of "8 years of economic mismanagement" as rich little leftwing Democrat Nancy Pelosi bleated. Democrats want this to be painted as the fault of Bush and the Republicans, but their hands are far from clean. This goes back before Bush and even before Clinton - it is a longstanding problem of government growth in the money supply, and the long held belief that the government will step in.

So, according to CNN the Dow Jones has plummeted 7%, it is about time to do some bargain hunting.

Obama and McCain don't know what to do. Obama is trying to make hay from it, McCain is trying to say Obama would spend even more taxpayers' money on new programmes.

The truth is both look like less than Presidential material at the moment - neither give the public confidence in the economic future. Gerald Warner in the Daily Telegraph says that as McCain and Obama both supported the package, US voters chose "none of the above" in putting huge pressure on Congress to say no.

For now the taxpayers have won the battle - the question is what the cost of that will be in the short to medium term.

Incomes of uneducated don't rise

According to The Press a study by Christchurch social agency Supergrans claims that "the income gap between families of unqualified and qualified parents has more than doubled over 25 years". Hardly surprising. If you're uneducated then unless you gain experience, and skills as a result, why SHOULD you expect your incomes to rise?

The positive side to the story is that the agency is promoting education among older uneducated people, which of course, is part of the answer. Indeed my Aunt (neither elderly nor uneducated) has recently retrained to be a teacher's aide and is a damned good one from all accounts.

However, the notion that this is a problem for the government to fix by raising wages is a nonsense, it is up to individuals to take opportunities to retrain, and for the overwhelming incentive to be clear - no education, no skills means low wages.

Our children will thank us

So say the environmentalist lobby. The likes of the Green Party, and indeed the vast numbers who believe that it is critical now to force or subsidise people into a low carbon dioxide future because of the "costs" of climate change. The primary point such doomsday merchants make is how unreasonable it will be to allow "our children" to pay for this.

So have you noticed how willing so many are to use their children's taxes (and grand children's) to bail out the unwise borrowing of so many today? Why not pay the cost now? Why not ensure that the risks of foolishness are born by those who took them? Government borrowing transfers problems to future generations - it may be justified to manage the capital costs of core government spending, such as defence infrastructure, but to bail out banks?

Whose children will thank you because you were prepared to support governments who borrowed off their future taxes due to the mistake of a minority of people offering and taking credit unwisely?

US taxpayers' kids will pay

First came the effective renationalisation of Fannie Mae and Freddie Mac, both Frankenstein monster creations of the US Federal Government in the first place. Then came the monster loan to AIG, effectively nationalising one of the world’s biggest insurers and now the US Federal Government is taking off the dud loans of banks.

This from the Bush Administration, long hated by the left internationally – it has now grown the size of the US Federal Government beyond recognition, in effect printing more money and engaging in what may be the largest action of intergenerational theft seen in history.

The banking sector has been bailed out, the losses have been socialised and will be born by this and succeeding generations of taxpayers. The profits remain private. If ever an event in recent history could fire up the critics of capitalism this is it – and it is because anything but capitalism has been applied to the banking sector.

The Bush Administration has decided to borrow from future generations to avoid a wholesale collapse of the mortgage market and several US banks. What that collapse would have meant has largely been glossed over as “disaster”, because it would mean banks folding, their shareholders losing out, depositors (a key political concern) also losing out, but debtors to banks having new creditors who may call in the assets to sell. That would have meant homeowners with worthless mortgages (those worth more than the property), but also airlines leasing planes from ILFC - a subsidiary of AIG - (although it is hard to believe that they would’ve been sold themselves given the same companies would be using them).

The result would have been significant deflation of many assets, in particular bank shares and properties – the housing bubbles would certainly be over, mortgages would be far harder to get, but prices would have dropped.

Of course there would have been winners from it, those banks which were far more prudent, those wanting to purchase properties, and other prudent investors. The wise would have won, the foolish would have lost – but that would have included many householders with dud mortgages, and not a few depositors. Bush politically knew that if that happened, McCain would have been finished, as would the Republican Party for at least two more elections. He renationalised for political reasons, and passed the bill onto everyone’s children.

The left will blame loose banking regulations, and “greed” – but wont say that same greed applies to those on modest incomes seeking to buy properties with 100% mortgages. The left will want to constrain the buying and selling of shares, and the availability of credit, with the sort of mindlessness of those who don’t understand economics and finance. Yet failing to note the state’s role in what is a boom/bust cycle. Both US and UK governments have long continued to borrow from their own and foreign economies, injecting inflationary spending into their economies, fuelling property inflation with central banks anxious to always avoid recession, on top of regulations requiring financial institutions to lend a proportion of mortgages to the “less well off”.

It’s notable that John McCain has been distinctively uncomfortable with the bailouts – they go against his own political instinct. Barack Obama is swimming in it though, because he mindlessly blames the Bush Administration, ignoring the Clinton Administration when so much of this started to happen. Lying being the standard stock in trade for politics. However McCain would have hardly done any different. The bigger question is how quickly McCain or Obama would privatise these new enormous liability companies – have a guess who would be slowest.

In the UK, Gordon Brown looks distinctly on the sidelines, as the banking sector itself responds to the crisis through mergers and acquisitions, but also taking the US taxpayers’ injection of their future earnings as a boost to confidence.

Sadly the worst part of all of this is not the bailing out of shareholders, not the bailing out of debtors, not the billions of US dollars worth of intergenerational debt that taxpayers will be forced to bear, but the erosion of a core capitalist principle by the US Federal Government’s actions. Those involved in investment and business take risks daily, whether it be farmers, shopkeepers, taxi drivers, publishers, radio stations, food processors, furniture manufacturers, trucking firms, hotels or charter airlines – the owners, their employees and customers rise and fall on the risks taken. Such businesses fold daily, with not a sign of taxpayer bailout – which is appropriate. Banking is different. The bigger the bank or insurance firm, the better equipped it should be to manage risk, but the bigger likelihood the state will bail them out – if only because the state fears the fallout from all those who deposit with and borrow from them.

This of course means that mortgages, finance and bank shares are clearly less risky than other investments in other sectors. It also means that if the revival of share prices flows onto property finance, the property bubble will return and shares will rise on the back of a massive injection of future taxpayers’ money.

It will happen again.

As Gareth Morgan says in the Dominion Post - the tendency for governments to "save the world" on these occasions is only increasing the frequency at which it will need to happen, and the cost to be met in later years.