What struck me this week....

Obama - slicing tall poppies down, you're not so smart... it's not your business, you didn't build that

This is likely to be as controversial as Hilary Clinton's famous "it takes a village to raise a child" statement, which many conservatives took as denying the primary role of families.  

Obama said this:  look, if you’ve been successful, you didn’t get there on your own.  You didn’t get there on your own.  I’m always struck by people who think, well, it must be because I was just so smart.  There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something—there are a whole bunch of hardworking people out there.

If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business—you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.

So DON'T be proud, you're not an individual, success is always a collective effort.  Don't think you're clever, lots of people are.   You're success is because someone gave you help, you CAN'T be successful through your own hard work and intelligence.  Be grateful for the roads, because you wouldn't succeed without them (the fact others didn't do what you did is blanked out).

Presumably he thinks Olympic Gold Medals belong to lots of people, not the people winning the races.

Not PC wrote about it, and I concur.  I also like his post that includes satire about it.

Pure unadulterated anti-individualist, pro-collectivist drivel.  If Mitt Romney can't capitalise on this to grab the votes of most small business people, of indeed most Americans who strive and believe in recognising individual success when it happens, he doesn't deserve to be President.

Helen Clark gives an award to a tobacco entrepreneur

The warrior against smoking is hoisted by the petard of the profligate mega-bureaucracy she leads, not that she isn't a stranger to hypocrisy.  After all, few things are more hypocritical than a woman who has never created a business in her life getting US$500,000 a year, from global taxpayers, tax free, flying around the world flying first class (not just business class), staying in 5 star hotels, being chauffeured around telling the world that it should do more to address poverty.   Well done Helen, you cold, hypocritical, control freak.

Auckland's Mayor wants more taxes

Len Brown thinks that there is a "funding gap" of NZ$15 billion for Auckland transport.  Truth is that he can't convince users of government provided transport infrastructure or services to pay more to pay for his wishlist of totemic projects, especially the nearly NZ$3 billion Auckland CBD underground railway (given railway users already only pay a third of the cost of operating the existing trains, and not one cent towards the pending electrification and new trains).

He's arguing for a regional fuel tax (ignoring that it's unfair to those who don't use fuel on the roads, and those who wont use his totemic projects), tolls for new roads (all well and good, but there are few of those) and congestion charging (which Labour says is unfair, preferring regional fuel tax, and National rejects).

The real answer is to cut his spending plans to what fits within budget.  State highways are not Auckland Council's responsibility.  Maintain the local road network, pay out the existing public transport subsidy contracts and after that, bid to NZTA for new capital projects.  Understand that when ratepayers will throw you out for raising rates to pay for a railway, that means they don't want to pay for it so you shouldn't do it. 

Portugal's drug decriminalisation has worked

The number of drug addicts has halved since Portugal decriminalised all drugs in 2001.   Gutlessness prevails in mainstream politics in the English speaking world.

New Zealand continues the war on drugs
  

A report that 2573 people have been arrested en masse by the NZ Police for the victimless crime of consuming, selling and producing cannabis should have anyone with a liberal bent outraged.  The sheer scale of this is horrifying.  Of course it wont be the sons and daughters of MPs, lawyers, doctors, journalists, company directors and the like who are targeted, it will be largely lower class, brown skinned people and other reprobates who “deserve it” in the war on drugs.  Because, of course, the war on drugs doesn’t actually mean treating everyone who has drugs the same way – it means letting middle class successful people off the hook for dabbling in them whilst they wag their finger at the people who they don’t think are capable of making the same decision for themselves.

As Lindsay Perigo says, will the Police not stop until all 450,000 people who smoke cannabis are in prison?  

How Greece's government destroyed US$140 million of national wealth with one policy

You ban the government from selling surplus assets at less than 75% of their book value.  Meaning you're ultimately forced to sell them for 22% as the market collapses in the three years of prevaricating over the sale.

Romania's government slides towards authoritarianism

What do you call the EU's reaction to one of its newest Member States governing under emergency powers, politicising the entire public sector including the judiciary, making the state media an arm of the ruling party, overruled the Constitutional Court (so changing the constitution)?  Pathetic.  Why?  Apparently because so many MEPs are aligned to the socialists (successors of Ceausescu's communist party) who are annexing Romania's entire political system to suit themselves, and because the EU can't admit that it made a mistake in admitting Romania when it was subject to serious issues of corruption.  The EU COULD cut funding across many areas, immediately, such as agriculture and regional funding for infrastructure, but it wont.  The Party of European Socialists, including the British Labour Party, are keeping quiet. 

What's wrong with the Olympics? Part one - the economics

You’re going to see more and more hype in the next few weeks, as the world’s most political sporting event is held in London, and a vast wave of positive support will infiltrate the media, politicians and the event itself.

There is one good thing about the Olympics. It provides a showcase for the best in world athletics to compete and demonstrate the results of their hard work and training and be achievers. That is a good thing. The recurrence of this again and again, is a reason to smile. Opportunities to do this are special and remarkable.

Yet there is a lot wrong with it, so much I’m going to dedicate three articles about it.

• The first is on the economic cost
• The second is in the cost to individual freedom (and surrender to an authoritarian corporatist approach to sponsorship to fund the Games by "any means possible")
• And thirdly is a lesser important point, it is how the transport infrastructure in London has not been upgraded to cope, despite seven years of warning.

No business case

From an economic point of view, there was no “business case” for the British government to support the Olympics being held in London. It comes with a direct financial cost to British taxpayers including future taxpayers, a direct economic cost imposed on much of London, a subsidised platform for sponsorship and the self-aggrandisement and glory claimed by politicians.

The Olympics are political, they are a statement to the world by a country seeking to show off. I need not go through the list of recent hosts to demonstrate that. The previous Labour government bid for this event to try to show off, it didn’t do it for the economy.

£11 billion is the total cost of the infrastructure, hosting and the “regeneration” work undertaken related to the London Olympics. £2 billion is expected to be recovered from sponsorship, ticket sales and broadcasting rights, the rest is a transfer from taxpayers to contractors. Nearly £2 billion of the expenditure is in “regeneration”, code for government subsidised property development. The goal being to make Stratford (the main games site) into a desirable place to live and for businesses to locate (it now has three railway, two underground and two light railway lines serving it).  With the exception of Canary Wharf/Docklands, the evidence of government sponsored regeneration actually providing a catalyst to economic growth and jobs in the UK, is scant.

So financially, it will lose money.

What about the economy? Some economists would claim that this money will be returned in bucketloads because of the increased tourism and investment it will bring, except that this doesn’t bear close scrutiny.

I heard a story of someone in UK Treasury who told then Chancellor of the Exchequer Gordon Brown, that the Olympics would not create a net economic contribution to the UK economy. Gordon allegedly said “don’t worry, we wont win”.

London is already one of the most popular cities in the world for tourism. Indeed it bulges at the seams with tourists. There is evidence that the Olympics deter visitors who may otherwise have come. It brings athletes, who by and large, are not particularly high yielding tourists. It brings coaches, trainers, broadcasters and the like. It brings some spectators. However, it also scares off many others.

Moody’s produced a report saying it was unlikely that the Olympics will boost the UK’s economy. It claims the main sector to benefit will be hoteliers, with 90% occupancy estimated, although at this time of year London typically achieves 80% anyway. Given it was Diamond Jubilee year anyway it seems difficult to imagine that the extra numbers, if they turn up, will actually compensate for the for the taxpayer subsidy. In fact there is some anecdotal evidence that the numbers expected are NOT turning up. A quick look at Wotif.com for London in the next two weeks shows ample availability for hotel rooms with considerable discounts.


This is despite rather weak analysis from Lloyd's regarding the multiplier effect of spending, ignoring what people would have invested or spent the money on had they had it in their own pockets - (it isn't relevant that Lloyd's is a bank that was bailed out by the state and is now majority state owned).   Goldman Sachs says:

Goldman expects the Olympics will boost UK economic output in the third quarter of 2013 by around 0.3 - 0.4 ppt quarter-over-quarter (QoQ) (+1.2-1.6%qoq annualized), but this will be largely reversed in the fourth quarter.

Noting that the economic impacts of the Sydney Olympics were negative compared to the forecasts.

Economic impacts of the Sydney Olympics

The effect is more serious than that when you consider that London hardly has any spare capacity in its transport infrastructure to cope with the deluge of people for major events. The result is that thousands of businesses are telling staff to take leave or to work from home during the Olympics. The reason being that significant parts of the public transport and road networks will be close to gridlock. Business trips are being deferred because of anticipated queues at immigration entering Heathrow. With business likely to be deferred over this period, and those undertaking business facing real increases in cost due to overcrowding on roads and public transport, it’s notable none of this was taken into account in the glowing self-justifying “business case” for the Olympics from the previous government.

The so-called “legacy” is also grossly exaggerated. The Olympic stadium is likely to be offered to a football team (yet to be selected) to be used at a price less than the cost it took to build it, effectively destroying some taxpayers’ wealth. The regeneration of the Stratford area will be seen in property values, but this remains a fraction of the total cost to taxpayers.

Unfortunately, what’s insidious is that it is completely politically incorrect for the media to talk about this now – in the run up to the Olympics. Any major newspaper publishing articles about it would be seen as churlish and spoiling something great. No major politician dare say that which millions of people are saying – how can a country with public debt expected to reach 92% of GDP, which is overspending to the tune of 8.3% of GDP, with a PM who talks about a decade of austerity, justify pouring billions of pounds into a two week celebratory event.

Yes most people will watch some of it, and enjoy that. However, they would’ve done so anyway. Yes, there will be a sense of national pride (except from some Scots and Ulster nationalists) about the event, and some London pride as well, but didn’t the Diamond Jubilee provide that too? Wouldn’t there have been pride if the British Olympic team competed and won elsewhere?

So I’m not celebrating. My money has gone into this event (more than the average, given my income). I am betting the net GDP effect, in the long term, will be negative, as it has taken money out of taxpayers’ hands. People who would otherwise have invested or spent it better, and will have deterred almost as many visitors as it will have attracted. It will have imposed significant costs on London businesses unrelated to the games, by almost gridlocking the transport network.

In short, a colossal waste of taxpayers’ money.  It is a massive vanity project, and who really believes it will result in more than a short term boost to participation in athletics? Wishful thinking.

The Olympics should be left to profligate semi-authoritarian developing countries, willing to squander their national wealth on showing off, or by seriously commercially minded bids from cities that can demonstrate they can make money out of it, financially, without taking from taxpayers.

Let’s stop pretending the Olympics is an investment, it’s a legacy from a profligate, image obsessed former Labour Government, that is a commitment now. All that can be hoped for is that it goes off without a hitch, shows London in a positive light and that the property developed can be sold for the best possible price – and a lesson learnt to never ever do this again.

Identity politics lays down a path of Orwellian thought control

In the UK at the moment, one of the main news items is the criminal trial of Chelsea football club captain John Terry for allegedly making a racist comment to footballer Anton Ferdinand.

Terry isn't exactly a great thinker, and given that one of his contract conditions is not behave in such a manner, he certainly deserved to be reprimanded if guilty and be subject to whatever punishment is appropriate in that context.

However, now he faces criminal charges, essentially for hurting someone else's feelings.

In New Zealand, Dr Cat Pause (yes, imagine the university thesis on the psychology behind that name) not only embraces this, but wants a similar approach to be taken to discrimination on the basis of mass.  She is a taxpayer funded university lecturer at Massey (yes, agriculture clearly isn't enough), and her belief in criminalising make fun of obesity, in opposing businesses selling diets, exercise and in her hatred of the fashion industry.  She even hates the airline industry for not having wide enough seats for the obese.

She is hosting a conference on "fatism" and of course she has been the subject of the obvious jokes from Whaleoil.  It is easy to poke fun at someone with an amusing name who is seeking to normalise a condition that health professionals regard as dangerous and a key contributor to a vast range of chronic diseases, particularly a condition that is largely a matter of personal choice.  

However, I'm not laughing that much, because the wedge that has opened up the chance for taxpayers to fund discussion, debate and study into this perspective was created many years ago.  It's the embrace of identity politics, and its neo-Marxist, ultra-collectivised, power stereotyping that pigeon holes absolutely everyone into categories, whilst claiming it is actually about empowering people.

The conference Pause is leading demonstrates this:

Fat bodies politic: Neoliberalism, biopower, and the ‘obesity epidemic’ by Jackie Wykes

This paper will argue that the discursive construction of the ‘obesity epidemic’ mobilises neoliberal concepts of risk and responsibility to produce fat people as failed subjects across various sites of power, including capitalist production, profitability, and reproductive (hetero)sexuality.

In other words, "fatists" blames capitalism for creating a subjective "myth" around obesity as showing people as failures as productive individuals and as being fit to breed.   The existence of plenty of successful overweight people, men and women, is blanked out, because it doesn't fit the story being manufactured.   

Then there is this paper:

The role of diagnosis in marginalising corpulence by Annemarie Jutel

In this presentation, using overweight as a heuristic, I will describe the social model of diagnosis and how it assists us to understand contemporary attitudes to health, illness and disease.  At the same time I will explain how the ascendance of diagnosis and the paradigm of evidence based practice have forced the emergence of overweight as a disease category.

In other words because evidence is used to inform medicine, being overweight is seen as a disease.  Now I think it isn't a disease, because it can't be caught and it doesn't spontaneously emerge, but it is a "state of being".  People aren't born that way (unlike race and sex).  However, is it seriously being argued that medicine should not be evidence based?

It is easy to go on, but Cat Pause claims she is "promoting the idea that fat people deserve the same rights and dignity as non-fat people".

Yet there is no objective assessment of not having the same rights.  The rights she appears to want are demands upon the persons and property of others to make special provision for obese people.  Of course she has a precedent in this, in the "disabled rights" movement demanding accessibility and people to be made to pay for their private property to be accessible to people they don't know.  She claims airlines kick fat people off planes, and then demands that economy class have wider seats (although she pays for premium classes herself - which is the same point with better food anyway).

Of course she goes further.  She wants to criminalise "fat hatred"  Why?   "fat phobia, or fat stigma, or fat hatred, is harmful. It stigmatises fat people, which is harmful for both physical and mental health. It also affects non-fat people – making many of them terrified of becoming fat. Being shamed, or bullied, is never good for anyone"

It's Orwellian thought control, she wants it to be wrong for people to think it is wrong to be overweight, wrong to seek to change their bodies, wrong to sell goods or services to facilitate that.  She wants to criminalise people being hurt by what others say. 

 

Yet people don't have a right to not be insulted or hurt.  It is a fact of life.  A person throwing an insult because of how you look isn't nice, and isn't fun, but is it a matter for the criminal law?

Should the state be there to protect people from stigma, hatred, fear or shame?  

What is next?  The obvious next characteristic to pursue is hair colour.  Red headed people are probably sick of being called gingas, or being thought of as angry.  Blondes are probably sick of being presume to be ditsy, stupid or even slutty.  Should short and tall people demand "rights"?  How about people who wear glasses being thought of as being smart or geeky?  How about commenting about what people wear?

Those of us who embrace individualism and the treatment of people as individuals have no problem with the moral dimension of being open to who people are, what they think and what they do, but it does not mean surrendering the personal right to not have to surrender to what others want to claim from you.

If you own a business, should you not have the right to decide who you trade with, who you buy and sell from and who you employ?  Indeed, similarly as a consumer you should also be able to assert the right to buy from whomever you wish, and refuse to trade with those you don't wish to. 

Moreover, you do have a right to not like people.  There is a right to not be polite, to not be considerate and accommodating.  That doesn't mean using force or fraud, but it does mean you can blank out people, ignore them and yes, laugh at them. 

Sterilising expression and discourse by criminalising it is disturbing.  

It can be seen in the thin line between actions that insult Islam and Muslims who claim they are being "discriminated against" because they have beliefs that I, and billions of others, regard as peculiar or even evil.

It can be seen in the way that some people can throw around racist insults, promote racist policies without shame because the identity politics touters claim people of some races "can't be racist" - even Members of Parliament can be "oppressed".

Meanwhile, hatred of wealth creation, entrepreneurs and Christians is all allowed.

Human rights legislation banning discrimination should itself be struck off the books.  The proper response to racist and sexist activity by businesses is to boycott and shame them.  Indeed, if the fat women (and it is women) have a problem with how others treat them, then they can boycott, protest and the like.  That is entirely appropriate and the only way to really change behaviour, and to isolate those who are bigoted, rude or simply intolerant.

However, they and others should not claim a right to be treated a certain way by law by private businesses or individuals.  For those who do are as intolerant as those they seek to bully and force to treat them the way they demand.

In a free society we all have freedom of thought and freedom of expression, and that includes the right to say things other people don't like and to act on that basis as private individuals.  

Dr. Cat Pause and her gang of reality evading subjectivist post-modernists can create all of the fictional fantasy conspiracies, can proclaim victimhood and demand that people be forced to accommodate their demands, but for all of that they shouldn't be allowed to make people do what they want.

Her philosophy portrays itself as being about acceptance and tolerance, where it is about hatred and intolerance.  It is about reality denial and a grand claim upon the minds, mouths, pens, keyboards and deeds of everyone else.

It takes the right to be an individual and to live you life as you see fit, and morphs it into an artificially constructed "identity" with "oppression", "victimhood", an "interpretation of history" and as a result endless demands for taxpayers to be forced to pay for her studies and to investigate accommodating this self styled identity group, at the same time as taxpayers are being cajoled to deal with obesity as a key factor contributing to multiple chronic diseases (with children who are obese being a specific concern).

If it continues to get government support, then I propose that someone invent a "blonde studies" course and start doctoring up some post modernist snakeoil that would be easy for any half smart person to manufacture.   Then the "dim witted", "low IQ" and "not very smart" can claim the same, how they are insulted by being expected to know stuff.

The rest of us will be getting on with our lives.

Farewell Wim

I'm saddened today at the news I read this morning, having just come back from Rome, that Wim Verhoeven has passed away.

Peter Cresswell and Lindsay Perigo, and various commenters have said most of what I wanted to say, but I wanted to pay my respects in the best way I can from this distance.

I knew Wim as a stalwart of Libertarianz in Wellington for the whole time I was a member living there, and as others have said he was a kind, gentle, softly spoken, well mannered and generous gentleman.  He wrote submissions on bills, wrote letters to the editor of the Dominion Post (and predecessor newspapers).  He gave generously, including sharing his home for meetings and gave me lifts a couple of times.  I remember fondly his intelligent conversation, how keenly he liked to talk about a range of topics, current events, politics and philosophy, and how for all of his gentle mannerisms and kindness, he had a firm grasp on his beliefs, ideas and conviction in the value of individual freedom and opposition to government getting in the way of people living their lives as they see fit.

His profile is on the Libertarianz website, as he was a list candidate in the 2005 and 2008 general elections.

I know Wellington Libz will help give him a good send off (details on Not PC's website) and my deep condolences for Terry, the rest of his family and loved ones.

Buying something from the government is stealing?

Yes, this is Idiot Savant's latest flash of inspiration.

He describes anyone buying shares from the government in SOEs as buying "stolen assets".

Fascinating.

For he does not think of taxes - money taken by force by government - as stolen, regardless of whether or not it is to buy any assets.

Yet he thinks of the government, having bought assets by taxes, selling them, as "stealing".

You see he calls SOEs "public assets", "owned" by everyone.  Yet you are no more able to exercise the rights of ownership over a dam, road, school or hospital owned by the state than you are a privately owned one.   

However, he regards it as "public ownership" because the public, through its elected representatives (MPs), can "exercise control".  Let's just stick with that for now.

Using the electoral system he broadly supports, National got elected on a platform of part-privatisation. It is supported by parties which have either included or consented to that part of its manifesto.

So voters effectively chose a Parliament that has, through its elected representatives, chosen to "exercise control" on behalf of the public.

It's just he doesn't like it, because he voted for the Greens.  Yet he claims to support democracy.

He says "these goods were stolen from us by the government".  Well funnily enough they were, in the form of taxes.  In which case would he support selling them and giving everyone some money in return for the sale?  Of course not.

Instead he suggests "opponents of asset sales should boycott stolen assets".  I couldn't care less if they don't buy shares, and feel free to boycott buying their goods and services.  Don't forget all of the other companies privatised before, such as Air New Zealand (still 22% private), Telecom, Bank of New Zealand, State Insurance, former THC hotels, Intercity Coachlines.

However, you should also boycott EVERYTHING sold by the state.  The shops that now own former post offices and railway stations, the ex. Air NZ planes sold offshore, any closed schools, in fact any land at all that the state once owned.  After all, selling assets is "stealing".  Presumably buying state assets is "gifting".

This amusing view of property rights concludes with a sure fire approach to send New Zealand's sharemarket, property market and currency down to Zimbabwean levels "they should support calls for those assets to be forcibly renationalised at less than the sale price. Asset-thieves should not be allowed to profit from their crime."

That's right, the Soviet Union is back.  Buying shares offered for sale by a democratically elected government is a "crime".  Some belief in elected democracy he has.  No belief in property rights at all.  No interest, care or thought of what that does to both foreigners and New Zealanders seeking to invest their savings.  From big foreign companies to retirees, students or small business people, if they buy shares they are criminals - because they don't embrace his venal Marxist view of the role of the state.  After all, people from many backgrounds and income levels will buy shares, but to him they are all kulaks, the sellouts, the class and nation traitors.

I look forward to the Greens embracing this policy for the next election, for as somewhat socialistic many New Zealanders are, the idea the state can take back property you bought from it by force with a penalty, will frighten the bejesus of most.

He can live in his solipsistic south Pacific USSR if he likes, but all the aspiring successful wealthy people he despises wont be there paying taxes, opening businesses and employing people with him.

Labour's part privatisation would have been ok, but not National's

Meanwhile, the Labour Party can't reconcile its opposition to part privatisation of SOEs with its own attempt to part privatise Air New Zealand to its biggest foreign competitor.  Apparently because it was once renationalised, this is ok.  However, almost all SOEs are the result of previous nationalisations, and by that measure the Nats selling part of Kiwirail to whoever wanted it, would be fine.

It all started with Sue Moroney insinuating that John Key visiting Australia is all about a sales pitch for the partial privatisation of SOEs, as seen by this Twitter from Sue Moroney

Sue Moroney ‏@suemoroney -Really interesting that the trolling Nats won't deny that John Key is over in Aus flogging off our assets.

Sue Moroney ‏@suemoroney - John Key is in Australia flogging our assets off to them. Dumped Oz PM John Howard says its a great idea. #whatAsuprise!

Of course Labour had no problem with that in its last term, when it sought to sell 22.5% of its renationalised Air New Zealand to the airline's biggest competitor - Qantas.   

I said:

libertyscott ‏@libertyscott @suemoroney Yet Dr Cullen positively favoured selling 20% of Air New Zealand to Qantas, what's changed?

She said:

Sue Moroney ‏@suemoroney @libertyscott Labour bought AirNZ back - that's the difference. It was privatised and we got 80% of it back. Nats selling what we own.

Hold on, but when the state buys something doesn't that mean "we own it"??  

So I confronted that and made the point again.  Labour was ok with selling part of a state asset to a foreign company (and indeed competitor).

libertyscott ‏@libertyscott @suemoroney Wrong you got 86.5% back and sought to sell 22.5% to Qantas, its main competitor. Cullen press release here http://www.beehive.govt.nz/release/govt-approves-air-nz-qantas-proposal-proceeding-commerce-commission

She said:

Sue Moroney ‏@suemoroney @libertyscott So you see the difference now?

 I said:

libertyscott ‏@libertyscott @suemoroney You'd support National selling down 22.5% of Air NZ to a foreign competing airline? But not power companies or a coal mining co?

No response.  The contradictions of the Labour Party remain astonishing.  At least the Greens have always had a one way view of state ownership - the more the state owns = good, the less it owns = bad.

Conservative MP admits to having used drugs, so shouldn't she be in prison?

On  BBC Question Time last night, Conservative MP Louise Mensch, admitted she had used Class A drugs (she didn't specify what they were, and "A" is the "most dangerous" category including cocaine, MDMA, etc) and that they had had a "lasting effect" on her brain.   I'm not one to deny that, and I'm certainly not condemning her for it.

Yet I will criticise her hypocrisy.

See she thinks drugs should remain illegal and criminal, and supports the "war on drugs".

In which case should she now not hand herself into the Police and face charges, trial, conviction and sentencing?  Should she not also forward names of all of her family and friends who have done the same?

After all - if it's so bad, and criminalising drug users is the "right thing to do" by implication, why shouldn't upper class English catholic Tory MPs and their associates face the same legal sanction as young poor Afro-Caribbean or white working class boys?

You see it is very easy for those living in relatively cozy middle and upper class communities to support a "war on drugs", until you confront them with "how many people do you know have taken drugs" and then "shouldn't they be in prison too"?

Because of course it isn't those people that are allowed to "make a mistake".  Louise Mensch is smart, successful, married to a wealthy husband, herself a successful writer. She "knows better".  She wants to protect the ignorant, stupid, vulnerable poor folk who aren't capable of making such decisions.

She wants the war on drugs fought in Tottenham, Newham, Mossside, Brixton, Toxteth etc, not Kensington, Highgate, Hampstead and Tunbridge Wells.

So why don't the Conservative, Labour and "Liberal" Democrat MPs who believe in this simply say that the "war on drugs" is about poor people having drugs.  Rich people, the middle classes and the like often "make mistakes" when young but they shouldn't be condemned for it, because it only hurts themselves.   Louise Mensch has been allowed to get away with ingesting what she chose without prosecution, why does she deny that right to others, or why doesn't she insist the law she supports gets applied equally?

Just to be clear.  I wouldn't throw her in prison.  I think it would be absurd and unjust for her to be in prison for possession and ingestion of Class A drugs.  However, unlike her, I also think that everyone else in prison for such offences should also be set free and have their convictions expunged.  Had she been convicted, she could not have pursued the career choice she now has.  Why subject others to the same because the Police happen to more readily patrol their neighbourhoods and communities?

Judge says "society to blame" for sexcrime

That, according to the Daily Telegraph, is the conclusion of Judge Gareth Hawkesworth of Cambridge Crown Court (UK). It is also the logical conclusion of many decades of the embrace of the post-modernist philosophical morass of determinism and denial of the causality principle.

What happened?

A 14 year old boy tied an apron around the face of a girl of 4 and performed a sex act with her. The boy got a three year community order with supervision as a sentence.  The girl's parents are upset, but I don't want to dwell on what is an appropriate sentence, needless to say the boy needs both help and punishment.  What matters is how the judge got to his sentence.

The judge said of the offender:

"I'm satisfied it was impulsive and I believe you have become sexualised by your exposure to and the corruption of pornography. Your exposure at such a young age has ended in tragedy. It was the fault of the world and society.”

Actus reus and mens rea are the two key tests to secure a criminal conviction in most cases. Actus reus is the “guilty act” meaning the accused did the deed. Mens rea is the “guilty mind” meaning the accused intended to commit the crime. Prove both beyond reasonable doubt, and the accused is considered guilty of the crime.

Judge Hawkesworth has contradicted himself. For the boy has been found guilty and been sentenced, yet he effectively claims the boy did not have mens rea.  The boy was not "at fault".

For that to be true, there could have been a number of defences, such as acting under duress, or insanity. The age of criminal responsibility is 10, so he can’t legally claim that he is not responsible for his actions.  Yet the statement by the Judge implies just that.

He wasn’t under duress nor insane, but rather under “undue influence”, not by one person, but by “the world and society”. We are ALL to blame. He didn’t really have a choice. He was corrupted. Yet the murderers of James Bulger, who were younger when convicted, were not subjected to such an excuse (and their backgrounds did explain, but did not excuse their actions).

This is the philosophical reef upon which Western society has been wrecking reason, objectivity and justice against for many years. It is the underlying foundation of so much taught in the humanities departments of universities. It is the fundamental dimunition and denial of free will and conscious volition.

It is, in fact, the argument put forward both by the post-modernist believers in a large state sector and many religious conservatives. The Muslim women who are told to wear the niqab do so because otherwise men “can’t help themselves” but molest them. Christian campaigners for censorship argue that erotica, pornography and violence in the media “makes” people commit those crimes, indeed the current censorship laws are in part predicated on this. That’s why you can (in New Zealand, Australia and the UK, but not the USA) be prosecuted for writing or owning erotic stories about certain sexual acts ( a woman was prosecuted for writing such letters). David Cunliffe supported this strongly in select committee when challenged about it. The idea is that such stories “make people do them”, so it is better to take away a bit of freedom than to risk “making people do crimes”.

In this case, “society” or rather EVERYBODY made the boy commit the crime, so EVERYONE should feel shame and contrition. Not only the little girl, but the perpetrator is a victim.  Consider what effect that will have on the girl, to think that the offender is somehow less responsible.  If "society" and the "world" are responsible, isn't she a tiny part of that?

In which case, the judge is effectively saying who is he to blame the boy? Society must do more to shield people from such corrupt influences. It is deterministic. Because the boy was exposed to pornography (although it appears he looked for it, watched it and kept doing so), it was inevitable that he would commit this crime.  He wasn't just corrupted (probably true), but he was incapable of reconciling fantasy and desires with reality.  He could not control himself.   Yet he is not insane.

I don’t need to explain the consequences of extending that principle. For indeed we see them today:

Excusing people who steal, vandalise and commit arson against the property of innocent people because they were “upset” at their own lives. Yet vast numbers of people can claim the same or worse, but do not commit such crimes.

Excusing those who beat up their children because they don’t have enough money. Yet millions are in poverty and do not mistreat their children.

Excusing the woeful life choices of this generation, because of what happened to past generations. Yet many make different life choices having inherited next to nothing from past generations.

I don’t doubt Judge Hawkesworth is, in part, politicking. He wants politicians to restrict the access of young people to pornography. You see, he could have blamed the boy’s parents, for allowing him such unfettered access to the internet. He didn’t. He blamed us all, implying the solution is going to come from government or at least from people listening to his preaching.  We all raise all children, we are all responsible for everyone else's children (and of course we must pay for them and have our behaviour regulated, as if we are children too).

Let me be clear, I believe there is an issue about unfettered access by young people to extreme content online, and that there are potentially serious consequences that can arise from this. Whether the state acts or not is a political question. However, when sane individuals commit crimes, including teenagers (who are between being children and adults), it is quite simply incorrect to claim that others are to blame.

To attribute blame to an amorphous collective such as “the world” or “society” is meaningless and even corrosive. There is no such thing as a collective brain or consciousness (unless you subscribe to the malignant class or race theories that ultimately justified mass murder on hitherto unknown scales). For a judge to even think it appropriate to “blame” in this way is not just unprofessional, but dangerous.

Who will turn up in his court next week to claim “it is society’s fault that I…” (insert crime)? How can he disagree when he believes this is a perfectly credible defence to grant someone leniency?

After all, if this boy isn’t to blame for his actions, why should others be to blame for theirs? Is not every criminal a product of their experiences, influences and history? Can everyone with rotten parents, or who was bullied, or who saw a violent or sexually explicit film, image or read a story, or had no friends, or grieved their dead pet or whatever – now say they are not to blame, but society is?

Similarly, does it not mean that everyone who does well at school, who wins a sports match, starts up a very successful business, becomes wealthy, becomes popular, invents, creates or discovers something of note, is not actually responsible for that? Are not those who succeed therefore “because of society”? Should not everyone who does well then be made to share the fruits of their endeavours? Think how often you hear that trotted out by those on the left who fondly believe in increasing taxes for those on higher incomes, who say that successful people are only successful because of “everyone else”. That if the state hadn’t provided a hospital, school or roads, these people would have been “nothing”.  Even though the number of tall poppies that grow from this very same field are always few and far between.

Think what that means for how the state treats individuals. You’re not to blame when you do bad, and you’re not to get all the credit when you do good. It was all going to happen anyway, and we’re here to soften the punishment and to share the proceeds. Individual choice? Not so important now.

That, ladies and gentlemen, is at the core of so many of the political debates that are engaged in today.

Is the individual to be treated as a thinking, conscious, choosing human being, who whilst carrying a vast array of influences from family, peers, media, community, school, religion, business, can decide whether or not to act in a certain way, including whether or not to act with objectivity, reason, benevolence and respect for others? Or is the individual already pre-determined, with his ancestors, sex, race, religion, sexuality and class effectively programming him to think, act, succeed or fail in certain ways?

If the former, shouldn't people be free to live as they wish, as long as they respect the right of others to do so?  If the latter, is there any point to anything people do at all, unless it is a constant battle of power between those pre-determined to succeed and those pre-determined to fail, until everyone is ironed flat so we are all pre-determined to be in the same way?

Who will bail out Germany?

This is the question economist Detlev Schlichter has asked in today’s City AM.

Seems ridiculous right? After all, Germany is bailing out the rest of the Eurozone. Its economy is growing, its budget deficit is low. Greece is the basket case of the Eurozone, with Portugal, Italy, Spain, Cyprus and Ireland not far behind. If you were look at who would be next, both Belgium and France appear on the scene, because both have high public debt, budget deficits and are structurally sclerotic economies (imagine Belgium without the massive EU bureaucracy sucking in money from across Europe and consuming in Brussels).

Germany though? Well yes. It is, once again, wilful blindness to reality. Germany’s public debt is 81% of GDP, this having risen from 61% in 1999. That should indicate that there is a day of reckoning to come. Yes the budget deficit is low, but in an environment of steady growth, low unemployment and very low interest rates (meaning public debt can very cheaply be refinanced), Germany isn’t able to run a surplus. Remember how the Keynesians say that in good times you can run a surplus and pay down the debt you incur in the bad times. Well this is the good times for Germany, and it can’t run a surplus. Why?

Quite simply, the German state is lumbered with the same burgeoning welfare state and social policies that have already been bankrupting its southern neighbours. The difference is that the economic growth Germany is experiencing for now, and the low interest rates are slowing the inevitable slide towards that day of reckoning.

Schlichter points out that in the past four decades “Germany extended considerable, unfunded promises to the populace, mainly in the areas of public health insurance, state pensions and the public care insurance”. He blames this as an inheritance from the Helmut Kohl administration, an ostensibly “right wing pro-business” government. He says it implies effective government debt in excess of 200% of GDP. It is Germany’s ticking time bomb.

The difference with France and the south of Europe is that Germany has a more liberal labour market than all of them, but that isn’t hard. Germany’s state may be more efficient in tax collection and operation than the southern states, with much less corruption, but again that isn’t hard. It was the centre-left government of Gerhard Schroeder that implemented modest reforms (Agenda 2010). He liberalised labour laws, reduced the size of the welfare state and reduced regulation. Merkel has been unable to continue this further, even though she started her administration in a grand coalition with the leftwing SPD opposition, after he resigned as leader as his party had lost badly in the 2005 election. The message was clear. You don’t get re-elected in Germany after implementing radical reforms.

You can now see why Angela Merkel doesn’t want Germany to be the saviour of the rest of the Eurozone anymore – Germany cannot afford it. German voters are as attached to their big generous welfare state as other Europeans, but they have been immune to actually paying for the full costs. The legacy has been rising debt.

So when the protestors in the rest of the Eurozone think Germany will write them cheques to bailout their own bankrupt welfare states, they are deluded. For not only can Germans not afford that, they can’t afford their own. The difference is that German politicians are hoping that no one notices for now, and that the problem becomes someone else’s. On top of that, German taxpayers are carrying, still, the burden of the deeds of their ancestors as guilt that makes them at least partly amenable to helping the rest of the Eurozone.

The problem is that if German taxpayers/voters and politicians don’t confront their own bubble of debt and overspending, they too will face a crisis. That will indeed be a Eurozone crisis, a European crisis and a global one. That’s if Japan and the United States haven’t dealt with their similar looming crises in the meantime.

Peak oil is bullshit - ask George Monbiot

Yes, the poster boy for the green movement, George Monbiot, has come out in today's Guardian admitting he was wrong. 

Oil isn't running out, there isn't an energy crisis.  He's not happy about it, because you see it fits into the broader agenda about fighting climate change...(emphasis added)

For the past 10 years an unlikely coalition of geologists, oil drillers, bankers, military strategists and environmentalists has been warning that peak oil – the decline of global supplies – is just around the corner. We had some strong reasons for doing so: production had slowed, the price had risen sharply, depletion was widespread and appeared to be escalating. The first of the great resource crunches seemed about to strike.

Among environmentalists it was never clear, even to ourselves, whether or not we wanted it to happen. It had the potential both to shock the world into economic transformation, averting future catastrophes, and to generate catastrophes of its own, including a shift into even more damaging technologies, such as biofuels and petrol made from coal. Even so, peak oil was a powerful lever. Governments, businesses and voters who seemed impervious to the moral case for cutting the use of fossil fuels might, we hoped, respond to the economic case.

You see, he made the shocking discovery that the free market and the price mechanism delivers some remarkable results:

A report by the oil executive Leonardo Maugeri, published by Harvard University, provides compelling evidence that a new oil boom has begun. The constraints on oil supply over the past 10 years appear to have had more to do with money than geology. The low prices before 2003 had discouraged investors from developing difficult fields. The high prices of the past few years have changed that.

Yes, the price goes up, so the economics of production change, with more expensive fields and sources becoming economically viable.

Now George is distressed about this because he is convinced climate change is the new armageddon:

The problem we face is not that there is too little oil, but that there is too much.

In other words, the arguments against consumption of fossil fuels on the basis that they are "running out" are absurd.  The claims that aviation is going to collapse, that private motoring is going to evaporate, that export and tourism driven economies dependent on goods and people travelling long distances need to become autarkic "green economies" are nonsense.  

Many years of industrial, energy and transport policies based on "peak oil" scenarios need to be revisited.   All need to be put on a market footing.   Pursuing unprofitable, unviable renewables with taxpayers' money is fraudulent and wasteful.  Building big new railways on the basis that "people wont be able to get about" without it in an age of "peak oil" is bullshit.

Meanwhile, there ARE environmental arguments about the use of fossil fuels, but those are arguments first and foremost about noxious emissions (which a property rights approach can address), and then about climate change.   However, as I have said before, an appropriate response would be for governments to stop subsidising activities that emit CO2, and get out of the way of those using or developing technologies that offer alternatives.  Let's say "first do no harm".

I can't wait to see how quickly or otherwise the rest of the green movement stops using the "peak oil" rhetoric (they can't admit making a mistake collectively), and starts moving back to the armageddon rhetoric he is using.   A big underground rail loop in Auckland will no longer be about "protecting us from peak oil", but rather "saving the planet".  Hmmm.

Meanwhile, Monbiot's children will be saved being lectured about how we are all doomed since he said "right now I’m not sure how I can look my children in the eyes".  With such self-loathing I'm hardly surprised.

UPDATE:  James Delingpole does a delightful review of Monbiot's previous scaremongering in the Daily Telegraph, and describes him quite appropriately as:

one of those bitter, misanthropic, control-freak kill-joys, green on the outside but red on the inside, the true purpose of whose "environmentalism" is not so much to save the planet as to end Western industrial civilisation.

How long before the Moonbat Monbiot followers Green Party in New Zealand either excommunicates Monbiot or starts showing some contrition, or will it persist in its pursuit of the swivel eyed peak oil doom mongers?

TVNZ7 funeral and braindead TV, where have these people been?

I'm amused at those who chose to hold a "mock funeral" for a little watched state TV channel (TVNZ7) on the basis that without it New Zealand TV would be completely braindead.  As if equating the closure of a TV channel with "death" isn't itself rather childish and unbalanced.   Indeed, quoting the 1.6 million cumulative viewing figure as being meaningful is also rather braindead.  All it means is that at some point, 1.6 million people had the channel on for at least five minutes.  At no point has TVNZ7 had viewing figures representing 1% of all people watching TV at any one point. 

Where were the handful of people who give a damn been?  New Zealand television has been braindead for nigh on 25 years, it all started when then TVNZ CEO Julian Mounter prepared an all out attack against the upcoming TV3, by focusing on adventure, entertainment and by dumbing down national news and current affairs into a simple binary "good vs bad", "us vs them" format.  Lindsay Perigo said so himself not long afterwards.  The focus was on growing the news audience to include the vast bulk of people whose main interest in news is the sport, celebrity "news", disaster and crime stories (so easy to make it a story of victims against adversity) and then some cute kid, animal or quirky piece at the end.

TVNZ7 did not challenge that, it was TVNZ news lite, and had a handful of local programmes with certain high profile commentators who would host debates.  However, viewing figures were abysmal and the standards although higher than TVNZ could hardly be said to have been at the cutting edge of intelligent debate. It didn't present a wide range of incisive opinions with in depth analysis.  National Radio with Pictures it was not (if that is the standard its acolytes were aiming for, though it isn't mine).

However, why the fuss over this channel?

Regional channels did make attempts to have more uplifting TV.  Triangle has done so (excluding Martyn Bradbury) as has CTV over some years, yet the demise of Stratos from nationwide coverage caused far less fuss.  However, it is possible to see more current affairs on free to air TV now than it was 20 years ago, given both TV3 and TVNZ have Sunday morning shows that they did not previously have.

Yet I wont pretend this amounts to anything of particular note.  The reason is simple; regardless of what politicians, pundits, bloggers and journalists think, most people most of the time do not turn on television wanting intellectual stimulus and debate.   Television is an entertainment medium.

Most people, most of the time, don't want the sort of television that the public television advocates want to push.  After all, the Australian ABC has long had audience levels well below that of the big three commercial network oligopoly. The BBC's highest rating shows are indistinguishable from what is on commercial television (talent shows, sit-coms, soaps and sport).

Yet it's not hard to understand the disdain many hold against most TV in NZ, especially given the dominant free to air broadcaster is state-owned.  The bigger question is the chicken and egg one.  Did TVNZ result from a braindead culture of whim worshipping entertainment driven airheads, or is TVNZ in fact part of the problem? (take for granted that TV3 has essentially gone along with it)

I'd argue that TVNZ follows the culture (it wouldn't be a roaring success if it didn't tap into it), but that it also reinforces it.  Not challenging it, not extending people, not trying to go a step above the audience.  Not uplifting,  but in fact embracing and celebrating the "average mediocrity" of "everyday kiwis".  Their interests, their understanding of the world, even how they talk is just replicated by TVNZ, or even lowered.   In fact, my favourite braindead TVNZ moment was in 2000, when a TVNZ "journalist" said the "people of Pyongyang took a day off work to welcome the south Korean President", when Kim Dae Jung undertook his historic visit of north Korea.  Braindead indeed.

This airhead culture predates TVNZ, and is now seen in the regular political discourse of many commentators.  It is seen in the hysterical hyperboles seen lately about part-privatisation, the anti-scientific scaremongering about anything nuclear or anything to do with genetic engineering.  Complex ideas, issues that have more than two perspectives and anything that needs plenty of time to explain doesn't work well on TV after all.

The whole issue about the airhead culture is big in itself, and it's the height of hypocrisy for some of those who embrace shallow, sound bite culture and participate in it, to think that a small TV channel that doesn't challenge any of it is the way to deal with it.  The same people who think paying teachers based on performance is wrong think somehow they are well placed to judge the performance of broadcasters catering to the people those teachers helped churn out.

Yet is there a case to say intelligent TV can help?  Arguably yes.

Of course, intelligent TV is widely available and seen throughout NZ.  It's called Sky.

Sky brought New Zealand 24-hour news in the form of CNN, and more recently multiple options ranging from the BBC, Sky News, France 24, Fox News, CCTV and the new channel for nutty conspiracy theorists who are anti-American - Russia Today.  New Zealanders have never had better access to news about Australia, the USA, UK, Europe, the Arab world, China and Russia.  It also brought multiple dedicated channels for documentaries and then classic movies, arthouse movies and well as the mass market entertainment channels it supplies.

Sky started by paying the government for its first network, a series of UHF frequencies, installed its own transmitters and bought content.  It spent the first seven or eight years losing money, and now gets into around half of New Zealand homes.  People who are prepared to pay for the content it provides, which is not just sport, not just movies, but far more content than state TV can ever provide.  Now we all know Sky succeeds because of sports coverage, but nobody would have predicted what it now brings, thanks to an open market, absence of foreign ownership restrictions and absence of local content quotas.  It isn't just because of the poor standards on other channels, because pay TV thrives in the UK, which has seven state owned national non-commercial TV channels (and which heavily regulates three commercial ones to provide "public service content").

Yet that isn't the point according to public TV advocates.  Indeed, they don't like Sky very much at all.  The Listener, once the state owned magazine with a statutory monopoly on TV listings, has already published an article rallying an unsurprising set of arguments about Sky - with it being foreign owned, owned by News Corp (the "devil incarnate" to much of the left), owning the rights to much compelling TV content, and allegations this is "unfair" against a state owned broadcaster that has existed for over 50 years, 29 years of which was in a monopoly position. 

What isn't braindead about embracing such shallow, xenophobic, anti-big business attitudes? 

You see, the Save TVNZ7 club have moved away from this now, as Clare Curran intimated on Twitter saying:

@publicaddress have pretty much said all of that before. Good to hear Maharey on this though. Things have moved on tho. Time to address Sky

A successful business, which has brought far more choice and intelligence to NZ television that any other broadcaster, is now in the firing line from one of those who asserted that she is against braindead TV.

I'd have more sympathy if those who wanted to Save TVNZ7 had raised money to set up their own TV channel - which of course you can in New Zealand, given that there are no legal barriers to entry and there is a surplus of digital TV frequencies available on Freeview.  It is a matter of money.

The problem is that the Save TVNZ7 people don't want to put their money where their mouths are, they want to make everyone do it.  So when the investors in Sky, have put their money in, have done so with no taxpayer subsidy at all, have been supported by around half of the adult population in subscriptions, you might wonder why they don't like that very much.

I'm resigned to free to air TV in NZ being braindead, because it's what most people want most of the time.  There is better on Sky and some regional broadcasters.  There is more online and that is where the media is heading.

I don't trust politicians to bring me better broadcasting, because I don't trust them to buy me food, clothing or buy me healthcare or a pension.  Those who want better should support what is there now and if so inclined, make their own content.  It is remarkably cheap to do so given digital technology (none of which came from public broadcasters).

The coming years will continue the profound revolution in media that has been going on for the last 20 years, a revolution that is challenging existing free to air broadcasters and newspapers.   The ability to access content from all over the world and publish your own content is transforming media, discourse, journalism and starting to affect politics. 

That is where the future is - not a small state owned TV channel, nor in considering ways to regulate one of the country's most successful broadcasters (particularly when just about any way that a government might consider regulating it will breach the country's WTO commitments on audio-visual services).

UPDATE:  Mark Hubbard has also written well on this.

Kiwirail's asset revaluation - because Labour concealed the truth with accounting: UPDATED

Regular readers will remember that I’ve been long critical of the bizarre Treasury valuations of the social policy/heritage/commodity sector subsidy project called Kiwirail. So the latest report that this “asset” is to be revalued hardly surprises me. However, I am enormously dismayed at the unprofessional politically driven basis for valuation of this business which was instigated by the previous Labour government. It is one thing to throw taxpayers’ money at buying it back, another to hide what a real dud it is on the government accounts. Let’s bear in mind that neither Labour, nor the church of the Holy gRailway the Greens, have any interest in really showing what it’s worth.

So let’s start with the latest announcement. What does it mean?

The short version is “I told you so… again”. What was reported before has finally happened.

The land assets will remain under the NZRC, which has in fact been the case since 1 April 1982 when it was created. There was always a peppercorn rental of NZ$1 paid for use of the land under the rail corridor, which given that the Crown isn’t paid for the land under the road network, has always seemed an easy compromise in dealing with the thorny issue of valuing strips of land with little alternative use (especially roads, given land without access to roads has greatly diminished value). This should not be controversial, but let’s be honest about what the valuation of that asset should be – the market value of the land if sold. A study commissioned by the MoT valued it, in 2001, at NZ$462 million. This could be indexed to today’s values and priced, but I doubt it would top NZ$1 billion. Bear in mind this was never privatised in the first place, because every time TranzRail closed a rail line (which was rare), the corridor would, ultimately, be able to be sold by the Crown.  So the valuation was done professionally based on assumptions of the value of neighbouring land being applied, in most instances, to a narrow inaccessible corridor.

Yet the Annual Report 2011-2010 indicates land is valued at just over NZ$6 billion. This is quite absurd, so is the asset write down going to address this? Let’s continue.

The transfer of the other assets to a separate SOE is exactly what happened before the last privatisation, when NZ Rail Ltd was set up. The logic of this is clear, as the issues around rail land and its use are complex. Partly because of Treaty of Waitangi claims over Crown land, partly because the confiscation of past land under the Public Works Act means that if the land isn’t to be used for rail purposes, the previous owners or their successors must be offered the land back.

So the new SOE will be responsible for everything, other than the land, just like before. This is already raising the spectre of a new privatisation among those who treasure Kiwirail because they think it will be the saviour in the event oil prices and climate change suddenly decimate the viability of road transport.

Bill English states the total assets are being written down from NZ$13.4 billion to NZ$6.7 billion, this being both the land and the operations business. A simple halving of value, indicating a lot of in depth work was not done into this at all. The Kiwirail press release explains this further by saying that the non-land business will carry a valuation of up to NZ$1.3 billion “reflecting the revenue generated by it” rather than the current NZ$7.8 billion.  That's helpful in analysing this further.

The land component of the valuation seems to retain most of its book value, as it will be worth around NZ$5.4 billion, yet wont be expected to make a return on most of that asset (given the land under the roads isn’t expected to either). A small writedown of around NZ$600 million, but not nearly enough. Has the land under the rail network really shot up in value by a factor of 11 since 2001?  Kiwirail's Annual Report indicates that a professional valuation was done, no doubt in good faith. However, does that really reflect the market value of this land? If a railway line across a field, or behind some warehouses or houses is sold, are there really any other likely buyers beyond the neighbouring property owners? The discrepancy between valuations seems extraordinary, and I doubt whether valuations of railway corridors are done frequently enough in New Zealand to enable it to be equated to other such valuations.  

Setting that to one side, the valuation of NZ$1.3 billion for the operating business still seems wildly excessive. It was bought for NZ$665 million. How has it suddenly become worth double that since 2008? Is it revenue? Well no.

In 2011 it had gross revenue of NZ$667 million. It also got nearly NZ$345 million from taxpayers (yes you’ve spent more than a billion on this one and counting). However, its operating costs were NZ$567 million. Cool NZ$100 million profit before government right? No. Once you remove roughly NZ$60 million in subsidies for operating Auckland and Wellington passenger rail services, you’re down to about NZ$40 million. Not so good then.

Bearing in mind that the NZ$345 million from taxpayers is a capital grant to replace and renew some assets, you’ll also see it’s clear this isn’t a sustainable business able to renew its capital.  Otherwise it would take out debt that would be repaid over the depreciated life of those assets, which of course is not going to happen (but Treasury of course has taken out debt to pay for the nationalisation and all of the capital grants).  Bear in mind also that the market valuation when Toll Rail was nationalised was only NZ$435 million. Has the government really trebled the value of this business even though it has never paid a dividend yet? 

One guess as to why Opposition Finance spokespeople haven't asked that - because they fully supported this destruction of taxpayer wealth.

So the valuation continues to be generous in market terms. Kiwirail, if sold, would not go for the sort of money on its accounts, even if it continued to get hundreds of millions of dollars in subsidies and grants every year.

The use of replacement cost as an asset valuation gives a false impression of the value of an asset if it to be sold, simply because it does not generate sufficient revenue to justify ever replacing the asset on the scale (and in the same way) as it was originally acquired.

My previous post on this was right.

Kiwirail is not an “investment” in its current form, but rather an emotionally laden piece of heritage that mixes some commercial elements, some local public policy elements with a lot of hyperbole and wishful thinking.

Debates about pouring taxpayers money into it need to be based on some market based accounts, accounts that might actually show it can generate a reasonable rate of return based on what it could be sold for – but which wouldn’t ever justify the money poured into it so far.

For that reason, given both National and Labour have thrown over a billion into this taxpayer owned bonfire, and the Greens are just gagging to throw billions more at it, means that having debates based on reasoned balanced analysis are absent when most of those involved prefer conspiracy theories around corruption, hyperbolic evangelism about rail “saving the economy” and economic illiteracy.

Most of my past posts on this subject are summarised in this one, on what it would take to make the railway a viable business.

It includes the following ones:

-  The Greens posted a link to a great presentation on Kiwirail, which actually destroys most of their own self-generated myths about the business.  I link to it here.

-  Where is the rail network viable?

-  Bill English admits the rail network is virtually worthless

Another good read is this from Ross Clark which explains that the "failure" of rail privatisation is because there are some serious questions about the viability of rail at all.

UPDATE:  I know this article has been linked to by a couple of forums.  Please read the articles at the bottom and indeed the presentation I linked to here. You can romanticise as much as you like, and I have a stack of Rails magazines from the 1980s and 1990s, and the NZ Railway Observer as well, so I am a rail enthusiast at a personal, emotional level, but the hard economic facts are that rail is an expensive way to move goods given the high capital costs of the bespoke equipment and infrastructure.  Only when volumes are high, frequent and over long distances do the fuel and personnel advantages start to offset this.  It's about economics.  In the US, rail freight succeeds in spite of serious undercharging of trucks on untolled interstate highways, in NZ Road User Charges contribute to a very different picture.

Union and religious bullies tell you when your business can trade

Once again, union bosses and socialists - most of whom haven't created wealth from scratch in their entire lives - have found common cause with conservative Christians, in blocking legislation that would have allowed businesses to open the days they want to - this time in Timaru only.

For shame. 

I expect it of the nasty little busybodies in the Green and Labour parties, who can't even let an owner-operator business open the days he wants to, who embrace the religious (who they spurn most of the time), because they fear that some more people might feel like they have to work on a public holiday.

It is not about allowing people to shop.  It is about allowing property owners to decide when they can open their businesses to trade. THEIR businesses, not Maxine Gay's, not Peter Shearer's. 

It's none of your bloody business.

Same to the petty preachers who think because it is against THEIR religious belief to do business on certain days, think they should by force demand others obey their beliefs.

Get out of the way.   The fact that National MPs opposed this shows that the shadow of Rob Muldoon hangs over this party with such gutless "pragmatic" despisers of choice and free enterprise.

Jacqui Dean's attempt to let her constituents decide for themselves if they wanted to open on Good Friday and/or Easter Sunday, has been thwarted by 70 MPs who think they know best.

Yes it was only Timaru, but so what?  It is one step towards freedom.  If only more constituency MPs would do the same, then the country could see tiny roll backs across the land, and eventually they might get it that there is no point having such laws at all.

It wouldn't be compulsory to open on those days.  Where is there a law making that compulsory?  Who even suggests that, except those with the warped post-modernist belief in floating strawmen that distract from the real argument - property rights.

I haven't seen the breakdown of who voted on this Bill, but all those who opposed it have shown themselves up for what they are - petty minded little busybodies who think they know best how ordinary men and women, shopkeepers, run THEIR businesses.  Forgetting of course, that these business owners are those who pay the wages of the MPs and indeed the edifice of the state these MPs so love to harness to do their bidding.