Bush administration goes forward - on roads anyway

Whilst many pundits decry the Bush Administration as a “disaster” as if it were self evident, it is clear to me that in the field of transport, it is light years ahead of past administrations of both colours.

The current Transportation Secretary Mary Peters (and her last significant predecessor, Norm Mineta) have both made the very clear and blunt points – the status quo doesn’t work. Environmentalists may be surprised that the Bush administration is strongly supportive of road pricing, instead of ongoing politically driven funding of roads and public transport.

Some of the best points she made at a recent meeting of Governors at the White House were:

“in the era of a government mandated monopoly in telecommunications and price controls you'd get a recording: "I'm sorry all circuits are busy. Please try again later." "Your call couldn’t go through the system for the same reason your car can’t get through rush hour – poor pricing," Peters said.”

That's the fundamental point. People put up with chronic traffic congestion roads, but wouldn't with other infrastructure - and it is due to lack of pricing and poor quality investment - those are both due to government's running roads in the same old Soviet era way. She also points out that throwing taxpayer money at the problem hasn't worked:

"The failings of federal tax and earmark programs she said are highlighted by the 300% increase in traffic congestion in the past 25 years while spending on roads and transit is doubling every ten years."

Think also about healthcare, how throwing money at that simply isn't working either. None of this should be a surprise.

"There is no greater symptom of failure than the fact that Americans simply don’t support putting more money into this broken system. Poll after poll shows strong opposition to traditional fuel taxes. The public ranks gas taxes as among the least fair taxes at the federal, state and local levels. And they are rightfully suspicious that higher taxes will (not) translate into more efficient transportation systems."

Quite right too. Fuel taxes are charges for buying fuel, not buying road use. While New Zealand has only just moved to spend all central government fuel taxes on transport (note this includes public transport, walking and cycling infrastructure), the temptation during hard times will always be to use it for general revenue.

"More and more people are seeing that direct charges offer a better deal for taxpayers than increasing dependence on dysfunctional sources like federal gasoline taxes. This simple but powerful technology unlocks enormous new opportunities for communities BOTH to attract new investment capital AND to manage congestion through variable prices."

So let the private sector in and the market mechanism of price in. Letting them both do it removes the political albatross that doing either wont work well. London's congestion charge is severely hamstrung by the political agenda of Ken Livingstone which gives a significant portion of London traffic a discount or exemption, but also earmarks the money for a lot of buses, many of which carry few people.

Hopefully her initiatives to set free private capital for investment in highways at the federal and state levels, set free the price mechanism for charging for highway use, ending "earmarked" pork barrel funding for roads and getting better results from what federal spending that remains will not be jeopardised by the games of Obama, McCain and Clinton. I am not optimistic, but these baby steps are all in the right direction, and are worth watching. It also shows there is a bit of free market thinking in the Bush administration after all.

ARC plays with your money

The ARC, which became a greatly empowered and enriched entity under Labour, is looking to spend $10 million of Auckland ratepayers' money on Eden Park.

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Stuff reports "Council chairman Michael Lee said the proposed contribution would come from its investments, not rates" which is still ratepayers' money, he simply wants to soften the blow by claiming rates wont go up as a result - well they will, as there will be less money than there would have been otherwise.

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The alternative is that $10 million could simply be redistributed to all Auckland ratepayers as a grant. Given around 300,000 or so ratepayers, that extra $30 would be helpful for some, it might even help pay for a ticket to Eden Park - you know, so that people can choose to support it.

Roger Douglas and ACT?

Well if Sir Roger Douglas wants to return to politics and appear on the ACT list, good luck to him. However, it will raise the issue as to whether ACT IS the liberal party that Rodney Hide has been inching it towards. It could be an interesting challenge, after all ACT's original platform had a number of characteristics, that varied from the tempting to the confusing to the disturbing.

The tempting included:

• Zero income tax. That's right, the only tax ACT was pushing back in the early days was GST, with income and company tax gone.
• Privatisation of all government businesses and some activities such as ACC.
• Opening up social services such as health and education to a wide range of choice and competition. People would not have to put up with compulsory die while your wait health care or paying twice for their kids education if they wanted to use independent schools.

The confusing was:

• Absolutely no policy on anything that wasn't economic. For example, justice, law and order, defence, foreign policy, constitutional matters.

The disturbing was:

• Replacing income tax with compulsory private superannuation, compulsory health insurance and education cover. In other words, instead of the state forcing you to pay it to provide services, the state forced you to pay the private sector (although it wasn't always clear if schools would be privatised or not) for the services. Yes it might have been more efficient and more competitive, but it was still compulsion - and absolutely no indication that this was a transitional step which, on balance, I could support.

So let ACT go forward and be rescued by Sir Roger Douglas, but I doubt very much if it will be the liberal party it has aspired to be. Having said that, for some National supporters he might just give them a reason to tick ACT. Given National is largely devoid of policy, ACT can fill part of the vacuum, if only it would fill the vacuum it always has within itself. It is the vacuum that meant ACT had no policy on civil unions, no policy on legalising prostitution and doesn't lead campaigns to get rid of crimes such as blasphemy and sedition.

That, of course, requires a commitment to individual freedom, and only the Libertarianz have that in New Zealand at the moment.

Unfair trade : download the Adam Smith Institute report

It is here

Here are the highlights of the executive summary points, which are even more damning than I expected. 10% of the fairtrade premium goes to the producer, the rest is retail markup:

• Fair trade does not aid economic development. It operates to keep the poor in their place, sustaining uncompetitive farmers on their land and holding back diversification, mechanization, and moves up the value chain. This denies future generations the chance of a better life.
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• Fair trade is targeted to help landowners, and not the agricultural labourers who suffer the severest poverty. Fairtrade rules actually make it more difficult for labourers to gain permanent, full-time employment.
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• Four-fifths of the produce sold by Fairtrade-certified farmers ends up in non-Fairtrade goods. At the same time, it is possible that many goods sold as Fairtrade might not actually be Fairtrade at all.
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• Just 10% of the premium consumers pay for Fairtrade actually goes to the producer. Retailers pocket the rest.

So I challenge the Green Party, and promoters of so called "fair trade", to present the evidence. Show it is more than spreading guilt, feeling good and paying more.

Ask everywhere if your council or employer has hopped onto this bandwagon, why. Send them a copy of the report, and tell them to stop wasting money on this fraud, and instead lobby for free trade, or support a genuine NGO charity in a poorer country.

Fairtrade damned further

Following on from yesterday's reports on Fairtrade, a comment on the Daily Telegraph website makes for sobering reading - about the reality of Fairtrade:

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"I was the acting Chief Exective of the largest independent coffee and tea trader in the world in the early 1990's and found all that you have mentioned and even worse to be true. I want to highlight some of your points toward the end of your article to make clear that the mega-growers also ship and sell their lower quality beans into the Fairtrade markets through brokers and receive the subsidized "charity price" from the "socially responsible" rather unquestioning public. This is exactly what was meant to be avoided, and it is done in huge volumes. This type of illegal activity is almost impossible to police at the level where it occurs, and where supervision has been pursued it has either failed or been simply too expensive to maintain (especially when the bribes at the storage and market delivery locations are factored in). So what happens is that the small farmers end up competing directly with the mega-producers for "shelf-and-mouth" space, which is a losing battle and exactly the opposite of what was intended to occur. Please, everyone, do not buy Fairtrade unless you (or somone you completely trust) can track your purchase back from the cup in front of you to the fields/farmers that the beans (or other produce) came from."

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So there you have it, Fairtrade markets get exploited by the large producers that Fairtrade lovers so abhor, and it is difficult to thwart this.

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One of the most damning criticisms I have of Fairtrade is that it diverts attention from the REAL "fair" trade issue - opening up of markets. Perhaps the most wealth generating and liberating move that could be made for people in developing countries would be for both developed and developing countries to open up their markets.

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Developed countries need to end export subsidies that mean their producers undercut those from competitors, they also need to end prohibitions, quotas and tariffs on imports so that the most efficient producers have a fair shot at the wealthiest markets. Developing countries need to abolish legal monopolies on imports and infrastructure, open up internal markets to competition and remove prohibitions, quotas and tariffs on imports, especially those that can aid in improving productivity.

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Fairtrade diverts attention from the fight to remove these barriers to productivity and wealth, by claiming that fiddling with prices can make people wealthier.

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Of course those in poorer countries should not be maltreated, should not have their property stolen, should not be expected to work in extremely dangerous conditions, but the answers to this are complex, and lie significantly in having governments which apply a rule of law, which protect individual rights and property rights.

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So what is "fair"? Janet Daley in the Daily Telegraph today notes how the word "Fair" has been misused by the left and is now used as a synonym for equality of wealth, yet is highly destructive.

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She said:

... even more dangerous is the peculiarly lethal principle of "fairness" that seems to prevail in the NHS (or at least at the National Institute for Health and Clinical Excellence, which determines what treatments the NHS may use): if everyone can't have it, no one should. On this basis, procedures and medications that could save or transform individual lives must be barred if they cannot be made available to every patient who might conceivably benefit from them.

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Once again, "fair" must mean "the same": so the breast cancer patient who is a young mother may be denied the drug that could lengthen her life because it would not be feasible to provide it for all the breast cancer patients who are over 80, and if she offers to pay for the drug herself she may be barred from receiving any NHS treatment (because it is "unfair" for her to use her own money to buy what others cannot afford).

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How have we come to accept such vindictive uses of the word "fair"?

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Of course it was initially the fault of the Left and its special pleading lobbies, which - like some Fairtrade promoters - had a lot to gain. But the Right has been complicit: it has surrendered words like "fairness" and "opportunity" - and accepted caricatures of other words such as "selfish" and "greedy" - with scarcely a murmur of dissent."

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Indeed. Expect John Key this year, and David Cameron two years from now to talk about fairness a lot - and both will be peddling the status quo.