Obama the protectionist or the opportunist?

Barack Obama has, disturbingly, made a lot of noise about NAFTA – the North American Free Trade Agreement – which opened up free trade in most goods and services between the USA, Canada and Mexico. Obama, seeking votes from protectionist oriented businesses and trade unions, has called for NAFTA to be renegotiated, essentially to force US environmental and labour regulatory standards upon Mexico. Apparently that sort of imperialism is ok by the left.

However, CNN reports a memo by a Canadian consul official in Chicago, about a meeting with Obama’s economic advisor – Austan Goolsbee – suggests differently. According to the Daily Telegraph , it says “the primary campaign has been necessarily domestically focused, particularly in the Midwest, and that much of the rhetoric that may be perceived to be protectionist is more reflective of political manoeuvring than policy”

Which is positive of course for those of us who aren’t Marxists or nationalists, but doesn’t paint Mr Obama all that well from an integrity point of view.

According to the Daily Telegraph, Mr Goolsbee denies it of course “This thing about 'it's more about political positioning than a clear articulation of policy', that's this guy's language. He's not quoting me." The Canadian Embassy, to be fair, is embarrassed that a document from one of its officials is being used for political purposes saying "There was no intention to convey, in any way, that Sen. Obama and his campaign team were taking a different position in public from views expressed in private, including about NAFTA." Though I am sure the Canadians will be relieved if he will!

Hillary Clinton is making hay of it of course. NAFTA has been highly positive both for US consumers (as it has reduced costs for goods and services) and US producers (sourcing cheaper inputs and the rapidly growing market of Mexico) as well as Mexico. A stable growing Mexico will not only reduce poverty there (which apparently Mr Obama doesn't give a damn about), but also provide a wealthier market for US made goods AND reduce incidents of illegal emigration to the US - because there are jobs in Mexico.

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US leftwing imperialism to disallow Mexico from competing on the basis of what it largely can offer - lower cost unskilled and semi skilled labour - would impoverish both Mexico and the US. Mexicans without jobs can hardly fight for higher wages and working conditions can they now?

Canadian Pension Plan boxes on

It appears it isn't prepared to give ground, no doubt encouraged by the plummet in the sharemarket price of Auckland airport shares. Given that Canadian Pension Plan only is seeking a minority shareholding anyway, you'd have to wonder how it would meet any of the xenophobic tests of "control". If the purchase does go through, then Dr Cullen will have only succeeded in one thing - decimating the price that Auckland airport shareholders could OTHERWISE get for their property. Canadian Pension Plan could always just offer less, given how Dr Cullen has just destroyed wealth.

Something governments are awfully good at.

Winston Cullen's populist xenophobia

So according to Stuff Michael Cullen is as hysterical as Sue Kedgley. Who would have thought! Like some squawking bird he has thrown up his hands in leftwing xenophobic horror at the "gateway to the world" falling into foreign hands. You can see the talons of foreigners, eagerly trying to pillage what is "ours". Of course it seems to be ok for the Christchurch gateway to be held by a loony leftwing council and the Wellington one by a New Zealand investment firm.

What absolute nonsense.

The hurried legislation is Labour making a marriage with "don't trust the wogs" NZ First, pandering to the xenophobic fears of some on the conservative right as well as the anti-globalisation left - with no objective basis for it whatsoever.

The government will now have the right to interfere in ANY private land transaction, as "ministers will be able to block the sale overseas of any land or assets if it runs counter to the need to maintain New Zealand control of strategically important infrastructure on sensitive land."

What is this "strategically important infrastructure" or "sensitive land"? Better hope it's not yours, or those of a company you own shares in - because Ministers can now pillage part of the asset value -purely due to xenophobic hysteria.

The arguments Sue Kedgley rattled off in her press release are all too ludicrous, and I pulled them apart a few days ago. I said the Greens are Canadaphobic only partly in jest, because they are xenophobic when it comes to ANYONE from another country making an investment in New Zealand.

The impression is that somehow Canada Pension Plan would blow up the airport, or treble landing charges, in other words do anything OTHER than run it to maximise a rate of return.

Of course this isn't the first time. Dr Cullen deliberately delayed allowing Singapore Airlines to raise its shareholding in Air New Zealand to 49% because of a preference to consider the Qantas offer, which had already been rejected by the Air New Zealand board. It is speculation to claim that this dithering was because of a preference for an ANZAC Air NZ over a more "foreign" one. This dithering saw Air New Zealand collapse, until Dr Cullen forced taxpayers to bail out and nationalise the airline.

So I want three questions to be answered by those on the left who will cheerlead this on flying the red flag as they do...

1. What evidence is there and what incentives are there for a foreign owner of a New Zealand company to treat the assets and the business in a manner differently from a New Zealand one? Give verifiable examples, not simply tired rhetoric.

2. What is the financial value of land being "strategic"? Will you compensate the owners for this over and above the previous market value now reduced because of this legislation?

3. If the land is so "strategic" to you, why don't YOU and those who agree with you come together and buy it? Clearly the value is so high that you are willing to use force to ride roughshod over private property rights and contracts. Can you explain why you are unwilling to use your OWN money to demonstrate how strategic this land is?

Finally, I expect the shrieking Greens and xenophobic NZ First to support this, along with xenophobic Anderton. That will be enough, but will Peter Dunne, National and ACT stand on some principle? (The Maori Party is inherently racist so I expect nothing from it).

By the way, this isn't about privatisation - this is about already privately owned shares not being allowed to be sold to a willing buyer. Just think about it, and think about your own xenophobia.

It is racism, just a kind the left champions.

UPDATE: Not PC rightfully points out that "Too many New Zealanders don't like foreigners, however (or investment, for that matter). We think we might catch nasty diseases from them -- things like hard work and being enterprising".

Sue Kedgley is taking the credit for this nonsense, repeating her absolute doggerell that "New Zealand could not afford the economic, environmental, biosecurity or security risks of allowing control of our main aviation gateway to pass into foreign hands".

Go on Sue, explain yourself will you? Why do foreigners pose risks that locals don't?

Meanwhile Winston is cheering it on, like the Muldoonist he is.

UPDATE 2: No Right Turn makes the ultra nationalist/socialist assertion that privately owned shares comprise “our” strategic assets. If HE finds it strategic, why does he not buy them from those who don’t see it as being strategic? At the very least he argues this is about the balance of payments deficit - without explaining that this deficit is privately funded. The owners of Auckland airport shares are not responsible if some New Zealanders spend more overseas than they receive from overseas. It is not THEIR responsibility to make money to pay someone else’s deficit. Sadly he panders to the xenophobic populist nationalism of Winston Peters that is more about prejudice than it is about economics.

Healthcare - the elephant in the policy room

In both NZ and the UK, rational debate about public health care is just about impossible. This is because, as an issue, it is too complicated for the average journalist and average member of the public to understand.

Few would argue that there are not major problems with both the NZ health system or the British NHS. Waiting lists continue to grow and get worse. In short, the demands people place upon both systems often are not met by the supply - whether it being waiting lists for surgery, waiting times at accident and emergency, lack of coverage for necessary drugs, failure to accurately diagnose or supply international best practice treatment consistently, or even simply problems of hygiene in some hospitals.

So the response of both Labour governments in the UK and NZ has been simple- pour more money into healthcare. In the UK it is not far short of a 50% increase in the proportionof GDP being spent on state funded healthcare. The worst example of this extravagance has been the £2.3 billion NHS National Programme for IT, well £2.3 billion was the budget originally - it now is over £20 billion. However, taxpayers are easy pickings. In NZ it has gone up by around a third - yes a third, in GDP and in real terms - $2 billion more per annum, since Labour was elected. $2 billion is $500 per man, woman and child per annum.

So what have you gained from that? Seriously? You see, for example, Southern Cross could offer you the mid range private medical insurance for around $350.

Yes, that's how good health spending is.

The truth is that more money is not going to make a huge difference. Why? Because there are fundamental problems with state funded state provided healthcare:

1. Demand is endless: With no controls on price, and no sense that there should be limits, the public will demand the latest, best and most sophisticated healthcare concerning drugs, equipment, techniques and treatments. Rationing is not done by cost, but by politics.

2. State providers have little cost control: As seen in the 1990s, badly run, in debt hospitals in New Zealand get bailed out, are not allowed to go bankrupt, and so pressures to perform efficiently are poor. Costs increase because administrators simply ask the government for more money, and when it isn't offered, there are claims that it will hurt people's healthcare.

3. State providers have little competitive incentive to perform: As most users have little alternative, queues, poor service and failures to perform aren't subject to much sanction. Money still flows.

4. Increases in funding are largely captured by well organised health workers: Nurses, doctors and all others claim increases in funding, because they can. They public loves them, so they play up to that, they threaten strike action, and almost always win.

5. State healthcare provides little incentive to live healthier: Be a drug addict, smoker, heavy drinker, obese, don't exercise - you'll get treated the same as if you looked after yourself. Not only that, you pay the same and get the same treatment, well unless the bureaucracy starts discriminating against you.

6. Bureaucratic decision making is glacial and unresponsive: By its very nature, government agencies are slow decision makers, and tend to have to make tradeoffs between who is interested in the decision politically and bureaucratically. Multiple objectives and a lack of accountability for delayed investments and approvals means things move slowly.

You see the current model have no relationship at all between those who pay, those who use and those who supply. The incentives to limit demand, to look after yourself, are personal - not financial, and so the budgets grow, performance barely improves and nobody seeks to change this at the fundamental level.

Nobody.

Will you hear John Key this year seeking to radically change health care? No. You wont see it from David Cameron in the UK either. The reason being this- nobody on the right of the political spectrum has the courage or the articulation necessary to win the argument with the public.

The left is absolutely scandalous on healthcare. Dr. Cullen knows only too well that the current health system can't get better with more money thrown at it, but he wont reform it - he can't. The Labour Party writ large can't swallow the truth that the current system is broken - it cannot be made to work better. Its supporters will treat ANY steps to allow private sector participation or some sort of insurance model as being "Americanisation". US health care is the great bogeyman, and whenever it is mentioned there are images of people dying because they can't afford it. Few point out those dying because of failures of state health care. Yes, some in the US undoubtedly die because they don't have health care - but then so do some under socialised health care.

Unfortunately, the nature of mainstream politics is such that the left knows it can push the right emotional triggers on this issue in the media. It simply says "our way" or "American way". The solution to "our way" is always more money. Anything about a more businesslike approach is going the other direction, and the left can command a majority of those in the healthcare profession and hoards of hangers on to protest at will, making a lot of noise, but with precious little debate about how to do it better. Helen Clark can't wait to see if John Key says ANYTHING interesting about health.

The left wont point out how healthcare in many countries with socialised models is insurance based, and how this helps to control costs, demand, and incentivise healthier living. It ignores failures to achieve gains under high levels of additional funding, but will point fingers at those seeking to cut funding.

The call to end "endless restructuring" ignores that such restructuring is, at best, half hearted. What is needed is a fundamental change to how health care is seen, and it means starting to move towards individual responsibility.

There are many ways this could happen, probably the most palatable would be an insurance based approach. Such an approach would have several advantages:
1. Insurance premiums can reflect risk and behaviour, and encourage good behaviour (regular checkups and healthy living) but penalise bad behaviour (smoking etc). This would be far more effective than many public health promotion campaigns.
2. Insurance can invest the proceeds of premiums to get a return and manage risk more prudently than the state in collecting taxes.
3. Insurance creates a direct customer/supplier relationship, as people expect more when they actually seek medical services.
4. Insurance can allow more competition in delivery of health care. People can choose different suppliers, and insurance companies.

Now how could the state move towards this? It could simply offer you back the proportion of taxes you pay that goes towards healthcare, and you could buy health insurance with that money. The state COULD develop its own health insurance company that operates by default as a portion of your income, and you might opt out of it buying private care instead. That was ACT policy, not libertarian but arguably a significant step forward. Which is what I am looking for.

Will John Key propose anything that WILL address the fundamental problems of public health policy? Highly unlikely. You will elect him though, and the problems will persist - again, and Labour will say more money is needed. The best National's health discussion paper says is "The judicious use of public-private partnerships can increase the availability of elective surgery and reduce waiting lists." A toe in the water wont stop someone from continuing to overheat.

and if you think it's hard in New Zealand, in the UK the NHS is sacred - shame so much that is sacred is not subject to close scrutiny!

The anti-Obama strategy that will fail

Giving a damn about his middle name being Hussein
Giving a damn about him being an Arab or African-American or whatever.

At the most this will pander to conservatives who are bigoted xenophobes, with little substance behind why Obama should be opposed. It will shore up the leftwing liberals who respond badly to such doggerell, so it is NOT manna for Republicans.

What DOES matter is that he is leftwing, his economic policies are blatantly anti-free trade and pro-big government. His talk is mostly rhetoric and little substance.

Obama as a President is most likely to be a disaster for New Zealand, as he will have little interest in promoting a liberalisation agenda at the WTO that persuades global abolition of agricultural export subsidies, removal of non-tariff barriers to agricultural imports and moving towards free trade of agricultural commodities.

That is why New Zealanders should, grit their teeth, and hope Hillary wins in Ohio and Texas tomorrow.