Roger Douglas damns Nats on ACC

ACC is a pyramid scheme. Who says? Sir Roger Douglas

He says of the government's ACC bill:

Nothing in this Bill deals with the fact that, from its inception, ACC was a flawed pyramid scheme. In the beginning, it operated on a pay-as-you-go basis. That meant that for many years, it seemed cheap, as the full cost was not apparent – all of those with long term injuries were not yet making claims. Unfortunately, those years of low cost also saw the entitlements expand – so that by the time the system had absorbed all those with long term injuries, and covered the expanded entitlements, it suddenly seemed to cost an awful lot.

These problems are set to get worse. We have an aging society. An aging society implies not only more payouts, but also a lower proportion of people paying levies to cover the Non-Work Account. Because it is a Ponzi scheme, it will require ever-expanding numbers of people working to pay the levies.

So you can see how it has gone wrong, as it progresses, more and more claim it, stay on it for extended periods, making it progressively more expensive. Concepts completely alien to the economically illiterate left.

He says Labour knew this, and sought ACC to become fully funded by 2014, but it also expanded "entitlements" effectively setting it up for bankruptcy. The nonsense spread by the left that ACC is in fine shape because it receives more than it pays out, ignores the unfunded liabilities it has:

If any private insurance company had the books that ACC has, they would be declared bankrupt. The only reason that ACC is still solvent is that it has the capacity to increase levies. In essence, it is solvent because it can force people to cover its costs.

In other words, it is solvent because it has a state monopoly - it is solvent because you are forced to pay for it.

He suggests competition "The only viable way to ensure that ACC delivers results for reasonable prices is if it is open to competition. If people can get cheaper rates elsewhere, they should be allowed to leave. If that means risky workplaces start paying higher premiums, so be it – it will encourage them to improve workplace safety"

He makes the same classic arguments about competition, including one I have repeated:

"Currently, ACC sets a flat rate levy based on the risk in an industry. Those employers which have safe environments subsidise those who have unsafe environments. There is little commercial incentive to create safer workplaces.

By keeping ACC as a monopoly, and not properly allowing risk pricing to emerge, we are in fact increasing the number of workplace accidents. In the private market we have insurance excesses, we have no claims bonuses, we have risk-based premiums. The private market is all about mitigating risk. ACC, on the other hand, is about forcing the good employers to subsidise the bad ones."

The ACC monopoly is classic socialism - all employers pay for the collective risk, the good employers subsidise the bad ones, but who cares, it's all warm fuzzy shared and we all feel good about it, don't we?

After all you hear the left saying privately provided accident insurance will include a profit component, increasing costs, which of course implies that profit should be eliminated, and everything provided by the state, because profit increases costs. Classic Marxism.

All the lies of the left about "privatisation" completely ignore the real debate - why the state monopolises a compulsory accident insurance scheme that means the careful and prudent subsidise the reckless and imprudent? So now, of course, National cuts back ACC coverage to try to fit the budget - meaning all complain about the monopoly delivering less than what people want.

The advocates of state monopoly don't have very good arguments against competition, except use of a Labour commissioned PWC report that had terms of reference to effectively justify the status quo (a classic case of commissioning a study to tell you what you want to hear).

No other country runs this sort of pyramid monopoly scheme for accident cover, it is time to dismantle it and move on. Opening the whole damned lot up to competition is the FIRST step.

Then it's time to look at the next Ponzi scheme - National Superannuation.

Rudman's narrow thinking on drugs

Brian Rudman bemoans opiates as a "deadly scourge" effectively calling for the eradication of opium plants in Afghanistan. He doesn't have a suggestion as to what Afghan farmers should do instead, doesn't consider how this will shift production elsewhere, and doesn't even think that the criminalisation of opium creates many of the problems inherent in the trade. After all, opiates are used for medication, such as morphine.

He says "no one" is fighting it, which is patent nonsense, I guess he missed this. Although the futility of it is clear, since the Afghan government and so many in Afghanistan are reliant on the trade.

The UN Office on Drugs and Crime, which has a vested interest in retaining the status quo, is his main source of information, and of course it is going to play up the threat. Nowhere are the questions asked:
- Is the main reason it is so profitable because it is illegal?
- Are some of the reasons it is so deadly because it is illegal?
- Is the criminal involvement in the trade because it is illegal?
- Will the elimination of opium in Afghanistan end the trade and supply of heroin?

Where does Rudman get this "fact " from, for example "It is triggering the spread of HIV at an unprecedented rate"? Really? So are the reports that in Africa the location with the highest prevalence of HIV, it is about sexual transmission NOT opiate use just nonsense?

Or is it that he has a terribly old fashioned view on the war on drugs, in that the decades of continued failure have passed him by?

London's capitalist paper

I've quoted a few times from City AM. It is London's less well known morning free paper. It focuses on business and finance, so for many will have little appeal. For me it is the one paper in the UK that consistently, without fail, supports free markets and opposes government intervention to prop up failure.

So I recommend looking at the editorials by Allister Heath at least, even if you are uninterested in shares, banking and markets generally. For the philosophy expressed is a positive one. Indeed, Heath wrote last week just this:

"unlike others, we have refused to go down the road of demagogic class warfare and the politics of envy. City A.M is the only newspaper that stands up for City workers and believes in their values. We support a real free-market economy and oppose bailouts as well as crippling tax hikes; first and foremost, we are the paper for London’s capitalist classes. "

Now that's something work looking at for me. So read City AM, and to start how about this little piece on the financial crisis.

It's not libertarian, but it does seek to embrace the creation of wealth and decry those who destroy it. That in itself is a good thing.

George Osborne does not know banking

George Osborne is the Tory Shadow Chancellor of the Exchequer. He has never had a real job. He has a second class degree from Oxford and has spent almost his whole working life either as an MP or working for the Conservative Party. His own ample inherited wealth has protected him from risking his own money in business.

So for him to call for banks to limit bonuses to £2000 or hand them out in shares is stupid, stupid indeed, and shows him up for how incredibly shallow he is, and indeed how shallow the Conservatives are.

The Conservatives are going for the envy vote, knowing that those in the banking sector are small in number and will probably vote Conservative.

The Times quotes Liberal Democrat Treasury spokesman Lord Oakeshott:

“If state-owned banks such as RBS and Lloyds pay bonuses using shares, they would have to issue new equity, which would dilute the taxpayer’s holdings,” he said. “George Osborne clearly does not understand how shares work . . . His ignorance is toe-curling and he hasn’t a clue how markets and public companies operate.”

Osborne talks of retail banks, but it is investment banks that pay large bonuses. So he doesn't even have a cursory knowledge of the banking sector.

Allister Heath in the excellent City AM got it bang on:

"The Tories are persisting in their belief that there is a moral equivalence between RBS, which went bust and had to be nationalised, and HSBC, which didn’t take any money from any government. Talk of moral hazard: regardless of how well you do, you will still be hammered by the government."

This, you see, is the moral vacuum that those almost across the political spectrum fail to note. Politicians want to punish all banks, yet they rewarded the bad performers, so only the good performers truly lose out. Heath eviscerates Osborne in his editorial and concludes that the outlook is bleak if the Tories really do believe this nonsense:

"expect HSBC and Barclays to start working on their exit plans: no other country, including the US, is planning this sort of separation."

Snooping State drumming up business

(Warning - profanity in last paragraph)

I blogged recently about the Independent Safeguarding Authority - an Orwellian UK bureaucracy which exists to vet adults as to whether they are pedophiles, or more specifically, whether they might be on something like a balance of probabilities. That, of course, gives it the veneer of being judicial, when it is quasi-judicial. In essence, if you EVER arrange to look after children for longer than a few hours, who you are not related to, it is illegal to do so in the UK, unless the ISA vets you. Vetting you is not just a criminal check, it is to check to see if you've been charged, investigated or if someone lays evidence of "doubt", you might be blacklisted - you have the right to challenge it, but the ISA will rule as final (short of you taking it to court for defamation I suspect).

This vile organisation has been under pressure lately, with even the government that spawned it wanting to curb its powers. Childrens' Secretary Ed Balls announced a review. Nothing like government creating something then effectively admitting it got it wrong.

So you might ask why the hell is the ISA effectively seeking to drum up business by claiming that even people who rarely deal with children might want to get vetted.

The Daily Telegraph reports:

"Sir Roger Singleton, the chairman of the Independent Safeguarding Authority, said the scope of the database could increase significantly because companies would fear losing business if they did not have their employees vetted."

He then describes how an electrician business might think it is a good idea, if bidding for work at schools, and that more generally it would be a competitive advantage.

In other words, he wants more and more people to be vetted, for his organisation to hold quasi-judicial judgments about whether people are perverts, and for it to become the norm so that NOT being vetted would make someone suspicious. Not ISA certified? Oh you must be a pervert then.

Sir Roger Singleton has good intentions, but he has paved the road to hell - a hell where every adult is assumed to have dubious intent towards children unless they are found innocent. Where society operates under a burden of proof not of all being innocent, but all being guilty.

It is a climate of mass distrust, a climate that I can only say is paralleled in countries with totalitarian governments - where nobody can trust who is or is not an informant.

The ISA should be disbanded. People should be able to request that others undertake criminal vetting for convictions, for anything less risks barring people who have done no wrong, or those who are victims of false accusations because they are "different".

Most of all, Sir Roger Singleton deserves to be blasted for promoting his little mini-Stasi.

He deserves to be told to get fucked by all those who look after kids without the slightest nefarious intent, how fucking DARE you run a system that implies that without your imprimatur, people are child molesters.

Why don't you and your joyless goons go to the more feral parts of our big cities and start seeing who really ARE the child abusers in this country, the ones who have unwanted children, who ignore and neglect them, leave them to be preyed upon by strangers, gangs, alcoholics and drug dealers? Or is dealing with this sort of thing a bit too frightfully difficult for the upper and middle classes?