Farewell Roger Kerr - one of New Zealand's intellectual giants

I am genuinely saddened at the news of the premature passing of Roger Kerr, news we all knew would come in due course. I only met him a couple of times, and we talked about – unsurprisingly – a free market approach to transport.  He came on a march FOR capitalism, remembered my name and we had a great chat about a wide range of issues. He always was softly spoken, gentle, intelligent and played the ball, not the man.   For those unfamiliar with him, he was one of the architects of the free market reforms of the 1980s and 1990s, as a public servant and then as Executive Director of the Business Roundtable.  A role that saw him receiving nasty brickbats.

I can confirm what Lindsay Mitchell said of him:

He was very experienced and accomplished. I was out of my league. But neither the audience nor myself was made to feel as though Roger was superior, above us, imbued with some god-given truth. Roger knew that persuasion meant honest and non-personal debate. In fact I think he was Mr non-Nasty. A rarity in the emotional arena of philosophical ideas.

Roger made time for people. He was humble and magnanimous. He could never have met the low standards of politicians and political debate in the house.

Cactus Kate’s comments about the strength of his writing are also true. He was one of the best writers to synthesise free market economics and public policy in a coherent, intelligent and eminently readable way:

What he leaves behind for us younger members of the VRWC is literally a lifetime of wonderfully written literature, speeches, opinion and research….It is not often in life you get to meet someone so academically smart who doesn't sit in an ivory tower on the taxpayer tit.

David Farrar has pointed out how Roger could have easily gone overseas and earned much much more money, but his interest was in New Zealand and in making New Zealand a happier, wealthier, more prosperous and free country:

Roger had a great love of New Zealand. I have no doubt he could have earnt much more money if he had not devoted the last 25 years to establishing and growing the Business Roundtable. While of course his views were controversial and often unpopular, Roger was only motivated by a genuine desire and belief that they would make New Zealand a better place.

Roger was genuinely a man who was easy to respect, whose mind was that of a giant, and who didn’t let the insults and hatred spun by some on the far left affect how he communicated. He wasn’t baited by the intellectual midgets who couldn’t respond to him with their minds, so responded to him with threats.

He lived a life of remarkable achievement, got to see his ideas implemented in many ways, and saw the fruits of it. However, there was always so much more to do. It was shown in that he blogged up to the end with a post from the 28th. He is a tremendous loss from New Zealand public life. His contribution has been immense, the likes of which puts the political circus of the election look so shallow and frankly inept.

The only wonder I have is why this man did not become Sir Roger Kerr. Given some of those who gain such a title, he is undoubtedly one of those who deserved it so much – although his own modesty and personality was hardly one of a man who demanded or expected such a thing.  He CNZM was so late,  no doubt because both National and Labour politicians were either too gutless or churlish to recognise someone who was out of their league. 

The NZ Herald has an excellent tribute to him in pictures.

However, one of the more poignant tributes come from Lindsay Perigo's interview with him earlier this year.  His introduction is written here.  

I wish his wife (former ACT President and now candidate, Catherine Isaac) , family and loved ones sincere commiserations. His legacy is one to be proud of, and his memory, influence and contribution will long be part of New Zealand’s history.

Told you so - Kiwirail's bullshit asset valuation is written down

The NZ Herald has reported that Kiwirail has proposed writing down its asset value of NZ$13 billion by NZ$6 billion, and splitting the firm into a property company (with a NZ$5 billion value for the rail corridor and land), which is essentially the old New Zealand Railways Corporation and the operating business (with a NZ$1 billion value).

I predicted this in 2009 saying:

The NZ$12 billion book value of rail on the Treasury accounts is a nonsense, equating it to all other SOEs combined (e.g. 3 power companies, Transpower, NZ Post) which all make profits. Most of the value is based on a replacement cost if it was built today, which of course would never be done. I'd argue it is probably worth 4% of that at best.

That was based on a presentation by David Heatley from the NZ Institute for the Study of Competition and Regulation called"The Future of Rail in New Zealand".

I would still argue Kiwirail is grossly overvalued.  Its business and related assets are not worth NZ$1 billion, indeed they are probably about a third of that.  The value of the land is more significant, but I would question the NZ$5 billion for that, especially given the Surface Transport Costs and Charges study valued the land in 2001 as being worth NZ$462 million.   Property prices haven't inflated over 1000%.   Indeed there may be more value in the scrap of the track.

The key point is that The Treasury was being seriously disingenuous accepting that ridiculous over valuation of Kiwirail in the first place.   To consider an infrastructure business as being valued on a replacement cost basis is ludicrous, for it would see all of the electricity SOEs valued on the basis that you would - once again - build a Clyde Dam, for example.

The real asset value of Kiwirail is the optimal value that can be gained for the business either as a going concern, or if it was split and sold for the sum of its parts.   As much as there is much romanticism about it (and I carry a fair bit myself, as I have loved trains since I was a child, and have many fond memories of riding on them), that shouldn't be allowed to distort objective appreciation of what Kiwirail is as a business.

I believe it has a future, providing a core freight service on higher density lines, and given the fortune poured into the black hole of commuter rail in Auckland (and not so much in Wellington), it may as well be used for that until those assets need replacement.  However, it is telling that, at a time of high fuel prices, and with RUC rates having recently been increased, the railway still struggles.   The reasons why are partially explained by Heatley's presentation, and are in part because there simply isn't enough freight with enough frequency being moved in New Zealand on the routes serviced by railways, to make most of the lines sustainable in the long run.

Could it be that a further writedown will be on the cards, and is the reason it hasn't happened that much yet is to protect debt related to Kiwirail?

What do we want, more Nanny, we're the 0.99%

The 99%.  It's laughable and ridiculous.  The New Zealand mob is claiming it represents 99%, which obviously means it should set up a political party and then sweep to power in the November elections.  After all, with the MMP electoral system, it would mean they would have power, could pass all the laws they want, raise the taxes they want.  

Except of course, they aren't 99%, not even 9%, but quite possibly 0.99%.

More seriously, what are they about? It is very easy to dismiss them as the usual leftwing mob who demand government does more violence to the property and people of whom they don't approve.   However, there is one point - opposition to bank bailouts.

Government should not prop up business.  There shouldn't be subsidies for any businesses or protection from competition.   Corporatism should be fought.  Banks that make foolish loans that they can't recover should not have their risky behaviour bailed out by taxpayers.  That includes loans to governments.  Shareholders, bondholders and ultimately depositors should bear those losses.

Yet the "occupy" mobs think all banks are bad, they oppose capitalism and demand other people's money to pay for all the things they like.  Yet they use mobile phones invented and built by capitalists, on telecommunications networks invented by capitalists, wears clothes sold by capitalists, drinks coffee and eats food produced and sold by capitalists.   They think capitalism is bad, yet they can't conceive of what it is like to eliminate capitalism - which after all, is simply the freedom to establish your own business trading goods or services, to make a profit (or loss) and hire who you wish to supply labour.   The alternatives have tended to at best result in sclerotic stagnation, or at worst created rivers of blood.

By contrast they embrace government, the institution with the monopoly of legitimised violence.  They want new taxes, they want to take money by force from people who they think have too much.  Yet on a global average, virtually everyone in everyone developed country meets that definition.  The average GDP per capita (PPP) is US$11,000 per annum.  Every country in the European Union, every OECD country (including Turkey and Mexico), even Botswana is above that level.  By rights surely at least half of the people in those countries should have more tax taken from them, to pay for?

Public health care monopolies, education monopolies, state welfare and state make work programmes.  

They want more Nanny State and they think people who earn higher incomes will keep doing so, just to pay for what they want.  Even if they don't think that, they want to confiscate wealth and give it to the state, as a trusted party to "look after everyone".

So childlike.

Old Holborn went to visit the London mob and concluded:

Bottom line? These protesters want MORE taxes, an enlarged welfare state, a bigger Government, State jobs and death to bankers – and a bath. Marx would have been proud of them. I give them a fortnight at most. The Police have already removed the portaloos and it can’t be long before Starbucks and Pizza Express get fed up with toilets blocked by Lentil casserole and organic dysentery. As much as I hoped people had woken up from the stupor of a decade of Labour benefit addiction, the OccupyLSX protest is nothing more than a cold turkey sweat of the terminal welfare junkies.

Meet the new boss, same as the old boss.

He also points out how intellectually inept the mob are, because they somehow think that public debt is the responsibility of capitalists:

No one has EVER forced me to buy shares. Contrast if you will, the £100,000 of PUBLIC debt carried by EVERY family in the UK, thanks to Politicians and the Central Banks raiding our currency, yet no one has demanded to occupy Parliament or the Bank of England. Germans are protesting outside the European Central Bank in Frankfurt, thousands of them who know EXACTLY where the criminals are. Us? Sitting on the steps of St Pauls Catherdral and being kettled once again by the laughing Policeman.

There are good reasons to be angry.  Angry at politicians who ran budget deficits endlessly to bribe voters with their children's and grandchildren's money, without their consent.  Angry at politicians who required banks to lend to the feckless and who ran the fiat currency system that provided an ongoing supply of credit to banks, expecting them to lend, and then who promised to save the banks when they loaned out too much.   Angry at politicians who were never straight about the ponzi schemes they created of public debt, pension and health promises.


Yet they should also be angry at themselves.  How many of them would vote for any politician who pointed out the overspending?  How many of them would vote for politicians who would let banking be free, who would let banks be very tight and conservative on credit? 

You see in a liberal democracy people are to blame for the governments they elect.  In the UK, US, EU, New Zealand, all over, the majority voted for governments that favoured some businesses over others, that spent more than they gathered in taxes, that protected some with the money of others, and which refused to say "no" when people kept wanting more and more without paying for it.

No.  They are hooked on being protected from reality, being protected from the consequences of their own decisions.  They want the government to give them jobs, give them health monopolies (anything else is like "America where people die bleeding on the streets because they don't have their credit card handy to pay the ambulance" (bullshit)), teach their kids what they should learn, give them homes, tell them what to eat, look after their families, wipe their bums.

They offer at best confused anger over a situation they don't understand.  At worst, they are a mob who want what other people have out of pure envy, and are hopelessly addicted to government fixing their problems.

In Rome they were violent criminals, hopefully this time the mobs will quietly dissipate under the contradictions of their own incredulity about economics.

Abolish child poverty by not having kids you can't afford

An Institute for Fiscal Studies report in the UK has said that government changes to welfare policy will result in it failing to meet targets to eliminate child poverty by 2020.

There is an absurd “legally binding target” to eliminate child poverty by 2020 in the UK. That in itself is a gross misuse of the law. Laws should not be passed to demand that government ensure certain social outcomes arise (there is a similar stupid law requiring the government to reduce CO2 emissions, who gets penalised if the government fails?).

Child poverty in 2021 is largely preventable now. There is no need for any children under 10 to be raised in poverty by 2021. This is my strategy for eliminating child poverty for the under 10s by 2012.

If you can’t afford to raise children then:

1. Contraception is free (taxpayer funded), use it;

2. If it fails, there is a waiting list of financially secure people ready to adopt;

3. First trimester abortions are available for free on the NHS;

So don’t have children you can’t afford.

Some people have children they can afford but circumstances change. That is not preventable, although if taxation were lower, more could afford to take out insurance to cover such situations.

Child poverty is first and foremost the responsibility of the people who brought the child into the world in the first place. Parents have the responsibility to consider how to bring up their kids, how to pay for them, how to provide them what they need.

Nothing would be more important than for government to make this, seemingly obvious point, clear.

In addition, don’t allow anyone to immigrate with children if they also cannot afford to keep them.

One way to do that would be to painlessly phase out the child benefit. Declare that one year from now, no one will get child benefit for any future children. 

Child poverty is not a disease you catch, it is not the responsibility of everyone who doesn’t have children and those who have them, who can afford them.

It wont be eradicated by governments, political parties and “charities” calling for taxpayers to be fleeced to constantly pay for people to raise children they should not have had in the first place.

Depending on government to fix a social problem is deluded and misguided. The best way government can help is to get out of the way. Make the first £10,000 EVERYONE earns be free of income tax and national insurance as a start, and stop paying people to breed.  Raise the income tax free threshold according to GDP growth every year

Steve Jobs - he lived!

So much can and is being said about Steve Jobs. Creator, businessman, salesman, innovator, capitalist. He turned computing, music, telecommunications, publishing and media all on their heads.

The likes of him does not come from the death worshipping stone age cult infested cultures that rule Iran, Afghanistan (still), Iraq (now), Saudi Arabia or Pakistan. They don’t come from the conformist, respect authority for the sake of it, what is yours is everyone’s and what is everyone’s is yours, culture that rules China. They don’t come from the “it’s my right to have what you have”, “equality above everything”, “demonise success and wealth” culture of the trade union movements. They don’t come from the technology scaremongering, armageddon chasing, state violence worshipping, new age fascists and forked tongue demagogues of the environmental movement. They don’t come from the envy dripping, reality evasive, faux “pride” and control obsessed culture embodied by the European Union and its acolytes. They don’t come from the lawless, “might is right”, “the ends justify the means”, lying, hedonistic, crass culture of nihilism seen in Russia. They don’t come from the superstition laden, misogynistic, tribal, faux nationalistic culture of willful blindness to atrocity that infests sub-Saharan African politics.

When the news is dominated by politicians who blithely borrow, tax, spend and print money that they never earned, from wealth that has nothing to do with them, with bureaucrats and commentators, keen to tell others how to live, what to do, and to control the judgments, the passions and thoughts of others. When culture is flooded with mediocrities preaching nihilistic hedonism, and generating mass market pablum that resembles other mass market pablum. When business and marketing is so utterly full of those who worship surveys, cliches, short termism, image over substance and platitudes over invention. Steve Jobs was a breath of fresh air. When he would launch something new, people would watch, because it WAS new - it WAS innovative, and it wasn't because he was looking after the "greater good", it was because he wanted Apple to sell something people would want because it was great. It so happened that millions agreed. Firms worldwide would love a Steve Jobs. A manager, who understands the detail of the products, but also design and what people would want. However, such people wont come from production line education systems or cultures of conformity or aversion to risk.

They come from a culture where individuals can be themselves, where diverse pursuits that many may seem odd, most don’t understand, can provide fertile grounds for minds, imagination, creativity and risk taking. Where those who do take risks to produce, create and sell can keep (most) of the fruits of their endeavours, and bear the consequences when they get it wrong. Where success is lauded and admired, because people see in those who climb to the top, a piece of them, of what it is to be great, to live life pursuing your dreams, your ambitions, your ideas and your passions. They aren’t there to grab their share, to chop down the tall poppy, or to demand that people exist and work for a “greater good”, for the greater good is in all individuals pursuing their dreams, and in free people interacting, sharing, relating and standing on the shoulders of the giants who make their lives that much better.

In a world where so many are obsessed with intricacies of trivia of nobodies, where so many are obsessed with what others think of them, where so many are out to force others to give them what they haven’t earned or created, and demand rights to the fruits of the minds and labour of others, Steve Jobs was none of that.

He wasn’t the nihilist who saw humanity as a problem, he wasn’t the second-hander who claimed what others had done for his own, he wasn’t living for the sake of other people, was not seeking to control the lives of others, to tell them what to do, or to tell people how to be. He was himself, he led companies that created what he thought were good products, and let them speak for themselves.

He was a man who lived his life for his own purposes, for his own dreams, and was a stunning success. The pecuniary reward he got was a tiny fraction of what he generated for Apple shareholders, Apple employees, sub-contractors and Apple customers, and indeed its competitors who have aped him, and now generate further wealth and happiness for millions.

The legacy of what he did for Apple, what he created for millions, pales in comparison to the example he created for the most fundamental thing of all – he lived.