Fear unbridled government? The answer isn't a coalition

When Geoffrey Palmer wrote "Unbridled Power" his concern was primarily about the lack of constitutional limits on government in New Zealand, and how Cabinet would dominate single party government which itself would almost always dominate Parliament.   Jonathan Milne has taken the latter tack in his latest article in the NZ Herald.  His hypothesis is that small parties will do badly this election, and that there is a real chance of something "dreadful" - one party government.

Of course he might think he looks like he is making a rather generic point about the advantages of coalitions and minority governments compared to single party majority government.   Yet he hardly hides his colours at all.  He doesn't pick on Rob Muldoon "banning inflation", spending billions on Think Big and bribing voters with national superannuation, he doesn't pick on Norman Kirk for creating big government businesses, expanding the welfare state and greatly expanding subsidies for government trading departments.  He wouldn't.  You see he isn't exactly an economist, or a historian or a political scientist, he's a leftwing reporter.  What other explanation is there for this comment:

The controversial free market reforms of the Rogernomics era were pushed through by the all-powerful fourth Labour Government without warning or by-your-leave. Similarly, there were few fetters on the National Government when Ruth Richardson presented her slash-and-burn Mother of All Budgets. No presidential veto, no senate or upper house sitting in oversight, and no small coalition partners to soften the hard edges of these governments.

All governments are "controversial", but you'd only say that if you thought that.  Except Jonathan is naive.  In 1987 Labour asked for a mandate to continue the reforms, got one and continued.   "Softening the hard edges" is the sort of comment one would only make if you disapprove, and those who disapproved were Jim Anderton and Winston Peters, and their bands of socialist, nationalist and xenophobic state worshippers they founded.

I opposed MMP in 1993 primarily because I had seen the previous two governments implement the most politically courageous policies in modern history.   Governments that cut subsidies, cut public spending, including cutting benefits.  They restructured government departments, made thousands redundant and privatised in the face of venal xenophobic hysteria.  Farmers, state sector workers, beneficiaries, pensioners and unemployed people were unhappy at the time, not a state of affairs most political parties are keen to promote if they want to be re-elected.  Contrast that era to the smile and wave of John Key, and Helen Clark's middle class welfare, and cash thrown at various interest groups (and craven acceptance of support from Winston Peters).

Even at the time of the 1984-1993 governments, the "hard edges" had plenty going the other way.  The fourth Labour Government opened up the Treaty of Waitangi settlement process, created bureaucracies for conservation, the environment, womens' affairs, youth affairs, Pacific Island affairs, and sowed the seeds for the Bolger government to pass the RMA.  Foreign policy saw New Zealand effectively step away from being aligned with the United States in the Cold War.   Education and health care remained firmly within the grip of the state sector and the rent seeking unions that dominated them. 

For Jonathan, stopping governments doing all they want is a good thing.  Which of course would be all very well, if what they wanted to do is more.  However, Jonathan's opposition to single party government is not that, indeed he rejects it because of history when governments were deliberately pulling back from spending money they didn't have, and telling people what to do.

He showed a childish thrill to think of the Greens and National working together on transport policy - because two conflicting ideologies must produce the best results.   He mentions NZ First, ACT,  Jim Anderton, Peter Dunne and the Maori Party, as if he misses them having influence (remember the positive influence of NZ First after 1996?).

Somehow he links Brian Tamaki to Peter Dunne, and then concludes while the Greens might not be good on "roading policy", one party government is "far worse", and his only evidence is the reforms of the 80s and early 90s.   That's just being rather vacuous.

Frankly, if either National or Labour were committed to privatisation, commercialisation, cutting government spending and winding back the state, I'd say bring on one party government.  However a Labour-Green-Maori-Mana government would be a four headed hydra of disaster, which would easily spook foreign investors and send more aspiring New Zealanders abroad. 

Unfortunately Jonathan hasn't really bothered to check what the two main parties have on offer.  National is hardly driven by a desire to engage in major reforms, it is instinctively conservative.  Labour is hardly seeking to engage in radical reforms, although is at least masochistically more interesting than National.

So no Jonathan, one party government after this election wont be perilous or dreadful, it will be "meet your new boss, same as old boss".  Politicians wanting to boss people around, spend their money while saying "it's good for you".  The only difference with a coalition is that the flavour changes.  Maybe if National needed ACT, and ACT gained 10 seats, there might be something more radical - presumably that's when Jonathan gets upset because that's not what he meant.  You see to him, like so many reporters in New Zealand, government should be there to fix problems, not get out of the way.

So you're having an election

Get a feeling it is a little like 2002?

Elections in New Zealand haven't been the same since 1996 when MMP meant that "winning" wasn't all it used to be.  However, sadly, neither the media nor the public have fully got to grips with it.  The simple truth is that it is extremely unlikely that National will get to govern alone, just as it was the same for Labour in 2002.  

A cycle has commenced.  In 1999, 2002 and 2005 Labour cobbled together coalitions, in 2008 National did, and it will likely do so again.  However, it cannot be guaranteed.  You see after one term, with a media essentially presuming a simple result, voters get complacent.

National will desperately want to ensure it gets a good turnout, for it will fear a low turnout will mean things are far closer than usual.  Bear in mind MMP means that it is getting party vote out that counts, and that means all electorates.  The flipside is that Labour will also be seeking a turnout, when it knows most assume it cannot win.

Yet it isn't quite as simple as that.  2002 is an object lesson for the two main parties, because it saw a significant shift in votes.

In 2002, Labour saw polling say it might win an absolute majority, yet it gained only a small swing of 2.5% in its favour, primarily because it gained at the expense of the Alliance.   National was decimated.

One interpretation of what happened was that support for the government, which had been slim, shifted around a bit, from the Alliance to Labour and the Greens.  There isn't quite the same parallel for National.  The Maori Party isn't a natural ally, and ACT is more likely to face fear of oblivion seeing its support go to National.

In 2002, the decimation of National was due to an assessment by many of its supporters that it had no chance, so they voted for United Future to give Labour a tolerable coalition partner.  This time, it is Labour that may be seen as having little chance, but Labour supporters aren't going to back Peter Dunne the same way (why would they? he is back to being a one man band), unless he gets some lucky media traction.

Some Labour supporters may choose to vote Green for the same reason ACT did better in 1999 and 2002, because they prefer a more principled opposition. 

This time round there is another dynamic - the Maori seats.

Mana Maori is making them a three horse race, and my pick is that it benefits National. 

You see, Mana Maori is more likely to take votes from the Maori Party than Labour.  Odds are this will not see Mana Maori pick up seats besides Hone's one, but could decimate the Maori Party.  It could eliminate the Maori Party overhang (but create a one seat one for Mana Maori), which can only benefit National.  Moreover, if Labour has a clean sweep of the Maori seats, the overhang is gone, but it only takes seats away from Labour's list allocation.  It can only be good for National.

Except of course, if ACT doesn't get Epsom or North Shore, and National is just short of 60, and Peter Dunne isn't enough.

National is playing its traditional game, being the classic "do next to nothing" party that saw it win most elections since the war.   It impresses the masses who like the smile and wave.  Labour will get out its core vote of public servants, low level aspirational control freaks, beneficiaries and some of the working classes.   What's left is who votes for the other parties.

The Greens have the clearest consistent brand for those who want someone else to do the thinking for them, or at least the emotive neo-Marxist posturing.  It's the party for people who believe the end is nigh, but also those who think they know best for other people.  The classic authoritarian party.

ACT is on its last legs, on life support, but still offers - just - a more "National than National" party with policies that are closer to National's own principles.

The Maori Party has shed its most racist, Marxist, pro-violence wing in the form of the Mana Maori Party.  However, will it have satisfied its supporters?  Has it handed them enough in coalition?

Beyond that, we are saying bye bye to Jim Anderton's personality cult party as he retires, and Winston Peters is having another go at attracting malcontents, but most of his past voters have passed away.   Peter Dunne faces his repeated challenge from two sides, and the only minor parties that remain outside that which have survived are the Alliance retards, Libertarianz and the ALCP.

Of that lot, only three parties offer any hope of less government.  ACT has a leader who talks the talk, and policies that mostly face the right way.  Libertarianz is consistently pro-freedom, with a nicely refreshed lineup, and ALCP maintains its single policy.

I hope to do a bit of a quick review of the main people on the party lists and the electorates, if the psephologist in me gets the time.

Greece is to collapse under the weight of its own reality evasion

Greek Prime Minister George Papandreao's decision to hold a referendum on the "bailout" plan agreed with other Eurozone countries has sealed the final act for Greece's democratic socialist attempt to live a life that it wasn't willing to pay for, and should serve as a warning for the economic catastrophe that the Euro project has become.

Let's recap what happened.

Since Greece became a liberal democracy in the 1970s, it has run policies that could broadly be called "democratic socialism".  A typical right/left democracy saw little difference between policies, but the Communist Party consistently would come third.  Progressively more generous welfare policies and a growing public sector, combined with a lackadaisical approach to tax collection, and feather bedding the armed forces.  Meanwhile, the Drachma devalued again and again.

Greece joined the EEC in 1981 and the money came rolling in.  As the poorest Member State it gained funding to build infrastructure, generous agricultural subsidies and access to markets in Western Europe.  The typical EU type deal was made.  Greece gained new markets for its goods and services, grew tourism and attracted investment, whilst the money flowed in from Brussels to prop up a burgeoning public sector, inefficient state companies (Olympic Airways being one of the perpetually near bankrupt ones). 

The delusion worked for a while, and then Greece got the next offer - get a Western European currency.  The Euro.  Greek governments lied their way into the Euro, not really having a 3% budget deficit (hiding defence and hospital spending) at all.  So out went the Drachma, and Greece borrowed - more and more.  Borrowing for the Olympics in 2004, and this time credit flowed freely.   The Euro was being loaned out at interest rates reflecting the economic environment of the dominant Euro Member States - Germany and France.  So Greece was receiving credit not on the basis of running large budget deficit and public debt approaching 100% of GDP, but rather running low budget deficits with a reformed economy - like Germany.

Greek government kept getting elected, by Greek voters, to give them their pork, at little cost to them.  Ridiculously generous pensions, a public sector where nobody could legally be fired under the constitution, a bloated armed forces that had not changed since the Cold War (nor since Bulgaria became an EU Member State rather than the front line of the Red Army), and a tax system that was a bit of a joke, saw Greece slip slide its way to bankruptcy, as banks in France, Germany and to a lesser extent Britain and elsewhere, lent to the Greek government believing all was well - because it was the Euro.  A currency those banks believed would be government guaranteed.

They didn't factor on a Eurozone government going under.

Greece is to all intents and purposes, bankrupt.  Its austerity programme of cutting spending and increasing taxes only slices off some of the overspending.  It cuts the budget deficit NOT the debt.  Think of it as you being on the brink of being personally bankrupt and you've managed to cut your spending to be only 5% higher than your income rather than 10%.  You still need to borrow.

So who is to blame?  Well, quite a few.  Greek voters, Greek politicians, Eurozone governments, the European Commission and Greece's creditors all carry some blame.

Greek voters

If you believe in liberal representative democracy, then Greek voters are to blame.  They voted for politicians who gave them public spending that was unaffordable.   They didn't support politicians who believed in containing the size of government or even increasing taxes to pay for their socialist state.   They benefited from the loans taken out in their name, they happily evaded taxes, but they didn't evade taking advantage of the money spent by their government.   Now they are unhappy about facing reality - the reality that they have been living beyond their means, or at least, supporting governments that have been doing so.   For so many they need only look in the mirror to find who to blame.

Greek governments

Many Greek voters and citizens obviously did not support the government, and were not public servants or major users of the profligate Greek state.  They can rightfully blame Greek politicians for lying.  Lying to join the Eurozone, lying about the state of the books and engaging in massive reality evasion at elections.   It is telling how so few Greeks are pointing fingers at past Prime Ministers and Finance Ministers for their combined failure to confront the public finances, and most of all in colluding with the state sector to lie - and I do mean lie - about the budget deficit to join the Euro.   That big lie is now costing lives and livelihoods.   Greek citizens should be baying for the blood of these lowlifes - lowlifes who now live off the back of generous political pensions.   Greek politicians didn't just evade reality, they denied it and covered it up - for shame.

Eurozone governments

Greek governments would not have been facilitated down this path had Eurozone governments not allowed it to happen.   They could have shown greater due diligence with Euro membership, but the Euro is a political project, driven by France, accepted by Germany, to bring European economies together.  It is not an economics project, but one driven by hubris, pushed by people sharing a democratic socialist vision of the EU being a fortress of common laws, taxes and generous business and personal welfare states.   They wanted it to be central to EU membership, and France itself has almost always failed to meet the Eurozone membership test itself, of a budget deficit no greater than 3% of GDP.   They supported lending to Greece, supported Greece's fiscal profligacy (given their own) and engaged in their own wilful blindness of both Greece and their own failures to meet their own disciplines.   Reality ignored

European Commission

The EC got Greece hooked on the corporate and state welfare of its subsidy programmes and cohesion fund.  It supported Greece's growth of the state and addiction to the European project as part of its political culture.  The EC is adept at covering up its own embarrassments and at pretending things are what they are not.  The EC wont admit failure, wont admit the inherent immorality of its project of transferring wealth from the earned to the unearned, and of power from Member States to the unelected Council and Commission.   The European Central Bank is, of course, central to this.

Greek creditors

The banks that loaned to Greece believed they were lending to a watertight debtor.  They believed German, French, Dutch and other Eurozone taxpayers would cough up, if anything went wrong.  They facilitated Greece's overspending and expected to make money out of making taxpayers pay up - whether they be Greek, or other Europeans.  They pretended governments couldn't go bankrupt, the "bailout" deal is based on them swallowing a 50% write off of the debt borrowed to date.

What now?

The bailout is doomed, quite simply because Greece is still overspending, its economy is on its knees and the banks that have loaned to Greece will be forced to face a larger than 50% cut in their loans.   It isn't enough and can't be enough.  France and Germany are pretending they can fool the markets into having confidence, through the construction of complicated derivative lending instruments, akin to those blamed for hiding risk before the financial crisis of 2008.   

However, the collapse will come from the referendum on the bailout.

If Greek voters choose yes, they face short and medium term pain, in the form of a vastly smaller state and longer term pain, by being hooked to the Euro.   They could take a bitter pill of reducing their failed democratic socialist state and become a reformed, free market economy that is competitive, following the reforms of its northern neighbours (e.g Bulgaria).   However, I wouldn't count on it.

If they choose no, as it widely expected, then Greece will default.  It will be unable to borrow, the government will effectively shut down many activities, and is likely to be forced out of the Eurozone, meaning it will have to either create its own junk currency, or operate in Euros independent of the European Central Bank.  The price of that will be severe in the short term.  Any Greek resident who isn't moving their money into a foreign bank in Euros is gambling, because Greek banks will collapse.  Greece will face an Argentine style default so will have no budget deficits after that, but then it could reawake and be revitalised.

The Greece experiment in profligate democratic socialism will have been dumped - and eyes will be on the Italian, Portuguese, Spanish, Belgian and French varieties.

Oh and despite the vapid plaintiff words of some protestors, most of the blame for all of this lies not with the private sector but the political classes, and ultimately, the majority of voters.

The Eurozone crisis is not a crisis of capitalism - it is the dying gasps of a grand project of democratic socialism, and the first - weakest - branch of that tree is about to fall off.

I want to vote ACT

but I'm unconvinced.

Rodney Hide's record the past three years has been bitterly disappointing.  I am glad I didn't vote ACT in 2008, for I'd be, in part, to blame for the gargantuan planners' wet dream called Auckland Council.  

However, ACT has purged Rodney Hide and installed Don Brash, a man for whom I have immense respect, a man who almost single-handedly rescued National from near oblivion to near victory in 2005 - a mission that failed because of the National Party and some ill-advised campaigning.

The candidates are largely a fairly impressive lot.  Brash and Isaac top the bill rightfully, but there are two issues.

Firstly is John Banks.  How he got admitted to be a candidate is beyond me.  Peter Cresswell says much of what I think of him.  It's not that he's a bad man, he is certainly interesting, but he is not a lover of individual freedom.   Indeed, his profligacy as Mayor (remember how he once opposed the grand plans for Auckland's rail network then supported them?) is not what you'd want from someone seeking to keep the National Party's spending in check.  Actually, as a man who held Rob Muldoon as a figure of respect, you'd already be wondering why he could ever be trusted to help reduce the size of the state, and that's ignoring his vocal and solid opposition to the Homosexual Law Reform Bill in the 1980s.  

Now it wouldn't be so bad if he was an electorate candidate in Whangarei, and lower down the list, but he isn't.  He is ACT's lifeline.  ACT is betting on him winning Epsom to stay in power, so ACT will owe John Banks everything.  Now I'd like to think the people of North Shore might choose Don Brash instead, but Banks is still number three on the list.   In other words, he is hard to hide from.

Choosing Brash as leader appears to be in part a purge of gutlessness and the remnants of pro-state conservatism, but why include John Banks?  Nobody can pretend he has a profound belief in smaller government and individual liberty.  Similarly, what delusion can ACT have that Banks is some sort of high profile "celebrity" candidate, in the mould that Hone Harawira, Jim Anderton, Winston Peters and Richard Prebble have been for minor parties before?

Let's say I swallow Banks and look at policy.  How does that look?  Let me rank the policies out of 5.  1 being virtually worthless. There are 18 policy areas, possible score of 90.

Defence - Positively allowing nuclear powered ships, and strengthening the armed forces, including rebuilding relationships with the US and Australia.  4 out of 5.

Economy - Cut spending to 29% of GDP (the level Labour left the country at in 2005), cap spending increases to inflation and GDP, cut regulation and privatise.  Hardly bold.  Nothing on flat tax. 2 out of 5.

Education - Increase school autonomy, increase state funding of independent schools, increase school choice in assessment systems, more scholarships for underprivileged children.  Less ambitious than National's 1987 manifesto.  1 out of 5

ETS - Remove agriculture from ETS and suspend the rest till majority of trading partners have caught up.  A quite respectable approach.  4 out of 5

Environment - Push road pricing, market pricing of water, support mineral exploration and "acknowledge" the role of voluntary groups.   With RMA elsewhere, this largely looks positive.  4 out of 5

Health - Encourage competition, target subsidies on the poor, reduce taxes so people can buy health insurance, review occupational licensing and reduce bureaucracy.  Promising, but a bit vague.  3 out of 5.

Immigration - Lower administrative barriers to entry, favour productive workers, ensure it is no drain on the welfare state.  Reasonably positive, although somewhat vague.  3 out of 5

Law and order - Review procedures around self-defence, consider re-introducing Sentencing Council, sanctions for prisoners who reject opportunities for rehab/education, "broken windows" approach, victims to receive reparation payments.  Nothing on victimless crimes or National's authoritarian approach to drugs.  1 out of 5.

Local government - Pressure local government to focus on core role, reduce restrictive land use planning.  Less policy than before.  Such an opportunity to reform!  1 out of 5

One law for all - Allow more choice in education and health (yet not really mentioned much in either policy), accelerate Treaty compensation process, remove RMA requirement to consult by race, no Maori seats, no local authority Maori seats and no statutory boards.  It goes much of the way there, but could be clearer. 4 out of 5

Primary industries - Reduce spending, dump ETS, streamline RMA.  It could be worse, but could include property rights as well.  3 out of 5

Regulation and red tape - Continue Productivity Commission, pass Regulatory Reform Bill, reform RMA.  Could have been a long list, but it is aiming the right direction 3 out of 5

RMA - Separate planning and approval functions from councils, limit consents fees, widen powers to order costs against objectors, increase rights to compensation from planning decisions, removing "intrinsic values" from consideration.  Nothing on property rights, but otherwise it is a positive step forward. 2 out of 5.

Spending cap - Pass Spending Cap (People's veto) Bill, promote culture change and innovative policies.  Not a lot to say about this.  A step forward, but not nearly enough. 3 out of 5.

State owned assets - continue a rational evidence based debate about the government's role?  Well yes, but you can do better than that.  Much better.  You say so in economic policy, so I will say a 3 out of 5.

Tertiary education - Remove fee caps, introduce market interest rates for student loans, open trade courses to competition, lower taxes so students can pay back loans quicker.  A useful step forward, but not more so 3 out of 5.

Transport - Invest in projects with higher benefits than costs, embrace better pricing, streamline the RMA for building infrastructure, push government to invest in any modes.   RMA streamlining shouldn't interfere with property rights, and the government should be investing less. What about the private sector?  Disappointing 2 out of 5.

Welfare - Youth minimum wage, tougher approach to welfare, reform Working for Families, and more detail.  Definitely the best thought out policy of the lot.  A generous 4 out of 5

50 out of 90.   Is that enough?

I wish I could say yes, but there are three things missing.

Property rights

Where are they? Where is putting property rights at the centre of the RMA?  This should be central to any liberal party.  They are alluded to, indirectly, but why just that?

Tax

Nothing specific about taxation, about reducing it, about flattening it.  Yes, spending caps are all very well, but there isn't even a focus on deficit elimination and then lowering taxes.  That is disappointing.

Victimless crime

I don't expect legalisation of drugs, but I do expect something to be mentioned.  I do expect a review of criminal laws to consider how there might be a reduction in regulation overall and interference in people's private lives. 

It's a shame.  I wanted to vote for ACT,  I really did.  I like Don Brash a lot.  He could make a very positive difference to a government,  but what I've seen so far is very very disappointing.  Can it be saved?

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.