France in denial on its long path of stagnation

The Economist got it right when it had its cover page with the very title “France in denial” and today City AM’s Allister Heath said it more clearly about the French Presidential election:

“The useless Nicolas Sarkozy was given a bloody nose; the awful, economically illiterate Francois Hollande is in the lead...there is no pro-capitalist, pro-globalisation, low-tax, Eurosceptic, outward looking party in France... what passes for the centre-right in France is social democratic and fanatically pro-EU”. 

 Quite. A look at the candidates for President says it all. If I was French I couldn’t stomach any of them. Of the ten candidates, three are communists (Melenchon, Poutou and Arthaud), one is fascist (Le Pen), another a conspiracy theorist/quasi-fascist (Cheminade), two are liberal socialists (Hollande and Joly), one is a soft "moderate" socialist (Bayrou) and the other two are conservative "Gaullist" socialists (Sarkozy and Dupont-Aignan). What a choice! It's about "how would you like your more government sir, with a red flag, black shirt, green banner or just some more tax and protectionism?" 

Whether they embrace the EU or reject it (and there are plenty in that group rejecting it, because they see the EU as a free market capitalist project), they all support an economic nationalist fortress France, they all support more taxes (Sarkozy’s “austerity” programme has been mostly about tax increases and he embraces financial transactions tax), they all reject free trade - the free movement of goods, services, capital and people. They all, to a greater or lesser extent, paint the bogeyman not overspending governments that can’t keep their fingers off of the credit cards to bribe voters with borrowed money, but the new scapegoat “the bankers”. They all paint any alternative involving less government as “failed Anglo-Saxon” policies, despite the fact that manufacturing as a share of GDP is the same in the UK as in France, it is just the UK industries are more numerous and smaller than the grand state owned or subsidised industries that are national champions. 

The French story is one of despising capitalism, but as the Economist points out, it is rather contradictory:  

The French live with this national contradiction—enjoying the wealth and jobs that global companies have brought, while denouncing the system that created them—because the governing elite and the media convince them that they are victims of global markets. Trade unionists get far more air-time than businessmen. The French have consistently been told that they are the largely innocent victims of reckless bankers who lent foolishly, or wanton financial speculators, or “Anglo-Saxon” credit-ratings agencies. Mr Sarkozy has called for capitalism to become “moral” so as to curb such abuse. Mr Hollande has declared that his “main opponent is the world of finance”. Few politicians care to point out that a big part of the problem is the debt that successive French governments themselves have built up over the decades.  

The forthcoming contest between Sarkozy and Hollande is really a matter of how much more socialism do you want for France? Bearing in mind that part of France’s socialism, its molly-coddled rural sector, is actually funded by German, British and Dutch taxpayers through the EU. If Sarkozy wins, and he unilaterally implements a financial transactions tax, he will chase the financial sector from Paris to London and Zurich tout suite. If Hollande wins, he will do that and more, with a new 75% top tax rate (at 1 million Euro) just to make sure the message is clear – France doesn’t want really successful entrepreneurs (which of course, the 250,000 or so French expats in London already know), and he is looking to lower the pension age, just when it is clear how big a demographic problem France has in paying state pensions in the future. 

What both offer is a different speed of the process that Portugal, Spain, Italy and Greece followed for the past couple of decades, of growing the state, growing spending, growing taxation and pretending that this works. France’s GDP per capita ranking in Europe has slipped in recent years, now between the UK and Spain/Italy. It hasn’t run a budget surplus for nearly 40 years, and its visibility in the international marketplace for services is low, despite it being the largest component of the economy. Public debt is 90% of GDP, it has the largest state sector in the Eurozone at 56%. It has banks chronically exposed to bad debts in the Eurozone periphery which are grossly undercapitalised. Its labour costs are 10% higher than Germany’s, but French unemployment is 10%, Germany’s is 5.8%. France hasn’t had unemployment less than 7% for 30 years – putting a lie to the socialist myth of how caring a big state is with strong labour rights. The Economist suggests neither of the two leading candidates will address these structural problems: 

 “If Mr Hollande wins in May (and his party wins again at legislative elections in June), he may find he has weeks, not years, before investors start to flee France’s bond market. The numbers of well-off and young French people who hop across to Britain (and its 45% top income tax) could quickly increase. Even if Mr Sarkozy is re-elected, the risks will not disappear. He may not propose anything as daft as a 75% tax, but neither is he offering the radical reforms or the structural downsizing of spending that France needs.” 

 Furthermore, if France embraces an agenda of protectionism, closing borders, higher taxes and more subsidies within the EU, it will clash with the German, British, Dutch and Danish visions of what the EU should be. It will, fundamentally reveal what has long been the underlying tension in the EU – those who want to use it as a shelter and as a super-government to fund their own national rent-seekers, and those who see it as part of a project to break down borders of trade and travel (a third group see it as a source of money to milk while their economies are relatively poor - yet French farmers get three times the subsidy per capita as Polish farmers, as part of a compromise because expanding the Common Agricultural Policy to pay for 12 new states would have bankrupted the EU).

Germany calls the shots in the EU today and can be expected to block such nonsense, but what is next for France? 

Five years of Hollande chasing away business, with more stagnation, more credit rating drops and disappointment that he can’t mould the EU in the image of nationalist socialism? 

Or five years of Sarkozy fiddling enough to stop things sliding too fast, playing lip service to his own nationalist rhetoric, but by and large representing the status quo or slow progressive decline? 

What’s most repulsive is how popular fascism remains, seen now when Sarkozy – son of a Hungarian immigrant – talks of “too many foreigners” in France to woo voters from the seductively dangerous Marine Le Pen, despite he himself having spent five years embracing the political union that facilitates open migration among 27 countries. 

Or indeed the popularity of communism, with a sixth of voters choosing options that have been tried, tested and delivered misery and poverty across half of Europe. What does it say about the desperation of French voters who are swamped by the miasma of stagnation that they blame foreigners or businesspeople, and think a strong authoritarian leader will save the day? Where have we seen this before?  Fortunately, most French voters will never embrace fascism or communism proper, but they are almost infantalised to think politicians, with advice from those educated at the closed shop École nationale d'administration (Civil service school), can fix their problems with more laws, more spending and more taxe.  (Perhaps it is the philosophy behind THAT school that needs to be investigated)

Whatever does happen, one thing is abundantly clear, the future French President and forthcoming government will not be friends of capitalism, free trade or open markets. They will continue to seek protectionism at the price of French consumers and taxpayers, the unemployed and those who fund the EU. France will be the most strident force in international trade against free trade, less subsidies, more transparency and smaller transnational government. More strident indeed than even China. The question is to what extent it gets ignored and sidelined as it embarks on its continued process of relative economic delay, or if it ends up slowing the Western world down with it, given its prominent role in Europe. Given how central France is to supporting the growth of the EU project, and how it is the single loudest opponent of liberalisation of trade in agriculture, it is fair to say that, for those of us in New Zealand (and indeed in all efficient agricultural exporting economies), France will continue to represent the biggest stumbling block to getting progress in opening up international trade in agricultural produce and services.  For those of us in the UK, it remains the fervent cheerleader of a Federal Europe, and opponent of the UK vision of the EU as an open area for trade and business, rather than a protectionist fortress.

Editor supports individual freedom for the UK, but do the people?

I've written before about City AM, a free newspaper that is avowedly pro-capitalist. It has a circulation of over 100,000 in London, and is distributed across metropolitan London every morning (although to be honest just because I've always lived somewhere where it is distributed doesn't mean it is everywhere!).

Its editor Alistair Heath is a bright young finance and business journalist who shows he thinks well outside that world in his regular pithy commentary about public affairs, politics and economics.  He has successfully managed to become a regular commentator on BBC and Sky TV news programmes, and on a range of radio stations, so his influence is growing.  A breath of fresh air when the UK political discourse is dominated by so many arguing about what government should do, rather than whether government should do anything at all.

His latest editorial demonstrates he isn't just a man for the economy, but a man for freedom.  He writes:

LIBERTY. Freedom. When did you last hear these two words in the UK political debate? Well, I certainly can’t remember. Our country is dominated by busybodies and collectivists who believe that they and the state have the right and duty to tell us all what to do, to spend our money for us and to control what we can eat, drink, trade or say. It’s all gone too far. Individual freedom and its twin sister personal responsibility are the cornerstones of successful Western, liberal capitalist societies; yet these are being relentlessly undermined. Ultimately, there is no difference between economic and social freedoms. Attacking one endangers the other.

So this is my plea: let’s put the emphasis back on the individual. Let’s stop trying to ban everything. Let’s stop describing a tax cut as a “cost” to the government or – even worse – as morally identical to public spending. Let’s stop assuming adults should no longer have the right to eat fast food, or smoke, or drink, or paint their walls bright green, or build a conservatory in their back garden, or whatever it is they wish to do with their own bodies and with their own private property. Let’s once again speak up for the rights of consenting adults to choose how to live their own lives, even if we disapprove. Let’s allow people to hold, discuss or display their beliefs freely, especially if we disagree. 

I could easily just copy the whole lot, but it is worth a read in its own right.  Why should it come to this?

The examples of government seeking to boss people around and demonstrate the attitude of "we know best" towards citizens have continued to grow under the Conservative/Liberal Democrat government.  Despite early claims of a "bonfire of regulation" touted by the Liberal Democrats, it is clear that any pretensions towards individual freedom from that party have gone up in the smoke of pragmatism.  Politicians so easily outwitted by Oxbridge educated bureaucrats find it difficult to fight on principle, and as Conservatives who have had at best a checkered history of defending individual freedom, especially since David Cameron started the "transformation" of the party into an bullwark of environmentalism and activism, treat freedom as something you declare when the other lot are in power. 

Examples in recent months of clampdowns on freedom include:

- Proposals for new powers to require all telecommunications companies and internet service providers to retain records and  make them freely available to the security services of all phone calls, all emails and all internet website visits for all users for the past year.  The Deputy Prime Minister, Liberal Democrat Nick Clegg glibly reassures people that it doesn't include the contents of such communications, but the government will be able to access, as of right, records of everyone you every called, emailed and indeed everything you looked up online.  Of course you are meant to trust the Police, security agencies and indeed the whole apparatus of government not to abuse this to snoop on people's private affairs, inquire why people might search all sorts of words or visit certain websites.

- Proposals to force property owners to install energy efficiency measures if they build an extension or replace their boilers.

- A new law to prohibit the sale of tobacco in anything other than plain packs or to display tobacco in shops.  Already health authoritarians are demanding alcohol and fatty foods be treated the same way, or that there be a new fat, sugar and salt tax on"unhealthy food".

- Grasping measures to claim more tax from the wealthy by capping tax allowances for charitable donations, capping income tax free allowances for pensioners, imposing extortionate taxes on the sale of homes worth more than £2 million.

- Prosecutions for men who have made offensive and racist comments on twitter about footballers.

- Proposals for the state to recruit (as private contractors) tens of thousands of nannies to provide parenting support for those on low incomes.

- Fiddling with the planning laws which do little to change the need for the consent of ones neighbours, council and various interest groups to make changes to your own property that don't infringe upon the property of others.

The antipathy of politicians towards freedom does reflect a disturbing streak among some in the UK.  It was most visible when comedian Alan Davies said it was wrong for Liverpool Football Club to boycott playing on the anniversary of the Hillsborough disaster because similar events don't provoke similar abandonment of activity.  In response he received death threats and what would have been called (had it raised his race, gender or sexuality) hate speech.  People so angry they would threaten to kill a man because he expressed a different opinion.  A cultural attitude of absolute intolerance of those who offend you.  This is the sort of attitude seen all too often in public places when drunken ferile (typically young) men or women "take people on" because they think someone said something or look at them the wrong way, or they were "disrespec'ed".  A sense that one's view of the world, even the way people react around you, is a right that you can defend with force.

What does this mean? It means that there is an underbelly of grotesque intolerance about other views, an intolerance rooted in the justified fights against the state backed racism, sexism, censorship, sectarianism and bigotry of the past, but which now embraces an attitude not only of what is called "political correctness" (which the left deny even exists), but of generalised intolerance about those who offend others.  Some Muslims demand it, Christians are rightfully demanding they be treated with the same kid gloves as Muslims are, now it's people from regions and even the smug Scottish First Minister, Nationalist Socialist Alex Salmond has said the Economist magazine will "rue the day" it made fun of Scotland with a cover page depicting an independent Scotland as Skintland.   This is the language of Islamists upset about Danish cartoons, now being assumed by a leading politician.  

Is it any wonder that people across the country think it is ok to get angry and threaten violence if someone offends or upsets them?  

Is it any wonder that politicians think it is ok to regulate, tax and control activities, language and monitor communications that is contrary to the goals they want to achieve?

Allister Heath's editorial is welcome.  It should be replicated in the Daily Telegraph, which once ran a campaign about individual liberty - when Labour was in power of course.  

Labour presided over a 13 year period of ever encroaching state control and new laws, the Conservatives have shown they have been dazzled by bureaucratic promises that everything will be "ok" and threats that without new powers, people might die.  After all, every extension of the Police state would, of course, reduce crime (and who can argue against that?).  The Liberal Democrats meanwhile are no longer liberal in any sense of the word, and just a different sectarian part of the socialist brand unaffiliated with the unions.

It is time for Britons who do believe in freedom to stand up, to say no and to demand the end to the ever increasing calls to regulate, tax and monitor people's lives for their own good.  You wouldn't expect bureaucrats and politicians to tell you what to eat, what to wear, what to watch, what to say, where to go and who to associate with normally.  Yet that is exactly what they all do, to a certain extent, right now.

Politicians in the UK respond to one overwhelming trend - public opinion.  Only when the people who demand freedom shout loudest and demand to be part of the political discourse, will that opinion move and the erosion of freedom be stopped because voters don't want any more of it.

In the UK,  the Adam Smith Institute, the Taxpayers' Alliance, the Libertarian Alliance and the Institute of Economic Affairs are all at the forefront of taking on the statists.  It is time that more stood up for simple right to live one's own life as you see fit, as long as you do not interfere with the right of others do the same.

100 years ago today - a disaster in the making

Today millions of people will be commemorating an event that happened on 15 April 1912.  It wasn't uncommon in itself, having similarities to occasions that happened before and since, but over many decades it passed into legend.  Movies, books and songs have been written about it, and more than a few people have made it an obsession and a fascination.

The people who were injured and killed as a result of the chain of catastrophic errors that followed are themselves largely forgotten, except by the remaining relatives and friends of those who were lost. 

However, the hype that surrounds the event today is ridiculous.  It isn't something to be commemorated, for it has caused millions to be wrapped up in a romanticised version of events, that underplays (and even glorifies) the horrors that can't be denied.  Although it has sustained the careers of thousands feeding the industries surrounding it all, is it right that this be such a focus for so many?  

I was tempted to go to the place which is the epicentre of the commemoration of the event this year, because I know it would not be repeated on the same scale given it was a centenary, but decided not to feed this monstrous caricature of reality.

No it's not the 5th largest peacetime shipping disaster, more an event that spawned a man whose decisions killed millions and enslave millions today.  

A dictator was born.

The star in the sky commemorates the event for these folk

Brian Rudman - a little knowledge isn't dangerous, just ignorant

Brian Rudman is perhaps the most regular of the NZ Herald's columnists to comment on transport issues in Auckland.  He comes at it from a rather predictable standard point of view which blends the railevangelism of the Greens with the cynical populism of NZ First.  To be fair to him, he does a bit of research, but the conclusions he comes to shows a rather dire lack of understanding of economics, a paucity of depth of knowledge about the sector and an unfortunate tendency to be driven by faith rather than evidence.

His latest column is headlined "tolls alone won't unclog our roads".  The implication being that someone claimed that they would.   A more honest headline in response is "trains wont unclog our roads", since column after column he has been preaching the gospel of the church of passenger railways.

What he is talking about is a proposal to introduce new tolls on Auckland's existing motorway network to "raise revenue" tax road users to pay for Auckland Council's grand transport plans, much of which is to fund infrastructure for subsidised public transport services.

There are three substantive issues here:

1.  Is the NZ$11.7 billion "funding gap" real and justified?  (i.e. should that much extra money be spent on transport in Auckland? What is gained by that? Who are the winners, and are they the same as the losers?  Why should anyone trust Auckland Council on this?  Given that all of the future money taken from motoring taxes and rates is already taken into account, has anyone asked Aucklanders whether they are willing to pay more?

2.  If there is a gap, how should it be funded?  Should users pay more for infrastructure and services they will benefit from?  Should ratepayers pay for infrastructure that increases their property values?  Should existing taxes go up? Should there be new taxes?

3.  Should Auckland roads have direct tolls/road pricing introduced as a different way to charge for road use, which could also reduce congestion by introducing the price instrument?

Is the NZ$11.7 billion "funding gap" real and justified?

On the first question, Rudman fails.  He doesn't ask this question.  With some irony, the Greens are attacking (with some good reason) central government's Think Big highway spending plans for being poor value for money.  Neither the Greens nor Rudman apply a similar test to the Auckland Council project list.  For many years, the former Auckland Regional Council had unfunded transport wishlists, is it any surprise the new Auckland Council has simply grandfathered that wishlist and added to it?

He simply parrots the simple line that Auckland "needs more public transport " and the myth of "building the passenger transport options that might well help unclog the roads without the need to build more".  Might well? Where in the new world have major rail projects actually unclogged roads?  What city has accomplished this successfully?  It's a simple belief system - it is one the Greens share - but it is just that, a belief.  The bare fact is that no new world city has significantly reduced traffic congestion from construction of a new rail link - none.  Advocates may argue that congestion would be worse without them, but that's just hypothesis, and it isn't based on any significant difference in mode share from car driver to rail after a line has been opened.

So let's take the highest profile project that he and the Greens advocate - an underground CBD rail loop.

The Treasury/MoT report that reviewed the Auckland CBD underground rail tunnel states that this project, estimated to cost NZ$2.4 billion in capital, with ongoing additional costs of NZ$37 million per annum (although revenue offsetting that is not mentioned), will only reduce car trips into the CBD by 2,000 a day - out of a total of 40,000.  Now 88% of commutes in Auckland are not to the CBD.  That stark fact is constantly ignored by almost all advocates of rail in Auckland.

Of the remaining 12% around, 42% of motorised commutes to the CBD in Auckland are by car - yes a majority go by public transport now. You might ask why that is a problem.

So his pet rail project, will reduce 5% of 42% of 12% of Auckland commutes, which means only 0.25% of Auckland commutes will be shifted from car to public transport.  It's a brave person indeed who claims that is worth NZ$2.4 billion.

However, he completely blanks out the other effect.  The CBD rail project reduces bus trips to Auckland CBD by 10%, with double the number of people taken from existing bus services, both subsidised and unsubsidised, than from cars.  NZ$2.4 billion would in part be about shifting more people from buses than cars.  In short it is estimated to accommodate only 19% of the growth in future trips to the Auckland CBD.  The rest would be travelling by bus, car and ferry.  In his own article on this very report he blatantly misses this point by saying that other improvements wont be able to "cope with the predicted 32,000 extra passengers into the CBD in the 2041 morning peak. For that we need the rail loop." No Brian, only 6,000 of those 32,000 will use the loop.  It's deception to claim otherwise.

So it has a negligible impact on congestion, in fact the effect is so low it will be more than offset by forecast growth in traffic.  It reduces bus use more than car use, and only 1 in 5 future Auckland CBD commuters (which are themselves a subset comprising 1 in 5 of all Auckland commuters) would use it.

Even if you presume that all of the car commuters to the Auckland CBD benefit from the 5% reduction in car trips (and presumably a handful of fewer buses), that means that only 5% of all Auckland commuters experience a reduction in the negative externality of congestion.  So quite why should anyone pay over NZ$2 billion, plus ongoing operating subsidies, for 6,000 new rail commuters and for 5% of car commuters to save time (which they would do, on the margins), is a mystery.  It either hasn't occurred to Rudman (the report is rather clear on this) or he is evading it.

If there is a gap, how should it be funded?

However, let's leave that to one side, because his column does.  How should the money be raised if it was legitimate in the first place?  He doesn't spend much time on how it should be funded, rather how it should not be.

The solutions be posits are to both spend existing funds differently and raise new taxes from motorists.

He wants the state highway budget "redirected" towards public transport. Beyond the Puhoi-Wellsford motorway project, he isn't too clear on what other funded road projects shouldn't proceed.  In the past he has bemoaned other parts of the country getting money for roads, when his beloved Auckland can't get enough to pay for what it wants.  What he neglects is that outside Wellington and Tauranga, virtually all state highway projects are about reducing accidents, not reducing travel time.  However, he is an Auckland advocate so let's just accept that bias as being natural to him.  To be fair to the Greens, they do seek to abandon large swathes of road projects, including the Waterview connection, Puhoi-Wellsford and Waikato Expressway series of projects. 

For new money, he supported the regional fuel tax Labour tried to introduce, but which the National government scrapped.  This was a stupid idea, and tends to be embraced only by those with a paucity of understanding of such taxes and their role in New Zealand.

For a start, regional fuel taxes in the past have been opposed by oil companies because of the administrative cost in applying differential taxes for a commodity distributed nationally.  Service stations near the boundaries of Auckland (which most people wont be aware of) would be winners or losers for fairly obvious reasons if applied regionally.   National tried regional fuel tax in the early 1990s and had to abandon it because oil companies calculated the revenue that should have been collected based on consumption in the regions, but applied the tax nationally to save on the administrative costs and boundary effects.  Regional fuel tax for Auckland risks being applied nationally again, unless government applies stiff enforcement procedures to stop oil companies repeating this - which adds another cost.  Something Brian curiously ignores given his pleading on the cost of operating tolls.

Secondly, he ignores the effect on diesel.  There is currently no fuel duty on diesel, because diesel powered vehicles are liable for road user charges (RUC), paying in advance for distance travelled on roads based (shortly) on maximum vehicle weight.  There are various reasons for that, but what it means is that RUC, in its current form, cannot be applied regionally because diesel vehicles have distance bought before they travel regardless of where the roads are.  So regional RUC wont work for now, without a significant change in technology.  Regional diesel tax would mean the 36% of diesel usage off road would have to have a refund scheme (as applies to petrol tax), which imposes an administrative cost on the agriculture, industrial and fisheries sector to which this largely applies - unless Brian thinks that off road users of fuel in Auckland should pay for Auckland transport, in which case he is arguing to get rid of refunds for off road use of petrol and LPG as well (and why only abolish refunds in Auckland).   He simply wont be aware of these implications of imposing new costs outside the transport sector.

In other words, his bright idea for new money is full of holes, but since Labour tried to do it (against official advice) it must be ok, because he trusts politicians of a leftwing bent.

Should Auckland roads have direct tolls/road pricing?

Most of Brian's latest comment is a diatribe against road pricing.  That puts him firmly in a camp I describe as populist left-wing opposition to tolling - he shares this with NZ First.


I am, in principle, in favour of road pricing as a replacement for taxation of motorists, because it creates a direct relationship between the road user and road provider, sidestepping the interfering influence of politicians seeking to spend motoring taxes on pet projects.  However, from an economist's point of view, it enables the price instrument to be applied to roads.  That alone means road users can be charged directly for the costs of the roads they use, accordingly to the proportion of usage, according to the wear and tear they impose on the roads, and according to the vagaries of demand and supply.   Congested roads would cost more, managing demand, but generating revenue that might be enough to remove bottlenecks and build new capacity, or may simply mean off peak charges are lessened to spread demand.  It is this lack of the pricing instrument, which affects both demand for road use, and the funds to supply roads, that is the biggest single factor in facilitating traffic congestion, and the negative externalities from that in the form of wasted fuel and increased pollution.  Even when applied bluntly, the effects of pricing on congestion have been seen clearly in Singapore, Oslo, Stockholm and London.

It would appear Rudman is almost oblivious to this, or at best dismissive of it.


He claims tolling is "not fair", because he doesn't believe Aucklanders should pay more for their roads and public transport than other New Zealanders.  Rather odd that, if Aucklanders actually wanted more roads and public transport than other New Zealanders, they shouldn't pay.  Who should pay?  Aucklanders pay more for land and property now, does he suggest people living in Oamaru pay a land tax to equalise it, or should Auckland land be subsidised? However, this is a man advocating a REGIONAL fuel tax, which would mean Aucklanders would pay more.  He can't make his mind up. It is a specious "argument" worthy of a drunken talkback caller.   Aucklanders should pay for the transport they want, maybe if they did, they may want less of it (and nothing could be "greener" than that).

He repeats the claim by Chairman of Auckland Council's business advisory panel Cameron Brewer that "tolling is a flat tax that hit the poor the hardest".  Yet I have never seen Brian advocate that poor motorists get a discount on their petrol tax (the equivalent to a toll now), or discounted train fares, or discounted phone line rentals.  Why is a user charge for one service a "tax" when it doesn't apply to others?  Again, a specious argument.  Even though Brewer's sensible suggestion that "it be levied at a reduced rate for service sector shift workers in off-peak times" has economic merit in that tolls should be lower at times of low demand.  Brian's regional fuel tax, which would be paid most by those in least fuel efficient (i.e. old) vehicles on slow lengthy trips would be paid more by them, but he blanks out even considering that.

His next claim is that tolling targets private motorists, whereas commercial road users and councillors (cue NZ First type rhetoric here) can pass it on.  Well what would a regional fuel tax do Brian? 

However, moving beyond this rather facile rhetoric, his big opposition to tolls appears to be because the collection costs are higher than fuel tax.  Now I've already fisked him on fuel tax given that the regional fuel tax would cost more than he thinks, and so would mean costs for administration by both government and oil companies, and for those off-road users of diesel facing a new refund regime.  However, he does use both the Northern Gateway toll road and the earlier Auckland Road Pricing Evaluation Study work to back up his claim that, yes indeed, having a direct customer relationship with users one by one and being accountable to them is more expensive than a tax.  However, as I have written before, the costs now claimed are for a government specified bespoke system that is far more expensive than it should be.  Work I've done elsewhere indicates the costs of collection can be much much less if you have the volume to sustain it and outsource much of it effectively, like utility companies do.  So this argument is less worthy that it appears on the face of it.

Yet the real benefit of tolls, compared to taxes, is that they can charge according to costs and demand.  The benefits to Auckland of road users paying tolls to use roads, compared to more taxes, is that they could be charged more for roads close to capacity and could be charged less for roads at off peak times.  This can spread demand, encourage use of other modes at peak times, and cause people to think again about whether it is worth using that rather expensive piece of infrastructure when it is highly priced.   Yes for "revenue" alone it isn't clever, but if that was the only measure, then electricity would be free and everyone would have paid for it through their taxes, so would phone calls etc.  The effect on use of electricity if it was paid for through your rates or income taxes would be dramatic.

To be fair to him, he is right in quoting the Auckland Road Pricing Evaluation Study work in opposing tolls on the motorways only.  I don't believe this can be justified in Auckland today, but I do believe that a shift from rates and fuel tax based funding of roads to tolls is justified.  The issue is how that is done (privatising Auckland Harbour Bridge might offer a clue).

If Auckland did have largely privately owned roads, charging usage on various basis (e.g. tolls, distance charging, property access charges), it would transform transport in Auckland, particularly by eliminating rates funding of roads (cutting your rates by 10-15%) and fuel taxes (cutting fuel prices by 20%).  It would mean users of main roads at off peak times would probably pay less, whilst at peak times they would pay more.  It would mean buses wouldn't need bus lanes in most locations, except where bus companies were willing to pay for special access.  Truck operators would probably change times of travel.  Short car trips would be more likely to be replaced with walking and cycle trips.  The legacy railway might even have a financially sustainable life, somewhere where it parallels road corridors too expensive to expand (or it gets taken over by them).  

Quite simply, it is Rudman who doesn't have a transformational state of mind.  He, and the Greens, are trapped in tired old solutions implemented en-masse in the United States in the 1970s and 1980s that have failed - in the form of new government provided rail transit systems.  He ignores road pricing, like it was ignored then (except at least then, technology was a bigger limiting factor than it is today).  He swallows the hackneyed and overused line that "building more roads leads to more traffic" (given Auckland has had a lot of new roads lately but no more traffic, he has failed to join the analytical dots).  He wants taxpayers to spend a lot of money for what are pet schemes, whilst he resists economics and employs contradictory arguments.

Auckland's transport could be transformed, with technology, pricing instruments and a more commercial and market oriented approach to the provision of infrastructure and services.  Cities from London to Stockholm to Singapore to Tehran even, have had success in better pricing of roads to reduce congestion, yes reduce.  New technologies in San Francisco and Los Angeles are offering real time information on parking availability with the scope for dynamic pricing of parking.  Bus rapid transit has demonstrated enormous success in Auckland in limited form as it is, and has also been a success in cities in the US, Brazil, Germany and Australia.

It is overwhelmingly clear that the advocacy of rail in Auckland is not about transport policy outcomes, but a broader agenda that is about intensification of the Auckland CBD, moving more Aucklanders into high and medium density housing, for environmental policy reasons, and because of a warm fuzzy feeling that electric trains are just great, but cars and roads are just wrong.

It isn't about Aucklanders making the best choices about how to get around based on the costs of travel, it isn't about balancing what people want in homes, businesses and leisure activities, it isn't about real environmental outcomes (because road pricing would deliver a bigger constraint to sprawl and reduce pollution due to traffic jams, than any rail scheme), it is about grand centrally planned visions that look nice in drawings and in theory, but don't actually deliver the real-world trade-offs people actually want.

The biggest irony is that the greatest beneficiaries of this agenda, if it gets pursued, are owners of commercial property in downtown Auckland.  Now they are far from willing, it would seem, to pay for more than a tiny fraction of the grand CBD rail project.   Is it not ironic then, that Rudman and the leftwing promoters of this plan are advocating a massive transfer in wealth from taxpayers across the country, to this small, some may say, elite group?

30 years since the foolish Falklands War

30 years ago a nasty little fascist military dictatorship launched a vain war to conquer a collection of islands 460km away from its territory.  The purpose was to rally a shallow machismo-like nationalism to divert attention from the economic disaster and oppression that it had brought to the people it pushed around.

Today its successor regime, democratically elected, and far closer to Western values of freedom and individual rights, is playing the same game.  Engaging in shallow machismo to demand that islands that are inhabited by people who don't want to be ruled by them, are handed over to them, and effectively commemorating a war that, by implication, it considered to be just.

For a woman called Cristina Kirchner, ruling a country in South America, to talk about colonialism is comical.  For the claim Argentina makes is because of its past Spanish coloniser (and her late husband's ancestry is no more linked to that land than it is to Spain).

Let's make it clear.  Britain discovered the Falklands, but France later established a separate colony on the Falklands that Spain acquired in the late 18th century.  Spain attacked the British colony, but a peace treaty divided the island.  However, subsequently both Spain and Britain abandoned the islands although leaving plagues indicating their claims.  Subsequently Britain returned, and Argentina attempted to do so, claiming Spain's authority.  It failed.

However, today countries don't fight territorial wars of conquest.  The Falklands have a permanent settlement of virtually entirely people of British descent.  Under the principle of international law known as self-determination, the future of the islands should be decided by those who live there.  As they have repeatedly made it clear, they want to remain under British sovereignty.   It's hardly surprising, given almost all of Argentina's post independence history has been pockmarked with dictatorship of both fascists and socialists, hyperinflation, corruption and economic illiteracy.  Kirchner has continued this tradition.

She has managed to reintroduce import licensing, constrained exports of food with export quotas and taxes.  Importers have to follow bizarre rules, that economic nationalists would be proud of, in that they need to export the value of the goods they want to import.  Absurd arrangements are set up as exporters make money by setting up multiple businesses to help importers get the foreign exchange they want.

Kirchner's regime in 2008 nationalised private pensions to help balance the budget, so she is a long proven thief, but a thief that commands enough patronage through subsidies, welfare and other transfers that she has managed to get re-elected.  

In fact, it has even started lying about its inflation statistics to the point that the Economist has stopped reporting it.  Argentinian politicians have long been adept at stealing from their own people through inflation to the point that the US$ is the preferred currency in the country.  Inflation is really around 25% despite official reports of less than 10%.   Of course the result of the preference to the US$ is strict monitoring of currency conversions with tax inspectors especially focused on such transactions.  The result is that larger companies arrange their affairs to minimise liability, small ones and individual Argentinians get their savings thieved either by inflation or Kirchner's patronage based administration.

Argentina's economy isn't stagnant, the rise in commodity prices has meant that revenue from mining and agriculture has kept the country afloat, yet Kirchner's profligacy has wasted away a period when the country could have boomed.  It could have built an economy like Chile, by doing away with patronage laden monopolies, trade licences and subsidies, and liberalising, but it refused.  It has even told RIM and other mobile phone manufacturers they must assemble phones in Argentina.  A few are proceeding to do so, at high cost, obviously creating less jobs than they are costing by raising the price of mobile phones.   The economics that brought Argentina from 2nd highest per capita GDP in the 1940s to third world are being replicated.

It's hardly surprising, she is allied to that poseur and economic lunatic Hugo Chavez, who helped fund her electoral campaign. 

So now she is using the Falklands to distract attention from the accumulated economic cost of her kleptocratic policies.  It is a tiresome expression of Latin machismo and bluster.  Argentina hasn't remotely got the means to militarily take the Falklands, and her interest is in vacuous nationalism, and to claim the oil and gas reserves that she claims are "polluting" "her" country and ocean.  They wont be if she was running them of course.

The fundamental issue with the Falklands is that self-determination is about what the people of a territory want.  The people of the Falklands want to remain British, not least because Argentina's unstable history of dictatorships of the left and right, kleptocratic lying corrupt regimes whether elected or not, is hardly conducive to closer relations.  Why would farmers on the Falklands want to pay extra taxes to export, or deal in the worthless Argentinian peso, or face the patronage laden courts, police or the socialist eccentricities of a country which elects Presidents who care more about their own pride and posturing than about their people.

That is why the Falklands will remain British for now.  For until Argentina and Argentinians create a country, a political culture, an economy, a legal and constitutional framework that people want to join, they will seek to remain part of the UK.  For however flawed it is and however distant it is, however slow its economy, however much of its glory is in history, Britain is still less corrupt, more stable, more dependable, and respects individual rights and freedom more consistently than a young post-colonial Latin American republic, barely a generation away from military dictatorship.

It is for that that good men and women served to defend the Falklands from the frightened young men of a military dictatorship 30 years ago.  The sacrifice and effort of those who defended the Falklands are to be commended and remembered, the loss and tragedy of those who were forced to fight the petty little war of Galtieri is sad.