Being rational about privatisation

If there is one issue that is guaranteed to result in hyperboles, reality evasion and emotive banality from New Zealand’s left, it is raising the issue of privatisation of state owned enterprises. I think sometimes that those who claim to be “centre-left” are really hardline Leninists, who react as virulently as Mao’s Red Guards to those who don’t follow the “correct line”.

As a libertarian, I don’t believe the state should be engaged in owning and running businesses at all, because nobody should be forced to have their money tied up in any business. Some businesses the state owns are unviable in their own right and should either shut down, or be severely scaled back. They destroy wealth, and sustaining them is nothing more than taking from taxpayers to subsidise the customers of these businesses, who would otherwise either pay a full market price or go elsewhere. Kiwirail being a good example. If it was properly privatised it would still exist, but not on the scale it currently is at, which is driven by politics, not economics. Bear in mind though that key competitors of Kiwirail are state and local government owned, in the form of roads and ports. This significantly blurs questions of fair competition.

Others are profitable in their own right, but are constrained to expand because they don’t have enough capital and because the state, as a shareholder, tends to resist such expansion. Winston Peters stopped the Airways Corporation, an efficient operator by world standards, from expanding into other countries. An outrageous destruction of opportunity by a New Zealand company that could have taken its international best practice and earned foreign exchange from doing so. NZ Post is in somewhat of a similar position, being an excellent operator which was shoe-horned into entering the local banking sector by Jim Anderton, instead of entering foreign postal markets where it has true world-class expertise.

Some undermine competition and investment from the private sector, because the private sector knows state owned companies don’t fail. Ask yourself why there has been next to no new entry in the electricity generation market as the state has maintained ownership in 70% of generating capacity. Indeed perversely, after nationalising Air New Zealand, the last Labour Government deliberately tried to engineer the suppression of competition in the New Zealand aviation market, by promoting a Qantas part purchase of Air New Zealand. This would have effectively handed the state owned airline virtually all of the domestic, and 80% of the trans-tasman airline market. As it happens, competition authorities stopped the government creating this monopoly, which was not one of entrepreneurs, but the state colluding with a company that itself had its hands manipulating its government.

In cases where competition exists or can reasonably exist, it seems difficult to sustain any argument that the state should be in that market. Examples of this range from banking, to farming, retail energy production, exploration and supply, transport services, broadcasting outlets, telecommunications, postal services to housing. A state owned competitor at best can perform moderately well and be seen as any other player (how many people think electricity supply has been privatised and don’t realise most of the companies in the sector are state owned?). At worst it can distort competition and investment, as competitors see it as the player that cannot fail, even if it underprices and performs badly.

However, is there a case for the state owning any businesses, particularly ones some economists refer to as “natural monopolies”? I would argue no, and measures can be taken at privatisation to manage this over the medium term (such as requiring certain terms and conditions to be applied to competitors, and transitional measures of price control such as happened with Telecom). Yet this isn’t the issue presented by the Prime Minister’s announcement.

He is talking about a part-privatisation of five government companies.

One, Air New Zealand, is already part privately owned, because the last Labour government did not nationalise all of the shareholding. Given the Labour Party sought to sell 20% of Air NZ to Qantas (and Qantas did acquire 5% which it has since sold), the credibility in opposing any sell down of Air NZ is completely empty. Air NZ faces intense competition in some parts of its business, particularly Trans Tasman and long haul traffic to/from Europe. However, it isn’t individual kiwi shareholders it needs, it actually needs a massive injection of capital so it can expand and work more closely with its foreign partners. Whilst it has performed adequately, this is a highly volatile sector, and the airline is weak if it does not have strong support from highly capitalised partners.

Another, Solid Energy, is a commodity producer and exporter in a competitive international market. Some people find what it produces (coal) to be immoral, such as environmentalists. Quite why they should be forced to own a coal mine is beyond me. Quite why the Greens think so is beyond me even more. Solid Energy isn’t a great performer, it doesn’t make a good return on its capital. It has been erratic in paying dividends. There appears little value in the state holding onto it.

The other three are competitive electricity generators and retailers, Mighty River Power, Genesis and Meridian. They all compete with each other, and with the main private generators/retailers Contact and Trustpower. If it is fine for the private sector to have 30% market share, you may wonder quite why it can’t have all of it. Providing adequate power generating capacity to meet demand is a serious issue, and one that isn’t facilitated by companies that dominate the market but are themselves undercapitalised.

By no means would part or even full privatisation of any of these companies deliver harm to consumers, but are taxpayers losing out?

Well it depends on the following:

- Are the companies constrained from success by a lack of capital? In all cases, the answer is probably less. Extra capital means government borrowing or more taxes to “invest”. I doubt whether really faced with the question, most New Zealanders want to be forced to do this.

- Are the companies making returns better than the government debt their sale would retire? Bernard Hickey says yes, but I’d argue that this snapshot is a poor representation of the long term capital value. Solid Energy and Air NZ have not been good returns over a longer period, so these can be ruled out.

So if the electricity companies are making good returns does it still mean the state should hold onto them, because they make more money than the interest on debt that would be saved if they were sold? Well no. It does not make it moral to continue to force people to indirectly “own” any companies at all.

You see the underlying premise of state ownership of companies is force. You are all forced to have a stake in these companies, without actually having any of the privileges of ownership. You don’t get a dividend, the state uses it to spend on what it chooses (which the left assume you benefit from, but it is all in the mix). You get to inject money into the company without your consent. Most of all, you simply can’t get out of this deal and use the money yourself, since you may make more money if you simply had the money in your own hands.

Which raises the question of whether privatisation might better be carried out in some cases, not by selling shares, but by issuing them to New Zealand citizens in equal quantities. That would be true public ownership, and then the “average” “ordinary” “Kiwi Mums and Dads” or whatever sugar-coated adjectives are used, can decide using their own minds, whether they want to be shareholders in power companies, banks, a postal operator, farms, service stations, a railway, an airline etc. Many will want to, many would rather use the money to pay their mortgage, or put into their own business or put into savings. What would be wrong with that, except that an awful lot of socialists don’t actually like people making their own decisions with their own money, because they want to make the decisions for them.

So when the left talks about thinking about the average person, what they are saying is they want to think for them. Ownership by the public is not what the left wants, it is ownership by the state, controlled according to what politicians think is good for the public.

Paternalism pure and simple.

Who in Haiti and Malaysia can aim and fire?

For that's what Jean-Claude Duvalier deserves.  It is the least Haiti deserves.  The Duvalier family are irredeemably vile, murderous crooks.  Even divorcing his repulsive thieving bitch of a wife doesn't make Baby Doc more acceptable.  The record of his family added decades to the poverty, suffering and death of this sad, but proud country.  A country that threw off the yoke of French slavery, but was punished by the West for over a century and a half, and after paying off the French, got handed the Duvaliers.

The same Duvaliers who used the country's tobacco monopoly as a personal slush fund to enrich themselves.   The same Duvaliers who spent US$3 million on their wedding ceremony.  The same Duvaliers who ruthlessly suppressed dissent, maintained a ban on independent media and promoted widespread corruption and patronage.

Meanwhile, Robert Mugabe is in a hospital in Kuala Lumpur.  Another answer to the problems of a nation is in the hands of the brave.

Bear in mind these people are proven murderers and thieves.  If they were not politicians, they would have been subjected to extradition treaties and be treated as the evil men they really are.   However, they are not "common" criminals, they are the extraordinary ones, that hide behind "state sovereignty" to protect their blood dripping hands. 

Both deserve at the most to be treated as criminals, but as they aren't common criminals, their crimes are indisputable, their role in making the law as they go along, means they have no right to that.   As with Saddam Hussein and Nicolae Ceausescu, they have forfeited the rights of human beings.  For the only legitimate use of the death penalty for me, is the removal of tyrants - as it is an act of self defence and revolution.

Greens imply Queensland to blame for floods (updated)

Whilst the Queensland floods have seen the media filled with stories of death, attempted heroism, homelessness and the callous mindless destruction that can be wrought by nature, most have been expressing sympathy and compassion for the victims.

Politicians across the spectrum in Australia are unified in their expression of the natural human emotions of compassion, and benevolence.  Genuine concern for the victims and willingness to do as they can to help.  The Australian Green Party has been no exception, supporting the Queensland Government flood appeal.

Not the Green Party of Aotearoa/New Zealand.  No, it's a chance to blog on climate change.

First, Russel Norman says climate change evidence is compelling and that events like the floods are more frequent because of it.  Even though the scientist quoted says "It certainly fits the climate change models but I have to add the proviso that it’s very difficult – even with extreme conditions like this – to always attribute it to climate change".  "He says the extremes being encountered in Australia this week fit climate change models, but it is too early to prove a direct link to changing weather patterns."  However, if you have the faith, believe in it brothers.  There could be a link, but that's about it.  Given the last flood on this scale was in 1974, unless such floods occur again in the next 5-10 years it would seem to be a weak link at best.

Second, Russel points out one of the key industries of Queensland is coal mining so says "It is also noteworthy that Queensland is one of the biggest coal exporters in the world and so is making a significant contribution to climate change."

Putting those two statements together is effectively saying  "floods caused by climate change, Queensland exports climate change, Queensland brought it on itself".

Finally, after blaming the floods on climate change, blaming Queensland for contributing to climate change, the school prefect in the Greens come out to patronise Queenslanders:

"I hope that, once the cleanup is underway and people have a chance to recover from the impact, the 2011 flood leads to a debate in Queensland about whether they want to continue to be such a big contributor to climate change given that climate change makes such extreme weather events more likely."

Yes, the fools, they should do better next time.  Not that I was elected to represent them, but I want to make a political point anyway.


Presumably if Queensland shut down coal mining tomorrow all that would happen is the price of coal would go up, tens of thousands would be out of work, millions would be poorer off and there would be still no protection from floods - funny that.

He ends it with a weak expression of support "Love to all my family and friends over there. – ‘74 didn’t take out Brissie and neither will ‘11!" I'm surprised he didn't throw in a "you should have known better that this would have happened".

Most politicians responding to natural disasters respond with expressions that show they give a damn about the human beings who are suffering and rebuilding their lives.  Russel Norman has done it to make a political point, to effectively blame the victims and hector them into debating how much of it was their own fault. 

This is from the same people that go on about how they, unlike others, put people first.  No, it would appear they put politics first.  However, it is not the first example this week of people on the political left using a tragedy to score points.

UPDATE: Russel Norman's response is, as before,  to misconstrue and ignore my point, then engage in an ad-hominem attack saying "I really do love the way “Liberty”Scott tries to shut down debate. Keep on writing LS I think you demonstrate nicely the kind of freedom that the far right believes in, and it ain’t freedom of speech!".  All I suggested was that blaming the victims for a disaster on the day people were being killed wasn't good taste, but as someone who plays the man not the ball, he doesn't appear to understand the concept of standing aside from politics in the midst of tragedy.   Then he calls me "far right" because it is all so easy to paint someone libertarian as fascist.

This being the same man who thinks non-ionising electromagnetic radiation from cellphone towers is an issue because it is about adding to "background radiation", but similar radiation from far more powerful TV and radio transmitters can be ignored.  So it is safe to say he has scientific credentials that wouldn't get him passing NCEA Level 1 science, which tells your something about the extent to which he can be taken seriously on anything to do with real science.

Only we can stir up bigotry and hatred

Once walking down a Wellington alleyway I saw a piece of graffiti which depicted Nandor Tanczos saying "everything you do is political".  A similar philosophy has seemed to have gripped some on the political left in a manner that is both inexplicably vile and hypocritical at the same time.  Even the Secretary of State claims that the murder was by "an extremist".  I'll leave aside thay apparently only the shooting of the Congresswoman is significant here, and that the shooting of a child and several others are hard to connect to any political motive at all - but then it would be inconvenient to even consider that.  Malcolm Harbrow doesn't even mention those killed in his own unhinged diatribe of bigotry.

The killer in question is clearly rather disturbed, with possible psychoses.  What about his politics?  Well as much as can be gleaned from evidence seen so far, it would appear they are as deranged and incoherent as his behaviour.  Some on the left have grabbed his hatred of the government, concern for the constitution and embrace of a gold standard as evidence he is a Tea Partier, yet conveniently ignoring his appreciation of The Communist Manifesto and Mein Kampf.  Him being an ardent atheist wouldn't exactly align him with most Republicans either.  Then there is a report that he believed he could fly.  There were signs he was interested in the occult, but he also loved animals.  Time to point fingers at similar people?

Yet this transcript of his Youtube posting shows even less coherency, with random obsessions with the currency (he wants a new "third" currency), literacy and that the government engages in mind control and brainwashing.  He burned an American flag on Youtube, an act frequently seen committed by leftwing protestors (and one they defend as free speech, yet decry burning the Koran).

How could anyone say this nonsense has any credible link with the Tea Party, Republican party, Libertarian Party or whatever?   He hated the government, but then those on the far left, religious extremists of Christian and Muslim hues and white supremacists all share this.  He liked the Communist Manifesto too apparently.

To make such an accusation is itself an act of hatred and bigotry, to tar a whole political group with the brush of blame for inciting the murders of a disturbed young man. 

The Tea Party itself has three core values:

- Fiscal responsibility;

- Constitutionally limited government; and

- Free markets.

Quite how that can be blamed for inciting murder is a stretch.  So the philosophical and political agenda of the Tea Party can hardly be said to be responsible.

However, those on the left cite the map with crosshairs as incitement to murder.  It isn't the politics, but the dialogue and the way it is expressed.

There are two problems with this leap of "logic". 

First, it applies the very same logic that the conservative right (and the feminist left) uses to justify censorship, on the basis that it incites people to commit crimes.  Media should be devoid of violence and sexual imagery, because it might "raise the passions to a height at which a weak willed man could not resist".  It has been used to claim that nudity incites rape, that young women wearing short skirts and revealing tops incite rape.  It carries the implication that criminals are not responsible for their acts, but rather "society" is to blame for creating an environment that incites them.  Some on the left claim that "society" is to blame for why someone might torture an infant after all.  This disconnect between actual events and actions of an individual and any sort of choice or responsibility is a dangerous form of determinism, and one that has long justified the actions of totalitarians who believe all must be controlled to ensure people act "responsibly".

If it were true there would be justification for controls on speech to limit language, given the danger that could arise from that.  Of course, the US has constitutionally protected free speech that has only few limits, which are around defamation and production of recordings of actual violent and sexual offences.  So any call to "tone things down" wont be about legal limits, it will be about "being polite".  Yet should political discourse be limited just because someone unstable could misinterpret it?

The second problem with this approach is the failure to look in the mirror.  You see the left doesn't mind using violent rhetoric itself, especially when George W. Bush was President. For years it used the same inflammatory rhetoric, in depicting George W. Bush as a terrorist, akin to Hitler and that the 9/11 attacks were a conspiracy between the Administration, Israel and the military-industrial complex.  This even includes a frequently quoted mainstream journalist.  The Guardian's TV critic Charlie Brooker wrote a review calling for the assassination of Bush ("John Wilkes Booth, Lee Harvey Oswald, John Hinckley Jr - where are you now that we need you?") , culminating it the text being removed from the website.  Jeff Jacoby of the Boston Globe outlined multiple examples of those on the left using extreme inflammatory language, such as an NPR leftwing journalist saying it would be "retributive justice" if the then Senator Jesse Helms or his grandchildren got AIDS.  More recently, plenty on the left put up placards that call for violence against bankers, or jokingly then seriously suggest it online. 

So the idea that rhetoric that could be interpreted as violent is a "Tea Party" "right wing" trend is sheer nonsense, when the left uses the same language, pure and simple.  Pot-kettle.

Indeed, if you want to stir up hatred and bigotry, then what do you call smearing a political movement with blame for a multiple murder?  What does that do to lift standards of discussion and debate?  In fact by pointing the finger so ridiculously at the Tea Party for the actions of an unstable young man, it is doing precisely what the left is accusing the Tea Party of - engaging in bigotry, hatred and viciousness.

The strengh of rhetoric from some libertarians (not the "right" as the Republicans in the US have been part of the problem) is because many are fed up with politicians borrowing and spending money that is not theirs, they are fed up with their own peaceful activities being taxed to pay to boost business, social or other interests that get listened to in government.  They are fed up with property rights being eroded and new laws being developed for the latest problem.

To end it, Jeff Perren's excellent post at Not PC has two very useful points.

Firstly, to reinforce the point that the reason some express political anger is because they want change to less government.  Not something many on the left (and some on the right) understand.   As long as there are politicians who want to spend more, tax more, borrow more and regulate more, there will be those standing up to say no, again and again.

Secondly, he links to the excellent Michelle Malkin piece showing explicitly violent rhetoric used by the left against the right in the US.  Then again, it's hardly surprising that the left has long excused violence used in its name to justify political action (e.g. threats and intimidation of so-called "scabs" at pickets), given it so warmly embraces state violence to accomplish its goals.

You see, when someone commits murder, with no clear motive, then the appropriate political response is, in fact, exactly what President Obama has done so far.  It was a crime, there was some courage shown by those who confronted the gunman, and the bigger concern is for those who have lost a loved one.

Let those who want to occupy the fetid sewers of hatred, bigotry, blame and hypocrisy wallow, and be shown up for the shallow opportunists they are.

Hungary leapfrogs to authoritarianism

Hungary has long been known as one of the countries that openly defied the Stalinist brutality and inhumanity that was imposed on it by Moscow after WW2, and having one of the first set of gutless mice who scurried off when Mikhail Gorbachev told the Soviet satellite countries that it wouldn't intervene if their regimes faced overthrow by popular acclaim.

Since then it has reformed, opened up its economy, joined the European Union and NATO, and made huge strides towards being an independent relatively liberal open country, with a vibrant civil society, embracing freedom. The old cliche that the price of liberty is eternal vigilance is only too true, as the coalition government of Fidesz-KDNP is proving too well.

The 2010 Hungarian election saw a collapse in popularity for the Hungarian Socialist Party, which despite its name (and being the partial inheritor of the old communist Socialist Workers Party), has helped lead many free market reforms in Hungary for some years.  The communist element left very early to form a tiny hardline party that has never done well.  The socialists had been in government in coalition since 2002.  However, the biggest blow to the socialists was in 2006, not long after the last elections, when a recording was released of the socialist Prime Minister, Ferenc Gyurcsány, openly saying his party had lied to win the election.  Mass protests erupted.  The government remained tainted and stank for the next four years, voters never forgave the socialists.  The 2010 election saw the socialist vote collapse from 42% to just under 17% of the vote.  Those votes had to go somewhere.

As a result, two opposition parties did comparatively well, Fidesz and Jobbik.

Fidesz has had a laudable history as one of Hungary's first independent political parties, being pro-freedom, anti-communist and youth oriented.  However, its electoral success was more limited as parties flourished after the end of one-party rule, so that it had a respectable 7% of the vote in 1994.  Then the party transformed into a conservative party, adding the name Hungarian Civic Party to its name.  It adopted an approach of social conservatism and greater nationalism, and grew to 28% support in 1998.   In 2010 it won the greatest plurality with nearly 53% of the vote, up from 43% (the socialists had been governing in coalition with the Alliance of Free Democrats, a liberal free market party).

Whilst Fidesz could govern in its own right with 262 out of 386 seats, it had campaigned jointly with the Jobbik party.

Jobbik (or Movement for a Better Hungary) was originally set up as Christian oriented conservative party, with strong nationalist credentials (although distinctly non-racial, rather culturally nationalist).  It was sceptical of EU accession.  The 2006 protests gave it a perfect platform to campaign on, as it simply said the communists are still in charge (given the socialists lied).  Jobbik claimed the electronic media was on the side of the government, so that it was ostracised unfairly.  It claimed crime was on the rise and needed to be addressed.  It developed a manifesto opposing free market capitalism, social liberalism and multiculturalism.  It promoted granting citizenship to Hungarians who live outside Hungary.  It was "very nearly" fascist, in that it avoided anti-semitism, anti-Roma and other such language, but was strongly pro-Hungarian.  It got just under 17% of the vote.

So Hungary elected a conservative government, with an ultra-conservative coalition partner.  It has sought to radically change the Hungarian state, and one of the early controversial moves has been the creation of a new media law.  This law creates a media regulator which judges whether TV and radio stations, and newspapers have provided "balanced coverage", and can fine or shut down those deemed to have failed.   The Prime Minister has evasively said this is "just like" other European countries.  It's not.  It is state control of the dissemination of debate and opinion, and it is unacceptable.

If that wasn't enough, the government has found a new way to address Hungary's public debt.  It is confiscating the private pensions of citizens (or rather saying "hand them over to the state or get no pension at all").   The current Hungarian system has some parallels to Roger Douglas's compulsory retirement savings account idea, although it retains a significant public sector component.

All Hungarians are required to put 8% of their salary into a private pension fund of their choice, another 1.5% is effectively taxed to pay for current state pensions.  Employers were also expected to make a contribution, with pensions received being a combination of private and state funded pensions.  Now it is being confiscated, and mixed messages are being given as to whether receipts will reflect contributions or not, the strong suspicion is that this is easy money.  The government has said it is about dealing with the budget deficit, a deficit not caused by people saving, but by overspending.  However, the same government is increasing state pensions and increasing maternity leave.

"Though the accounts are not linked to any underlying assets, an individual’s pension entitlement is tied to the sum recorded in that account, giving earners an incentive to contribute more. But the government’s most recent statements suggest the individual accounts will be no more than a regular statement of the value of the pensions contributors can expect to receive, with no relationship to contributions made."

In other words, a money grab. Unadulterated theft on behalf of the state. 

The EU has lodged protests about the media law, but not the state theft (which is unsurprising).  Given Bulgaria, Poland and Ireland have all embarked on related confiscations of pension funds to cover short term overspending, and the EU strongly supports state confiscation of private property, why be surprised?

The media law should be scrapped, and private pensions should be sacrosanct.  Indeed the only safe policy is to keep it completely out of state hands altogether.

Bear in mind that in New Zealand, the equivalent is a pay as you go pension, that promises you absolutely nothing, that pays nothing if you die before you retire, and bears absolutely no relationship to what you pay the state.  So no need to worry about state theft of your pension in New Zealand, it is simply par for the course as it is exactly what happens to anyone paying above the average amount in tax or dying before age 65!