We can’t rewind we’ve gone too far

DPF on the credit downgrade:

This makes it even more imperative that the NZ Govt gets back into surplus as fast as possible.

The issue is not government debt but net national liability – because private debt can and does turn into public debt at the stroke of Bill English’s pen. The challenge is to grow the damn economy at a higher rate than 0.1% per quarter, increase savings and decrease borrowing.

Meanwhile, this Stuff piece on our Prime Minister’s adventure in radio – an hour long PR stunt on a network his government loaned $43 million dollars for no good reason -  is one of the most acidic straight news stories I’ve read in a long time:

Just days after a New Zealand SAS soldier was killed in Afghanistan and as Standard & Poor’s joined fellow ratings agency Fitch in downgrading the New Zealand economy, Key is hosting an hour-long show on Radio Live.

A news bulletin during the show reported the second economic downgrade, but Key had not mentioned it by almost halfway through his show.

Key interviewed All Blacks captain Richie McCaw and thanked him for the way the team was going.

His next interview is with international business star Richard Branson.

As well as conducting interviews, Key also read the weather and gave the preamble to each segment of the show.

Key is scheduled to hold a press conference once his show ends.

Update: Via TVNZ:

Hosting a radio show this afternoon, hours after it was announced New Zealand’s credit rating had been downgraded , Key said Coronation St was “worth saving”.

“Who’s home at 5:30?” Key said on RadioLive.

He said he would talk to “someone important” at TVNZ about the change of timeslot.

It’s 4:30. The news starts at 6:00. Key has until about 5:30 to get an All Black to do something newsworthy, or he’s going to be a laughing stock in the lead story.

Dreams of recession

A couple of people sent me links to this clip of an unusually candid share trader on BBC, asking for my opinion. Allesio Rastani alleges that Goldman Sachs ‘rules the world’ and that traders dream of recession so they can make money from it, and he encourages ordinary people to do the same.

It’s true that some traders shorted the 2008 financial crisis and made loads of money. Michael Lewis wrote a great book about it called The Big Short, and Rastani seems to aspire to the same success as the characters in this book. But most of the financial world lost money in 2008. Lehman Brothers got wiped out. Bear Sterns went bankrupt the year before. Those traders weren’t ‘praying for recession’. Sure, most of the companies got bailed out, but that is no longer an option for most western nations, either financially or politically.

And if you’re hedging on recession, someone needs to buy those hedges.The ‘big shorters’ got rich by betting on the collapse of collaterised debt bubbles, because many experts and trading companies thought a market collapse was impossible. I don’t think many traders are going to get rich betting on market collapse in the next decade or so. Are any experts insisting that ‘Greece will never default’ or ‘a European banking crisis is unthinkable’? No.

It’s true that Goldman Sachs essentially owns both political parties in the US, and that makes them powerful in some respects. But they don’t control the decisions of central banks in China or Europe, which have a pretty massive impact on the global economy – arguably more than the US government does.

Update: Luke in the comments links to this Telegraph article explaining that Rastani is not really a trader, but a ‘motivational speaker’. Which makes sense.

Better lines needed

Via Stuff:

In spite of renewed calls to pull out of Afghanistan, Prime Minister John Key said this afternoon that New Zealand would not be honouring the deaths of  Leon Smith, Doug Grant and Tim O’Donnell if New Zealand pulled its troops out.

This is the stuff politicians say when they’re talking about the deaths of soldiers they’ve sent into combat. ‘We must stay the course, honour their sacrifice, they fought for freedom etc.’ And I think the politicians believe it, because they really don’t want to face the alternative: that they’ve sent men to die in the name of domestic political advantage and short term geo-political positioning to advance our trade and defence alliances.

But all that rhetoric really only counts when you’re in a conflict for the long haul, and you’re trying to achieve actual strategic outcomes. Our troops are in the middle of a complex civil war, in which New Zealand has no stakes whatsoever, and we’re pulling our SAS troops out in six months time anyway. So, somehow, pulling out now would dishonor the deaths of our soldiers – but pulling out in March, when the strategic situation is likely to be the same, or far worse, won’t.

Dumbest scare campaign ever

The Herald sums up the submissions to the Government’s Video Camera Surveillance select committee:

The committee also heard from Police Commissioner Peter Marshall, who said evidence was being lost and safety put at risk.

“I am aware of a particular situation which involves the safety of community members and we have been trying to identify a particular offender. It is a serious top-end scale offence likely to be committed.

This is the crux of the argument put forward by the Police, the Prime Minister and the Attorney General: ‘if we don’t give fisheries officials legal powers to install secret cameras in the home of private citizens, lives may be lost!’

So let’s talk about risk to the community. The police obviously consider Valerie Morse a risk to the community. They charged her with terrorism! That charge was thrown out by the Solicitor-General, and the Supreme Court dismissed the other charges against her because the police made an informed decision to break the law when they collected evidence against her. Because the police acted illegally, someone they consider a terrorist is at large! Haven’t they put us at terrible risk? When do we see some accountability on that score?

As far as the actual bill, I see this in terms of real-politik: the civil service is always eager to expand its powers; Judith Collins is an authoritarian who believes in the limitless expansion of police power for its own sake; Key is a pawn of his officials, and Finlayson is so desperate to become Justice Minister he’ll happily tear up his reputation as a legal expert to do so.

But let’s say you’re a National supporter, and you think the government is acting out of principled, selfless motives – they’re just trying to protect us! But National won’t be the government forever, and this sets a dangerous precedent for all future governments. Are you happy for a Labour-run government department to knowingly act in an unlawful way, then retrospectively change the law if they get caught out by the courts?

No longer a national treasure

There’s a useful point to be made in the Terry Serepisios saga, and that’s that this is how our economy works. We have booms and busts and speculative bubbles, and some risk-takers make large fortunes during these cycles while some go bankrupt, and some fortunes are lost on the down-turn, and some aren’t.

But for various reasons, our society idolises risk-takers like Serepisios when they’re at the top of the cycle. They have all that money! They must possess superhuman wisdom! They must know the answers to all of societies problems! And, famously, Serepisios was the star of a reality TV show screened by TVNZ called The Apprentice, which was based on the premise that he was a financial genius instead of a risk-taker who managed to stay on the right-hand side of the wealth curve for several years during a speculative property bubble.

Which is not to deride speculators – the economy needs them – just the popular view that the (temporarily) successful ones are gods amongst us, we should structure our entire economy around their whims, they shouldn’t have to pay any tax, etc.

Cough

Via The Herald:

New Zealand’s main centres have the worst air in Australasia and Auckland is the most polluted with twice the concentration of damaging airborne particles as Sydney, the World Health Organisation says.New Zealand’s main centres have the worst air in Australasia and Auckland is the most polluted with twice the concentration of damaging airborne particles as Sydney, the World Health Organisation says.

I’m not a treasury economist, but my understanding is that if we pay the people who produce the pollution to produce more pollution, they’ll produce less pollution.

Update: The WHO has withdrawn their data.

Various positions

I went to Te Radar’s Eating the Dog at Downstage last night, and, as is customary when you get free tickets to something and it turns out to be good, I recommend you go and see it. The show is a stand-up comedy routine in which the material is drawn from New Zealand history, and watching it I was reminded of Bill Bryson’s latest book which is a history of domestic homes.

See, some people see history as the words and deeds of great men, and Marx teaches us that it’s the operation of economic forces and clashes of classes, but Bryson points out that history is mostly just billions of discreet human moments and lives, which generally aren’t all that tragic or dramatic, but are often absurd and comic. That’s roughly the approach Te Radar takes to New Zealand history

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Meanwhile, Trotter blogged a few days back about the wonders of compulsory unionism. Funnily enough, I’ve just started reading Margaret Pope’s book about her time in the Lange-Douglas government. On, I think, the second page she explains that as an educated, urban liberal female in the 1970s, she voted for the National Party because of her intense dislike for Labour’s policy of compulsory unionism. I guess Trotter would reply that Labour could do without the support of urban liberals (their current core demographic), because they’d be a ‘workers party’.

This perpetual fantasy about a ‘workers party’ (see, also, some of the Mana Party rhetoric) is based on the same misconception as the religious parties that occasionally flare up: people look at census results and think, ‘Look at all the people who identify as Christians/earn low incomes! If we get their vote we’ll be in government!’

But it’s not the 1930s. We’re an individualistic, post-industrial nation. People don’t see themselves as ‘Christian’ or ‘working class’ in a political sense. We’re no longer ‘labourers’ – we’re human capital, or, to put it another way: our poor aren’t poor, they just haven’t made their first million yet.

Which isn’t to say that there isn’t a place in politics for improving the lot of ‘workers’ – just that unions are no longer the way to go about it. We have a political party (Labour) who are supposed to advocate for these sorts of policies – and they did get us that fourth week of compulsory holidays – but on the whole they’re pretty quiet on this front. Back in government they talked about compulsory redundancy, which would be tax-free, but they had better things to spend their time on, like regulating light-bulbs and shower-heads.

My theory is that Labour are reluctant to pass too much ‘pro-worker’ industrial legislation because that undermines the power of the unions, who fund and support Labour. There’s no point in paying a union fee if there’s a political party who will act directly on your behalf.

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The new Fairfax poll has the Greens on 10% and Russel Norman registering as preferred Prime Minister for the first time, albeit with 1.7%. We keep hearing about how the media will only focus on trivialities and so the public are ‘switched off’ to politics, but the Greens’ radical strategy of releasing policy and talking about things they think are important seems to be playing out pretty well.

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In the same poll National is at 54.3% and Labour 28.1%, proving that if you offer people a small bag of cat-shit and a large bag of dog shit, they’ll generally, reluctantly, take the smaller bag. And then the people trying to give away the dog-shit will cry, ‘Don’t you know that small bag is full of cat-shit? Wake up!’ And people like John Armstrong will write ecstatic columns about how New Zealanders love bags of fragrant, wonderful cat-shit. You get my point.

SOP

Via TV3:

A rift has opened between ACT leader Don Brash and his most important election candidate over the decriminalisation of marijuana.

Dr Brash on Sunday suggested marijuana should be decriminalised, saying it was a relatively harmless drug and prohibition was ineffective and expensive.

ACT has previously run a tough anti-drugs policy and his comments surprised other parties.

They also appear to have surprised John Banks, a former police minister in the National government, who is ACT’s candidate in Epsom – currently held by former ACT leader Rodney Hide – and has to win it to ensure the party stays in Parliament.

“I’ve always been opposed to drugs and I always will be opposed to drugs,” Mr Banks said on Radio New Zealand.

“It isn’t party policy and I can’t see myself walking into Parliament to support the Greens in decriminalising marijuana.”

Worth noting that this is absolutely consistent with Brash’s behaviour as National leader. He’d decide to make a speech about something, email a bunch of his friends and ask them for ideas on the subject, and then he’d announce their suggestions as party policy in his speech, scaring the hell out of the rest of the National Party, a dynamic that led to Brash sacking his Welfare and Maori Affairs Shadow-Ministers.

Brash can’t sack Banks, obviously, and I now hope that ACT gets enough of the vote for a Brash/Banks parliamentary party.

 

Drugs, the law and free will

I/S comments on pot decriminalisation:

From a liberal perspective, the state has no interest in policing what people stick in their bodies for fun. If it causes public health problems, like alcohol and tobacco, then you treat it as a public health issue, like alcohol and tobacco. But you don’t go around banning things just because old farts disapprove.

That is the strict liberal perspective. I used to adhere to it myself: ‘People should be free to take whatever substances they want.’

The problem with this is that many drugs have addictive properties. They actually take away the individuals’ freedom to choose whether to consume them or not: nicotine and heroin are the classic examples. By banning their sale and preventing addiction, aren’t you actually increasing the total aggregate of freedom? (I guess this forms the core of almost all left-wing politics: by removing freedom in one area we greatly increase it in another).

The liberal counter-argument is that people have to consume the product to become addicted, and that’s a matter of choice. But the companies that sell these products target them at low-information demographics, like children and teenagers, whose ability to make rational choices is reduced. And when they are able to make rational decisions they’re addicted.

I don’t think pot is addictive (although some people demonstrate compulsive behaviour towards it, and the effect is similar to addiction), so I think it should be decriminalised. But I don’t buy into the liberal philosophy of a broad legalisation of drugs of abuse.

Shades of the CGT debate

Key on decriminalisation:

“Go and ask the police officers, go and ask the parents in New Zealand whether they want their 18-year-old child to be smoking a joint before they head off to school,” he told TVNZ’s Breakfast programme.

This PM is not good on his feet. If his party hasn’t focused-grouped and pre-planned talking points on an issue, Key reverts to inane gibberish. Are children drinking bottles of whiskey before they head off to school? If so, is that an issue for parents, or a reason for the state to spend a hundred million dollars a year prohibiting the sale of whiskey?