The Dim-Post

February 10, 2012

Y Kant Steven Deliver?

Filed under: economics — danylmc @ 2:28 pm

Steven Joyce, Minister for Everything had an op-ed in the Herald a couple days ago lamenting the nay-sayers in New Zealand who demand growth, jobs etc but cripple our economy by imposing too many constraints:

We need an environment that is encouraging to entrepreneurs and ideas people. We need to ensure we make resources available for businesses to use. We need stronger and more internationally integrated capital markets that provide money for investment. We need to ensure our people have the right skills. And we need to remember that we have a small domestic market, so our businesses will need to access world markets a lot earlier than similar businesses in countries located in larger world populations.

That doesn’t mean handouts. It just means removing more of the roadblocks that stop people from doing things.

And that’s when the problems start to arrive. The people who say “we want jobs” but then in the next breath say “but you can’t do that … you can’t build that there … you can’t expand that … you can’t explore for that there … you can’t live here … you can’t invest in property here – you just can’t do that!”

And very quickly we start limiting our options. Through the 2000s, as a country, we progressively boxed ourselves in more and more to depend on fewer and fewer industries based on what the “can’ts” said.

Firstly, almost every meaningful international study routinely crowns New Zealand as one of the best countries in the world in terms of regulatory environment and ease of doing business. There’s something pathetic about the endless lament we hear from our business leaders, endlessly crying about how HARD it is for them to get anything done, in what is literally the easiest country in the world for them to operate.

Secondly, Joyce claims that can’t have job growth because we ‘boxed ourselves in’ during the 2000s. Which is funny, because we had extraordinary job growth during that exact same period. What he’s really saying is that New Zealand needs yet more deregulation. So what he’s really saying is: ‘We need more finance company debacles and leaky home crisis’, or, more plainly: ‘We need to structure our economy so that a small number of people make vast profits until the market fails horribly and all the costs are picked up by the taxpayer.’

Saying ‘You can’t’ has a cost. But saying, ‘You can, and we’ll assume nothing bad will happen, and if it does the public will wear the cost,’ also has a cost. And it tends to be a lot larger than saying, ‘You can’t.’

57 Comments »

  1. Actually I was going to start a goldmine in my back yard but I was told that I can’t because apparently Grey Lynn is not zoned for goldmining. This is bureaucracy gone crazy. It’s no wonder I can’t get rich!

    Time to cut some red tapez!

    Comment by nommopilot — February 10, 2012 @ 2:32 pm

  2. I wasn’t even going to store the tailings in Grey Lynn – I was going to ship those to waterview…

    Comment by nommopilot — February 10, 2012 @ 2:33 pm

  3. based on what the “can’ts” said

    This is, for mine, the most outrageous line of the piece. The rest is only ideologically mendacious; this is the Clark-era dogwhistle, perfected during the period when the MP in question was running the National party campaign.

    L

    Comment by Lew — February 10, 2012 @ 2:35 pm

  4. “almost every meaningful international study routinely crowns New Zealand as one of the best countries in the world in terms of regulatory environment and ease of doing business. ”

    Agreed: we suffer due to (a) distance to market and (b) size of internal market. However, MORE regulations won’t help, just like most people agree, larger class sizes aren’t as optimal as small class size, all other things being equal.

    Comment by Clunking Fist — February 10, 2012 @ 2:42 pm

  5. Joyce made his packet out of an taking advantage of consolidation in an essentially unregulated domestic market, creating an effective monopoly comprising 22 commercial stations over 17 years and then flogging it to a foreign media conglomerate, paying no capital gains tax in the process.

    I mean, if that’s not a case of restrictive red tape gone mad and government perpetuated “you can’t” philosophy, I don’t know what is.

    You’re just a hater, Danyl.

    Comment by Gregor W — February 10, 2012 @ 2:47 pm

  6. We have had the following disasters/crises over the past 5 years which can be related to deregulation:
    Leaky buildings
    Finance companies collapsing
    Canty Earthquake (see CTV building)
    Pike River (lack of H&S inspectors and relaxed mining rules)

    Only one of these was a natural disaster and even then better regulations would likely have helped to save lives. I would like to see the cumulative cost of all of these to see how much money we would have saved by having more red tape

    Comment by max — February 10, 2012 @ 2:49 pm

  7. To be fair Max, Leaky buildings and Finance co. collapses were largely due to shitty regulation rather than deregulation per se.

    Comment by Gregor W — February 10, 2012 @ 2:52 pm

  8. Pretty much what you’d expect from Prostetnic Vogon Joyce, the Kiwi Dick Cheney.

    Comment by DeepRed — February 10, 2012 @ 2:57 pm

  9. True for finance companies, although deregulation in the 1990’s allowed untreated timber to be used, along with dropping standards for building apprentices

    Comment by max — February 10, 2012 @ 3:00 pm

  10. There’s other possible sides to the examples @6 if they had tighter regulations:

    Pike River – may never have been mined (and other projects that haven’t blown up may not have happened either)
    CTV Building if stricter building regulations and earthquake standards had been enforced it (and many other buildings) may not have been built
    Finance companies – stricter regulations may have meant less investment so less business growth (SCF may not have invested in dairy)
    Leaky buildings – building costs would have been higher, housing prices may have been forced even higher and/or less built

    Comment by Pete George — February 10, 2012 @ 3:12 pm

  11. @Pete: but was it worth it?

    Comment by max — February 10, 2012 @ 3:17 pm

  12. Earth to Pete…

    think about the $ billions that have been lost by individuals through finance company collapses and leaky buildings – all money that would have otherwise been fuelling economic growth.

    Comment by MikeG — February 10, 2012 @ 3:28 pm

  13. @max – speculation on reflection is impossible to quantify.
    @MikeG – but too many regulations or regulations too strictly applied can stifle economic growth.

    We can’t run through the last couple of decades again with a few different parameters so we can’t know what diifferent regulation levels would have caused.

    Regulations are always a balancing act, and are prone to being to strictly applied, too laxly applied, and ways found round them which all affect actual outcomes. You hope to get productive, growth orientated, safe and affordable outcomes but none happen perfectly.

    In a practical example Christchurch faces a real dilemma over rebuilding regulations. If safety is too low a priority the risks (and costs of reinsurance) could be to high, but if safety is enforced too much then rebuilders and developers may bail out and leave a half done city.

    Any balance that’s chosen will be an educated gamble. In fifty years people will be able to look back and criticise what didn’t work well as a result, and will have forgotten (or will never have taken any notice of) what did work ok.

    Comment by Pete George — February 10, 2012 @ 3:51 pm

  14. It’s easier to do business in Singapore. Perhaps we should follow their example and own the national airline, the ports, and the power company. Oh, wait…

    Comment by George D — February 10, 2012 @ 4:06 pm

  15. Yeh I love that pick and choose ‘we should be like [insert country here]’

    More go getters like Australia (apart from the award wages, the unions and the super, let alone 3 levels of government), like the Asian tigers (except that most of their growth was from state lead industries, boosted by war contracts and often for dictatorships), like Ireland (except that we can’t tow NZ to the coast of Europe, get European subsidies and oops, how’s that going now?)….

    anything you can’t make a kiwi/iwi comparison like cans/can’ts is in the too hard basket.

    Comment by sheesh — February 10, 2012 @ 4:13 pm

  16. @ max

    “although deregulation in the 1990′s allowed untreated timber to be used”

    my 1912 house has untreated framing throughout as does basically every house in the street/suburb. How did that happen and why isn’t it leaking?

    Comment by insider — February 10, 2012 @ 4:30 pm

  17. Pete George @13

    And last time National were in government every gamble they made turned out crap, costing a lot of people a lot of money and allowing a select few to fill their pockets and run.

    Sure we can’t rerun the economy since the 90s but it would be nice if they could try a few different parameters other than dialling down the tax, regulation and government responsibility knobs and waiting to see what happens…

    Comment by nommopilot — February 10, 2012 @ 4:39 pm

  18. @Pete George

    Yes, if you regulate or otherwise act to prevent (or at least smooth out somewhat) the boom and bust cycle, you prevent booms. You say this like it is a bad thing?

    Comment by Richard — February 10, 2012 @ 4:41 pm

  19. insider – they are not made of radiata pine

    Comment by Adrian — February 10, 2012 @ 4:41 pm

  20. Old houses tend to have native timber frames.

    Comment by danylmc — February 10, 2012 @ 4:48 pm

  21. @richard – smooth out good (if you get the formula and application right and coinciding with international conditons). Get it wrong and you can get stifling or stoking, both can be bad.

    People often say “if only they didn’t do that shit wouldn’t have happened” or “if only they did that we’d all be smelling the roses”.

    The reality is invariably a lot more complex and difficult to manage.

    Comment by Pete George — February 10, 2012 @ 4:58 pm

  22. @insider

    As the others have said different timber types, and it is also part of the design. Modern “leaky homes” tend to have concealed gutterings, have unconventionally pitched roofs, which means that water goes in odd places, and actually often have sealed cavities, which means that when water inevitably does get in, it is more difficult for the water to escape.

    The problem is that “leaky homes” were designed on the basis that they didn’t leak. Whereas older (and post 2002 houses) are designed around the idea that the houses *do* leak and thus ensure that the water is dealt with sensibly.

    Art deco buildings sometimes have “leaky home” type problems too, for similar design problems (surviving ones, obviously less so — that’s why they’ve survived).

    Comment by Richard — February 10, 2012 @ 5:03 pm

  23. PG @10, that is the stupidest thing I’ve read on the internet.

    Comment by Chris Bull — February 10, 2012 @ 5:12 pm

  24. You haven’t explored much of the interwebs have you Chris.

    Comment by will — February 10, 2012 @ 5:30 pm

  25. Chris – are you more interested in simplistic impossibilities?

    Comment by Pete George — February 10, 2012 @ 6:00 pm

  26. PG #20

    “The reality is invariably a lot more complex and difficult to manage.”

    Yeah, everybody so shut up and stop acting like you know what you’re talking about.

    Comment by nommopilot — February 10, 2012 @ 6:03 pm

  27. nompilot – that sounds more like another simplistic impossibility. Not your call anyway.

    So what do you think? Too much regulation for progress? Too little? Too strictly implemented? Or too lax.

    Comment by Pete George — February 10, 2012 @ 6:26 pm

  28. @Will, I dunno, saying billions of dollars of wealth destruction needed to happen because without it happening then we wouldn’t have had the irrational exuberance that caused it is right up there with the worst of the trademe/huggies forums or /b/.

    Comment by Chris Bull — February 10, 2012 @ 6:52 pm

  29. When you hear someone say the words ‘nanny state’, ask if they know the causes of Pike River………..
    When you hear someone say we should cut red tape, ask if they know someone with a leaky home…………….
    When you hear someone say the words ‘nanny state’, ask if the know the causes of the collapse of the C.T.V. building…………
    When you hear someone say the market is the solution, ask if they know someone who lost all their savings from a finance company………..
    It’s just a start….I imagine people can think of more
    Now, why doesn’t the media ask those questions??

    Comment by Paul — February 10, 2012 @ 6:53 pm

  30. “It’s easier to do business in Singapore. Perhaps we should follow their example and own the national airline, the ports, and the power company. Oh, wait…”

    Although contemporary conservative economic thinking holds that privatisation and deregulation must inevitably go together you could probably make a case for the idea that deregulation and state ownership might be the sort of sensible middle ground that a lot of people like to verbosely yearn for.

    Comment by Hugh — February 10, 2012 @ 6:58 pm

  31. The annoying aspect of leaky buildings is that some “professionals” who contributed to the problems ( eg architects ) appear to have got away scot-free, whereas I have to pay taxes and rates to fix other peoples problems.

    NZ timber houses had evolved over 120 years, with eaves, mild earthquake proof structures, weathertightness, roof angles, different grades of treated timber, etc. etc. All of that wisdom was tossed away in the early 1990s in favour of modern designs from Mediterranean climates.

    The need to keep untreated kiln-dried wood dry was well documented before it was used, and was stressed in some documents, but not emphasized by NZ timber suppliers, council inspectors etc. In the early 1990s I had my 1920s’s house extended. The archiiect specified untreated kiln-dried timber ( cheaper ), and the builder had pallets delivered onto the uncovered site well before it was required. Pretty standard practice, providing an illusion of imminent progress, and a chance to invoice for materials.

    I diligently covered the wood with plastic against rain, as specified by Australian manufacturers. The builder just could not understand why I bothered, and when I pointed him to the Australian information and even the note on the pallet wrapper, he just said that it was unnecessary.

    The information was there for all to read, but the combination of new design and untreated kiln-dried wood has created a totally avoidable problem. It’s not directly attributed to deregulation, but more about giving home owners more choices of materials ( the anti-treatment chemicals lobby was vocal in the 1980s and 1990s), and the professionals ignoring the well-known properties.of untreated wood. Even heart native woods will rot if kept humid and/wet, it just takes longer.

    Comment by Bruce Hamilton — February 10, 2012 @ 7:01 pm

  32. @Pete George #10: are people really that expendable? Litigation often dictates otherwise, and fills the vacuum in the absence or weakness of regulation.

    Comment by DeepRed — February 10, 2012 @ 7:05 pm

  33. “…Joyce made his packet out of an taking advantage of consolidation in an essentially unregulated domestic market, creating an effective monopoly comprising 22 commercial stations over 17 years and then flogging it to a foreign media conglomerate, paying no capital gains tax in the process.

    I mean, if that’s not a case of restrictive red tape gone mad and government perpetuated “you can’t” philosophy, I don’t know what is.

    You’re just a hater, Danyl…’

    Now, I am moe than slightly drunk and once I have showered (with a supply of bubbles to tide me through the ordeal of fresh water) I plan to take my wimminz and finish the job in those places in the big smoke where Pete George can only dream of being on my side of the velvet rope. But I have stop briefly to salute possibly the greatest post on this site, ever.

    Comment by Sanctuary — February 10, 2012 @ 7:08 pm

  34. “on my side of the velvet robe” nice one. Can you put aside a Wendys Baconator Burger for me, I’ll be along later to pick it up.

    Comment by will — February 10, 2012 @ 7:12 pm

  35. Bubbles, wimminz and velvet ropes, I haven’t seen Sanctuary’s kinky side before.

    Comment by Pete George — February 10, 2012 @ 7:31 pm

  36. Leaky homes was not about “deregulation”, it was about changes in the regulations.
    Bruce Hamilton, sorry but you are wrong, the industry acted on the advice of the regulators of the time. Thats the issue. If you were so diligent why did you accept untreated timber in the first place- oh yeah- cheaper, as you said. However it complied with the regulations, and treated timber was simply not available anyway.
    By the way, buildings leak in Australia too-big time, I am involved in fixing them, its just that it didnt have the media beat up it did here, and the “regulation” in Australia with so called “guarantees” has actualy made it almost impossible for individuals to get fingered, unlike here where any 2 bit lawyer can squeeze out a settlement.

    Comment by gn — February 10, 2012 @ 8:06 pm

  37. Joyce sounds like Perigo in drag.

    Comment by peterlepaysan — February 10, 2012 @ 8:14 pm

  38. Iwi/Kiwi – Cans/Can’ts – Haves/Have-nots.

    We’re building quite the family of simplistic and fabricated dualities aren’t we.

    What kinds of public debate has each of those inspired?

    Comment by ORP — February 10, 2012 @ 8:26 pm

  39. GH,
    The building code is a performance based system, it allows diverse choices for timber to be used for wall structures. There is also a facility to use alternative solution provided they comply with the performance requirements.

    The code also specifies weather tightness, which if achieved, would have allowed the untreated kiln-dried timber to perform as intended. The timber treatment choices are usually specified by professionals, and checked for code compliance by regulators. Lawyers go for the deepest pockets, and ratepayers and taxpayers had them, as builders/developers can form a new company for each development.

    It’s called ” leaky building ” because that that is the root cause, not the untreated timber. The buildings do not comply with the code because of inadequate weather tightness due to cladding materials, design, and construction – which are usually specified/installed by professionals.

    Comment by Bruce Hamilton — February 10, 2012 @ 11:41 pm

  40. Hmmm, my last post got moderated into oblivion. Silly WordPress.

    Anyhoo, leaky homes have also been an issue with McMansions in the States. Coincidentally or not, a lot of them were foreclosed upon in the wake of the Subprime meltdown.

    Comment by DeepRed — February 10, 2012 @ 11:52 pm

  41. Maybe Stephen Joyce misheard, and it’s not actually “can’t” that people are saying to him.

    Comment by Higgs Boatswain — February 11, 2012 @ 4:10 am

  42. The Food bill going through parliament now was written by the supermarket duopoly to help kill new competition. And the actual cost of the vast amount of new regulation will be passed down to the supermarket consumers.

    Joyce is taking the piss.

    Comment by Simon — February 11, 2012 @ 7:35 am

  43. “We need an environment that is encouraging to entrepreneurs and ideas people. … That doesn’t mean handouts.”

    Someone should tell these guys that: http://tvnz.co.nz/politics-news/govt-lends-mediaworks-43m-against-advice-4108249

    Comment by Grassed Up — February 11, 2012 @ 8:15 am

  44. @39 Clever Higgs.
    @15 “Yeh I love that pick and choose ‘we should be like [insert country here]‘”
    Trouble is that Mr Joyce must necessarily be comparing NZ with other countries in order to come up with his (distorted) view. You can’t be better or worse unless you compare apples with apples. Unless you are living in another universe?

    Comment by ianmac — February 11, 2012 @ 10:22 am

  45. @ianmac #41: it’s called cargo cultism.

    Comment by DeepRed — February 11, 2012 @ 11:10 am

  46. You could also include the huge ecological and economic ($130 million) cost of the Rena in this. As in, “we can deregulate the shipping industry and let flags of convenience ships with foreign crews who are not protected (or regulated) by any labour laws operate in our waters and it’ll be fine. Most of the time.” The problem with SJ is that most of what he says is rubbish, but he says it very cleverly so people tend to agree with him.

    Comment by Amy — February 11, 2012 @ 5:19 pm

  47. When Joyce was Minister of Transport he came up with the Wellington Road of National Significance from Levin to the Airport. It costs $2.4 billion to generate a return of $1.6 billion.

    It’s entirely galling to be lectured by someone not bright enough to use a calculator.

    Comment by The Economic Illiteracy Support Group — February 11, 2012 @ 7:29 pm


  48. @ianmac #41: it’s called cargo cultism.

    Worse, it’s ideology. Rather than looking at comparative evidence, this government’s actions rest on a set of untested assumptions about markets, rationality, and the inevitability of outcomes. Lest this be seen as empty rhetoric, I challenge others to show me a single major policy decision from the last three years that has been explicitly predicated on evidence, from either here or elsewhere. I may have missed something.

    Were they more pragmatic, I’d be more inclined to forgive them – their conditional pragmatism is based on the limits that MMP democracy imposes on them.

    Comment by George D — February 11, 2012 @ 8:53 pm

  49. “Worse, it’s ideology. Rather than looking at comparative evidence, this government’s actions rest on a set of untested assumptions about markets, rationality, and the inevitability of outcomes.”

    John Key wouldn’t know an ideology if it fell out of his cereal box.

    Comment by Swan — February 11, 2012 @ 10:04 pm

  50. He’s right though, all this can’t really is hurting us. We can’t implement broad-based capital gains tax, we can’t afford to keep our profitable assets in public hands, we can’t have same-sex marriage, we can’t divert precious roading funds for mass transit, we can’t pre-fund the super blowout, we can’t build a clean-tech economy, we can’t afford to stop carbon emissions, we can’t raise the minimum wage, we can’t have a national public broadcasting service, we can’t…

    Comment by garethw — February 12, 2012 @ 9:54 am

  51. In the absence of anyone congratulating Danyl for the Tori/Tory reference… http://en.wikipedia.org/wiki/Y_Kant_Tori_Read_(album)

    Comment by Ethan Tucker — February 12, 2012 @ 10:27 am

  52. What has not been mentioned here is that Mr Joyce demands the right to pick the projects/investments that he and his sycophants and prefered lobby groups deem as desirable. For example, he hurls the country into motorway projects that fly in the face of all the latest transport research. Research that even NZ’s own MoT is producing. He is leading NZ in a direction that we should not be going and calls his critics ‘nay-sayers’.

    Comment by The Wheeled Pedestrian — February 12, 2012 @ 1:46 pm

  53. How does Joyce get away with polishing all these turds? The simple fact is, he’s the Kiwi Dick Cheney, tapping into latent prejudices to discredit any resistance to his agenda. And the costs might only be found out the hard way, as was the case with Think Big.

    Comment by DeepRed — February 12, 2012 @ 9:21 pm

  54. Wow, this thread reads like the standard. The balance is vertiginous.

    Also, deregulation led to the massacres at Parihaka and at Turanga. It also meant that village was allowed to be built too close to Mt Tarawera. Deregulation – is it worth it? IS IT WORTH IT????

    Comment by Rick Rowling — February 13, 2012 @ 7:55 am

  55. We need an environment that is encouraging to entrepreneurs and ideas people.

    If the best these “entrepreneurs and ideas people” can come up with is more dairy, more mining, oil drilling, and asset sales; then perhaps we need a different “environment”. Whatever that means.

    Comment by The Green Blazer — February 13, 2012 @ 10:03 am

  56. Steven Joyce is the embodiment of all the reasons why no person should ever vote for National.

    He is actively advancing the interests of his infrastructure and broadcasting cronies…at the expense of us all and the general public good. He refuse to stand in a local seat despite his party being very hostile to “unelected” MPs and actively opposing MMP by putting up a referendum to get rid of it. The hypocrisy is outrageous enough….but the shallow cronyism crippling public broadcasting and blocking better public transport amount to a serious and ongoing cost to this country we really can’t afford.

    Comment by Steve (@nza1) — February 14, 2012 @ 12:56 pm

  57. Paul Buchanan (“Pablo”) had a thought-provoking post A culture of impunity which expands on the question of “shallow cronyism”. As Buchanan says it might not be “corrupt” in the generally accepted view but it’s not transparent and some policies seem to be rammed through regardless of logic or opposition. Both short and long term I only see downside from the proposed sell off of the power companies. Brian Fallow in the Herald has described the SOE sale off as a Solution in search of a question. WHich begs the question who exactly will benefit from the “mixed ownership model”?

    Comment by TerryB — February 14, 2012 @ 10:57 pm


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