The Dim-Post

August 6, 2015

Notes on today’s John Armstrong column

Filed under: media — danylmc @ 6:30 am

The column is here.

The press gallery used to ‘hunt as a pack’, all chasing the same stories at the same time, and political staffers used to moan about this especially if their Minister or MP was the one being chased. That doesn’t happen so much no more unless the story is really huge. What the gallery does now is arguably worse: media outlets tend to minimise stories they don’t break themselves presumably to punish whatever comms or PR person fed the story to their rivals.

So in the absence of any exclusives the Herald’s line on the Saudi sheep deal has always been that it’s no big deal. Just good old Murray McCully being Muzza. It was a silly stand to take and it looks even sillier in the face of Andrea Vance’s story yesterday based on OIA’d Treasury advice about the deal which shows officials raising strong doubts about the legality and the benefits of building an agrihub in the middle of the desert, and strongly advising against the whole thing.

John Key’s response to this is the same as it was after the Inspector of Intelligence caught his office collaborating with WhaleOil – deny the whole thing by ‘talking past’ the media, negating the uncomfortable facts of the story and simply repeating to the public over-and-over again that everything is the Labour Party’s fault. It’s an effective tactic, or at least is has been in the past, but it is so weird for a gallery columnist – even the Herald’s – to lavish praise on Key for misleading the public so awesomely.

Armstrong’s previous column was about New Zealand First and how its ‘dying’ because its voters are aging. This drew outraged responses from people like Duncan Garner and Chris Trotter who sternly warned Armstrong never to count Winston out, which is true, I guess – but surely the substantive critique of  Armstrong’s thesis is that it just obviously isn’t true. Peters won an increased majority in the election and he just won an electorate off the National Party.

‘New Zealand First’s voters are dying’ is a common fantasy in the National Party, who hate and fear Peters for obvious reasons. (It’s cognate to the ‘John Key doesn’t really want to be Prime Minister so he’ll step down any day now and just go away’ fantasy that circulates around Labour.) And that’s always been my problem with John Armstrong. He sees it as his job to perpetuate the spin and disinformation and fantasies and outright lies of the major parties – the government-of-the-day especially – when the point, surely, is to do the exact opposite?

August 2, 2015

TPP and self-delusion

Filed under: Uncategorized — danylmc @ 9:10 am

Via RNZ:

Another TPP meeting, another failure to reach agreement.

Yet the words used to describe the negotiations did not, once again, talk of defeat.

Instead, the joint statement by the TPP Ministers said: “We have made significant progress and will continue work on resolving a limited number of remaining issues, paving the way for the conclusion of the Trans-Pacific Partnership negotiations.”

Yet the hurdles highlighted as sticking points going into the talks proved to be same issues holding up an agreement.

And as Trade Minister Tim Groser said, one of those is the main prize for New Zealand in these talks.

“You can see clearly that there are one or two really hard issues, and one of them is dairy.”

But Mr Groser is nothing if not an optimist, expressing confidence there is a solution that will benefit New Zealand’s dairy farmers and those in countries resistant to opening up their markets, like Canada and Japan.

Mr Groser admits total tariff removal is off the agenda, and he was no mood to give in in Hawaii.

The reporting in Australian media was a bit different. According to them it was their negotiators who held tough and refused to give in. But they also report:

According to industry figures currently in Maui, Hawaii, for talks on the Trans Pacific Partnership Agreement (TPP), the US is not sticking to a position agreed to 18 months ago which was to be the starting point for this round of negotiations.

“When we heard, we were absolutely devastated by it because it put us back so much,” Australian Dairy Council chairman Noel Campbell said.

According to Mr Campbell the US now will not budge unless Canada opens its markets.

So the latest round of talks sounds like it was a huge step backwards, rather than the amazing progress Groser’s trumpeting. And this round was supposed to be the big breakthrough timed to prevent domestic political constraints in various member countries from contaminating the process. There are now so many participants with so many conflicting vested interests that the windows for advancement are very small. Actually, it now looks like those windows don’t exist.

Back when New Zealand signed the Free Trade Agreement with China, Helen Clark admitted it happened because we’re such a small economy. We were China’s first FTA because we were a harmless test-case for them, and we used our small size to our advantage to leverage a good deal. The original TPP arrangement was supposed to work a bit like that. New Zealand and the other signatories – Chile, Singapore and Brunei – would conclude a high quality deal covering off all the big problems in modern trade, and then when other larger economies saw how well it worked we would gradually lure them in.

Why didn’t that happen? One of the main reasons, I suspect, is the hubris of the Trade Minister and the senior staff at MFAT. Tim Groser made a comment the other day about how the TPP talks needed to remain secret from the New Zealand public because it was a task for adults ‘not breathless children’. Groser is very much a product of the culture of elitism at our Foreign Ministery. ‘The finest minds in New Zealand do not go into business or science or medicine,’ MFAT assures itself. ‘They become diplomats. MFAT is the best of the best.’ They’re the Top Gun of the public service, according to themselves. They’re the people who know what’s best for the country. They understand the way the world works. They’re the adults in the room.

Groser takes that self-regard a step further, and seems to think he is the best of the best of the best. World class. A major player of world historical significance. A global titan of international trade. And why should such a man waste his priceless time patching together a deal with the likes of Chile and Brunei? Why not Canada, too? Mexico? Japan? America? Why not put together the greatest trade deal in the history of the world? Why should he do anything less?

Because it isn’t going to work, seems to be the answer. If we had a small, highly successful trade pact and larger economies were negotiating to try and access it, as per the original plan, then we’d be bargaining from a position of strength. Instead we have some of the largest economies in the world dictating terms to us. Groser’s singular genius – whether real or a pathetic self-delusion – is running up against the hard reality that vested interests in those exponentially larger economies simply do not have to give us anything no matter how dazzlingly brilliant our diplomats think they are. We have no leverage – except to walk away, which is something our negotiators will be loath to do because they have so much invested in the process.

We don’t know what the benefits of TPP are – according to MFAT they’re trivial: a couple billion dollars by the year 2025, To put that in perspective, our trade with China is worth about $20 billion a year now and we didn’t have to sign away our own sovereignty to get it. And even if we achieve our big win – access to the US and Japan for dairy – we’re already hitting the environmental limits of our dairy production capability. And there’s a global glut in the dairy market. US farmers are currently pouring their excess milk into abandoned mines.

The best outcome here seems to be failure. The other negotiators realise it isn’t going to work and let the deal fall over, and then we can go back to the original plan of high quality arrangements with comparable economies who we can bargain with in good faith. That was a smart idea.

July 30, 2015

Notes on Seveneves and Aurora

Filed under: Uncategorized — danylmc @ 10:44 am

(Warning: contains huge spoilers for both novels discussed).

The last two books I read happen to be sci-fi novels: Seveneves by Neal Stephenson and Aurora by Kim Stanley Robinson. They’re two of the big names in contemporary science fiction, and they happen to have written books dealing with similar themes. And they both have similar problems.

First, the theme. A lot of science fiction is set in space and in it it’s a given that humans will invent space colonies and interstellar space ships and go and live on other planets. When people think about an optimistic distant future for humanity that’s what a lot of us imagine. ‘We were born here,’ Michael Caine croaks in Interstellar, ‘We were not meant to die here.’ So Robinson and Stephenson ask whether that future is remotely likely. What will living in space actually be like?

The answer both of them come up with is: really, really shitty. We’re biological organisms. We evolved on earth over billions of years; we’re tailor-made for terrestrial life, and space is just amazingly hostile to us. It’s a lethally cold vacuum saturated with deadly radiation. The occupants of Stephenson’s ‘Cloud Ark’ in Seveneaves – built because a disaster renders the Earth uninhabitable – find themselves contemplating a perpetual future in which they and their descendents live on a low-calorie diet of photosynthesized algae, have no privacy and a low life expectancy due to the phenomenal cancer rate, micro-meteor strikes and chronic mental illness from the stress of orbital life.

Things are less immediately doomed in Robinson’s Aurora. It’s set five hundred years in the future, and the characters are on a large, far more comfortable starship than Stephenson’s doomed cloud, travelling to a solar system forty light years from Earth to colonise a planet there that has liquid water and breathable air. The journey takes about two-hundred years, so we’re several generations in when the story begins.

Robinson does a couple of interesting things. Firstly, he points out the basic flaw of the ‘intergenerational starship’, which is a beloved sci-fi trope. Starships are closed systems, he explains, and the second law of thermodynamics tells us that entropy will always increase inside a closed system. How’s that gonna work over hundreds of years? Very badly. The soil pathogens on the starship mutate, wiping out crops and leading to famine. Cosmic rays from space damage the ship’s quantum computer. Vital elements bind to plastics in ways that are hard to recycle, leading to resource depletion. Which leads to scarcity. Which leads to violent conflict. Starships ain’t gonna work, Robinson reckons.

The second very interesting thing he does is attempt to answer the Fermi paradox. Given that the universe is old and vast and compatible with life, why isn’t it filled with extra-terrestrial life? Why aren’t there loads of civilizations out there colonising the universe and coming into contact with us?

Because, Robinson says, planets capable of sustaining life will teem with microorganisms that will be deadly to alien visitors.There probably are other intelligent civilisations in our galaxy, the characters decide, but they aren’t reaching us via starships because of entropy and they aren’t colonising because of biology. They’re stuck on their home planets, just like us – only we haven’t figured that out yet.

So that’s an interesting moment in sci-fi. Two of its top writers are basically calling it for space. Sort of. Neal Stephenson is a self-confessed space-nerd. He doesn’t want his book to show that we have no future in outer space, so he does a very odd thing. Two-thirds of the way through his up-to-then very exciting, very bleak novel in which the deadliness of space brings the entire human race to the brink of existence and our extinction is inevitable, he flashes forwards five thousand years to a future in which billions of humans are all living happily in space, somehow.

This end sequence is terrible. Often plot-less, hard to conceptualise, filled with stupid neologisms – Stephenson’s worst habit – and with no proper ending. But my core problem is that I just didn’t believe any of it happened. The first six hundred pages set out with devastating clarity that everything in the last three hundred was impossible.

Robinson doesn’t know how to finish his book either. He gets his starship back to Earth with some of its inhabitants alive and should probably – like Gravity – stop at the moment of landing. They made it! Instead there’s a hundred extra pages of nothing much. He wants to say something else, I think, about how we should enjoy life here; so he ends with a very boring scene in which the main character goes swimming at the beach. For about twenty pages. But he’s already made the same point more effectively by showing us space explorers starving to death or being blasted out of airlocks or dying of alien pathogens. We get it. Space is awful. Earth is nice. We’re stuck here. We should look after it.

July 29, 2015


Filed under: Uncategorized — danylmc @ 8:57 am

Fran O’Sullivan is – as always – very excited that her friend Trade Minister Tim Groser is doing high level serious important trade stuff and meeting important serious people during the TPP negotiations. Although . . .

At the negotiating level, broad support has been stitched up in several areas, notably constraining state-owned enterprises from using soft loans to compete against private companies.

But contentious issues critical to New Zealand’s well-being are yet to be addressed.
Top of the agenda is market access for dairy.

Both Groser and John Key earlier signaled that it would be a deal-breaker for NZ if there was not a high-quality comprehensive result on this score. The position has since become more nuanced.

On TV3’s The Nation’s Groser said it was important as it was 25 per cent of export earnings. “It’ll be a bit light this year because of fallen dairy prices, but it’s typically around that. We’ve got very good deals shaping up in the other areas, and the deal on dairy simply isn’t there yet.

So we’ve conceded on IP, generic drugs, investor state dispute mechanisms and government anti-competition clauses, but haven’t quite gotten around to even asking for anything that we want yet.

I sure would like to play poker with Tim Groser. ‘Right. I’ve given you my house, my savings, my pension scheme, my clothes, my boots and my car keys. Now shuffle the deck and let’s start playing.’

July 28, 2015

Economics and propaganda

Filed under: general idiocy — danylmc @ 8:00 am

Last week I tweeted a couple of observations about the role of economics in modern propaganda and marketing; namely that it’s a frequently used tool in both of those disciplines that relies on its ability to advocate for political parties or ideologies or corporate – or other interests – while masquerading as an impartial science. Some people agreed with this and others took objection, and twitter isn’t the best medium for fleshing these things out, so here’s a more extended take.

There’s a famous science fiction short story called The Cold Equations. It was written by a guy called Tom Godwin and published in 1954 in Astounding Magazine.  In it an emergency ship is heading to a remote planet with urgently needed medical supplies without which the explorers on the planet will die. The pilot finds a stowaway on board the ship: a young girl. But, the pilot explains to her, the ship does not have enough fuel to account for her additional mass. If she stays on-board then she, the pilot, and all the people who need the medical supplies will die. She must be blasted out of the airlock into space. The laws of physics demand it, and there can be no humanistic appeals to morality against the cold, hard equations of the universe. In the end (spoiler) she willingly goes to her death.

There have been plenty of criticisms of this story, all making much the same point: Godwin’s science is fine but everything around it is ridiculous (engineers especially hate it on the grounds that no space mission would ever have such a tiny margin of error that a ~60kg weight discrepancy, preventing even the most minor course correction, would doom it to disaster). A whole lot of absurd premises are piled on top of each other to get to the point where the author can blast a young girl into space and justify it on the basis of science.

Most of the economic arguments I encounter look exactly like this to me. Selected, sometimes sound but often absurd premises carefully framed around a statistical finding or mathematical model so the economist can advocate for a client or ideology or agenda but say, ‘Look. Science! We gotta face the cold hard facts. There is no alternative!’ Here are two very recent examples:

1. Should we have a ban on foreign property buyers? BNZ Chief Economist Tony Alexander says we should. He provides six very compelling-sounding reasons why, but doesn’t mention what is certainly the most important from the BNZ’s point-of-view – that foreigners paying cash or overseas-raised debt for houses means fewer mortgages for New Zealanders, and thus less profit for the BNZ. And he ignores the fact that Australia has a foreign-buyers ban (with an exception for new homes) and absolutely none of the things Alexander predicts a foreign-buyers ban will accomplish have happened in Australia. The empirical evidence from the very similar country right next door seems like it should have some salience here.

Bank economists are, along with politicians, the most prominent economic spokespeople in our society. Most people hear economic arguments from these two groups every day, and sometimes what they say is sensible and sometimes it ain’t – but there is always an agenda, and the reason these groups use the language of economics to advance their own interests is because they know that it is the perfect propaganda tool, because it disguises itself as impartial and scientific.

2. But, twitter pointed out to me, what about academics? Politicians aren’t real economists and of course bank economists have an agenda, but academics are out there doing real science and getting peer reviewed, right?

Well here’s something that a bunch of right-wing economists, mostly academics, were all retweeting today. A blog post by Bryan Caplan, a very famous professor of economics at George Mason University in the US. Caplan is also a libertarian which means he adheres to an ideology which preaches that government is evil, and all of his research as a scientist harmoniously proves that his ideology is correct. (This doesn’t tend to happen in other sciences; science is mostly the experience of dreaming up beautiful ideas and theories and testing them to find out that they’re dead wrong, but somehow libertarian economist’s results always seem to endorse their beliefs about the state, and left-wing economists results’ always endorse theirs, even though the two ideologies are totally incompatible). Caplan talks about a documentary in which a homeless guy is given $100,000 and wastes it. He concludes:

Libertarians have occasionally offered their critics the following deal: We’ll support a one-time Equalization of Wealth, if you agree to abolish the welfare state. I’m not surprised that no one has taken the bait. Most poor people aren’t as dysfunctional as Ted. But deep down even bleeding hearts subscribe to my insensitive theory that – at least in the First World – ordinary prudence is enough to keep almost anyone out of poverty.

I could say a lot about that but I’ll restrict myself to the science. Firstly, most scientists try to have a cohort of more than one person before they make a sweeping statement about all of humanity. Secondly, you also try and have a control group. What happens if you give a non-alcoholic non-homeless person a huge sum of money? Like, say, lottery-winners? Well, if you google ‘lottery winners curse’ then you find out a lot of them do exactly what the homeless guy did – they fritter it all away. Some middle-class lottery winners end up becoming homeless. The academic literature on just how prevalent this is is contradictory, but my point is that this prominent academic economist and all of the economists retweeting and endorsing him sure don’t look like serious scientists. They look like bank economists or politicians, only they’re advocating for ideologies, not corporate or political interests.

The other point I’d make about economics and peer review is that yes, other sciences have peer review, but peer review is not really that robust. If you find something interesting in a new anti-cancer drug and you’ve tested it on mice, then you publish it in a peer-reviewed paper. If you want to give the drug to thousands of patients then you have to put it through clinical trials, a very robust process that takes years (and costs a fortune). You really, really, really need to be right. But economics doesn’t go through that kind of screening before it gets picked up by policy-makers and used to justify policy changes that affect the lives of millions, or tens of millions, or billions. Here’s an Economist article on the Reinhart-Rogoff debacle (too long to excerpt) explaining why that’s a problem.

But what really set me off on my twitter rant was thinking about Thomas Pikkety, and the response to his contention in Capital in the Twenty-First Century. His thesis in that book is simple – that in a capitalist system the rate of return on capital is greater over time than economic growth, meaning capitalism leads to concentration of wealth and greater inequality. It’s an important and simple thing to know about the economic system that drives the world. If he’s right then it has huge implications for our society and the level of redistribution and government intervention. Caplan above believes that capitalism is moral. If you work hard it will reward you. Piketty claims the opposite. That it is an amoral system in which wealth simply aggregates to itself.

Unfortunately there’s no way for a layperson to tell whether Piketty is correct because the response from his economist peers are neatly divided along ideological lines. Left-wing economists say he’s right, right-wing economists insist Piketty has been ‘debunked’. He’s dead wrong.

Because my values are left-wing I’m inclined to think Pikkety is right. But I also trained as a scientist, and I know that a gut-feeling based on my prior values isn’t good enough when you’re making huge decisions about the political economy. Economics is supposed to be a science, and economists certainly view themselves as such, and tend to be far more confident in their findings than, say, climate scientists, or geologists, or psychologists, or any other field that deals in uncertainty. But as a non-economist I find that every time I encounter the discipline it looks nothing like science and is indistinguishable from either politics and political activism or marketing, but is made more insidious and more powerful from its presentation as a cold, objective set of facts against which there can be no argument

July 21, 2015

Politics and the real

Filed under: Uncategorized — danylmc @ 1:23 pm

There’s a section in The Hollow Men in the post-Orewa chapter in which Brash is about to be interviewed by – I think – Kim Hill, and one of his media advisers tells him something to the effect of ‘If she accuses you of racism, get angry.’ And she does, and Brash does exactly that. Today:

Andrew Little has lashed out at TV3’s political editor Patrick Gower, calling him a “desperate journalist”, as he got angry over questions on Labour’s foreign buyer campaign.

Is Little angry because him and his advisers agreed that getting angry was a good strategy to give the story more legs and generate coverage, or is he angry because he’s angry? We’ll never know, but I think probably the former. What else did he think he was going to get asked about today? This is a way to show the leader being tough and standing up for real kiwis, etc.

It could be that the inside-the-bunker atmosphere in Little’s office is so intense they’re convinced themselves that they really are just trying to have a conversation about foreign investment, and that all the accusations of racism are hysteria or bad-faith, and Little’s indignation is genuine. I doubt it though. Journalists like it when they provoke emotional reactions from politicians. It makes them think they’ve gotten through all the artifice and spin and gotten something ‘real’ – so they often go big on these stories, which is precisely why politicians fake these responses.

July 15, 2015

The racist style in New Zealand politics

Filed under: Uncategorized — danylmc @ 8:27 am

I don’t have much else to say about Labour’s Chinese-Housing-Market story but thinking about it this morning reminded me of something an Asian-New Zealand student in my lab said a few years ago about racism and politics (I can’t remember if it was related to one of New Zealand First’s outrages, or possibly Paul Henry’s comments about the Governor General).

Her point was that she experienced racism on a pretty frequent basis, mostly from guys yelling insults at her as they drove past in cars, and whenever politicians indulged in politics about Asian immigration it always felt like they were siding with the guys in the cars over her simply because there were more of them and politics is a numbers game.

I thought about that after reading these columns by Tim Watkin and Chris Trotter in which they confidently decree that Labour aren’t being racist. Because race comes up a lot in our domestic politics. There was National’s Orewa speech, obviously, and ACT plays the race card every single election (last year it was then-leader Jamie Whyte announcing that Maori were comparable to pre-revolutionary french aristocrats). New Zealand First reliably whips up anti-Asian sentiment. Phil Goff gave a speech on ‘Nationhood’ that attempted to replicate Brash’s Orewa speech. One of National’s ‘spin-the-wheel’ distractions whenever there’s a scandal is to warn us that the boat-people are coming. And we’re never far from a debate about eugenics with various right-wing commentators routinely suggesting that we sterilise beneficiaries.

And every time race comes up as an issue all of our pundits – who are mostly white guys, like me, who have never experienced life as an ethnic minority – pontificate about whether the issue is racist or not. The ruling is routinely partisan. Right-wing commentators insist that the debate about eugenics or ‘Maori privilege’ is not racist, but are aghast at Labour’s race-baiting on Chinese property investment. Left-wing commentators who wanted Paul Henry hung-drawn-and-quartered for his comments about the Governor General insist that Labour’s ‘Chinese-sounding-surname’ stunt is just a genuine attempt to talk about the broader issue of foreign investment.

If that’s all it is then why are so many Chinese New-Zealanders so offended by it? Could it be that white people who have never experienced racism aren’t the best arbiters of it, while ethnicities who experience racism on a routine basis know it when they see it, and are pretty damn sure they’re seeing it now?

Labour’s latest stunt might work, or it might not – ACT’s never do. But our politicians keep making race a political issue and so long as they continue to do so it’d be nice if commentators based their judgments on whether something is racist or not on how the community affected feels about it, and not our own vague abstractions or tribal sympathies.

July 12, 2015

What we talk about when we talk about Chinese people

Filed under: Politics — danylmc @ 12:07 am

Today the Herald published a number of stories about:

The first picture has emerged of Chinese buying patterns in Auckland’s pressure-cooker housing market — and it suggests a powerful, big-spending influence.

Real-estate figures leaked to the Labour Party, which cover almost 4,000 house sales by one unidentified firm from February to April, indicate that people of Chinese descent accounted for 39.5 per cent of the transactions in the city in that period.

Yet Census 2013 data shows ethnic Chinese who are New Zealand residents or citizens account for just 9 per cent of Auckland’s population.

Cue a twitter and blogosphere storm in which people accused the Herald and Labour (mostly Labour) of race-baiting using misleading statistics. Keith Ng wrote this. Rob Salmond replied.

Let me back way up here and talk about what’s driving (some) of the interest in Chinese investment in Auckland property. Back in 2008 New Zealand signed a free trade deal with China. They quickly became our largest export market. We’ve never had a relationship like that with a country like China before. Their economy is more than fifty times larger than ours. It’s been growing at an insane rate, and it’s heavily protected but slowly opening up (the boom and bust in their stock exchange in the last few months is due to the recent legalisation of margin trading). We’re like a goldfish swimming alongside an aircraft carrier.

So our new relationship with China is going to impact on New Zealand and our unusually unprotected and unregulated economy in lots of different ways that no one predicted when the trade agreement was signed. Some of them might be good, others might be bad. A lot of people suspect that’s what’s happening in the Auckland property bubble – which almost everyone agrees is bad – is that speculation from investors in China are driving the price increases. But there’s been no way to tell because until a couple weeks ago the government refused to collect data on the residential status of property investors. All of the arguments have been based on anecdotal evidence which National has always dismissed as race-baiting.

Labour reckons that their leaked real estate data indicates that a large number of home buyers are Chinese, disproportionate to the population. The problem with that, as people have been tweeting at them all day, is that their statistical analysis also captures (a) New Zealanders of Chinese descent and (b) migrants from China, all of whom have as much right to buy houses in New Zealand as anyone, but the tenor of the stories strongly implies that they don’t, and that there’s something wrong with people from those groups buying houses in Auckland.

Politicians know that this kind of race-baiting really resonates with a huge section of the population. This is a country in which people were confiscating car keys off Asian drivers just a few months ago with the media and police cheering them on. So when a politician says ‘I’m not trying to be racist . . .’ and then says something that lots of Chinese people find deeply offensive I don’t think they should have the benefit of the doubt. It’s not up to Twyford (or me) to say whether he’s being racist or not – that’s a decision for Chinese New Zealanders, and a lot of them seem very offended. And in these cases the offense is usually intended. It’s baked into these kinds of tactics – accusations of racism ‘close the circuit’ in comms speak and amplify the story, winning sympathy with voters who think that the big race problem in New Zealand is white people being falsely accused of racism.

On the other hand, I do find the logic of what Labour are trying to say fairly convincing. In his post Keith converts the percentages in Labour’s analysis into raw numbers and seems to think that demolishes Twyford’s argument, but I think he’s wrong. I haven’t done a big fancy regression analysis to figure out the likelihood that the sales in Labour’s dataset can be accounted for by Auckland’s resident ethnically Chinese population, but I think the chance is very small. Maybe Labour’s right? Maybe a lot of the buyers in their data are foreign based Chinese investors?

Unfortunately we can’t tell based on what we’ve got. But we do need to figure out a way to talk about the ongoing impact of China on New Zealand without (a) the entire conversation being written off as racist or (b) offending Chinese New Zealanders. Feels like Labour’s just set us back aways there.

July 9, 2015

What is happening inside New Zealand First?

Filed under: Uncategorized — danylmc @ 5:44 pm

First there was the Deputy leadership coup. Then the comms team in New Zealand First had the gallery churn out puff-pieces about various New Zealand First backbenchers – surely the least newsworthy individuals in Parliament? Yesterday one of their staffers wrote a column about ISIS that ran under Ron Mark’s name in the Herald.

It’s all a bit weird. New Zealand First’s brand is Winston Peters. Why are they diluting it? I have no insights into what’s happening in that party, but my guess is that it is positioning itself for a post-Winston Peters future. Why now? Peters has just won an electorate and he’ll probably have the balance of power after the next election. He has no reason to step down. But people inside his party are behaving as if he might.

Who will replace him? The press gallery have this fantasy that it’ll be Shane Jones. It’s hard for them to trail around behind that great man, sighing wistfully, when his job takes him out of the country most of the time. Imagine if he was back in Wellington and, like, leading a party! That would be the most amazing thing ever!

I’d like to see St Jonesy try and lead a party too, but I can’t see it happening. New Zealand First has been around for over twenty years. It is dominated by Peters but it has a board, staff, MPs, volunteers and donors, all of whom will feel invested in the party they’ve helped build and have ideas about its future. Parachuting in a guy who isn’t even a member and unilaterally making him leader would tear it apart. If Peters steps down before the election then there might not even be a legal way to make that happen.

It’s going to be Ron Mark. But really, speculating about the next leader of New Zealand First is like wondering who’ll take over as lead singer of the Rolling Stones after Mick steps down. A party lead by Mark will not win 5% of the vote. He could conceivably win Wairarapa against its very unpopular National MP and bring some MPs in on the electorate seat loophole. Or St Jonesy could stand in Northland and do a deal with National. Many things are possible if/when Peters goes, but the most likely, I think, is that his party will fail to return to Parliament. With the destruction of the Conservative Party and availability of 200,000 New Zealand First voters our politics could get very unpredictable.

June 30, 2015

Greece, morality and technical challenges

Filed under: Uncategorized — danylmc @ 10:28 am

What happened? Roughly:

  • The two main political parties in Greece (PASOK and New Democracy, center left and center right, respectively) spent many years transforming the Greek economy into a unique ‘low tax high public spending’ model, in which there was a generous social welfare state but no tax revenue to pay for it. (Shipping, for example, which is where most of Greece’s very wealthy earn their money, was exempt from taxation).
  • So it was funded through borrowing, mostly from French and German banks. The left-wing government won entry to the EU currency union by defrauding the European Union, partly through paying Goldman Sachs to convert part of its debt into derivatives, which it didn’t have to declare to EU officials.
  • Eurozone membership allowed Greece to borrow money at extremely low rates, so the center-right government went on an insane borrowing binge for four years before the global financial crisis.
  • In the wake of the GFC it became apparent that Greece had been misreporting its economic statistics for years, that its public debt levels were unsustainable and that it was in threat of default. The Greek economy went into a deep recession.
  • Now, normally when countries go into recession they devalue their currency. Greece couldn’t do that though because it was a member of the European Currency Union. And normally when you’re in a currency union you’re also in a political union – like the United States – and wealthy members of the union simply transfer money to poorer regions. But there was zero political will in Germany and France to just transfer money to Greece, for obvious reasons.
  •  Enter the ‘Troika’. The International Monetary Fund, the European Central Bank and the European Commission undertook a series of loans to bailout the Greek government and prevent it from defaulting on its debts (which were, remember, mostly to German and French banks). The Troika made the loans contingent on a radical restructuring of the Greek economy.
  • These were the famous ‘austerity measures’. Lower government spending. Wide-scale privatization of state assets. New taxes. The austerity measures would cause some temporary pain, the Troika admitted, but according to all of their forecasts they would lead to a rapid recovery as bond markets rewarded the Greek government for making such tough choices, and business confidence soared.
  • The austerity measures were implemented, slowly, against a backdrop of massive protests, public strikes and rising political support for far-right fascist political parties. The recession worsened. Unemployment increased. More and more businesses went bankrupt.
  • The deepening recession put the Greek government in danger of default again. They went back to the Troika who agreed on another bailout loan on the conditions of even harsher austerity, the first round obviously not having been implemented properly, but the second guaranteed to lead to a recovery and robust growth.
  • The second package was passed through the Greek Parliament, amidst a backdrop of rioting and looting in central Athens. The second round of austerity measures were implemented: the economy continued to collapse. A UK economist described the outcome in 2012:

Since the beginning of 2008, Greek real GDP has fallen by more than 17pc. On my forecasts, by the end of next year, the total fall will be more like 25pc. Unsurprisingly, employment has also fallen sharply, by about 500,000, in a total workforce of about 5 million. The unemployment rate is now more than 20pc. . . . A 25pc drop is roughly what was experienced in the US in the Great Depression of the 1930s. The scale of the austerity measures already enacted makes you wince. In 2010 and 2011, Greece implemented fiscal cutbacks worth almost 17pc of GDP. But because this caused GDP to wilt, each euro of fiscal tightening reduced the deficit by only 50 cents. . . . Attempts to cut back on the debt by austerity alone will deliver misery alone.

  • The social consequences have been devastating. The suicide rate has soared. Youth unemployment is at 65%. HIV rates are up 200%. 20% of the shops in Athens are empty and the city is filled with homeless. 400,000 people in Athens eat at soup kitchens every day; about ten percent of the cities population.
  • The two centrist political parties were voted out of office, replaced at the beginning of the year with Syriza, a radical left-wing party. Because the government is unable to meet its debt repayments Syriza went to negotiate a third rescue package with the Troika, who after careful consideration decided that the Greek economy needs more austerity.
  • Syriza campaigned on an anti-austerity platform, so they’re putting the new austerity offer to a referendum, something that has deeply offended the Troika. A ‘no’ vote seems likely to trigger Greece’s exit from the euro. No one knows what will happen then. One bank estimated the cost to the Eurozone at about a trillion dollars. (Greece is defaulting on a $1.6 billion debt repayment to the European Central Bank).

So there’s plenty of blame to go around here. The politicians who ran Greece from 2000-2009 shouldn’t have borrowed all that money that they couldn’t pay back. The banks shouldn’t have loaned it to them. The EU should have anticiptaed the problem that lack of currency control would cause troubled countries.

But the real blame seems, to me, to be with the Troika. A bunch of the world’s most brilliant economists have contrived to take a moderate sovereign debt crisis and used their expertise to wreck a developed economy, inflict extraordinary misery on millions of people and initiate the break-up of the Eurozone, triggering a global market panic.

Keynes used to say ‘The economy is not a morality play. It is a series of technical challenges.’ Unfortunately, Europe’s economists turned out to be the worst people imaginable at solving this challenge.

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