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Gareth Morgan says support for reform is gathering steam. Your view?

Gareth Morgan says support for reform is gathering steam. Your view?

Gareth Morgan and Susan Guthrie have authored a book called The Big Kahuna that proposes a single tax rate on all income, including from capital, and a Universal Basic Income for all.

By Susan Guthrie and Gareth Morgan

The Economist magazine leads its latest issue with its prescription of how to increase tax of the rich.

At last we have arrived at the point where the most conservative proponents of market economics admit that the past 30 years, since Reaganomics and Thatcherism were unleashed, has resulted in a serious distortion of our tax regime.

The only opposition to significant reform is now the ugly Hard Right rump, which favours jungle economics and taxes only to pay for their security forces and lazy or paralysed politicians.

It is indeed a revolution that has swept the world's financial press as, finally, there's recognition of the damage wrought from policies that have allowed greater and greater wealth disparity in most developed economies.

The damage from financial deregulation and the enthusiasm of central banks to distort wealth distribution by essentially directing banks to lend on property in preference to all other forms of credit, plus their utter negligence in controlling the activities of shadow banking, spawned an orgy of property speculation and deterioration in commercial bank balance sheets.

Taken together with so-called taxation reform that in effect has exempted the rich from tax on the credit-fuelled capital gains, we have ended up with a grotesque polarisation of wealth.

That the conservative financial press - staring down the barrel of rolling recessions as the consumer-led economy stutters to a standstill - is acknowledging negligent central banking and distortionary taxation "reforms" as the cause - is the start of the fight back.

It's been six weeks since we published The Big Kahuna and during the past month we have contributed to the New Zealand Herald articles about inequality, redistribution, tax and welfare. The responses to our suggested policy reforms have in general been favourable, albeit there have been reservations about the radical nature of the changes recommended.

Be aware, we are not talking here about minor tweaks, this is substantial reform of the decrepit tax and transfer regime we have ended up with.

Sure, the response from some critics has been to attach labels - communists, naive do-gooders, public enemy number one - resisting vehemently the concept of extending the tax base beyond just cash income to all income that accrues from wealth.

How they will respond to this latest out-pouring from the Economist magazine, the bastion of conservative economics and dependable source of moral and economic guidance for the well-heeled, will be fascinating. Let's hope their education is enhanced.

"There are three good reasons why the wealthy should pay more tax," hails the Economist.

"Raising more money from the rich ... can be done not by increasing marginal tax rates, but by making the tax code more efficient." Starting to sound familiar? That means filling in the loopholes, like trusts and tax free income from capital.

"Since the main beneficiaries of the deductions are the wealthy, richer folk would pay most of that. And since marginal rates would be untouched [or reduced], such a reform would do less to discourage them from creating wealth."

The Economist even goes so far as to support the "mansion tax", proposed by Britain's Liberal Democrats. There it is, unfudged straight shooting as always - the rich should pay more tax and they should not have access to gaping tax loopholes.

'Warren Buffett too'

It's not just the Economist that is awake to the damage wrought by tax systems that leak. In the United States - a country traditionally anti-tax and all for unfettered markets - the mood is the same. Calls from high net-worth individuals, like Warren Buffett, to tax the wealthy more have struck a chord. A September Gallup poll found 2-to-1 support for higher taxes on those making more than US$200,000 a year.

Lest you're still festering in your increasingly lonely resistance to this emerging consensus to taxing the rich and redistributing the proceeds, economists at the IMF have joined the call, finding causal links from inequality to poor economic performance: "Higher income inequality in developed countries is associated with higher domestic and foreign indebtedness".

"Equality appears to be an important ingredient in promoting and sustaining growth. The difference between countries that can sustain rapid growth for many years or even decades and the many others that see growth spurts fade quickly may be the level of inequality. Countries may find that improving equality may also improve efficiency, understood as more sustainable long-run growth."

No surprise, then, to hear from the IMF that "the view that income inequality harms growth - or that improved equality can help sustain growth - has become more widely held in recent years".

New Zealand stands out a mile from other countries in the ambivalence it displays towards taxing wealth - particularly the wealth locked up in land and property. Even the US - not known for its aggressive tax stance - has a capital gains tax for goodness sake.

In The Big Kahuna we identify the sieve that is our tax system and show how to tighten it up. We also need to overhaul our welfare system to restore the rewards from paid work for those who choose to undertake it and provide the means for all to find a balance between paid and unpaid work.

The Big Kahuna policy combination provides a lower marginal tax rate on wages earned above $70,000 (from 33 per cent to 30 per cent) thereby achieving the outcome of most concern to the Economist - maintaining incentives for those with high skills to work, innovate and take risks.

While the Economist confined its enthusiasm to reforms which close tax loopholes, its logic equally applies to the tax/welfare reform we propose.

"Imagine a tax system which made the top rates on wages and capital more equal, and which eliminated virtually all deductions. It would also allow for a much lower top rate of income tax. The result? A larger overall tax take from the rich, without hurting the dynamism of the economy. Now that would be worth blowing your horn about."

Cheers to the Economist, our policy prescription - and it is a revolution - is becoming more orthodox by the day.


- Gareth Morgan and Susan Guthrie are authors of The Big Kahuna - Turning Tax and Welfare in New Zealand on its Head - published recently.
This item was first published in the NZ Herald.

Here are links to Part 1 in this series, and to Part 2 in the series.

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You either have the State controlling your life: you have no privacy from the bureaucrats, you have no freedom, you're simply on the road to serfdom at the hands of the brute State and tyranny of the majority where humanity has been time and again over the darkest periods of the 20th century, or, you are free to control your destiny, pursue your happiness, love your family, friends and the wonderful process of living, with the state as your servant only, protecting you from force of others in the classical liberal society.

That is all that is being discussed here: it's nothing to do with economics, although his form of Keynesian socialism is destroying the West anyway. Marxist Morgan would have us living the Lives of Others; from the core of my free soul, I hate him for what he is doing. To advocate the brute State, you have to be a brute yourself, Gareth, compassionless and uncaring.

I regret compromising my principles and joining Kiwisaver to get some of my tax back: but one promise I can make: my funds won't be with Morgan Investments by the end of this month.

(And as for Buffet, he has spent the last 20 years fighting the IRS in order for his investment company to pay less tax, to the point the IRS now say he owes them US$1 billon. As hypocritical as making a lot of money from a share deal, paying no tax on it, yet advocating in the same circumstances I should be).

Exactly, it is absurd that the "size of the State" has steadily advanced to greater and greater percentages of the economy in most western countries, and the debate always is about where to get the revenue from to support this. This process has to have hit its limits already.

I am all for taxes being ameliorated from the bottom up. Every tax cut should be made by increasing the amount of income taxed at zero percent. The worst "marginal tax rates" are faced by people getting off benefits and becoming workers and taxpayers. This is the single biggest "wrong" in our system.

But even the political parties who claim to represent the working poor, never advocate this. This is because these political parties are all about useful idiots and growing State power and adding to dependency. It is also because the profligate government espoused by these people simply cannot afford to give "tax cuts to the poor".

The political snivvellers who forever mouth off about "tax cuts for the rich", need to be held to account by the media - are you, then, advocating an alternative system of "tax cuts for the poor"? No? (and they never are). Why not?

He may lose your KS custom but with all the book advertisement he's had here the last few weeks (months?), the book sales should make up for that!! 

Black or white, as per normal......the other 99.9999% of voters recognise that there are shades of grey....thats what the ballot box is for.

I would rather the state have limited control than private least i have the power of the vote over the state.


Grey is the colour of prisons, steven.

As for your vote, it's useless against the tyranny of the majority. Mine certainly is. No freedom to be found in our social(alist) democracies.

Society is the formation of the majority....there is a difference, I certainly dont see why say 1000 libertarians in NZ should have any meaningful control of the other 4million...that would be the flee on the tail of the dog. That isnt freedom....thats letting the sharks feed at will....


Let me take you through it again, slavey steven. How many times is this now?

A libertarian wants a society precisely where he or she can't control anyone, and, so long as he or she does not initiate force, no one can have control of him or her, most certainly not the state, because the state is merely a servant there to police the non-initiation of force principle. That is the classical liberal society, it is NOT a democracy, it has no politicians, they're not necessary.  That is a state of freedom.

Compare that to our social(alist) democracy, which is a tyranny of the majority. For example:

You have a democracy consisting of ten people, nine of these people are white, one is black. The democracy holds a democratic election voting on the proposition that white people should not have to work and be able to live off the efforts of black people. The vote is won by nine votes to one: the black person is now a democratically elected slave, his vote was useless to him, the majority is his master.

Get it yet? (How old are you?)

Tribless, you say

A libertarian wants a society precisely where he or she can't control anyone

If this was true then there would be no government, no army, no police, nothing. The poor people have nothing to protect apart from themselves so why should they be forced to pay to protect your assets.

The role of the state - a state so small no one today would recognise it - is to police the non-initiation of force principle: that involves a police force (domestic aggressors), an army (outside aggressors), plus a criminal and a contract law system. That's it.

And then we could have this, again.

So, if i and others choose to protect ourselves and not pay for police or an army then as far as you are concerned TOO Bad. We MUST abide by YOUR view because YOU know what is best for me.

So much for your freedom

I dont see it as slavery.....and in fact you have the choice to leave....


So Tribless,

Do you worry about vast chasms between the rich and the poor?

Do you think these gaps make society and the economy more stable?

Are you happy for large corporations to hold unchecked power?



Don't be so mean Bernard...he needs that e!

The abuse of the large corporations you speak of are part of crony capitalism, not laissez faire, Bernard.

Regarding the gap between rich and poor, I answer to that in my blog (and I'm really miffed, to say the least, that I've lost the damned thing). But, as you've asked, indulge me while I copy one of my posts:

Income Inequality - so what? (Reprise).

This is a rehash of a very old post. I'm putting it up again, because I'm sick and tired of the rot constantly talked about income inequality.

So Eric Watson and Bill Gates earn more than me: big deal. Doesn't mean their lives are any better than mine; I have the money to buy everything I need, and both these gentlemen and I squeeze through the toothpaste tube at the same rate and that'll be the case no matter how much more they earn. All of our standards of living are unrecognisable to past generations thanks to the industrial revolution and the innovation and wealth creation of free markets. But to do what the social democrats are doing, regulating and destroying free markets and forcibly taking the earnings these men have generated through risk taking and entrepreneurship to give to me in an effort to 'even us all up', just takes all of our freedoms away completely, and puts us living in the jail of Nanny State,our pursuit of happiness gone.

And to counterweight the nonsense spoken about tax the rich harder and higher, which the ObamaMessiah is again announcing from the sandpit of Washington as he continues to bankrupt that once great nation of free men and women, just as Cullen did in New Zealand thereby distorting our tax system, consider this:


In 2008 (the latest year for which accurate data are available), the bottom 95 percent of income-earning households in the U.S. – a group that surely includes “middle-income taxpayers” – paid 41 percent of the revenue taken in by Uncle Sam from the personal income tax, while the top 5 percent of income-earning households paid 59 percent of this tax revenue. And looking only at the top 1 percent of income-earning households – surely “the wealthy” – they paid a whopping 38 percent of federal personal income tax revenue.

Now for a different angle.

In 2008, for the typical household in the top one-percent of income-earning households in America, the percent of its adjusted gross income that it paid in federal income taxes was 23.27. Middle-income households paid less. For households whose earnings put them in the top 50 percent, but below the top 25 percent, of income earners, the percent of their adjusted gross income paid in income taxes was, on average, 6.75. For households in the bottom 50 percent of income-earners, the percent of their adjusted gross income paid in income taxes was, on average, 2.59.

Similarly in New Zealand, the top 17% of taxpayers pay 97% of the tax-take, while over 44% of families take more in benefits out of the welfare state than the taxes they put in it. So guess who are actually having to pay for the jail of State anyway. And what a pity the majority of this tax money is being criminally squandered on making our violent, unsustainable, welfare States even bigger. We're all going to regret that in time. Best to leave people with their own money, and create the right incentives for a free and prosperous society. And don't worry your neighbour might have more than you, because to 'fix' that you destroy the civilised society completely.

As I say more and more: before advocating legalised theft of other peoples' efforts, go rent a movie called The Lives of Others, and see if you really want to live in the world you'd have us all inhabit.




Income Inequality - So What (Reprise 2)

Following onfrom my post yesterday.

There's another contradiction employed by the people who are wowsing about income inequality. They bemoan that the gap between rich and 'poor' - a nebulous concept in an historical context - is growing, and thus we must tax and regulate to reverse it.




That gap is growing under the planned economies of our social(alist) democracies: pork barrel politics and crony capitalists gaming regulatory systems set up by politicians clueless as to economics, unintended consequences, or the philosophy of freedom. Ie, with an eye mainly to their own aggrandisement.


So why does anyone think more regulation, more taxation, more crony capitalism will 'fix' it.


I wonder if they might stop to consider the answer, therefore, lies in the way of the freedom and prosperity gained from the classical liberal society and laissez faire capitalism, as opposed to crony.


And in other news I see the ObamahMessiah is now to go ahead with Puffet's Envy Tax, (PET cronies), on the rich. As written in this blog previously, don't think that more tax revenue means less government debt, and so a way out of America's problems, far from it, and never forget the hypocrisy of Puffet - I wonder if he's told the directors of his investment firm to drop their 20 years of fighting the IRS and pay the $1billion in taxes that he owes? (Not likely).


"So Eric Watson and Bill Gates earn more than me: big deal. Doesn't mean their lives are any better than mine;" Couldn't agree more with you there. But jealousy is part of human nature...

You guys are missing the point. It's not about eric watson earning more than anyone else. Good on him. But does he pay more income tax than those whom he earns more than, probably not. This is about fairness, not dragging anyone down. You guys are confusing high income earners with the wealthy. High income earners under this proposal will pay the same percentage income tax as everyone else under this proposal. How is that unfair?

17% of taxpayers pay 97% of the tax take. I think that more than their 'fair' share, don't you?

Though what does fair mean when we're talking about taking a person's income from them, no matter how much they earn? Where did we lose morality?

Yo, Ellery: experience has taught me jealously seems to mainly motivate the socialists ... food for thought.

Yeah, okay Iain, then let's go to laissez faire and the gold standard, and live the free life.

Oh, no wait a minute.  You believe in the angels or something equally absurd.

"Income Inequality - So What (Reprise 2)",

"There's another contradiction employed by the people who are wowsing about income inequality. They bemoan that the gap between rich and 'poor' - a nebulous concept in an historical context - is growing, and thus we must tax and regulate to reverse it."

Maybe this one is too simple for you to understand. The plan is to tax the upper income brackets more and then re-instate the social systems, universal free education, universal free higher education, universal health-care, infrustructure for a secure energy grid and a liveable pension for the retired, kicking in at a reasonable age.

Because all these systems have been drastically under-funded over the last 25+ years they have broken down. In order to reduce this problem the government will need to increase it's income.

Once the correction to these institutions kicks in then lower and middle income earners will have a higher effective income. This will be because they don't need to pay for the doctor every time they go, don't need to pay multiple fees just so their child can attend school, don't have to pay off a massive student loan, don't need to pay as much for energy and don't need to mortgage their home just so they can afford to be cared for in their advanced age.

As an added advantage all these social systems function better when they are freely available, e.g people who regularly visit the doctor don't get sick as frequently. Basically this is about re-instating a system which was affordable 25 years ago before it became idealogoically underfunded. Everybody should have grown up enough to see that the idealogical hocum favouring free-market capitalism is thin at best. Nobody should trust a bunch of economic theory which believed that the 2008 crisis could not happen, because it's clearly not valid.

Strange that you would miss this concept and focus on drawing up a strawman argument about crony capitalism, which is completely irrelivant.


The Welfare State has been in place for 80 years. From the inception it's affordability was an illusion: it was always only possible on current generations getting a free lunch at the price of bigger and bigger tax bills for future generations - that was plain irresponsible, and the global financial crisis is nothing less or more than the natural consequence of the Keynesian socialism and fiat money systems on which it was all built (and the cruel deception of generations of well meaning politicians with no ability to face reality).

We have a die while you wait health system. A state school system from with a quarter of the kids have enough numeracy and literacy problems to make them unemployable. It's a Gulag of Good Intentions, with the operative word being Gulag.

And that's before we even get onto the the ethical, moral issues. The Welfare State is built on State coercion and bullying. Our social(alist) democracies have destroyed the only ethic that could have led to stable, peaceful prosperity, and the freedom of each individual from the force police and the thought police, as well as from each other: that is, the classical liberal society founded on the only economic system that is proven to generate prosperity and foster freedom, laissez capitalism. The only compassionate society is a classical liberal society.

And no, what we have with our social(alist) democracies today has nothing to do with laissez faire capitalism: it is crony capitalism, and it's crony capitalists involved in pork barrel politics and game playing regulation, that is growing the gap between rich and poor (for those that think that a problem - read my post above, I don't). Here's a fascinating graph, over the last two decades the two countries that had the biggest growth in the gap between rich and poor, were the two paragons of social(alist) democracy, Sweden and Finland. Fit that into your belief system.

But overall, there's only one issue in all this for me: liberty, I want it. And the biggest abusers of liberty over the last one hundred years have been the State. We are far closer now to 1984, than 1776.

Absolute rubbish. The vast majority of people who saw the consequences of Rogernomics decided immediately it was not a good thing. There was no unaffordable social policy rhetoric until the financial system collapsed, although post the 80s most social policy systems have been vastly underfunded. You still base your perspective on economic theory which didn't even see the crisis coming.

I know well enough some of the causes of the change in Sweden (noting also the difference between growth in gap and the actual size of a gap). The primary one being the privatisation of a public banking system. Also noting of course the social system bailed out banks in both Sweden and Finland, which is hardly going to be healthy going to be healthy for even a well managed and funded social policy framework.

How did chicago school policy work out for Chile by the way? or in Africa where it was applied? US looking pretty free-market these days, especially the bankrupt financial system. Why was Bush 2's  economic policy team against his 2003 tax policy? Why did Bush 1 dismiss Reganomics as 'voodoo economics'? Why did 450 professional economists in the US inclusing 10 Nobel prize laureates oppose them?

"We have a die while you wait health system.", While I don't agree that it's that bad, by any means, this is what happens when you underfund the system so that a tax break (of 30%) can be given to the top income bracket.

"A state school system from with a quarter of the kids have enough numeracy and literacy problems to make them unemployable.", We also have child labour laws so they are unemployable until they leave school. Also education has been obviously underfunded for about 20 years again same reasons given above. I hope you count yourself in the illiterate or innumerate because you seem to be having trouble,

The state programs have been vastly underfunded for a reason Nicos, because it is not possible to extract enough tax revenue from a society to fund these programs.

Rogernomics policies at the time were required because we were broke, or very close to it. At the time we were witnessing the inevitable endgame of an extended period of socialist policies.

When you subsidize/incentivize something you get more of it. By restricting the ability of one to succeed and by softening the impact of not paying ones way the consequence is obvious.

I am thinking Tribe has more of an Austrian than Chicago view on things, the Austrians have been screaming from the rooftops the GFC was coming, they still generally feel more is to come, there is a lot of dept that needs to be liquidated before a bottom is reached, it is felt this may come in the form of a currency crisis. Its Keynesianisum/socialist thinking that thinks an economy can be kept levitated at artificial levels indefinitely.


Cheers Banksterbasher. Yes, I'm an Austrian.

And to reiterate: Rogernomics went nowhere far enough: it should've got to the flat tax rate if it wasn't for the teabreak. The commodity export prosperity from the rural sector over more than the last decade was on the back of the deregulation of the agricultural sector in the early 80's - it had nothing to do with Cullen, indeed, he squandered the wealth made by growing the State to almost a half of the economic activity of the country. And don't people remember, anymore, that when that Lange Labour government came to power, the country was literally going to default on it's debt commitments the day after the election. We were utterly, flat broke. Just as all the Western Keynesian Nanny States are now going under in Europe as well as the US.

If anyone takes anything from this thread, read the link I gave to the Mises bailout reader.

Though the one thing socialists are worse at, is understanding the facts of reality: that's why I'm a slave to the Nanny State, and the West is in the mess it is. I mean look at the Greek riots last night: they're protesting, at the same time, both the cutting of government services, and increases in taxation - that's contradictory, that's the entitlement mentality fostered over the last 80 years that has destroyed the possibility of the free society that existed turn of the century.

(And on the slavery issue: if you are forced to give away your labour to another, that is the dictionary definition of slavery - well through the tax system I am forced to give a good portion of my labour to the State, to be used for purposes I have no agreement with, and which I believe will simply continue to grow a violent, slave society.

Hey tribe, I am totally in your camp, freedom, no nanny state, and all that, but I think the big kahuna is the best thing I have heard yet.

I see it as a framework to achive those values.  TBK as I see it is't a marxist system at all.  It is all about where the thresholds are set.  Our camp might be looking for the flat tax rate and GMI to be approching 0%/0GMI, where as our commie friends on this site might be thinking closer to 100%/highGMI.

In the mean time it is efficient, and it removes a lot of the malicentive to succeed, and ten times better than what we have now.

The biggest challange we have is busting this dishonest monetary system.

Some of us believe that the biggest challenge we face is cutting down the bloated welfare state , which is bankrupting the country . Taking the power back from the politicians and the busy-body bureaucrats , and giving the power back to individual citizens .

... and all that Gareth Morgan's  "Big Kahuna " project does , is to turn every citizen into a ward of the state . The pollies gain 100 % power over the populence !

Makes yer wonder why those nanny-statists Clark & Cullen didn't come up with the same idea as Gareth's .

If you are a serious student of the Austrian school you ought to know about the monetary system, which you clearly don't.

There is no contridiction in protesting paying more for less in Greece, especially when the cause of their woes is not the cost. The von Meises school are just there to get rid of any kind of society as much as the Libertarians, of course they will claim that social policy is at fault.

So how did government social policy crash the US financial system anyway? It's not like US banks pay too much tax. Kind of alarming as well that you think New Zealands social policy is responsible, didn't the crisis come from overseas? Are we harbouring financial terrorists?

You don't appear to understand slavery either, its much more like working for a living than taxation, except you don't get anything wages in return. I suggest if you feel taken advantage of you could extract yourself from your 'slavery' and nobody will really care. Go to the DIA and get a passport and go to another country and pay tax to them. I swear they will let you leave, there is no bondage holding you. Nobody will say, sorry sir you can't leave John Key ownes you, you work for him now. I do hope that was the only miss-conception holding you back.


"If you are a serious student of the Austrian school you ought to know about the monetary system, which you clearly don't.""

I know the monetary system is run in the interests of those that are at the top, and it’s a mathematical certainty it will collapse, and that if we had an honest free market monetary unit rather than a government regulated one, we wouldn't be in this mess or have the widening gap between rich and poor.

"There is no contradiction in protesting paying more for less in Greece, especially when the cause of their woes is not the cost."

Yes there certainly is a contradiction. The contradiction is there isn't enough tax revenue to cover the entitlement expectations of its citizens, simple math’s.

"So how did government social policy crash the US financial system anyway?""""''mvvv"

Government regulation allowed for the lending of money "through the fed" at waaaay below what would otherwise be the market rate of money, and the downside loss was guaranteed by the government. This led to a ginormus global bubble in property prices.

If money was lent out at true market rates (i.e. the way most people think it currently works, by banks having to offer an interest at such a rate high enough to encourage people to deposit with them, and adding on enough margin to make a profit) then this bubble could not of occurred. Instead the fed kept rates really low (2.5%) for an extended period.

Any loss was guaranteed by the government through a government mandate that required Freddie and Fannie to back loans to borrowers that could otherwise not meet market lending standards.

Consider yourself enlightened.






Steady on there. The New Zealand health system is actually one of the best in the world on an outputs per dollar scale. It is in fact very efficient with the relatively small amount that we put into it. 

And for those of you with more money, you are perfectly welcome (and encouraged) to use the private options.

To be fair Berno, I don't think you can blame a widening gap between the rich and poor on free market principles. Generally were ever you see inequality in society you see government intervention of sorts.

For every intervention in the market there are always consequences unintended by the twiddler’s who implemented the change.



Realistically you are going to see government intervention everywhere, because there is always some form of government. What constitutes intervention is determined by an individuals perspective, Child labour laws = government intervention. Consumer guarantees = government intervention, Central bank insurance = government intervention, Border police = government intervention, Immigration policy = government intervention, Property rights = government intervention, Contract law = government intervention, Wellfare = government intervention, Working week = government intervention, Police state = government intervention, Central Planning = government intervention, Freedom of Speech = government intervention.

This makes laissaz-faire a practically meaningless concept. Give a sensible definition of government intervention and then maybe it would be worth talking about what a lack of it will do to society or equality.

It's interesting that you state that you want the government only to protect you from the force of others. When people speculate in the property market, they are exerting their force, and they are exerting their force in a way that directly harms me. My rent is more expensive becuase other speculate. My chances of owning a home are drastically reduced because others speculate. I want to be protected from the force of others tribeless! So I want the government to tax in a way that punishes people for harming me in this way, just like I want the government to punish people who steal from me. In the end it has the same effect on me.

You don't know the difference between force and a capitalist transaction.

When you pay rent both parties benefit from the transaction: the landlord gets a profit, you get a place to live. That is, capitalism is not a zero sum game, both parties partake voluntarily, and take value.

The property market transaction is entirely voluntary on all sides. You are as free to speculate as the speculator you despise. However, if you bash me over the head with a four by two, then you have taken away my volition in your use of force.

No wonder the West is a socialist mess breaking down into violence: Gramsci has really done his job well in the education system.


Now what do you think of my tyranny of the majority example above: happy to live in a society that works like that/this?

I don't have a problem with rent tribeless. It's speculation driving prices up with I take issue with. 

Property speculation causes me to pay more money in rent, and it is not voluntary on all sides. I was never asked. I had no control or choice in the matter, but I lose money because of it. The speculators have taken away my volition to spend  the $20 a week I used to have on whatever I choose. It's as good as if two of them had decided between them that I should give them an extra $20 a week, and taken it by force. The fact that they agree on it gives them no right to take it from me. Sound familiar? Surely a libertarian should be against any group exerting that kind of force - not just the state.

Saying that I have as much freedom to speculate as they do is nonsensical, it is like saying I have as much freedom to bash them with a two by four as they do to bash me. We both agree that everyone should be protected from bashing. 

No, Ben, what you are implying is that a shopkeeper is initiating force against you by charging you for his goods.

But we'll try another angle: what caused the property speculation in the first place? The property boom was absurd, and would not have happened to the extent it did in a laissez faire economy. The asset bubble was fueled by our fiat money, central bank planned economy, Keynesian socialism, because we are not a laissez faire capitalist economy. Take the government/state out of the economy, stop regulating our lives, and the property speculation that you think disadvantages you, would not exist. The answer is not to tax property, but to give us laissez faire where the market is not distorted by the unintended consequences of government interventions (which will always lead to our serfdom - read Fredich Hayek).

Once again, with the shopkeeper I do get a say, just like with the landlord. Not so the speculators. 

I'm confused. I was under the impression that speculation took off after large scale financial deregulation since the 80s. I can see how the government and central banks have had a role in loading us up with debt, but I can't see how they led to the rise of speculation (other than by deregulating ). Debt and speculation are two different things - people were bidding up the price of commodities long before households were encouraged to take on debt. Please elaborate for me. 


Property prices and debt took off when the monetary system, the creation of money, became dominated by private corporations. The central banking system is not the sole creator of money, or even the primary creator of money any more.



I've spent too much time here yesterday, I've got to work today. The best thing I can do is refer you to the many articles on the Mises Bailout Reader, start at those regarding the housing bubble.

Also you are wrong about the deregulation of the 80's: that deregulation went no where near far enough, but thank goodness for what did happen, for you might remember the country was literally broke: we couldn't pay our overseas debt bills. Many farmers who were forced off their farms with the dropping of subsidies would certainly disagree with you that dereguatlion led to speculation in farm land prices! Though our 'deregulated' farming sector is now one of the most efficient and profitable in the world, and thank goodness for that, because without agricultural exports, the country would be in a much bigger mess than it is. Finally, and the real biggy, the biggest factor in New Zealand over last decade leading to higher and higher land prices is over-regulation in the form of the RMA - for you in particular, that Act has been a disaster.

Sorry, you are trying to convince me that a private sector banking crisis, in a heavily deregulated financial environment, where the regulatory authority basically does not prosecute ever, was caused by too much government interference? Even Kafka would struggle with that narrative. 

Alan Greenspan admitted that much of his deregulation policy was a mistake, once he saw the consequences. Time to remove the blinkers, I think.




I've been reading the articles you linked me to. In them they identify the 1980s deregulation as being an important contributor to the bubbles.

In general, the articles seem to argue against governments placing incentives for assets, but not against regulation. They would disagree with an injection of money to deal with the problem, but I didn't see anywhere the idea of negative tax influences adressed.

In any case, we are in New Zealand currently in a state where there do exist strong tax incentives to invest in housing, due to the lack of any kind of taxation on income earned through capital gain. This has led to the misallocation of resources in housing. The big kahuna would remove these incentives that distort the market. I fail to see how this is a bad thing.

Eh?, but the Resource Management Act is entirely the sort of thing you are advocating -- if as you argue Tirbeless that government is needed to stop such things as physical assaults, soemthing like the Resource Management Act is needed to stop assaults of others on our environment, to ensure all costs are internalised.  

Getting rid of the Resource Management Act just creates massive subsidies to developers, miners, industry  from everyone else who has to put up with the degraded environment that is created.

Like I said earlier, the Libertarian argument, is entirely self defeating and contradictary when applied to any kind of property.


Government regulation allowed for the lending of money at waaaay below what would otherwise be the market rate of money, and the downside loss was guaranteed by the government. This led to a ginormus global bubble in property prices.

If money was lent out at true market rates (i.e. the way most people think it currently works, by banks having to offer an interest at such a rate high enough to encourage people to deposit with them, and adding on enough margin to make a profit) then this bubble could not of occurred. Instead the fed kept rates really low (2.5%) for an extended period.

Any loss was guaranteed by the government through a government mandate that required Freddie and Fannie to back loans to borrowers that could otherwise not meet market lending standards.

Consider yourself enlightened.


The key point being, money is not leant out (as in a transfer) but is manufactured by a commercial bank whenever they issue a loan (called a credit).

Double posting sorry


This laissez faire capitalist economy -- is it the same as what Adam Smith wrote about -- with the assumptions of lots of suppliers, perfect inforation etc.  beacuse if it is, such a beast ceased to exist many many years when we moved from village based barter-type economies.

Maybe there was laissez faire capitalism in the US in later part of the 19th century.  It lead (as it inevitably will) to monopolies, market abuse etc.

And I suppose Dickens wrote at length about  UK attempts at laissez faire capitalism.

Actually Laissez-faire markets have never existed. Adam Smith could not put his arguments into economic theory, but since then the neo-classical school has tried to justify his writing with their models. This has lead to generally more and more obtuse assumptions being made in order for these Laissez-faire markets to actually work,

For example, perfect information actually means everybody involved can forecast the future, and be right? Well hang on that sounds a bit unrealistic to me.

Smiths arguments were eventually correlated with something like general equilibrium theory, but a large flaw was found with this model, it does not apply to a macro scale (no matter what the micro analysis says).


Only once welfare is removed completely from our society can we begin to talk about equality. 

And indeed that is the underlying premise of the Big Kahuna - it abolishes the whole of WINZ and provides a simple equal in amount transfer to each and every adult New Zealander. 

The working receive the transfer as no tax on their first $30 odd thousand in earnings - and those not earning to the level of that tax free threshold receive it as a cash transfer. 

Beyond that, similarly, every dollar earned above the $30K (or thereabouts) threshold is taxed at the same rate - whether you earn a dollar or a million dollars above that threshold - and whether those earnings are by way of profit or labour.

It delivers to folks like Tribeless on the majority of their grievances - principle of which is it gets them (government) out of the business of setting a whole raft of rules to determine who is and isn't 'needy'.

The adjustments will be significant for many of the presently defined 'needy' but I suspect a surge in community ways of doing would arise out of the implementation of the policy.  Basically, society will look to families, friends, neighbours and wider civil society to assist them through the transition - as opposed to government.

Fair go Kate...I reckon you are just winding people up...Ask Goofy if the BK is a threat to his glorious Labour Parties potential to get back into power.

Of course it's a threat to Labour - just like it's a threat to National.  How many times and how many examples do we need to convince you that they are of one and the same mold?

I agree with Kate.  So many things like  20 hours free childcare etc have  had to be provided  because people do not feel able to look after themselves. The Big Kahuna proposal opens up the opportunity to take the guaranteed income and look after yourself. We could then get rid of the 20 hours free childcare and parents could look after their own children.  Similar thing arises for interest free student loans - get rid of the loans and let those who think they will benefit from studying use the guaranteed income to fund it.

How true.  Know a Mum, 3 kids, from two fathers on the DPB - living in a rental across the road from the beach in Papamoa.  Both preschool children are in full time daycare, the other is primary age - all paid for by the state (aside from I think a contribution from her of $10.00 per child per week for the daycare), while she studies naturopathy (of all things!) at home via correspondence - again knocking up an interest free student loan. 

And her parents live in a $1m+ house - only a couple of miles away - 4 bedrooms and only using one of them for themselves. 

Bring on the Big Kahuna I say!!!!

I think the Big Kahuna idea falls over on the fact that it means change and that means it would change again just as quickly back to the flipflop politics we have now, because Labour cannot survive in a nation without a huge portion of the population being trapped into keeping labour in power.

The very real threat to the Labour Party, is for National to have enough time to right the sinking rotting debt laden hulk and to go on to bring improvements in living conditions for an increasing % of the people. For that, National need to hold on past 2017.

I think you'll find the anti-Kahunas are more likely to be traditionally National voters.  National, for example, have categorically stated no changes to NZ Super (our biggest by far WINZ expenditure line) - whereas I haven't heard that out of Labour.  National have categorically stated no to capital gains tax - whereas Labour have adopted a part-policy on it.  National have retained all the middle class welfare systems (WFF, Accomodation Supplement) and added a few more on top (i.e. Whanau Ora).

JK ain't Ruth Richardson - his plan is to stay in power - and as far as he's conerned there's plenty more accumulation by dispossession available to be accomplished here on behalf of his overseas money mates.

Wol your idols in National are just as much of a bunch of troughers as Labour are. They all need to be cleaned out. Do you really think that Brownlee, Henare, Bennett, Williamson, English etc have any interest in changing the status quo?

Labour pork their voters with welfare, national pork theirs with lax environmental standards and finance company bailouts, but its all the same shit. The kahuna, while not perfect would still get my vote because it really is time for a change, and by raising your piffling objections Wol, you are simply prolonging the dysfunctional and broken system we have.

Get the broom boy, its time for a cleanout!

VL want Utopian won't get it. Of course both mobs are into pork slicing. Accept it as a part of this society. To achieve your Utopia, you need to use the broom to sweep away the entire population.

Most people will just work within the parameters they have Wol, be they beneficiaries or Pollies (same thing really though eh?)

A full-on revolution is a bit dramatic for my taste, but I do think that the kahuna is halfway would force great change on the mandarins and pollies, and a lot of the perma-bludgers. I remember when rogernomics was rolled out it forced a lot of people to change their game, which was good.

I agree that it will only last a while before people figure out how to game the system, or it gets corrupted bit-by-bit, but i really think that what we have now is such a terrible pile of shit, being exploited by a lot of terrible parasitic turds at both ends, that its time for a change. Really Wol, could it be worse than what we have now? I doubt it.

As you say VL.." it would force great change on the mandarins and pollies"..which is exactly why it will never get off the ground. "Could it be worse off"...well yes it could, much worse off VL...we could still have Queen Helen and Cullen on the Speakers right...and by now we would be known as the South Pacific Piigs nation.

You seem to accept that any BK implemented scheme would slide back into a corrupted mess...which begs the question...why waste the billions it would cost with the experiment?. We already have the corrupted mess. Let's try to push and shove and kick the bastards into a gradual acceptable reform of it. All the while, recognising that any improvement in the living standards erodes Labours support. They will fight your BK all the way.

I do see him as "right" because he believes in freedom - freedom from interference from the state in how we run our families and our lives.

As to reform of the monetary regime - he's not shy about criticism of central banking at all.

Not speaking for him, but I'd say we first have to stablise society under the present capitalist/monetarist regime.  Reduce inequities so that people can survive with the necessities at the bottom of Maslow's hierarchy - whilst at the same time putting the capital/debt generated under the current system to more labour productive work.

Then we can reform that which is broken regards the wider system.  The US Green policy is taking that kind of incremental approach.

He does not believe in freedom, Kate, the opposite. He wants to tax everything, all forms of capital. The breadth of the taxing legislation will be such I'll be paying much more tax, and given I have almost no agreement with the violent welfare state that is being built now with it, I find that offensive and unacceptable. And he openly writes about taxing success harder, and he seems to have a new found glee for redistribution. If you are a lover of freedom, there are few words in the Statist's lexicon, today, more frightening than 'redistribution' - it is straight out communism, the planned economy, planned lives, and the coercion of an all powerful State to enforce it on all of us.

As I said no the nzHerald article - because the MSM just seems to rehash articles now - the thing about the Gulag of Good Intentions Marxist Morgan wants for us, is that it is a Gulag. How many times to we have to repeat this Big Brother BS ...

Meebee someone could correct me ( 'cos I really am as dim as a Welsh coal-miner's jock-strap ) , but didn't Gareth propose a 1.8 % capital tax , on everything ?

.... now , 1.8 % may not sound like much as first glance , but it is $ 5400 on every average $ 300 000 house across the country , every year .

For the widow Mummy Gummy , that's half of her $ 11 000 " citizen's allowance " gone . Sonny-Gummy had better plant some potatoes for her ...... oooops , that's right , that little " priviledge " is currently being repealed by an act of parliament .

... we really are screwed , if we allow the bureaucrats to encroach into our lives any further .

I put Mummy Gummy into GM's calculator tool - try it yourself - I was surprised;

I assumed she's on the single super rate of $16,524 before tax annually (given she's a widow) and has no other income, no grandkids living with her and a $300K house with no mortgage on it.

According to Gareth;

Your annual net income would change by: $2,552

Great, you are better off! Spend it wisely!


And with the greatest of respect to Gummy and Mummy Gummy just why as a taxpayer should I be subsidising them even more than I already am ?

But think Kermit - Mummy Gummy might have a freind or relaion on the DPB who you'll be subsidising alot less - and Mummy Gummy would likely open up one or two of her spare bedrooms to that now struggling relation - making Mummy Gummy's empty nest far more productive than it presently is. 

The relation vacates a state house tenancy and the Govt can sell it - putting more into the state coffers with the prospect of lowering your personal income tax rate down below the flat 30% tax rate.

Think outside the square.

This proposal will change the way NZers structure their affairs - away from the state and toward one another..

See my post doesnt matter which way you slice it at $16k a year worse off I am subsidising somebody out there !!

If there will be all these savings elsewhere then how about setting the rate of CCT and income tax at a lower level...unless of course you are not completely confident it will work as you say it will  ?

And Mummy Gummy would still be $5.5k better off so what's the issue you have?

Tribeless - you seem to conflate the notions of freedom and taxation by hard-coupling the level of taxation wih the level of freedom.  i.e. the greater the taxes, the less the freedom.

But the liberal freedoms (last time I studied them) are:

freedom of expression; freedom of the press; freedom of association; equality before the law and due process under the rule of law.

No mention of freedom from taxation in there. 

Taxation relates to what socieities wish for government, as opposed to private enterprise, to provide.  I realise, for example, that you don't believe government should provide basic childhood education, nor sanitation, nor healthcare, nor roading and transport networks etc.

But how do we reverse these provisions?  Do you believe if we put up our national roading network for tender that some entity would buy it?  Maurice Williamson did back in the 1990s.  Are you and he still on the same page?

I don't conflate that at all, Kate. You don't understand me.

I'd point you to my blog which gives what I think, however, a little problem on Monday re-designing a template led me to accidentally deleting the damned thing, and now I can't get back into my Google Blogger account, so my mind will necessarily remain a mystery to you.

But, my  wish for a state (not politicians, don't need them) is to protect me from the initiation of force: nothing else. State as my servant, not the brutal master it is now. It's the difference between living with the hope of 1776, and the grim reality of 1984. Marxist Morgan lives firmly in 1984 (though ironically with his $100's millions tax free money, he's a little more equal than the rest of us in being able to buy some freedom from the State, if by no other means than hopping on a plane). As with Buffet, no good comes from a double standard.

... if anyone can tell me how to get past a Blogger error bX-snmq0l command, and get back into my Blogger account I'd appreciate it (note all the Google search references have been no help).

I always click through the links to your blog - and I do enjoy it - always glad someone's thinking out there!

And as for your FBT (I wanna pay more tax) problem - FBT is another one of those idiotic 'rules' that could go under the Big Kahuna.

Kate, what Tribeless seems to forget, is that the price of living in a civilised society is some form of income redistribution; better done at the hands of a democratically government than at the point of a gun. Were not the Russian/French revolutions a reaction to severe income inequality?

The desire for civilised society is the reason liberal democracies based on socialist principals have come to dominate western society; they are in effect the least worst form of society (apologies to Churchill). If you would like to live a society without government intervention in your life I suggest a move to Somalia.

Oh dear oh dear. Well I've got access to one post that's not on my downed blog: why the classical liberal society is not like Somalia (and the shallow thinking of those that make such an equation).

I wish those of you who would have us all living in the Gulag of Good Intentions would actually think for once.

Oh, and as for the social contract:

Philosophy, politics and economics in our Western social democracies - which are  societal/political/philosophical/economic systems based on need -  all meet in tax policy. When you start looking at tax policy, and the powers granted to IRD to enforce it - and they are granted any power they request - you soon start realising the 'social contract' social democrats are so enamoured with, is really just Nanny State setting down in the most authoritarian manner, the terms by which She will allow you to live and operate. There's no free society to be found here, and no free man would've signed up to any such one sided contract (unless, of course, someone was holding a gun to his head).

We don't necessarily disagree - the current system is a mess.

But what's wrong with the Big Kahuna?  It achieves more freedom for everyone.  If you want within it to pay less tax - then just invest all your accumulated wealth in business activities that generate a return on capital of greater than 6%.

Sure, you still pay tax on the profit at a flat 30% rate - but be positive - with the less state intervention in deriving "help" strategies for the "needy" government gets smaller and that 30% rate might be able to come down (once we pay back all the accumulated debt that is!).

Yes, no doubt all the what ifs haven't been addressed. But what really attracts me about the Kahuna is the potential it has for behavioural change - i.e. the adoption of self-help strategies by those worse off as a result of the policy reform.

It's that potential to resolve all those long-standing perverse incentives of our current welfare and tax systems. 

I didn’t say that Somalia was a liberal society; I put it forward as an example of lack of government structures to ensure civilised society.  

When has society ever been about the individual? if it were then we would never have survived long after descending from the trees. 6-7 million years of evolution says that tribe will always triumph over the individual. In NZ’s current democracy the tribe is the majority of the population that earn less than the average wage and they would never agree to a minarchy; it suits them quite well to take your wealth and there is not one single thing that you can do to stop them.

I like the irony implicit in your minarchist society requiring the will of the collective to implement; or were going to implement it by yourself?

Don't you agree that the smallest minority is the individual? And if the only role of the state is to protect that minority, then you would have a free and peaceful society. In fact, it is the only society where freedom and peace is possible. And if morality centred on the individual, all 'isms go: sexism, racism, the lot.

Your society of the tribe is Somalia. It is the true barbaric society.

See my reply above to steven about the tyranny of the majority.

Libertarians always argue based on the smallest possible scale to frame their argument. This is almost always because whatever they are arguing for involves transfering wealth from the majority to the wealthy, but this often can't be seen on a small scale. The whole philosophy is completely corrupt.

Example, reduce the youth minimum wage.

Libertarian argument: This will improve youth unemployment rates.

Consequences: People on the minimum wage will be replaced by people on the youth minimum wage. Employers get cheaper and more desperate employment market. Overall effect on unemployment rates likely to be neutral.

Example, reduce income tax rates on the wealthy. 

Libertarian argument: This will create economic growth and jobs (you are suppost to just accept this by the way, there is no evidence).

Consequences: People in the higher income bracket get more. Government must either take on more debt or reduce services to pay for shortfall in tax income. In the case of reduced (or privatized) service people on low and medium incomes must spend their savings or take on debt to make up for previously government services. Extra income to wealthy results in further financialisation of economy, e.g asset price inflation. Lower and middle income brackets become more dependent on wage checks as their savings become eroded.

Find me a libertarian in the bottom 1% and I might agree the theory is down to delusion rather than pure self interest.


Let me get this straight, there is insufficient money now to support full employment... But some time in the future this money will appear (some how, apparantly its got something to do with economic growth) and become available for repayment of credit extended by the banks?

So what you are saying is if somehow we could work out how this money comes into existance and then harness this 'power' creating money now, everybody could have a well paying job immediately.

Banks do make money from nothing. But they don't lend it for free.

"The essence of the contemporary monetary system is creation of money out of nothing by private banks’ often foolish lending..." Martin Wolf, Financial times, 9th November 2010

"...banks [make loans] by simply increasing the borrowers current account..That is, banks [make loans] by creating money" Paul Tucker, Deputy Governor of the Bank of England and Member of the Monetary Policy Committee

"The money-creating sector in the United Kingdom consists of resident banks (including the Bank of England) and building societies", Bank of England

"although there are a lot of Americans who understandably think that government money would be better spent going directly to families and businesses instead of banks "'where's our bailout?' they ask" the truth is that a dollar of capital in a bank can actually result in eight or ten dollars of loans to families and businesses, a multiplier effect that can ultimately lead to a faster pace of economic growth.", Barrack Obama.

Where is your credibility?

Libertarians always argue based on the smallest possible scale to frame their argument. This is almost always because whatever they are arguing for involves transfering wealth from the majority to the wealthy, but this often can't be seen on a small scale. The whole philosophy is completely corrupt.

Example, reduce the youth minimum wage.

Libertarian argument: This will improve youth unemployment rates.

Consequences: People on the minimum wage will be replaced by people on the youth minimum wage. Employers get cheaper and more desperate employment market. Overall effect on unemployment rates likely to be neutral.

Example, reduce income tax rates on the wealthy. 

Libertarian argument: This will create economic growth and jobs (you are suppost to just accept this by the way, there is no evidence).

Consequences: People in the higher income bracket get more. Government must either take on more debt or reduce services to pay for shortfall in tax income. In the case of reduced (or privatized) service people on low and medium incomes must spend their savings or take on debt to make up for previously government services. Extra income to wealthy results in further financialisation of economy, e.g asset price inflation. Lower and middle income brackets become more dependent on wage checks as their savings become eroded.

Find me a libertarian in the bottom 1% and I might agree the theory is down to delusion rather than pure self interest.


I think it's important to differentiate between Libertarianism and Objectivism.

Ron Paul (a Libertarian) is most certainly gaining momentum in the US and indeed it seems his most popular promotions are to end the fed, restore sound money (assumed to be based on precious metal reserves), demilitarise (return all troops from unconstitutionally declared 'wars/conflicts)', eliminate income tax (over time), eliminate capital gains and death taxes (immediately).  I assume payroll, business and consumtion taxes will be the targeted revenue streams, and he intends to significantly reduce foreign aid.  He's going to maintain socialised medicine for the elderly and impoverished (Medicare and Medicaid) but will abolish ObamaCare.

His website doesn't deal at all with issues assciated with other aspects of the welfare state (i.e. food stamps, unemployment assistance, Aid to dependent children etc).

But, solely based on his position on the Fed and the military - he'd get my vote - and given I'm an American, I might just vote for the first time in 30 years since leaving there.

He is a declared Libertarian, but is most certainly not in the mold of the Randites (Objectivism) nor the crony capital neo-liberal prescription (which seems to have morphed out of Objectivism - led by the famous Rand student, Greenspan); 

One point I would like to clarify with respect to Donagh’s article is the association of Dr. Paul with Ayn Rand. The first thing to note is that Paul’s philosophy of freedom was born approximately 150 years prior to Rand’s Objectivism. While libertarianism has been influenced by many thinkers throughout the centuries, the libertarianism espoused by Dr. Paul is very strict constitutionalism, an approach to government which does not experience substantial change.

Rand departs from Dr. Paul in her distinctive metaphysics, epistemology, and ethics: Ron Paul does not run on a theoretical philosophical platform and would not endorse Rand’s atheistic worldview even if he did. Their political positions do share some similarities, but even within politics, they differ hugely in foreign affairs and in strategy. So while Dr. Paul might admire Rand very much for her contribution to libertarian thought, and even be influenced by her writings (as can be heard in the video below), it should be clear that he thinks about politics from an altogether different perspective.

And backed up by this YouTube clip; 

So this idea of the state existing only to prevent the initiation of force, or whatever the Rand catch phrase - isn't his mantra.

And thisAnd 

The problem is, even if Libertarian system was started/wanted is it would de-generate into somalia...

ie free society in libertarian terms is an oxymoron frankly....

Its simple most ppl dont want the screwey system you do, so logically you should as an individual leave for a place that offers closer to what you want.


steven, I've disabused you of that argument, completely, twice - look at my link above. The liberatarian state is the furtherest thing from Somalia: and that country is far closer to the violence being grown in our social(alist) democracies under the tribe of the tyranny of the majority.  You're being deliberately, and arrogantly, stupid. I have no idea why you would do that, but your dishonesty doesn't engender me to carry on debating with you.

And here's the problem with your social(alist) democracy, again: it works via squashing freedom and privacy completely, and the brute force of the State. It's disgusting to freedom loving people. This argument is alway about philosophy, ethics and morality. Go read Orwell: you promote his worse nightmares, and wish to force me live in that cruel society with you. I just want to be left alone - why won't you do that?

Yeah, maybe I don't understand Libertarianism because its a group of disjoint self interests along a vague theme. 

"why won't you do that?"

Im perfectly happy for you to leave, find a country closer to your ideals.....otherwise if you stay you agree that you obey our Nation's laws.....or suffer the consquences.


cripes man it aint about taxing success harder, it's about taxing all forms of income.

Which is taxing success harder. Look at the language Marxist Morgan uses in this article. His gloating at how the Economist is supporting the line, tax the rich.

No its about taxing everything can be highly successful in a business and pay tax, or you can be highly successful in buying and selling shares and pay no CGT....that isnt succesful, its like libertarianism, parasitic.


All profit is taxed which is success, PAYE is success, profit from your labour, the point is some labour/endevour is not taxed, hence other labour/endevour is, it should be taxed.  So we need a CGT, this isnt taxing those more successful...its taxing an area that isnt taxed..

end of story.





Dont put word in my mouth that are not my words.

Convincing argument, I dont need to convince you....for me its simple, we have a society that society has decided that there will be public works and they need to be funded from the general population, hence tax.

Tax, everything, well in typical black and white extremism you show, you take a workaable statement/process and then attempt  to take it to the extreme to show it doesnt work or is the real worls it is accepted that you cant do that....however things like garath Morgan's Big idea lok to re-address imbalances in a workable manner.

The key is workable, not extremist.


"Which is taxing success harder"

Totally incorrect

It is about taxing currently untaxed income.  So take out the "harder".

It is closing loopholes in the current taxation system that only the wealthy can fully exploit.





Success made through perverse incentives in the tax system is no real success at all. It just leads to misallocation of resources. Of course we should discourage it.

how do we identify the ones doing successfully from those who do so because of abuse of the tax system?

Simple, remove the tax incentive. Then the ones that truly are successful will continue, and the ones who were relying on the incentive would fail. This is why I like the idea of the comprehensive capital tax - it deals to those incentives.

Sure, I agree that a 0% tax rate would remove unwarranted incentives. But I disagree that a 30% flat tax would not remove them -  a level playing field is still a level playing field, regardless of where the bar is set., too late

"cripes man it aint about taxing success harder, it's about taxing all forms of income"

"Which is taxing success harder"

To libertarianism you are a success if you have an income. Otherwise you are a failure (or starving to death). 

Think of them as mentally ill....

Then its easy to feel sorry for them, and not laugh (so much).


Don't you think it's a good idea that this idea reduces the size of the IRD immeasurable and destroys WINZ and many of the Social Ministries?



Now Bernard know jolly well there are enough in this society to chase after pork slicing pollies, to ensure the wee kahuna suffers the same fate as all other silly ideas. The current pigs breakfast is what we will still have in 100 years time.

The State is still my master, and to a much bigger degree, as its taking far more tax from me in my circumstances. And how, exactly, is IRD going to be reduced? I don't get that: they already have police state powers, and to police a tax base with the breadth of the Big ruddy Kahuna, it'll be keeping all those powers, and more, I would imagine. They already use up 8% of GDP, under the Big Kahuna that'll be up over 10%, I bet you.

Plus whatever goverment implements all the new taxes, won't make the adjustments in existing taxes - do you believe they would? We'll simply get a whole bunch of new taxes overlaid on the existing system. That's how the system works; that's how our current tax system is such an unholy mess (did you read my 'If Monty Python Created a Tax system' post? State larcency and theft will know no limit.

And what government won't be tempted to tweek the targetting, so the social ministries will carry on as before.

Many here are quick to call me an idealist: but I'm no more so than Marxist Morgan, but his idealism creates a Gulag of Good Intentions in which I'll be more trapped than ever. It ain't living.

The Libertarian argument is completely bunk. Libertarian opinion is always colonized by corporate self interest. If anybody was really arguing for a libertarian perspective they would be worried about a massive ubiquitious government intervention in all markets, the central bank. No libertarian does this, it's all self interest.

Why don't Libertarians want to tear up the central banking system? Because the whole philosophy is there only so that the wealthy can hoard the wealth of society and push everybody else down.

I would disagree and suggest you consider this that actually,

Communism deteriorates to totalitarianism

Capitalism deteriorates to fascim

For the former we see more and more control causes this, for capitalism less and less control or "libertarianism" causes this...

So while I agree that "The Libertarian argument is completely bunk" I dont agree with why. Humans are social animals to my mind and work best in groups for mutual support, ie we are naturally "socialist"....physically we lack the armour and strength to stand as an individual...and we dont need it, we have greaer "powers". As Newton? said I stand on the shoulders of giants"..... Libertarians to my mind are an anomaly...DNA gone crazy if you will....they only exist because of cheap and abundant energy allows them to be tolerated as parasites...

"Why don't Libertarians want to tear up the central banking system?"

Im pretty much sure (99.999%) that they do, they actually totally detest it I believe.....Im sure Mark etc will light up on maybe its a nice troll.


What is clear from your rant is I suggest reading up on their philosphy....Ayn Rand in particular has a lot to answer for, basically she's f*cked up the last 30 years for us.....she's lucky she's buried in the US or I'd wander over and pee on her headstone.





Sorry, Libertarians want to tear up the central banking system and Alan Greenspan ends up as the wizard of the US fed (Ayn Rand was his personal hero). That sounds pretty contridictary to me. I have heard of some Libertarians who actually follow the philosophy, but mostly its just colonised by self interest latching onto the arguments, which makes it very corrupt. The pure philosophy probably does not even talk about tax as I saw you mention before.

Also it does not function in reality, because even the most basic society does not exist in a pure self-interest system. Have a look at Irwin Schiffs cartoon philosophy it's laughably simplistic. ''

The communism you speak of is not really communism as Marx wrote about. Maybe something like real communism kind of exists in Venisuela and Cuba. Lenin didn't believe that real communism could exist in the USSR until the Capitalist system destroyed itself, if that is true or not, he destroyed one of the fundamental traits by breaking up the workers councils in the USSR and instituting central planning. I find it encouraging that 3rd world Cuba and 1st world US has basically equivalent health care systems in terms of results. I think this shows that Socialism is sustainable with the right initiatives and people probably like it.

I don't really believe that Capitalism deteriorates into Fascism either. One is an economic system and the other political for a start. So how come they can come to be related together? Well in my opinion the reason that this appears to be the case and happens is that the monetary system becomes privatised. Of course being able to control the monetary system leads to dominance of the political system. Usually a non democratic government can protect itself from this better than a democratic one (there was a significant private monetary influence in the USSR never the less) but the mistake is privatisation of the monetary system. I still believe in a fully government controlled monetary system democracy will be the dominant force.

"............ the behaviour of multi-nationals..............They are "above the law"

Which is actually a pretty good defination of facism.


However this only happens when the law is not enforced against these individuals. Capital has taken over literally every political system to a greater or lesser extent, I still believe that democracy is the dominant influence on the government when the monetary system is not privately controlled. Obviously having control over the money supply of a country or political system or having a large share of the wealth makes you pretty influential politically, in some cases above the law.

I think you will find Libertarians generally want to allow for a free market monetary unit rather than a government controlled currency, and don't support a centeral bank.


I have found more that 'Libertarians' don't know anything about 'Libertarianism' or the history of the philosophy which they claim to believe in. Most of them just want to latch onto some idea. Especially the ones here who really just want to yell as loudly as possible about tax policy, but don't actually have a point to make. 

That is why you have European Libertarians and American Libertarians and they are about as far appart as Liberals and Conservatives.



@Tribless - can I please get the link to your site. Your recent posts have struck a chord!

B flat?



Just did the online calculation and we'll be $ 16,560 a year worse off.....but the site cheerfully assures me "others wont be".

However if I load up with debt i'll only be $360 a year better off

Nice one Gareth. You've now got one less in your Kiwisaver scheme.

Yes Kermie , we'll merely be changing the current flawed system for an even worse crack-pot scheme .....

.. you wonder if Gareth didn't miss his true vocation in life , selling ferrett farms or ostriches ?

.... Morgan really is a Muppet , isn't he !

Kermit - I assume you're holding alot of unproductive wealth/assets.  So instead of sitting on fully paid up property - leverage some of it and go out and start a business that actually earns a profit which will offset the tax on your sunk capital holdings.

Better yet, if you don't want debt - just sell the property and start the business with the proceeds.

What;s wrong with that?

You could say that assets are only income in a different form, so why should these not be taxed yearly like monetary income? This would lead to pressure being brought to bear on governments to ensure monetary inflation does not debase the currency.

The properties we own are geared to less than 50%, and we have used some of the accumulated equity to start a business in the last year that now employs 2 people. Do you suggest I sell out of property and give the cash to Mark Weldon, or perhaps buy some gold ?

In case you hadnt noticed, gearing up to the eye balls isnt exactly a bright idea at the moment.

One of the issues I have is a guy who made a tonne of money, (apparently) paid no tax on the capital gain is now advocating using taxation as a very strong lever in peoples lives.

I dont agree with people being taxed out of their homes (Morgan has a "so be it" attitude to this)

I dont agree with every Kiwi becoming a beneficiary.

Finally, if I wanted to spend, say $1m, on a house...paid for with my tax paid income...why should I pay a further tax on the unrealised equity ? A CGT I could cope with, but this, no way.

Think of it this way - how much of your debt is devoted to property and how much to the business which employs 2 people?

No debt in the business, its been paid off already.

Without the properties as security however we would not have been able to get the business off the ground....

For most people their house is their home....somewhere to live and raise their family. Its not for the Govt, Morgan or anybody else for that matter to tell them whether its a productive use of their money or not.

If you want to make property less attractive as an investment there are ways and means. If you want to reform the welfare state, there are also ways and means.

It doesnt require a big kahuna....simply enforcing existing legislation would be a good starting point

simply enforcing existing legislation would be a good starting point

The existing legislation is really the root of the problem - it (both tax and welfare) is too complicated - too many rules, too many exceptions, too many patches and tweeks. 

If you have a bucket with one hole in it - you can easily plug the hole and carry on.  If the bucket has so many holes that it leaks like a sieve - you've gotta throw it away and buy a new one.

The fact that you have all your debt servicing in an investment class that fails to produce a reasonable rate of return (>6%) is testament to the theory of the Big Kahuna.  That deosn't grow our economy - it's a pure liability on our bop..

There is a reason why I have my debt servicing structured as it is....but I wouldnt expect you to understand it.

As for is over 6% FYI

Back to your drawing board.

Kermit I think you're being a bit hard on Mr Morgan and his paying no tax on the capital gain. He made 47 million from the Trade Me sale and promptly donated the whole lot to charity so I reckon he pays his fair share, not like most of the very wealthy.

Your annual net income would change by: -$4,860 Oh no, you'll be worse off. But others won't be!

Gees Kate,

we are retired and live off our income.

We pay enough tax now and don't bludge off anyone.

It's a bloody struggle to keep up as it is without forking out more dosh.

That would be $9720 more tax per year for my wife and I.

So you live off a rental income, I assume - and the capital in those assets is making a loss?

Sell the rentals - start or invest in a business that produces greater than a 6% return on capital.


Keep the rentals and defer the payment of the tax in the washup of your estate


Sell the rentals, bank the cash or buy bonds.

You have options - all you need to do is restructure your investment thinking.

Point is anyway that if you are relying on rental income from property as a retirement plan - it's all going to go pear shaped anyway if this global meltdown takes hold.

No I have no rentals.

I have shares, term deposits and bonds and live off the income. I reinvest most of it to "try" to keep ahead of inflation. I am not keeping ahead.

I do not want to start another business.  I am retired.  I sold my business.

WAS - that's the problem. You - like Kohn Key, are expecting your 'money', to increase, but without you doing anything.

But you both expect it to buy real things. More of.

Coud only happen in the paradigm where there were others doing romething real, with something real, at an increasing rate.

Curtail the rate of 'something', and of course your 'investments' are worth less.

It's surely can't be that folk don't get it. There are perfectly intelligent people here - so one has to presume they just don't want to get it.

Bit harsh, He IS doing something with his money, he's partially investing in REAL businesses and being paid a dividend, he's allowing his own money to be loaned to people wanting loans/mortgages via banks at a nominal fee which is not set by himself which earns less than current inflation.

Doesn't sound like expecting something for nothing to me.  This is not a benefit we are talking about

Justice - I've been posting for more than two years here. 'tis a simple message.

Basically, money has to have a home. It has to buy goods and/or services (Sounds like a broken record at times, sorry about that).

But - beyond peak energy, there is no more growing of the goods and services. So no underwrite of the investment.

Growth kept going because it had to or die. It therefore did so artificially - it had nowhere else to go. Derivatives got the blame, but investment expectation was just as guilty.

I realise that there were a whole generation who lived through nothing but up-and-up, and who might claim 'they weren't told'. Ultimately, you'd have to think that they didn't earn the 'wealth' they thought they had, because they - en masse - hadn't valued natural capital properly - they just did it at opportunity cost.

They're all in trouble now - loans, mortgages, investments, interest. It's gonna hurt those who didn't see it coming. For thirty years, I've been saying it was.


Yeah, PDK i understand all that as you should know. This is the problem with ALL fiat paper currencies and economies. "Interest paid is a huge driver of inflation".  So too though is "wage increases" . I think what I was defending was that asking for your return to AT THE VERY LEAST balance with inflation is not a horrible  or unjustified request.

If any of the main currencies fall over ( you and I both know at least one will) then we will all be suffering for it in some way. I get the whole "peak energy perpetual growth myth" believe me.  Don't sigh...........WE GET IT. For now life goes on for most.

Well its sort of one stage away from doing something thetheory was you invest in shares of a company which pays a dividend back on its business profit,  you lend the business capital in order to do things, I certianly bought shares in this manner.....So I would link him directly to JK.....JK I would say was more of a specualtor type where the underlying business doesnt matter and worse it doesnt matter if it succeeds or fails.....just as long as "he" profits.

Beyond that just about any business is in deep doo doo and we at least both know that...when it finally dawns on ppl that they cant make a profit because energy costs  will eat it  then businesses will close and shares prices will collapse..... the musical chairs will finish very quickly, 2 to 6 years. We become localised again and then things will need a huge re-org.....going to be interesting.....just what all the lawyers and accountants will be doing to survive will be interesting to watch. Hopefully just like during the industrial revolution engineers will be worth their weight in gold....


Sounds like your income on investments is high and on top of that you own your own home - so you are an income rich/asset rich individual.  If so, yep, you'll be the type that pays more tax.  Welcome to a very elite club!

The Kahuna might perhaps have the effect of encouraging you not to reinvest the income for safe/fixed dividends/return (which as you state aren't keeping ahead of inflation anyway) but to invest in higher risk ventures, which might make a loss in the early stages of their operation.

But I'd suggest that you ask a question on the Big Kahuna site about what changes in your investment behaviour the proposal might encourage to make the switch for your personal circumstances a tax neutral one.

My mistake was saving most of my income from my efforts over the years.

I should have bloody spent it like everyone else.  Well it is not too late and if something like this stupid Kahuna thing were to see the light of day I will.

I sold my business because I was sick of paying tax at 39 cents in the dollar (my shareholder salary) from the 1st dollar I earnt each year.

My savings had increased to a level that put me into the top tax bracket before any work effort income was added.

I figured it was time to kick back and live off my savings.

I don't and have never gotten any Govt benefits and probably will never see a pension.

I hear what you're saying and can fully see why you made the choices you did.  Funny thing, under the Kahuna, if you still owned the business, you would likely pay alot less tax than you did then.

Try it out on the calculator - as I'd be interested given the whole point of the Kahuna is to better allocate capital to more productive uses.

I'm not going to give that idiot Morgan any more traffic to his website.

With a bit of luck the Kahuna idea will die a natural death and I can be left alone to grow my veges and watch my savings quietly inflate away.

Well it sounds like an idyllic life to me!  Wouldn't fret the inflation - the more self sufficient your lifestyle becomes, the less worry that becomes as you are countering it's effects through your own efforts.

Mr We Are Stuffed : Hold off on growing those vegies , pal . Mark ( Tribeless ) has already put up a link showing that government [ at the behest of commercial growers  and seed companies ] is enacting legislation to prevent private fruit & vege production and dispersal . Swapping your surplus spuds with your neighbour's XS blackboy peaches will be out-lawed !

..... not kidding you !

Back to the fray : As appalling as WINZ & IRD currently are , Marxist Morgan's crackpot scheme to make every adult citizen of Aoeteoroa a ward of the state is infintely worse .

I agree with Mr Wolly : Fix the current system . It is do-able , rather than lurch to another extremism , Morganomics .


Personally , from wot you've said about yourself and your investments ( above ) , I reckon that you're a legend , mate ! ..... good on yer .


There are allowances in the proposal for those alreadsy retired so I don't think you'd take a hit.

His scheme is revenue neutral from a tax perspective.  So yes, if we carry on spending at the present same levels - we will need to borrow more, not only for new spend, but for the interest on the debt (which you so rightly point out is money out of thin air anyway).

But, the scheme already spends less on government (no WINZ and a much reduced IRD) - and that is all it attempts to address regarding reform.

You are trying to jump on the wrong bus.

It would be like me asking them a question about what the Big Kahuna intends to do about nuclear proliferation - and I wouldn't expect that they'd answer it.

Kate Just did a calculation for our business.  If from one tax year to another non current assets changed over $2m - due to QV valuation cycle-that change alone made very different outcomes for whether or not I was better off under Big Kahuna. I am assuming that non current assets will be valued via QV values. 

Is there not the danger in the Big Kahuna, just like CGT, that falling land/house values will result in much less of a tax take - therefore it will not be tax neutral, as you said it is intended to be. The difference between practice and theory and all that....

In an earlier post you said you expect families/communities will take better care of each other.  Given that it takes around a generation to truly see paradigm changes in attitudes I don't see this happening.  I come from a multigeneration-living-together background so see nothing unusual in that.  But if I talk to others - even other BBs about having their elderly parents live with them the answer is usually - I prefer to have no inheritence and have them living in care than living with me. Same with some BB parents with single parent kids - they got themselves in to this situation, I have raised my kids, not raising the next generation etc. Young people are even more vocal in not wanting to be living off/with their parents.

Home ownership could be a thing of the past for a number of young people because the capital tax on their home will be what tips the equation over - especially those first home buyers. I suppose you believe that they should go live with their family ;-)

A disaster like Chch will bring communities together, govt policy never will, unless we have lost our democracy. 

Interesting re your calculations - but I guess all that can be said there is that the proposal never intended for everyone to be better off - it's strucutred around equity and fairness in the treatment of all income/asset classes.

That aside however, this is an interesting statement;

A disaster like Chch will bring communities together, govt policy never will, unless we have lost our democracy.  

What I foresee looming on the GFC horizon is indeed a disaster in the making. Unless we reform ourselves, we will get the present Western world societal reforms: namely austerity measures - or another word for it, the total collapse of social order.  Anarchy will become the norm.  We are generally a very law abiding lot - when this credit crunch kicks back in that will all change.

Take for example, the government makes massive cuts to tertiary education funding, or removes the interest free student loan scheme - and suddenly we have a whole generation of current tertiary students taking to the streets to eek out a living.  Or they return home, get bored, and then turn to the streets.  We are brewing here a recipe for signficiant anger against anyone/anything in authority.

Was talking to a friend who has a kid who has just graduated from Police College.  The kid was keen to work in Sth Auckland and was initially told that they would be placed there.  However there has been a significant increase in police numbers in Sth Auckland and it is paying off, so instead they were placed in West Auckland - the 'new south Auckland' according to their older police colleagues.

The government has already made some changes to student loans - I don't see kids rioting.  Incremental changes will be more successful than wholesale, sudden changes.  It's about changing expectations/perceptions. We need graduates to be graduating in areas where there are employment opportunities, not because 'it is something I would like to do'.

suddenly we have a whole generation of current tertiary students taking to the streets to eek out a living.
For the majority of school leavers Kate this is the reality. I find your statement somewhat elitist. A bit like your ....while she studies naturopathy (of all things!) Nothing wrong with naturopaths Kate, they have their place in healthcare. ;-)

We need entrepenuers.  I spoke to a young chap with high IT skills - not gained at Uni but in the workplace.  He and some friends have set up a business in the Cloud.  Most of their customers are in Europe and the USA. The Cloud side of things is run here in the BoP.  Their niche product is designed and made in NZ and is selling 50% above budget week on week.  These are the people NZ needs.

I am an elitist of sorts.  And yes, I agree we have too many school leavers not going on to higher learning pursuits.  But I think you can gain higher learning through life experience as much as formal education - and in many ways higher formal education is a proliferator of the status quo anyway.  And I think many if not the majority of the world's entrepreneurs didn't need higher edication - they were inately inventive.  

Each child however deserves the best grounding/start they can get - and I'm probably an elitist in that I think loving, caring parents can give their children better starts than can daycare facilities.  And for a parent to choose to send children off to daycare in favour of having the time at home alone to study - naturopathy, of all things (I searched Seek and there's a single job nationwide for the search 'naturopathy') - it's hardly going to realistically get her and the kids off the benefit in he future.

It that is elitism - I count myself in.

Mmm...perhaps I wasn't clear enough.  I am not a subscriber to 'you should go to University' in order to get ahead.  So we have agreement there.   :-)

I am also a firm believer that the first three years of a childs life are very important and for me personally being an at home mum was not negotiable. I was fortunate that my circumstances allowed it.  I don't know your young mum but you do seem a tad disapproving of her (3 kids from 2 dads etc) ;-) There are many questions to your mum's example such as: why arent the grandparents offering to help with childcare?  At least she isn't sitting around having coffees and watching endless 'Oprah'.

Most naturopaths are self employed Kate.  With some support on running a business she may very well get herself off the benefit.

Life as a single mum with 3 kids would not be easy. Unless you have walked in her shoes............

"May very well" is irresponsible where children are concerned - putting their future at risk.  Fine if you have no dependents.  I get so sick of this "life as a single mum with 3 kids would not be easy" angle. I've walked in those shoes. Raised by a solo mother - being one of three kids.  But she worked all her life and a younger brother of hers was sent by the family to be at home with us when she was at work - and he worked too!!!!  She worked nights - he worked days - and we kids knew how to dress ourselves for school and make our own lunches from the age of five.  My husband's grandmother raised 7 on her own (the two youngest had to be farmed out to relations for their first five years) at the turn of the century after her husband died at an early age.  My point being, we need to get back to reliance on family and friends, as opposed to the state, when we find ourselves and hence, our children, in difficulty. 

Back to the case study, yes, why aren't the grandparents helping out?  They don't have to because the state keeps their daughter and her children with a separate roof over their heads and food on the table and pays for the childcare (as well as the daughters "education").  So Grandma and Grandpa pitch in for the cost of swimming lessons and are quite proud they've done their lot!!!

If the Big Kahuna came in - Mum on the DPB has options.  Move in with Grandma and Grandpa, or back with the father of the third child (still in a relationship but only 2 night, 3 days a week, so as to be able to claim they are not in a partnership), or let two of the kids from the other father live with him, as he's working full time and has a partner at home - no need for the DPB anymore for that particular "client".


Kate we agree on the ideal way to raise kids. :-)  BUT

things are different today... I honestly believe that people of our parents generation had more 'bottle' than some of today's parents. They operated in a vastly different social time however.  IMO the attitudes of  today's younger generations are a result of the way todays Generation Jones/ BB's raised their children. A system that encourages entitlement expectations has a lot to answer for as well.

The Big Kahuna will fail simply because it is too much too soon - the people will revolt once they realise the reality of how it impacts on them. As I said earlier the difference between practice and theory...........


Hmmm.  It's an interesting comparison - is the main offender parental example or state driven entitlement expectations? 

But I give the present generation of parents, or those within that procreation age range, alot of credit, or "bottle".  They study the system and work the angles best suited to their individual perferences.  They work the tax system, or work the benefit system, or work the education system, or work the legal system, or work the employment market - they're internet saavy, and are great at sharing these "workings" with their peers who have similar individual preferences. 

Change the game and they'll adapt - they grew up with a rapid pace of change - they can and do learn quickly and they have larger social networks than parents of generations gone by.

Sure, it will be a shock, but information can be disseminated very quickly and provided the new rules are simple, straight-forward and non-negotiable - the younger generation will adapt.  It's the GJs and the BBers which will go kicking and screaming into the change - and who will apply the most pressure in advocating for a return to the status quo. 

For example, how many 30 year olds believe house prices only go up?  And if they do, it's only because they believe their parents. lol. 

Nope, it's the older generation who won't get on board the Kahuna - and I think Gareth knows that.

"My point being, we need to get back to reliance on family and friends, as opposed to the state" Not everybody has family close by that they can rely on Kate. In fact, considering the high number of immigrants in NZ, a lot of people probably don't have that luxury. Not to mention that even if you are a "real" Kiwi, you'd have to live in the same town as family to be able to rely on them day-to-day (and this may have been the norm 50 or more years ago but not exactly anymore, not to mention that using grand-parents as free baby-sitters is pushing it a bit I think).

Relying on friends: sure, in an emergency. But I can hardly see myself calling them just to help out especially when, being around the same stage in life as I am, they are in the exact same situation (busy with young families) and have better things to do than helping me look after my kids as well.

"I think loving, caring parents can give their children better starts than can daycare facilities". I agree, and that's why we both went part-time after having baby #1 and subsequently worked hard to transition to self-employment from home. But daycare can be great too if used in moderation. If it wasn't for it, our kids would spend most of their time until school started, and it starts very late in NZ, with just mum & dad (no family, and initially at least as relatively new immigrants not a big social circle). Not to mention, I'm not sure how they'd have learnt to speak English properly if they'd stayed at home the whole time, speaking French all the time :) So a couple of days a week from 6-12 months has been a perfect compromise for us, and as far as I can tell they are all doing exceedingly well and couldn't be happier and better adjusted.

Well said Elley :-) 

My husband is a 1st generation kiwi with no extended family.  We always lived at least 2hours from family when our children were little. Both our fathers milked cows until they were in to their 70s, so our parents weren't in a position to come at short notice if we needed them.

We lived 25kms from town when our children were growing up but that didn't stop me from taking them 3 times a week in to town to kindergarten once they were able to go. I believe kids need a break from parents as much as parents need a break from kids, hence my choice of kindergarten over playcentre ;-) I do however feel for wee ones left fulltime in daycare, but realise that for some mothers there is no choice.


Not everybody has family close by that they can rely on Kate. In fact, considering the high number of immigrants in NZ, a lot of people probably don't have that luxury.  

We could and should allow access for o/seas retired parents to immigrate to NZ where they have grandchildren residing in NZ.  I'm an immigrant too - and my husband's (a kiwi) parents passed on very early in our children's lives.  I'd have given anything to be able to bring my retired, widowed mom over.  We could have chosen to be a dual income family - but even if we didn't it would have been a wonderful expereince for the kids. The UBI could be means tested for o/seas pensioners.  Health costs are a consideration, but Gareth's written a book on that too!  :-)

Not to mention that even if you are a "real" Kiwi, you'd have to live in the same town as family to be able to rely on them day-to-day.

So if in hardship - someone moves.  That's what family is for.

Relying on friends: sure, in an emergency. But I can hardly see myself calling them just to help out especially when, being around the same stage in life as I am, they are in the exact same situation (busy with young families) and have better things to do than helping me look after my kids as well. 


So the solo parent with a job pays another solo parent without a job to look after all the kids.  It's commonplace today in a business model via PORSE etc. 

Nothing wrong with early childhood education/group socialising - even for parents at home.  We sent our kids to Kohanga.  It gave my husband time to himself during the day - which he mainly spent renovating the house - power tools and preschoolers don't mix. :-) 

It's the kids who spend 40+ hours a week in factory daycare.  Who can't relax over breakfast.  Who get toilet trained en masse.  Who catch infection after infection, and never really recover except during their period of heir parents annual leave. Who get home to tired parents who haven't got the time or energy to prepare a decent, healthy meal ... let alone spend the time with the poor eaters to encourage them - so instead they get given a chocolate yogurt and plonked in front of a DVD. 

Ask any qualified ECE teacher.  None of them want to work in factory daycare.  They all want a position at a kindy.  Hence the extremely high turnover in most factory daycare centres. 



So if in hardship - someone moves.  That's what family is for.
Very simplistic Kate. We don't live in a perfectly ordered world. You are assuming that all families are 'happy families'. There are families in our society who have intergenerational abuse issues. I do agree welfare is easy to get when you  know how to game the system. But it is the system that allows it. The Big Kahuna will not work - human nature will see to that.

The assumption is also made in the business calculator for BK that the business will own non-current assets. In fact it won't work unless you enter a figure.  If you lease a building or are in a business such as 50/50 sharemilking you don't own any non current assets.  So if the calculator won't recognise these types of business does that mean that they haven't been allowed for in the planning of BK?  If so that is a pretty serious omission.

"We could and should allow access for o/seas retired parents to immigrate to NZ where they have grandchildren residing in NZ". Kate, from what I remember, retired parents can move to NZ without much difficulty so long as at least 50% of their kids live here.

I'm one of 2 kids so they could. But what makes you think they'd want to move here (they don't)? How selfish of me would it be to ask them to leave all their friends, all of our family & extended family, all of their activities/clubs etc just so that I can have a babysitter on hand (while depriving my sister of them at the same time)? I'd love them to move here and I've told them they would be able to if they wanted to, but it's not for me to tell them how to enjoy their retirement :)

Hi Elley - let's return to the initial premise I made: 

For those individuals/families in crisis/need it is preferable that spiritual, emotional and financial support is provided by family, than by the state. 

Moreover it is detrimental to society (as is the case at present) that there is an expectation that the state will provide for those in crisis/need over-and-above what could be provided by family who are also in a position to do so.

So, the assumption is the family are in a position to assist; spiritually, emotionally and financially.  It is understood that such support and assistance may generate some lifestyle changes for the family providing the support (i.e. more people may reside in a single household, a move might be required by either the family in need or the family able to provide the support), but such changes will not bring the supporting family into financial hardship, nor will the living arrangements be unhealthy (i.e. unsanitary, unsafe or overcrowded etc.) for anyone.

The question is (yes or no - as the question is in principle): should the family in need be entitled to be fully supported (housed, fed, educated and nurtured) by the state, thus relinquishing any/all responsibility for on-going support from the wider family?

Hi Kate, I think people are their own responsibility, not their family's  (past a certain age anyway!), not the state's. So to answer your question, no, I don't think the state should be relied on to fully support people but I also don't think that family should be expected to do that either.

When you say above "what could be provided by family who are also in a position to do so." and " the assumption is the family are in a position to assist; spiritually, emotionally and financially" - the family may be in a position to do so but are they willing, that is the question. And more importantly, are they (morally/legally) obliged to? Parents provide for kids when they are young but their responsibility kind of stops when the kids become adults. Personally I'd feel pretty bad if was still a liability for mine at 36 years of age. 

It's great to have a supportive family but not everybody has one so while it may be "preferable" that support be provided by family, I think the state should be there as a last resort in emergencies (as opposed to welfare being used as a way of life by some people).

I agree with you - the state should not be solely responsible, nor should it determine whether or not a family who have the means should provide the support. 

That is the beauty (in my mind) of the Big Kahuna,  Instead of means testing or any other of the needs assessment criteria presently employed regarding social welfare benefits - the Kahuna instead provides every adult with a UBI - and allows caregivers and their wider families/support network to work it out between themselves - i.e. use their own initiative and make their own value judgments.

And much as we'd all like to think the kids will become independent in adulthood - odds are you'll find many times they still need your help - even when they're "all grown up"!  For me, parental responsibility never ceases - and I think we need to get back to thinking this way as a society. 

I worry that it's the ubiquitous nature of the social welfare state that has changed these fundamental perceptions/values over time.  If a UBI serves to turn us back towards family and friendships, I think it would be a really great thing.



"The only opposition to significant reform is now the ugly Hard Right rump, which favours jungle economics and taxes only to pay for their security forces and lazy or paralysed politicians."

WOW, setting up a strawman here.

Gareth should be careful not to offend his client base, or does he not care now he is on the government backed Kiwisaver take?

Happy birthday, Iain!

Happy Birthday Iain.  Enjoy your family time. :-)

Just tried the calculator too: "Your annual net income would change by: -$3,360
Oh no, you'll be worse off. But others won't be!"

At least it's got a sense of humour! And if we got both our incomes up to 200K we'd start gaining from the BK (I love a challenge...). Oh well, it's only money right. Hardly the most important thing in life.

Yay, Elley - that's the attitude - increase your productivity as a means to neutralise the tax effect on your household.

See how beneficial this might be for the economy?


People seem to miss the real problem that will occur after the introduction of this new tax.

The banks will go bankrupt. They have to go under because they lend against family property that will automatically fall in value, fall by the reduction in value due to the increase in tax on family property. Fall, say 30%.

Who will bail the banks out as they have lent on a multiple of what they borrow.

The problem is not in what the government collects in taxes, it is in what they give out.

ah ha! Now you see exactly why Bollard & English refuse to increase the OCR to even come close to real inflation! Any major increase in mortgage and loan rates would effectively act just like the tax you speak of. ...............and why are they protecting their giant elephant in the room? Votes? Saving face? ( Bollard in particular knows exactly what he's doing, he's as corrupt as they come)

Hahahahahaha... "Banks will go bankrupt."


Do you not understand that banks create almost our entire money supply out of thin air as interest bearing bank credit?

Didn't stop the BNZ going bust twice. The money supply is not controlled or created by Main St banks. But you are 100% correct about the entire money supply being created from thin air. Time will tell what each fiat currency is truly worth in the coming 2 years I'd say

Of course the money supply is created by the banks, who else do you think creates it. the government? When you gwt a mortgage where do you think the 'loan' comes from?

BNZ needed recapitalization, in the form of a dovernment bailout, which is different to creating new money.

"When you gwt a mortgage where do you think the 'loan' comes from?"


OMG! lol, I leave it there i think unless someone else wants to bother informing this guy?

Stray76, simple question, Do banks have printing presses?  

You'll leave it there because you obviously don't know. Yes banks do have a printing press, it's called the fractional reserve system. Our entire money supply except notes and coins which is a tiny percentage, is created by private banks.

Yes, commercial banks can effectively create as much money as they can lend. But don't believe me,

"[Banks] do not really pay out loans from the money they receive as deposits. If they did this, no additional money would be created. What they do when they make loans is to accept promissory notes in exchange for credits to the borrowers' transaction accounts.", Modern Monetary Mechanics

"Banks actually create money when they lend it. Here's how it works: Most of a bank's loans are made to its own customers and are deposited in their checking accounts. Because the loan becomes a new deposit, just like a paycheck does, the bank once again holds a small percentage of that new amount in reserve and again lends the remainder to someone else, repeating the money-creation process many times.", Federal Reserve Bank of Dallas

"While banks have this power of creating money it will be found that they exercise it only within the strict limits of sound banking policy.", Reginald McKenna P.C., British, and a former Chancellor of the Exchequer (1915-16)

"Capitalist societies chose some decades ago to have a 'fractional reserve banking' system - where banks lend out more cash than they have in their vaults - because this helps provide money for companies and households to invest.", UK's Daily Telegraph where economics editor Edmund Conway

"Fifth, even before the crisis banks enjoyed various kinds of state support, including the effective right to create money, ....", Independent Banking Commission Interim Report (the Vickers Commission) 2011

"... banks extend credit by simply increasing the borrowing customer's current account, which can be paid away to wherever the borrower wants by the bank 'writing a cheque on itself'. That is, banks extend credit by creating money.", Bank of England

They don't print the notes, but they can convert credit into notes 1-1 pretty much as needed.

Sure, I should probably listen to your incorrect opinion rather than the correct opinion of insiders of the US and UK banking systems, members of the financial press of both countries and the president of the US. You have to face it in plain english, commercial banks create money, is a correct statement.


mist42nz, You are a fool, and not interested in understanding anything, about anything.



I don't really know whether and/or to what degree this proposal would effect a depreciation in house prices.  Theoretically, the banks only go bankrupt if the borrowers can't continue to make the payment on their mortgages. So an underwater property owner in of itself doesn't make a bank go bankrupt.

But then, why would the Kahuna make property prices fall anyway?  Sure, a great deal of people who live in over-valued properties with space they don't need (i.e. many of the retiring boomer generation) will sell up to trade down.  But, many of the presently locked out dual income yuppies with high salaries and no assets will have alot more money in their pocket - so I see these income rich/asset poor - buying up the assets of the income poor/asset rich.

I think it's a long bow to simply think that property prices plummet with a capital tax on property - it is so very dependent on what else is going on in the economy.

The headline ought to read, tax on the rich driving away investment finance and leading to increased unemployment for which socialists claim success in their drive to reach a Cuban Utopia in NZ.

Wolly I asked you to read, and either accept or rebut, that little piece I gave you this morning.

Before you continued the trite lightweight stuff.

Or was it too technical?

Do you know, reading the prosylitizing above advocating this neo-religion ...the overwhelming sensation I note which pervades past all the 'logic', figures and resolutions is one of pure unadulterated HATRED towards anyone who has more than five dollars in the bank earned through the sweat of their brow.

Communism was a fine theory too, they say.....

The older I get, the more I think George Orwell was one of the real prophets of our time.

I'm not sure you understood Orwell's political philosophy - he wrote against totalitarianism, and saw Soviet communism as a totalitarian (not a socialist) regime;

.... the other crucial dimension to Orwell's socialism was his recognition that the Soviet Union was not socialist. Unlike many on the left, instead of abandoning socialism once he discovered the full horror of Stalinist rule in the Soviet Union, Orwell abandoned the Soviet Union and instead remained a socialist — indeed he became more committed to the socialist cause than ever. 

In terms of today, yes, he was spot on:

"All animals are equal. Some animals are more equal than others".

That's the whole point.

The road to wig and peer.

Our good friend, the Dr?

Eric Crampton argues against the Big Kahuna over here

I don't think Gareth Morgan's Big Kahuna scheme is able to escape the trifecta by imposing new taxes on capital or land. Why? Because those aren't free lunches either. If it's worth having a land tax, it's worth doing it regardless of whether we have a GAI. So in the first stage we set the optimal tax structure - and I'm completely unconvinced that a capital gains tax is all that hot an idea anyway (see Seamus's posts here here and here.) But whatever the optimal tax structure, we implement it in stage one. Then, we still have to increase all the tax rates by enough to pay for a GAI if we're going to have a GAI. And the impossibility reasserts itself.

Morgan squares things with a cheaper GAI paying $11k instead of Treasury's $15k. But I have a hard time believing that's a stable political equilibrium. Could NZ politicos really avoid the temptation of adding targeted benefits for the many folks currently on benefits totalling well over $15k? If not, how quickly do we wind up having a GAI on top of a targeted benefit system?

Way to go, Tribeless,  It has always struck me odd that so many people want the government to "do something" about this or that and then complain that we depend too much on politicians.  

Bozobit: Trouble is, in a democracy it only requires 51% to win. That makes 51% happy little campers, but leaves the remaining 49% un-happy complainers. Next time round when the roles are reversed the previous happy-campers become the unhappy campers. Fact is there will always be a group who got out-voted and will be un-happy. Unless of course 100% all vote the same way. And from memory the only ones who have ever achieved more than 90% support were Saddam Hussein, Tan Xiue, and Kim Jong Il. 

Gareth Morgan you are a dead-set hero.

Generational wealth attained through selective tax policies is killing our economies, disenfranchising the generations that were not lucky enough to be born at an earlier time, and stirring social unrest. I don't subscibe to the  generational 'wars' meme as esposed by the media, but the growing disparity in wealth is obviously a temporal demographic phenomenon. Which has to be addressed for the well being of all citizens.

The cry of 'tax the wealthy' however is polarising. Some asset rich but cash poor folk do not consider themselves wealthy. They must see themselves as merely provident and therefore a 'victim' of any potential reform.

Regulation and reform should be targeted at asset speculation - especially speculation in the basic and time- honoured rights and expectations of all who inhabit a civilised society.

Most people (less the demented avaricious) would understand that these basic right need to be preserved for sake of harmony.


May that voice become a roar...if you can't fool them...or distract can't dominate them.

What about all the tax loopholes for corporations. You make no mention of these. Look at Google for example, the Americans are complaining about them dodging taxes and so are the Ausies and no doubt they are doing the same world wide, including NZ. Of course Google are not the only ones. So were is your tax policy here? If i get all my income from Corporations then who cares what the personel tax rate is?

First of all, who said we had a right to be happy?  

Second, a true democracy is a pretty rare thing.  I know little about how NZ really works in detail, being relatively new around here, but the USA, where I'm from is not really a democracy in the pure sense.  It's a constitutional representative republic.    I know that sounds like splitting hairs, but it's pretty important to understand.  

The whole point of the Constituion is to protect the rights of the minority against the majority and everyone against their government -- a greedy dangerous thing which left unchecked tends to gobble up everything in its path over time. So after over 200 years, we've shown that it can be managed, but often very, very badly!. Different countries have different versions of the same idea and some work better than others.  It's a manageable problem as long as you have an educated citizenry who understands why that's important. 

Alas, I fear we are losing that, which puts the whole proposition into question.  Time to party like it's 1789!

It is not just tax the rich..

Part of the problem is the "financialization " of everything.

eg.. Student loans lead to  dramatically increases in fees....   Easy credit for mortgages lead to increases in house prices....   The lower the lending rate ... the more it gets "Capitalized" into increases in prices...  ( interest free student loans = much higher fees )

The ticker has a little bit about this. 

Looking into current developments on many fronts – the world will never recover again, simply because among the powerful in societies ethic and moral requirements and standards don’t prevail 

It's sad Kunst is gone

it is indeed...

How do u mean... Kunst is gone..??

Walter is down on the Kaikoura beach counting the waves. He realised posting comments here was a total utter waste of bloody time. A bit like voting.

total utter waste of time Wooly....?...I wouldn't say that....and I'm sure you did not intend to impune the value of his posts......lot of smart people here you included ..he may just go on and stuff.

Jeez C why must you jump to conclusions. I was suggesting that all our posts are a total bloody waste of time because the pollies and the other sods carry on regardless. They don't give a stuff. I know what I post is a total waste...lost in space. I only do this for a laugh.

agreed Wolly post was more about other people not jumping to conclusions...because I...KNOW..that was not your intention. Cheers me ol Gypsy!

It's not a total waste of time at all! People read your comments and are influenced by them more than you know. There also comes strength from solidarity in opinion. Is Bernard wasting his time? Wolly, the pollies do read this stuff. How do you think Goff came up with sudden change of tune about CGT? 

They are constantly looking to the public for opinion on what might be real vote catchers, then they "tell us all want want to hear and hey presto!" the BS continues until next election. ;-)

MY POINT: Believing in Pollies is a waste of time YES, but believing in YOU or ME or Bernard ain't quite the same. I'm not seeking a government gravy train job and neither are you I'd say. We can afford to be "honest"

I am reminded of the painting titled "The Scream".

Hey wow..! Wolly  I got a copy of the ol Evard Munch  lurking about downstairs somewhere...put it away while the kids were growing up ...never got it out again...!...still it's just not the same without the it now..  

Make a great placard though!.......... no need for words......was he really tripping out when he gobbed on the paint?

need you any further demonstration.....? Wolly

Just completed the GMK model, I have assumed an investment portfolio equivalent to my GMK kiwisaver, my GMK investments have yeilded no where near 6% in any year, we are supposed to earn 6% from our endeavours otherwise we are taxed for not earning this, when GMK cannot generate anywhere near those returns for my kiwisaver.

How will the Big Kahuna when extrapolated address taxation by means of inflation..?

s'il vous plait.

To quote:

"I'm not sure you understood Orwell's political philosophy - he wrote against totalitarianism, and saw Soviet communism as a totalitarian (not a socialist) regime; "

Socialism to the degree described above in the guise of a 'Kahuna', if imposed on the whole populace to such far-reaching and profound effect is no different than size does not fit all, and the 'mindspeak' just shines through....

The world's dynamic capital has been progressively salted away and turned into static cash seeking a safe haven by those insisting that businesses and their ordinary shareholders should be bled dry in order to pay themselves and their toadies for 'their unique skills'.

So-called anti-business and draconian tax regimes in America and elsewhere presided over the most progressive and dynamic  advances in infrastructure, technology and social policy.  Why then is no one challenging views such as: The Big Kahuna policy combination provides a lower marginal tax rate on wages earned above $70,000 (from 33 per cent to 30 per cent) thereby achieving the outcome of most concern to the Economist - maintaining incentives for those with high skills to work, innovate and take risks.

I'm getting worried about people's motives for advocating 'taxing the rich' more when they hold steadfastly to the idea that the answer is to advocate  nominal and fastly decreasing purchasing power $70,000 and go upwards.  Does anyone here reject the idea that the only fair way to do it is to start at the top earner and work your way down?

What?  Are we worried that we won't get people like Reynolds, Gatting et al who have showed such sublime business and marketing acumen? Are we concerned that businesses will stop funneling hugely disproportionate amounts to management and reinvest instead in more R&D and equipment and higher wages for the riff-raff?

As with the proposed capital gains tax, forget about whether we think it's going to bring in the required (or even cost-neutral) revenue.  Start thinking instead of being seen to be fair first and clever, last. IMO, that's what it will take to start healing society.

I agree with you on two points, Haggis. I too do not understand why Morgan thinks that "maintaining incentives for those with high skills to work, innovate and take risks." 
is important for those earning over $70,000. When I started in business I worked harder than I do now, was more innovative and took more risks, but I did not earn much money. Why should the poor be deprived of  the same incentives as the wealthy?

I also think that the tax system should be fair. 'Fairness" used to mean treating everybody the same, but in the hands of modern economic thinkers it can mean whatever they want it to mean. Bill English says our current tax system is fair. Does anyone know what he is talking about?

Well, Herr Dunne has used the word 'fair' 5,342 times since about two weeks ago, and every time he's used it he has meant someone should 'fairly' be paying more tax. He's reported to have been 'dancing around his office like a girl' at the Big Kahuna, as Marxist Morgan has devised a way to fairly tax every damned thing :)

And it's also significant that in opposition to his coalition partner, Herr Dunne did not support ACT's Spending Cap Bill which quite responsibly sought to cap government over-spending to at least the inflation rate: obviously while it's fair the taxpayer keeps paying for the politicians daily mistakes, he also believes it fair our masters keep getting their money supply to keep financing their dreams and ambitions for my life, also known as my slavery.

Great little Gulag this police state of ours.

Oh, when I started my career, the IRD had a slogan 'It's our job to be fair' - snort. How times have changed.

Well Tribey me old mucker we'll agree to disagree on many things (cos you're totally wrong haha ), but if you're suggesting that Mme Dunne is absolutely the worst kind of Revenue Minister then I'm with you all the way. 

That dude is why I think pollies should have a 2 term maximum. The only positive revenue impact he's had is all the extra revenue that the gangs are getting selling drugs since Dunne banned (rather than regulating) those alt-weed products. The dick.

Oh, snap :)

Here's another thing I'll never fathom. Under both a hard left and then a right government, that's two different governments, we've had the exact same man as Revenue Minister.

What does that tell you about politics in the Police State? It tells me the taxpayer is screwed no matter which major party is in, as in the most important portfolio in the land, given tax policy and its thuggish enforcement is where politics, philosophy and economics all meet, there is absolutely no difference.

I have no truck with democracy, for freedom lovers it's become part of the problem, but putting that aside, voting, it was supposed to be about actual choices wasn't it?

Guess not.


Take your libertarian philosophy to its logical conclusion. Become an anarchist. Dispense with this "Libertarian" Capitalist nonsense. Its just a chain around your neck. Capitalism would have failed in the 19th Century without massive intervention by the Business State.

"The work of these men, taken as a whole and minus some Marxian mysticism, demonstrates how, beginning in the last decades of the nineteenth century, the "class conscious" corporate liberals of Big Business sought and achieved "progressive," neo-mercantilist regulation of the economy by the federal government in the interest of restriction of competition and cartellization of the domestic market. Simultaneously, some of the same corporate leaders (in and out of government service) for and gained government support of overseas economic expansion.
Pioneered by "class conscious" corporate and political leaders like Theodore Roosevelt, William McKinley, Mark Hanna, and Herbert Croly, foreshadowed in the corporatist "war socialism" of 1917-1918, and pursued unerringly throughout the interwar period by Herbert Hoover, Gerard Swope, Henry Harriman, and others, the essentially corporatist and liberal imperialist policies outlined above reached their culmination in the New Deal." 

The world's political economy is in today's current form, which I consider a monstrous hybrid, because otherwise it would have collapsed long ago. Karl Marx's analysis of the flaws within capitalism was an incively accurate one, and his prescription for a future "dictatorship of the proliteriat" was not so extreme as one would imagine. The Communist Manifesto doesn't diverge markedly from that of any of that written by a modern day Social Democratic party. Anyway many of his criticism weren't original and were drawn from the writings of Pierre Joseph Proudhon, the first avowed anarchist.

And you may mind, the writings of Proudhon's disciple, Benjamin Tucker worthwhile reading.

"But, says Herr Most, this idea of a free labor market from which privilege is eliminated is nothing but “consistent Manchesterism.” Well, what better can a man who professes Anarchism want than that? For the principle of Manchesterism is liberty, and consistent Manchesterism is consistent adherence to liberty. The only inconsistency of the Manchester men lies in their infidelity to liberty in some of its phases." 

BTW, Steven,

Somalia is actually the victim of the West's persistent meddling in the affairs of Africa that has continued since even before outright colonization began in the 1870s.

Naturally the West's "assistance" to Africa is always selfserving.

According to documents obtained by The Times, nearly two-thirds of Somalia was allocated to the American oil giants Conoco, Amoco, Chevron and Phillips in the final years before Somalia's pro-U.S. President Mohamed Siad Barre was overthrown and the nation plunged into chaos in January, 1991. Industry sources said the companies holding the rights to the most promising concessions are hoping that the Bush Administration's decision to send U.S. troops to safeguard aid shipments to Somalia will also help protect their multimillion-dollar investments there. "" 

Somalis again must bear the fruits of the "Black Man's Burden.

"The 'point of no return' in Africa came when the unnatural boundaries the British had originally set up to make colonial rule easier for them were unquestioningly adopted at decolonization. Regions whose people had natural affinities and common trading centers were chopped up into numerous 'nations,' as enormous as Congo/Zaire and as tiny as Gambia. What ended up happening time and again was that the basic aspirations of common people were used to constitute 'national identity' constellated around popular leaders like Kwame Nkrumah in Ghana, in whom people put their modest hopes. These hopes, despite the intentions of leaders like Nkrumah, were inevitably betrayed as African governments from their very onset adopted assumptions and forms that were European, and unresponsive to the needs and spirit of Africa. ""



I agree totally, there is a rather dump myth of an idea that only the wealthy can become employers or engage in business. This idea is totally un-justified. When a tax system is modified to favour the wealthy this is modifying the tax system to favour the wealthy. It has almost nothing to do with job creation, and frequently negative effects in that area. Nobody could claim the GST rebalancing was a great job creator, and by taken seriously.

Funny that someone calling themselves Austrian makes a good point and then Tribeless, claiming to be an Austrian, attacks Peter Dunne rather than playing the ball. 

The worst thing about socialists is they're such a humourless bunch. One almost looks forward to the Gulag for light relief.


Oh, and the ball was Peter Dunne, Minister of the department that belongs in the Soviet Union, not a free country, and makes a mockery of the notion of fairness, which was Austrian's original question.

Don't you think, Nic the Twit.

No I don't think,

that a statement about the incentives and mindset of entrepreneurs had anything to do with the minister for revenue dancing about in his office. I didn't actually see any kind of point to your comments either, just an attempted caracature of Peter Dunne. If minister for revenue was a really influential government position would both parties be happy to hand it to a member of a coalition party? 

Tell you what when Peter Dunne starts rolling around his office in a Cossac suite you can consider him the ball.

Goodness me, talk about retardation. Read this slowly, Twit, so you can keep up.

Austrian said:

I also think that the tax system should be fair. 'Fairness" used to mean treating everybody the same, but in the hands of modern economic thinkers it can mean whatever they want it to mean. Bill English says our current tax system is fair. Does anyone know what he is talking about?

And then, look at my first post, I answered exactly to that. I answered to it using a not so sophisticated - unless you have no humour bone - method called satire. As you say 'an attempted' caricature. Because sometimes satire and caricature are the best way to show a truth, while being a little entertaining at the same time (unless, again, you are a humourlous goof).

For the reasons I have stated, including his failure to back a spending cap bill, preferring instead, it has to be assumed, to tax and spend with the most powerful department in the land, Peter Dunne is a dreadful minister: tax law under him, for example, dumping QC's and legislating the awful LTC's, has been made a nonsense for those of us who have to try and comply with it. All pertinent facts to this thread. Including every time Dunne has used the word fair, and he's used it a lot, he has always used it to mean someone should be paying more tax.

Now bugger off. I've got client visits all day.


Yeah sure you accidentally mistook Peter Dunne's head for the ball in the middle of a ruck, I have heard that argument used before, usually by the intellectual class of a super 15 side.

You actually said, "Well, Herr Dunne has used the word 'fair' 5,342 times since about two weeks ago, and every time he's used it he has meant someone should 'fairly' be paying more tax.", Maybe Peter Dunne is right it would be fair if the social system was better funded.  Maybe you could find something better to do with your time than following the minister around counting how many times he mentions fairness.

You then seek to undermine this idea with a character assasination of Peter Dunne which really has nothing to do with whether or not this would actually be more fair. Play the ball, not the man.


I've actually found the stupidest man on the Internet.

Flouncing about like an outraged duchess because somebody disagreed, and called you on your bullshit?  Really?

I've actually found the most pompous narcissist on the internet.

So, what was the ball again?


Perhaps you could explain my bullshit a little better? I've been stunning myself under the pure while light of the sense I've been making.

The whole argument is rather obviously pointless anyway. I can not understand why anybody accepts that social policy is responsible for a financial and banking crisis. More so why government social policy in New Zealand is responsible for a financial crisis eminating from the United States.

The whole argument is the mental equivalent of blaming the canary in a coal mine for the suffocating fumes.

Changing the tax system in New Zealand is not going to fix the economy, no matter what the change is. Fiddling with the tax system can only result in a change in the distribution of slices of an ever diminishing pie.



I can not understand why anybody accepts that social policy is responsible for a financial and banking crisis.

I'm not saying that. The financial and banking crisis is caused by our planned economies: Keynesian socialism and the fiat money central banking system. But social policy encapsulates the philosophy that underlies a society: in our case, it's social(alist) democracy and that planned economy, which is only possible on planned lives, versus classical liberalism. Also, philosophy, politics and economics all meet in tax policy and enforcement of that policy, which is why I attack social policy via tax policy and the power of IRD.

We've been sold a social(alist) democracy and it's concomitant State planned and regulated economy, against many of our wishes - but in a tyranny of the majority, the vote for freedom is worthless.

The philosophy of that society is the privacy and freedom of every individual is irrelevant: individuals are sacrificed via the brute force of the State on the bloodied altar of the common good. The State as master, not as servant: the Orwellian nightmare society, every time. Thus the State spend in NZ is now 46% of our entire GDP - that's huge, and as the West is finding out, unaffordable. The welfare state never was affordable, it always relied on future generations of tax-slaves having to pay for the freebies of the current generation: it was a greedy and cruel hoax, and has and continues now to create the violent society that has killed freedom, and now works on blackmail - namely, the State must take from me what I would wish to spend on my family, to redistribute to complete strangers so they will not use violence to extract what I have from me.

It's a world, this one we've had forced on us, with no compassion, even though it was in search of compassion that it was founded: that's why I call it the Gulag of Good Intentions. And look at what we have. IRD have more powers of search and seizure than the police, because government considers extorting the efforts of individuals going about their lives, trying to pursue their happineness, more important, apparently, than stopping terrorists. And we are all forced to live The Lives of Others.

I resent it.


What has caused this was,

a) Relaxation of the regulations put in place after the Great Depression...

b) The neo-con/laissez faire economics model that has failed so badly...

"against many of our wishes", your wishes and maybe 1000 others....

"The Govn considers", you seem to forget that this is a Govn whether Labour or National led, voted in by the ppl on pretty similar something like 99.95% of the population (based on the last elections results) work, live and play is this society.

Now if the Libertarians were getting 40% of the vote you might have some argument. instead you get a % so small I'd need a multi-decimal calculator to work it out.....if I could be bothered.

That puts you considerably behind even the Fundie Christians like destiny church...

So since a society sets moral behaviours that pretty much puts you in the extremist of the extermists camp, which since you want to see this all crash no matter the pain, misery and probably loss of life thatwould cause seems to add up.


Actually Steven, the Great Depression was caused by the unparalleled government interventions of Hoover, who had already instituted every major program that became Roosevelt's New Deal, that extended the harmful effects of the depression by upward of a decade.

We've never had laissez faire: the banks are all part of the crony capitalist system, and should never have been bailed out - the West if further paying for doing that now.

And you keep stupidly banging on about Truth being somehow determined by how many people believe in something: even if 99 people out of a 100 believe they can walk through walls, they can't. I don't seek to hold you or anyone to anyone else's belief system or lifestyle, indeed, I want a classical liberal society precisely so that can never happen: I wish you would do me and other freedom lovers the same respect. But like the Left, you only know force, and bending people to the will of the tyranny of the majority or else a ruthless spanking to be dealty by Nanny State, and her Big Brother IRD, with you leering through your gaping empty headed maw on the sideline, just like a day's entertainment at the guillotine.

That is what makes you such a brute. And that's why the Nanny State is an Orwellian State, just look at how IRD operate to make sure my effort is taken to fund my jailers.


Actually I dont agree with you, pretty much totally.

This is not about truth, as such its about a society....who chooses rules etc.

If you choose to live in our society then you abide by our rules and laws....or Im quite happy to see you locked up for not, I promise I wont loose any sleep out of it.

Or of course you can leave, you are free to.



What really offends me, is the the sort of people who become politicians to rule over me, believe as you do.

You're an incompassionate, uncaring brute. Pure and simple. You are the perfect example of why I want a society where you have no control over me, or I over you.


In Germany in the 1930s and 1940s, with your cavalier dismissal of the rights of society's "enemies" that allowed the horrors of the Holocaust, as society decreed those considered "unfit" were condemned to the gas chambers. Not just minorities such as Jews and Gypsys, but communists and other radicals, the elderly, the handicapped, the homosexual, and the mentally ills. Have a care

Yes Anarkist. Great point.

All collectivist societies, the sort that steven supports, that purport to have the State pursue the common good, become capable of atrocity.

The society that bases itself on a written constitution that seeks only to protect that smallest of minorities, the individual, however, would resolve this. No politicians. No force. So long as you do not initiate force against anyone you can do whatever you like. That will be the first civilised society.

Throughout the 20th century the Left had to wring their hands in anxiety as one Leftist tyrant after another set about the murder of their populations. And the road to every murderous tyranny was always paved with good intentions. To the freedom lover there is no confusion here. Once a society aims for the 'common good', which by definition means abrogating the identity and rights of the individual at the feet of the all powerful State, then why would it be any surprise that such tyrants ended up extinguishing individuals en masse pursuing the 'common good'. That's why such brutish societies, and men like steven, are evil.

And interesting you mention the Jews and the holocaust. With me a Libertarian and you an Anarkist, we would not be on all fours vis a vis the place for 'a state', however, I suspect we would both be humanists. In the early 1930s in the Jewish emigre communities of Vienna and Berlin there was a burgeoning humanist, classical liberal movement/ethic growing, that could have led to true free societies today. For me one of the saddest things that happened in WWII was that flowering individualistic freedom movement was snuffed out in the gas chambers and concentration camps. And one of the ironies is that over the last 80 years, via the Italian Marxist Gramsci's underhanded workings through the education systems of the West, our social(alist) democracies have finished Hitlers work in killing completely the individualistic ethic needed to create the free society.

Such a revolution toward the civilised society will never happen, unfortunately, in my lifetime. And to understand why, you only need to read these threads, and how the MSM just don't 'get' the philosophical issues that underlie economics (and politics).

"Throughout the 20th century the Left had to wring their hands in anxiety as one Leftist tyrant after another set about the murder of their populations. And the road to every murderous tyranny was always paved with good intentions."

Actually if you put the political regimes that ruled the fascist Governments in the 20th century in their proper place in terms of the true historical context of the political specturm. They were actually properly on the Conservative Right. As in they sat on the Right side of the King French Estate General. The primary thrust of Fascism was its veneration and harking back to a pure bucolic Arcadian past. They're propoganda was replete with concepts such as Blut und Boden (Blood and Soil). 

Funnily enough this ethos was also embrased by the Tory Conservatives in England, which led to the flowering of organic agriculture and the beginnings of the Environmental movement. Its particularly ironic for me, because I profess to be a Deep Ecologist, likely to be amongst the most radical of environmentalists.

I think you go too far in labelling people such as Steven as evil. I would say rather they're either too lazy or to fearful to behave according to their own convictions and lack faith that others will do so also. They fear that without a strong and powerful authority, society will descend into "anarchy" and a barbarous war of all against all, whilst failing to recognise that the vast majority of societies on earth throughout history survived intact without such.

Yes, I very much admire the libertarian, and admittadly mystical ideology of Martin Buber, a Jew who was formerly a Professor at the University of Frankfurt. Thankfully he managed to escape from Germany before the Holocaust and emigrated to Palestine where he had a heavy influence on the Kibbutzim and Mochav movement in Israel.

I also wouldn't be so insistent on blaming Gramsci for his corrupting influence on the world's, after all New Zealand's welfare State presaged, that established in the West, by a wide margin.

A book I read on New Zealand's Education system since its establishment in 1877 had this to say.  "An education system reflects the dominant social traits of a society. Every community seeks to propogae itself and one of the main instruments used is the education of the young...One famous New Zealand historian and politician of the last century, William Pember Reeves, saw in this combination education and state ownership of land, the roots of the experimentation in social welfare legislation which was to distinguish New Zealand and Australian democracy from that of America with is trong distrust of interfering central authority.

 The state has always been the great colonial landlord and like all landlords has been called upon to do its duty by its estates. Wen in addition the State took up the work of providing transport and of borrowing great sums to build railways, roads, and bridges .."




I am just going to point out there was a financial crash first (including layman bros) and bailouts came second. Exactly the same in 1929.


But why did banks fail August 2008? And do you realise Fannie Mae and Freddie mac were US's welfare agencies set up by New Deal?

Failure in 1929 was, as with 2008, government interventions, and distortions of markets. Hoover's interventions in market, particularly: he had put in place every piece of the New Deal, that's was led to collapse, just as New Deal extended length of collapse.

Banks failed late 2007, because the interbank lending market froze up, because participating banks all realised that if they were involved in dodgy mortgage backed securities then so were their counterparts. In otherwords if they leant the other banks money they might not get paid back.

The mortgage backed securities were setup following de-regulation of the banking industry pushed by commercial banks. It was found out after the crisis that many people inside this sector didn't understand what they were selling.

Obviously if anything government policy and lending played a very minor role. Government social policy has less than nothing to do with causing the crisis, NZ government social policy less still.

You keep missing the point, the central banking system does not regulate the monetary policy nearly effectively enough, because of the way monetary policy is legislated. Its the commercial banking sector which primarily sets monetary policy. That is why, as Bill English has acknowledged, 98% of the NZ dollars in circulation originated as commercial bank credit.

Fannie Mae and Freddie mac are probably guilty of being patzies and allowing themselves to be taken advantage of. They clearly function as commercial entities however. Blaming them for the crisis while the lending structures were dreamed up and setup in other commercial institutions is the basic equivalent of blaming them for not forecasting the future. I saw an article recently which put the balance of blame on the NZ reserve bank monetary policy around 1998 for the housing bubble in 2006, really should find some better gods to worship I think. Central bankers can't predict the future.

The obvious place to look for the causes of a financial collapse is the financial system. Steve Keen the Australian economist has created economic models which show that the financial system collapses by itself. There is no tax or government in his models. He also forecast the crisis before it happened.


Yes, but reserve banks, and the fiat money system are not laissez faire, they are part of a planned economy. Those 'dodgy securities' were to wash up a wave of fiat cash that had been circling the globe - and the mortgage crisis kicked off from Fannie and Freddie, under command of government guidelines - welfare agencies - giving articially cheap mortgages to those who could never afford them when the correct cost of debt was ultimately applied.  If control of the money supply wasn't in the hands of politicians, and we went back to either a gold standard, or even just a basket of commodities based to peg currency to, then the asset bubbles, which were part and parcel of a planned economy,  would not have occurred to the extent they did, and more importantly, as obviously there will be corrections of malainvestments required in laissez faire, but under laissez faire those malainvestments are correct relatively quickly, unlike when government bailouts defer and grow them as has happened from August 2008 to today. And don't do to me what steven does. To try and separate out social policy and imply I'm saying that's what led to the crisis is a cheap shot straw man, I've never said that anywhere, look at my replies above: you can't take anything other than a systemic approach to this. It's the entire planned economic crony capitalist system that is wrong, of which social policy is but one part, both cause and symptom of the underlying social(alist) democratic philosophy.

The only solution in keeping with creating the free society is classical liberal philosophy (libertarian constitutional minarchy), and it's economic bed fellow, laissez faire economics. Under that system you and steve have no control over me, or I you. That would be beautiful.


(These posts are now becoming so squeezed up I can barely read them anymore, so I'm off.)

One final comment to add to my above post: the more I read about free banking, the more I'm liking the 'proven' concept of that.

Maybe you should start with a definition of Laissez-faire economics, because this concept is completely uninteligable. You need to define the boundary between regulation and intervention. I don't think one exists, but maybe then we could talk about if Laissez-faire economics can exist or are a good thing, if this was clear.

What I find deeply troubling about the apparent libertarian position is that you are quite happy to blame the government for an economic crisis, but you don't appear to put any blame at all onto privately owned companies. This is the same guys which lobied for de-regulation, took advantage of eventual de-regulation, have ripped many people off, demanded help from the government and generally have behaved like a complete bunch of pigs.

Despite this some how the first libertarian response is to attack the government? I mean if libertarians believe in a government which is against use of force wouldn't the first response  be to re-regulate, at least to the earlier extent? Or to loby for existing laws to be enforced? But no, instead we have to listen to some self sanctimonious rant about how it was just a bit free market but not free market enough.

Libertarianism is just a bunch of dispirate opinions, it shouldn't even pass as a philosophy, because there is no coherency. Just people calling themselves libertarian so they can bitch and moan about something the government has done. Exactly like the Tea party or Fox news or the Koch brothers.




The classical liberal society based on laissez faire capitalism is far from a 'bunch of disparate opinions'.

Laissez faire is unregulated by governments, but is not anarchy as contract governs it: one of the few legitimate functions of government is to provide a criminal law system to punish those who initiate force and fraud, and a civil law system so people/business can be held to contract.

Other than that, you keep trying to relate the current crisis to capitalism, when we don't have capitalism. At least, crony capitalism (which is the problem here) is to capitalism what sea horses are to horses.

Are you happy with the immense power held by the State currently? With the powers that IRD has to snoop, search and seize? Do you find it acceptable living in a society that believes your identity, privacy and freedom must be sacrificed to complete strangers at the whim of bureaucrats? Are you happy having your money taken from you by force to fund a welfare state that is growing violence by funding and creating the very 'class' it was supposed to be lifting up?

Footnote: classical liberalism/humanism (libertarianism) is not right wing, because it is not conservative.

You're happy to be an open book to any bureaucrat employed by the government , such as the IRD  ? Crikey ! They can trawl through your life , through your accounts , bank statements , phone records , anything at all , to find reason for them to take from you ( based upon their ever changing rules on what they're entitled to take from you ) , and you say OK ....... so long as they don't step on the flowers , or break a vase !

Golly gosh , I'd no idea that the brains of the kiwi sheeples had softened so much .

Geez Louise  !

"Laissez faire is unregulated by governments, but is not anarchy as contract governs it: one of the few legitimate functions of government is to provide a criminal law system to punish those who initiate forceand fraud, and a civil law system so people/business can be held to contract."

This definition is basically meaningless, it does not define the boundary between regulation and intervention. It's also not really going to be a capitalist system because you need some pretty serious rules and regulations to have a monetary system.

The other problem with Libertarianism is that once the government is neutered this leave a large number of institutions which are totally democratically unaccountable at the top of the pile. Hence Libertarianism will turn into Fascism at every turn.

I don't think I said anything about attributing the crisis to capitalism. I put the crisis firmly down to the financial system, where it belongs.

I am much more happy with the immense power held by the State than by the immense power held by Goldman Sachs, JP Morgan Chase, Apple and BP.

Typical, NZ gets the lowest quality imports of everything, including Libertarians.


There was nothing keynesian or planned about the last 30 years...Govns and the likes of Greenspan let the markets loose, this mess we now face is that end result.

There is no clearer indication of the failue of the laissez faire / lieberatian model than the last 30 years.

Comapssion? thats an ugly joke coming from a Libertarian.....there is no compassion in a liberatarian fundie....its the libertarian  way or death and destruction.



Let's just cut to the chase, Peter Dunne is a pratt, we all know that.

From this you seem to be telling us you are on your bare bones when farming apparantly has a considerable + GDP foot print and profit but needs to,

a) Damage/exploit the environment to do so without paying for that.

b) Expect a huge subsidy from us the NZ tax payer to fix the damage you have done.

c) Oh but wait, farmers are retiring tax free with huge sums.....

d) Claiming WFF and other social benefits due to debt payments making them look broke ie no disposable income.....yeah right.

Then also consider we were until recently, in 10+ years of boom so in the bust times you have no hope to make ends meet and will go bankrupt, en mass.....





You [Steven] are either a liar or a fool.

How very dare you, sir. On behalf of Steven, I take umbrage at your slur upon his good name and character. Steven is no liar.


Check out the WWOOF scheme or if your a conventional farmer Farm Helpers in New Zealand, I pretty much solely rely on WWOOF hosts as opposed to formal employment due to my convictions about conventional industrial farming and the dearth of paid employment on organic farms. Ironically I doubt its unrelated to the existence of the WWOOF scheme, which provides organic farmers a ready supply of idealistic young people and allows them to get away with paying workers mere subsistence, rather than minimum wage rates.  

Mist - you miss the point there, I suspect because you carry idological baggage.

We're not certified organic, but we don't spray and are thoughtful about what gets introduced to the property. Have a listen to Kim Hill this morning, re antibiotics. Same applies to artificial anything, really.

Wwoof'ers are typically mid-twenties couples, and motivated (the other kind probably tend to couch-surfing).

They are smart, typically post-graduate, pre settling down. Absolutely keen to learn skills, soak them up like sponges. You have to remember, my generation (nudging 57, I am) took most of the good resources, didn't mitigate our exhaust, in short, we dealt them a short hand.

One of the ways to redress that imbalance, is to teach; pass on your knowledge and skills.

We get as much back as we put in, they bring the world to our dinner-table, and they usually produce what's on it. I suspect that when we perambulate overseas in a few years time, we'll have the opportunity to reciprocate, and have a list of places to stay far exceeding out ability to visit them all.


 mist42, why do you consider Organics BS? I do agree that the arguments of advocates of organics, including myself, often lack scientific rigour, but one could argue the same of conventional farmers. Both sides are largely driven by emotion, with a distinct line having been drawn in the sand. There are also exceptions such as yourself and scientists such as Elaine Ingham who developed the Soil Food Web system.

"And anyway soil IS organisms and microorganisms”.

This is the central tenet of organics, and as I understand it conventional industrial agriculture and horticultural and even misapplied organic methods disrupts the population balance of microorganisms within the soil due to varying nutrient balance (carbon or nitrogen) and eventually leads to exhaustion of the relevant nutrients in the soil. I guess I've taken the word of organics advocates (who often are also scientists) as gospel, and failed to acquire the understanding of soil biochemistry myself which would have given me more credibility when it came to voicing my opinions on the matter. You challenged me to do so and I did my best to test their claims with info gleaned from scientific sources, but I have struggled to get my head around it, because “organic” science consistently linked the nitrogen and carbon cycles and microbial activity together, whilst most dissertations from “mainstream” approached both processes seperately, though one alluded to a relationship, but assumed prior knowledge and dealt mainly with mathematical calculations.

As for the WWOOF system. The primary source of WWOOF participants are international travellers, who travel on a budget. For them, WWOOF hosts provide a base for them to stay, whilst they search or wait for short term paid employment and  an opportunity to experience an authentic introduction to the Kiwi lifestyle. Many of them are also young city folk who wish to get back in touch with nature away from their urban or suburban lifestyles and a chance to learn new "hard" skills which are devalued so much in our society. They come from very diverse backgrounds, builders, landscape architects, environmental engineers, civil engineers, mechanics, biologists, and I even met a robotics engineer who worked for the European Space programme. For me personally, it is my lifestyle. An opportunity to work the land without the responsibility of ownership, dealing with debt repayment, bills, having to deal with merchandising the product etc.

With many of the hosts, farming for them is a sideline, a hobby they do on the weekends and holidays, though I generally volunteer on various communes around the country. A few would qualify as rather successful ventures. One of which has to generate $1 million dollars annually to stay afloat. It operates a small dairy farm, a commercial pear orchard, and other small enterprises. Another is Tui community which produces the Tui Bee Balm. I have yet to volunteer for a truly commercial farmer, because there are connotations of exploitation in the arrangement though, I accept small scale farming is a very marginal occupation and employing workers for minimum wages as well as other attendant costs such as ACC levies, income tax, compliance costs etc, its often out of the question. Funny world we live in. When food and water which mankind couldn't live without, is considered worth less than something completely discretionary like an Ipad.  


ooops , wrong spot ..... Hello Spot ! .... try again .......


 Just by accident – I discovered this it may help in your debate:

Well sorry mist42nz I am going to dissappoint you, I don't want everybody to work for less. I actually think that the majority should be more healthy, wealthy & productive.

Fundamentally what I want is stable value for NZ money over time. So if you get loaf in bread in the 1980's, then today in 2000 a dollar would still buy you an equivalent amount of bread. Of course what you will observe is that a NZ dollar today buys you a lot less than what it did in the 1980's. To start with lets assume this is possible and look at the improvements.

I think it should be obvious what this does to social policy systems, suddenly they are massively more affordable. Pension funds would obviously not lose half their real income over 20 years, insurance would be massively more affordable. Other systems like education and medical systems would be much easier to plan for because they could rely much better on their budgets with less inflationary influence.

Also at the moment wages never really keep up with inflation, this contributes to the gap between rich and poor in society. Many businesses get badly dammaged by periodic financial crisis which are not an irregular phenomenon. Businesses and individuals end up in debt which makes them both desperate and often willing to commit to virtual wage slavery.

Most importantly for me the economic and financial system can only function with perpetual growth, a downward turn is very bad for any economy running on a debt based financial system. This means that the ecological destruction of the entire planet is baked in.

So what is causing this directed inflation of everything against the value of a NZ dollar. Well basically it is there because relative to economic activity the amount of money (and credit) keeps rising. It is actually a part of the reserve banks charter they are suppost to control inflation, but because of how the financial system works can not.

In essence this inflation exists because commercial banks can and do create money, and of course they also benefit from loaning it. This basically leads to debts everywhere, everybody, every company, every government is in debt. Because of these debts banks have a massive influence on the political system. The media don't criticise because they are deeply in debt, the governments don't criticise because they are deeply in debt. Workers are tied to their jobs because they are 2-4 weeks from default on their mortgage. Farms and other businesses have already borrowed and so forsaken much of their future income to the financial system.

Occasionally lending collapses, for various reasons, and along with this debts which were previously serviceable can no longer be repaid. This is because the debt was created with expectations of stable future income, which turned out to be unfounded. When lending of credit shrinks existing debts become more onerous, the value of money rises, and previous debts can not be repaid. This is called a debt deflation by Irving Fisher and it's a good description of prevailing economic conditions today.


So how to fix this? Well in essence its simple.

1) The reserve bank should be made into the sole creator of NZ dollars. This is what many people think they do today.

2) Commercial banks can no longer create credit, this is called full-reserve banking. The financial sector can still lend money under this system. In order to lend money they would pool the money of many lenders, then this money is lent to a borrower who will pay interest on their debt. Only once the borrower repays the debt or part of it the lenders use the money again. Once again this is what many people believe banks do today.

3) When the reserve bank creates more money to support increased economic activity which they have measured to be occuring they will place it in the government account. This allows the government to either reduce tax rates, or to use this money to pay for increased social services. Because this spending is supporting economic activity it will not have a significant inflationary effect.

4) Obviously the reserve bank, as it does today, will set policy independent of government treasury policy. If the creation of more money will be inflationary, the bank will not create it. It should also be able to reclaim (and destroy) some money reversing inflation.

Nice dream Nic but reality rules. This is an economy run on credit, not cash saved by savers.

" This allows the government to either reduce tax rates, or to use this money to pay for increased social services."....again, a nice dream Nic but all it would do is expose the economy to political fiddles aimed at keeping govts in office.

 "the reserve bank, as it does today, will set policy independent of government treasury policy"...sorry Nic, another wee dream here. The RBNZ is never independent, not of the banks, nor of the govt. Reading in the media that the RBNZ is independent has no meaning.

When commercial banks create credit based on savings at a ratio of about 10-1 then it should not be a surprise that the economy 'runs on credit'. That is all there is for it to run on after all.

Of course they are independent of the treasury, this is very obvious. That is why the government goes to China to borrow money, not it's own bank. They are not independent of the commercial banking sector, but while the reserve bank ought to be in better control of monetary policy they are not. You think that Don Brash with his economic perspective (similar to Roger Douglas) could be reserve bank governor for 10 years through both Labour and National terms and dependent on the government?


What really matters is who controls the amount of money in the money supply. It would need to be some sort of independant committee. They would need to ensure the total money supply is always equal to (or close to) the total demmand and increase or decrease the money supply as required. Like you say, Government could then spend newly created money into the economy. At the moment, private banks create our money supply, hence many of our problems.

What has full-reserve banking got to do with planned economics?


So Nicos, where are you going to get this extra funding from to fund all these shortfalls? By borrowing it? Selling assets? Or taxing us all even more? Invading and looting another country?

The first two options increase the money supply which eventually translates into price inflation, the third option retards growth and as you say will be very bad for any economy running on a debt based financial system and is the foundation of a socialist system that as history tells us will not work.

I think most of your opponents on here feel the best way forward is with a honest monetary unit that can’t be corrupted by any government, a 100% reserve banking system and a government restrained to live within its means and within limits (to less an influence than what it has now).

We are miles away from that point at this stage.

I recon we need a gold currency (actual gold laminated within a note), or perhaps a public credit system where money supply is kept constant level well out of the reach of politicians.

The big Kahuna is a good start in sorting out our fiscal affairs I think.

I think you missed the point Bankbasher. NZ is a sovereign nation. It can regulate it's own money supply as it sees fit, that includes legislating handing over all powers to create money to the reserve bank. There is absolutely no need to borrow a cent to implement this change.

"I think most of your opponents on here feel the best way forward is with a honest monetary unit that can’t be corrupted by any government, a 100% reserve banking system.", isn't that what I described?

The 4 things are not 4 'options' they all need to be implemented into monetary policy at once.

The 4 options I mentioned above referred to my first paragraph.

You are describing a honest money.  A honest monetary unit can mean various systems, one of which is a system of public credit as promoted by the learned scholar Iain below, and Social Credit Party back in the day.

I would favor a commodity based system were gold and silver would be money.

Public credit requires handing over the control of the countries money supply to a small group of people.

A gold money system requires the government to set the unit of account and then allow the free market set its value. This would be volatile if there wasn't widespread adoption of it worldwide.

You should check out Iains blog.  He still wasn't worked out a secure way to regulate the issuence this public credit.  To the degree you increase the money supply is pretty much the degree you devalue its worth which is a problem.




Yes, if you wanted to pigeon hole me, I am in Ian's camp. His research and blog is fantastic very interesting and full of legitimate quotes and sources.

I don't think that a commodity based monetary system is going to be stable, the last one wasn't, and the earlier American one ended in a collapse as well. I will give you a link to an article I have written about this recently once it is posted on the positive money site.


The last metallic currency standard (USA up until 1913) was incredibly stable, practically 0% inflation for almost 150 years. About as stable as any monetary system has ever been. That metallic standard didn't end in a collapse; it ended in the takeover by a partially backed quazi-gold/fiat mongrel FED system.

It was the banking system at the time was unstable, because banks were allowed to lend up to twice as much money, as they had gold to back it, causing bank runs. This was a result of fractional banking rules not metallic money as such.

From 1913 the FED printed more claims to the underlying gold than what there was gold to back it, leading to inevitable crash first 1921 then 1929. At which point the gold had to be re-valued to match the number of dollars in circulation.

Love to read your article.





It seems like we are on similar pages then. The gist of my article is pretty much what you said, a metellic standard can only work with full-reserve banking reforms. I don't think there is enough gold in the world to make a sensible conversion to such a full reserve standard either. Gold would have to be worth $50,000US plus per ounce today.

I would suggest reviewing Bill Still's historic reviews if you have not. There were reasons for the reforms/changes which were applied to these gold standards.


Bill Still is a legend in my book.

Bbut outside metalic money, I have yet to see anyone dream up a system that dosen't put control of the full faith in the system in the hands of a small group of overlords.

There is always enough gold.  The price of gold is just the total amount of gold divided up into the total amount of monatary units, you can call them what you want, $50,000.00, $50gazillion Zimbabwe, or $1, dosen't matter, the value of gold dosn't change, only the unit it is priced in.  Gold would have to be $50,000.00+ but there is nothing wrong with that.

The reason for the change of the true gold standard was because rich bankers wanted to own and control America, not for any other reason. 




Sorry, I did word that a little bit harshly. The "testimonials" I gave all confirm the fractional reserve banking rules, they are only there to show that official people acknowledge what I said is true. Commercial banks create money. There is evidence (lots of it) that they are more influential in determining monetary policy than central banks as well. I have seen a couple of testimonials which support this as well, but they are fewer and further between.

My point about how this effects businesses, like farming, is if farming is a highly leveraged business, this has a lot to do with the way the finance system works. If farming was less leveraged it would pay much less of its income to afford finance. This would be more healthy for farmers and farm workers alike, though obviously the finance sector will not get nearly so much income out of this. 

I don't think that you have that quite right. Gold as a monetary metal is just a medium of exchange, it meets the value of goods and services being traded through free market price discovery.

If the amount of goods increases a fixed quantity of gold will just buy you more.

If gold is just a medium of exchange it is a purely barter economy. A gold standard is not, because people use gold backed notes these days, this introduces a relationship between gold and notes which is variable. I don't believe that a pure barter economy could ever exist again.

I don't think there is a suitable price to create a gold-backed-note standard with full reserve, not enough gold, massive transfer of wealth would be necessary to set it up. The last gold-dollar standard which was not full reserve collapsed, because it was not full-reserve. This is sure to happen again.

The other problem I see, which I didn't point out earlier in comments here, is that whoever has lots of gold will be in control of the money supply, because they control monetizing of it. The commercial bankers are in control today, but with a gold standard you can pretty much be certain that there will be a different but similar oligarchy. This was the reason for the change to a gold-dollar standard around 1913 in the US.


Oh gosh,

If there was the political will, there would always be enough gold, a suitable price is found by the free market system of price discovery.

The total amount of gold divided by how many green pieces of paper out there is about the price for gold, in a gold backed currency system.

A gold backed money standard needs to allow for the free exchange of currency for gold. This is to keep the accountability and integrity of the system in place.

A large holder of gold has no control of the money supply. That is like saying they have control of how much gold exists. Unlike those that are close to the source of the magical money machine, hoarding gold is of no advantage to anyone.

In my ideal dream world gold leaf would be laminated within the note, the actual gold would circulate with the people, negating the need for any one entity holding a big stockpile of gold.

Yes you are right, the constitutional gold standard was changed to a quazi gold standard so private bankers can take control of the economy. I would advocate taking that control back from any one group of people and returning it to individuals.

 WhWhy are 

Also, I think you're incorrect when you say a large holder of gold has no control of the money supply. If someone has a very large share of the gold, let's say a banking cartel, they can manipulate it's value in terms of purchasing power. In other words they can create for example a scenario where there is less gold in circulation, driving up it's value, making them richer. (Less gold means prices must come down) They can then get first use of their gold at it's higher value to buy up property, etc.Of course the bankers will be the biggest holders of gold and will thus end up controlling the money supply. So even under a gold standard, the bankers end up having a monopoly on money. It doesn't matter what form money takes, it could be anything. What matters is who controls the quantity of money in circulation.

"the actual gold would circulate with the people, negating the need for any one entity holding a big stockpile of gold." - Not true, people would always look for somewhere safe to keep their money, hence the bank.

"Whoever controls the volume of money in any country is absolute master of all industry and commerce....and when you realise that the entire system is very easily controlled, one way or another, by a very few powerful men at the top, you will not have to be told how periods of inflation and depression originate" - James Garfield, President of the USA, 1881. Two weeks later he was assassinated.

Any form of monetary system can be corrupted, whoever controls the money supply is what matters, not the form the money takes.

In order to make the exchange of goods and services easier, we sure made things f***in' difficult!

Returning to a gold standard won't work. The bankers end up with all of the gold in a very short time period. But keeping the money supply at the constant , correct level would. Politicians are not the problem, bankers are. Politicians are just puppets, whether they be red or blue.

Sorry, I just can't follow this narrative. It is very confusing, but I would say trying to apply a barter system to modern finance is not going to fit.

Lets look at a more simple trade, I will paint your house, you will exchange money for this,

Lets say that you will pay me 4 dollars to paint your house, 2 dollars income and 2 dollars materials. Its going to take about 2 months to complete. We make the trade, I get started. 1 month after I get started an international banking crisis occurs in another country and dollars are devalued to handle this. I can't afford the rest of the paint to finish the job and still earn an income and there is really nothing either of us could have done to forecast this occuring. Everybody is depressed.

Don't support a monetary system which causes un-necessary financial collapse.