Here's my Top 10 links from around the Internet at 3.00 pm today in association with NZ Mint.
As always, we welcome your additions in the comments below or via email tobernard.hickey@interest.co.nz.
See all previous Top 10s here.
My must read article today #9 on how a candidate for the job of Governor of the Bank of England is seriously suggesting canceling all the government bonds the central bank is buying...not so wacky now is it...
1. 'Get rid of the wet blanket' - William D Cohan writes at Bloomberg about the push coming from many on Wall St to throw off the 'wet blanket' of regulation that is 'suffocating' the animal spirits of the US economy.
There are growing calls now from US CEOs and CFOs sitting on cash hoards and arguing they have no confidence to invest.
If only they were given more government incentives such as lower corporate tax rates or lower tax on high incomes, then they would invest, they argue.
Cohan, himself a former investment banker, skewers the thinking in this excellent piece.
It's titled: 'How to crash an economy and escape the scene.'
It's the ultimate financial hit and run story.
Cohan talks about recent comments from JP Morgan CEO Jamie Daimon:
Dimon said the new regulatory environment is holding back economic growth. He said he had discussed the topic with business owners and executives around the country: “They all say it’s terrible. So it’s not just banks. We’ve done it to ourselves, folks. We’re shooting ourselves in the foot and we’re doing it every day. Get rid of that wet blanket and this thing will take off.”
Even Lloyd Blankfein, the chairman and chief executive officer of Goldman Sachs Group Inc. (GS), has started to make noise again after a few years of laying low. As part of what the press has nicknamed his No Apologies Tour, which has taken Blankfein to forums and media outlets across the country, he has also called for jettisoning the wet blanket. “Getting rid of some regulations and rules that are impairing people from investing vast pools of liquidity that are on the sideline, that are not owned by the government, that are theirs to invest but are just sitting on the sideline” will help get the economy humming again, he told CNBC.
And here's Cohan's conclusion:
No one -- no one -- on Wall Street has paid a serious price. The one criminal prosecution -- of the Bear Stearns hedge-fund managers Ralph Cioffi and Matthew Tannin -- failed miserably. Every bank has received its slap on the wrist, has had its insurance carrier or its shareholders cough up a few hundred million dollars -- the cost of doing business, don’t you know -- and moved on. And governments, most recently New York State, have decided to milk the banks for badly needed cash rather than charge the miscreants themselves.
Once upon a time, prosecutors were vigilant about prosecuting bad financial behavior on Wall Street. According to the Financial Times, during the savings-and-loan crisis of the mid 1980s, some 3,500 bankers were jailed for their transgressions. I still haven’t heard a good reason why the number of successful prosecutions in the wake of our most recent financial crisis remains at zero.
2. Cash, cash everywhere, but not a drop to invest - Hogan Lovells have put together an excellent interactive graphic from Bloomberg data showing how much cash corporates have on their balance sheets.
Corporates are cashed up, but very reluctant to invest, hire and grow.
US and Canadian firms have US$1.85 trillion of cash to invest, British firms have US$147 billion, European firms have US$837 billion, Latin American firms have US$71 billion, Middle Eastern firms have US$31 billion, and Asia Pacific firms have US$1.1 trillion. That's a total of US$4 trillion of cash sitting on the sidelines ready to go.
Why isn't it being invested?
What are companies worried about?
One argument is they are uncertain about the government spending outlooks and see the incomes of their customers (particularly the middle to lower income groups) as flat to falling. They also see the debt levels of their customers, particularly if they are households, as too high to spend a lot on consumer goods.
So how do you deal with this problem. Either find new customers (maybe it's government) or wipe the debt and start again.
3. Japanese exports to Europe - Everyone was looking at the slump reported yesterday in Japanese exports to China in September because of the street protests in China and boycotts of Japanese products.
But FTAlphaville points out Japanese exports to Europe fell by just as much (26%). The only bright spot (or the least dark spot) is America.
Japan’s preliminary September trade data tell a story not dissimilar to China’s — exports to Europe are slowing (unsurprisingly) by a lot, down 26 per cent for the month, year-on-year. Asian exports also fell, by 8.3 per cent. But US exports rose 0.9 per cent. The six months between April and September show a more striking contrast: exports to North America rose 16.6 per cent; while for Asia they fell 4.7 per cent and for Western Europe, there was a 20.8 per cent decline.
4. Finally, some support for Bo Xilai - This is curious and surprising, given the lid on dissent in China.
BBC reports on how 700 Chinese academics and former party officials who have called on the government to give disgraced former Chongqing Mayor Bo Xilai a chance.
A group of Chinese leftists have written an open letter asking parliament not to expel disgraced Communist party official Bo Xilai. The letter, signed by more than 700 academics and former officials, was carried on the left-wing Chinese-language website Red China.
It said the move was legally questionable and politically motivated. China's leftists are a small but vocal group to whom Mr Bo's populist policies appealed.
5. Currency manipulation - One of the big items (no doubt) in tonight's final Obama vs Romney debate will be whether to declare China a currency manipulator.
Ezra Klein writes here at Washington Post why declaring China a manipulator could be a waste of time. He also points out there are many others doing much worse, including in this handy table.
He's worth listening to. He has only just retired from the boards of Fletcher Building and the Reserve Bank of New Zealand. He was around before and after the Grand Experiment and worked at extremely high levels. He knows the issues, the characters involved and he knows the outcome.
I agree with him. I didn't use to, but the Global Financial Crisis has exposed the weaknesses of unrestrained capitalism and banking in particular. New Zealand's obsession with letting the market decide and letting the capital flow where it will is naive and dangerous.
He makes a good point about how our tax system makes it very profitable for foreign owned companies to buy companies with strong cash flows here and load them up with debt.
7. The sliding global economy - This chart shows the relationship between global trade and industrial production. It suggests another downturn.
8. Credit bites back - Economists Moritz Schularick and Alan Taylor write at VoxEu about the role of credit in the histories of financial crises and concludes America is actually now doing better than expected.
The central part played by credit in the deep downturn and weak recovery fits a recurring historical pattern. Financial crises correlate with more painful recessions. This column takes a close look at 14 advanced economies over the past 140 years and shows that larger credit booms during expansions have been systematically associated with more severe and prolonged slumps. In short, credit bites back. Measured against the historical benchmark, the recent US recovery has been far better than could have been expected.
9. 'Just cancel the debt' - Here's an idea. All the government bonds being bought by central banks could be just canceled by those central banks after they've been bought. This would be fairly unrestrained central bank financing of government spending.
This seems like heresy, but it's being openly discussed in senior policy making circles in the Northern Hemisphere.
Here's Gavyn Davies writing at FT.com about the idea put forward by the IMF.
One radical option which is now being discussed is to cancel (or, in polite language, “restructure”) part of the government debt that has been acquired by the central banks as a consequence of quantitative easing (QE). After all, the government and the central bank are both firmly within the public sector, so a consolidated public sector balance sheet would net this debt out entirely.
This option has always been viewed as extremely dangerous on inflationary grounds, and has never been publicly discussed by senior central bankers, as far as I am aware [1]. However, Adair Turner, the Chairman of the UK Financial Services Agency, and reportedly a candidate to become the next Governor of the Bank of England, made a speech last week that said more unorthodox options, including “further integration of different aspects of policy”, might need to be considered in the UK.
Two separate journalists (Robert Peston of the BBC and Simon Jenkins of The Guardian) said that Lord Turner’s “private view” is that some part of the Bank’s gilts holdings might be cancelled in order to boost the economy. Lord Turner distanced himself in public from this suggestion on Saturday. However, the notion will now be widely discussed. It is easy to see how the idea could appeal to a finance minister facing the need to tighten fiscal policy during a recession in order to bring down the public debt ratio.
Why is this such a radical idea? No one in the private sector would lose out from the cancellation of these bonds, which have already been purchased at market prices by the central bank in exchange for cash. The loser, however, would be the central bank itself, which would instantly wipe out its capital base if such a course were followed. The crucial question is whether this matters and, if so, how.
Furthermore, the effects would be increased even more if, instead of just cancelling past debt, the central bank were to co-operate with the government, agreeing to directly finance an increase in the budget deficit by printing money. We would then be genuinely in the world of “helicopter money”, with no pretence of separation between fiscal and monetary policy [2].
Outside of wartime, developed economies have not been normally been willing to contemplate any such actions. The potential inflationary consequences, which are in fact signalled by the elimination of central bank capital which this strategy involves, have always been considered too dangerous to unleash.
For me, that remains the case. But others are more worried about deflation than inflation. This genie might soon be leaving the bottle.
10. Totally Jon Stewart on the second Presidential debate
149 Comments
On cancelling the internal debt of the UK, between the Central Bank and the government, it has seemed obvious for some time that this debt will never be repaid. There is no economic need to do so, given it is a debt from the government to the government. As well it is both politically and economically difficult to see how either the UK or the US get back to even a fiscal balance on an annual basis, let alone a surplus that would pay off hundreds of billions of pounds, or trillions of dollars, respectively. Especially as they don't need to. I don' really think the markets would blink much if and when the formal step to write them off is taken. (Ironically the only way they could be paid, was if very high inflation wrote down the real value of the debt.) Doing so negates the need for high inflation, rather than be a direct cause of it.
The fact that doing so would allow more coordination of fiscal and monetary policy would be a good thing. In the US for example, rather than effectively encouraging more consumer debt, as Bernanke is currently doing, he could say coordinate with the feds to reduce taxes on lower income people, which would encourage consumption, and allow them to reduce their own debt.
To stop governments using this as a very easy out; key measures going forward should be government expenditure by department as a percentage of GDP measured against their own history, and international best practice.
I suspect Romney has a variant of this plan in mind, as otherwise his maths don't add up at all. Write off government debt to yourself, and hey presto, the deficit is gone.
On Hugh Fletcher, I also agreed with nearly everything he said, and commend people to check it out; if you didn't already when someone kindly posted the link here a couple of days ago.
The only intriguing thing, given his views on the current account and foreign investment, was why the Rserve Bank appeared to have opposite views even though he was on the Board. He clearly did not get his way at all.
#1. There are growing calls now from US CEOs and CFOs sitting on cash hoards and arguing they have no confidence to invest.
If only they were given more government incentives such as lower corporate tax rates or lower tax on high incomes, then they would invest, they argue.
What BS! Write me a real sob story. If high paid CEO's and CFO's were keen to invest they'd already have done it and not be in their current position. Maybe the corporates are waking up that in the current environment (rigged/manipulated interest rates, etc) it's just too risky to chase higher yields and they want someone else to pay for it.
#2 One argument is they are uncertain about the government spending outlooks and see the incomes of their customers (particularly the middle to lower income groups) as flat to falling. They also see the debt levels of their customers, particularly if they are households, as too high to spend a lot on consumer goods.
So how do you deal with this problem. Either find new customers (maybe it's government) or wipe the debt and start again.
Wipe the debt and start again? Yeah, that'd be clever wouldn't it. New customers? How does that work if incomes of middle to lower income groups are falling. Maybe a third option (ignoring resource limits/end of economic growth) is to pay higher incomes (while cutting top incomes) to the lower and middle class instead of expecting govt. to provide a living wage to consumers.
This is all about wanting more for themselves and expecting someone else (taxpayer/govt.) to pay for it.
http://www.stuff.co.nz/stuff-nation/7838284/Change-how-our-money-works
A piece on stuff talking about an honest monetary unit.
That article is pretty flawed. I suggest the link below which actually accurately describes how banking actually works, though you will probably have to sign up to the Australian paper to read it.
http://www.debtdeflation.com/blogs/2012/10/22/the-myth-of-fractional-reserve-banking/
I have written my own piece to try and explain to friends where we are at in the cycle, which that article fingers as "willing borrowers are few and far between". That to me also explains why exactly why corporates are holding on to money as well, private enterprise won't invest in production as they know there will be no one to sell to, they are already maxed out on servicing debt(the interest component that kleefer doesnt' think exists).
You can't force unwilling people to borrow so I expect the government(s) to eventually step in to take up the slack. I am not sure how they will do that as I don't think money printing will do it alone, it needs an outlet, a way of being introduced into circulation.
I want to get my head around the shadow banking system a little better as zerohedge claim this is responsible for the lull we are in.
Re #6. An interesting interview with Hugh Fletcher. I see that he genuinely believes (like Bernard) that we have been going through a laissez-faire experiment in the economy! The Fletcher family business has had a long, cosy and prosperous relationship with the Government and its heavy-handed control over the last 100 years, so it is not surprising that from his perspective any initiatives in the direction of a free economy (like those initiated by Roger Douglas and the Labour Government) are seen as scary. He does not like the market deciding where money should go, which raises the question, who should decide where the money should go? Who is the God-like genius that can can control the money and lead us into prosperity? One man who had that quality was Rob Muldoon, but I am sure many have forgotten or are unaware of the nightmare that he created. Boom bust cycles, rampant inflation, wage and price controls, the tax system...etc etc. The government was bankrupt. After that both Labour and National had free-market leanings for a while, but that soon fizzled out. We have never had a laissez-faire economy, and I do not see any movement in that direction in the main political parties.
Regarding banking regulation: The banks in the USA had more regulations governing them than they have ever had when the crisis hit. It is hard to see them in any sense as being "unrestrained". However, when you have government guarantees because you are too big to fail, then you have license to be unrestrained. True to form, some of those banks are lending more adventurously and using their guaranteed status as advertising, thus gaining an unfair advantage over the prudent banks, (who would have picked up more customers if the reckless banks had been allowed to fail!). Moral hazard at work. The simple lesson we should learn is that the government should be kept out of running the economy.
Forget trying to educate Bernard , Austrian ...... he still insists that the GFC was purely the fault of capitalism , rather than the truth , crony-capitalism ....... the politicians in bed with big business & incompetent central bankers ......
...... and his cure , greater central planning and monetary controls , more regulation , greater redistribution of wealth and income .... straight out of the annuls of failed socialist policies of the past .... more bureaucracy , not less .... much much more ....
Bernard , Bernard , Bernard ...... it's exasperating , dear boy , that you do not learn !
Straight back at you Gummy. ;)
Though I agree with you on crony capitalism and I'm with Austrian that bailing out the Too Big To Fail banks was ultimately a mistake.
I'm not advocating socialism or muldoonism.
Just some sensible regulation and restraint of leverage.
cheers
Bernard
Austrian - ask yourself what 'the economy' is. Then ask how long it can be underwritten in current form, and why. Then ask what will effect the morph, given that 'reactive' will be too late. Probably is too late. Govt of some form, is the only answer.
Sorry, I know rules get in the way of unlimited activity, but you see, behind that again is the impossibility of unlimited activity anyway.
Your comment is a non sequitur. Just because certain resources are finite (as you love to remind everyone), it doesn't follow that we need more and bigger government to manage those resources. Quite the opposite, in fact: we need to use the market to allocate those resources to their best (most profitable) use.
You talk about "rules" getting in the way of "unlimited activity" but you forget that the market imposes its own "rules" on participants through the price system and the profit-and-loss mechanism. As you say, no market activity is truly unlimited. But what you really want is a justification for your love of using the state to impose your will on others.
If you say " peak " something , or call someone a " denier " , you can shut down any further debate with the smug feeling that you're right , and can never be proven wrong .......
........ until someone does .... because mankind continues to achieve the unpossible , butcha won't read about that stuff here , in the gloomster zone ....
Unless David Chaston does the Top 10 ! .......
Kleefer - it continually amazes me that folk can put up such nonsense and - presumably - believe it.
Firstly, I didn't say 'more' or 'bigger', did I? Presumably that was you assuming.
Markets do no 'allocate' resources. Scarcity drives the price up, which speeds the greed-driven drive towards depletion. The only goal is profit, and profit has zero chance of saving a society from the ulitmate depletion of an essential, or of driving a change which will be detrimental to the bottom-line.
The problem is that we have to effect a morph of mind-boggling proportions, using the existing energy source, in no time. Given that all real income - profit included - needs to be underwritten by energy (or it's just one of Soddy's negative pigs) the morph to a lesser form has to represent massive collective losses. We are seeing the start of that now; no chance of anything but a whole lot of frightebed lemmings running from the Dow to the bank to their pillow to gold. You think that will give a good, thoughtful, measured societal result?
Bollocks.
And 'most profitable' is not 'best'. It's profitable to sell coal to China, but it's not best for those who cop the impacts of them burning it.
Oh, of course, someone who thinks like you, wont think there are repercussions from burning coal, right? Wouldn't fit with the flawed assumption that profit is best for the planet.
Gummy, I had not thought about educating Bernard. That is an interesting idea. However he seems to be reading lots of different authors, and I am sure he is capable of educating himself. What is encouraging is that he admits to having changed his mind about things, so he is at least open to change. Many of the articles he finds for us demonstrate that there is a lot of questioning of the current economic orthodoxy because things are not working as they are supposed to. I do not know what will be the outcome, but it is good to see that many worried people are looking more closely at the work of our economic wizards and are asking questions.
I think Bernard and David have done a great job with the market information re NZ that they have amassed on this website. I have found it useful, and I have recommended it to others. I hope that they are making money out of it so that they can keep it going. I also hope that they will never receive government funding and so will never feel obliged to endorse government policy.
Austrian
Many thanks for your kind comments.
Interest.co.nz is sustainable without government funding and I share your distate at the prospect of ever having being forced to endorse government or any other policy for that matter.
I'm more of the permanent critic type... ;) Although I do see many good things around me all the time. The respectful, insightful and often friendly tone of the debate here often warms my heart.
cheers
Bernard
Here's a challenge then, why don't you suggest an actual policy that Roger Douglas didn't advocate somewhere in the last 30 years.
Then we can consider your new 'Laissez faire' economic strategy and if its actually different to the free-market strategy which Roger Douglas inflicted onto the country. At least we know that the 'Roger Douglas' strategy was a failure and un-wanted, so lets see how different your idea of 'Laissez faire' is to what was actually implemented.
Are you advocating a return to pre-Roger Douglas reforms? Talk about forgetting the whole reason reforms were necessary in the first place.
Yes lets go back to the golden days where we purchased goods from Japan, had them disassembled, shipped to NZ and then reassemble them here, so we can feel good about how great we were as a 'manufacturer'. The days where the railways had thousands of extra workers to move track ballast from one end of the platform to the other, massive farm subsidies ... etc.
Zero company tax across the board, theres a policy for ya. And a great incentive to get the economy moving and attract business. Why do businesses pay tax in the first place?
At least we know that the 'Roger Douglas' strategy was a failure and un-wanted,
Do we truly know that or are you repeating Helen Clarks lines from the 1990's - 2000s?
And if so why has not a single one of these reforms been reversed? Lets get those marginal tax rates back up to 60%+ and see what happens to the economy.
I wasn't advocating anything actually. Just trying to find out how far you can differentiate from these reforms which we already have a clear standard of national acceptance on.
So, is that the only difference, Douglas would go to 15% you would go to zero? And thats the difference between 'Laissez-Faire' and 'Crony Capitalism'. Wow, thats impressive, no thankyou.
Well if you want real reforms, I would suggest NZ change to a cantonal style of government.
Only then can we test to see what policies truly work in different areas and let direct democracy and freedom of movement decide the outcome. Better than 30years of psuedo- debate. Unfortunately it will never happen.
So why can't we have direct democracy on a national scale? But I can't see a single reason that this cantonisation would improve anything. You can already choose which council region to live in, so why do you have a problem with a BBQ again? I am sure you can find somewhere in the country which will let you grill your food.
If you were looking for the key reason that Rogernomics should be considered a failure, it is that it promised higher productivity, but delivered the opposite especially relative to other compirable OECD countries. If 'Laissez-faire' can't get that right what credibility should be given to other promises of what privatisation will deliver.
Also, remember to differentiate yourself, Roger is a tarnished brand and this idea didn't do much to redeem his popularity
http://bradtaylor.wordpress.com/2009/07/25/roger-douglas-supports-competitive-government/
Well you could have direct democracy on a national scale, however there would be less elements of competition / choice / freedom.
Last time I checked councils can't decide to offer a different taxation mix (business/personal/consumption/duties), nor can they offering differing social expenditure priorities, customise programmes to their demographics, or set education spending priorities etc.
The key thing is councils are also heavily dependant on property prices via rates, which if anything is going to mean the staus quo will endure.
I sense a hesitation to try something new?
You know as a New Zealander I am certain you could choose to live in pretty much any other country in the world. So you already have a pretty wide choice of policy. Its pretty obvious why this doesn't address any of the problems you seem to claim it does, its because there are real reasons people are restricted to their geographic region, and I think its pretty clear a cantonised system would still suffer from this.
The point I was making is in fact Councils don't appear to address the BBQ issue you raised (should that be non-issue) and councils do have discretion over a lot of this already. Why not? Could it be that an expect checking your potentially explosive housing adaptation is justified authority.
I don't have a hesitation to try something new, but I do have a hesitation to try something which already failed once again. More importantly its really not up to me, if the country doesn't choose it, its a wrong decision. One of the key issues is that Rogernomics was essentially forced onto the country, the Labour party were not elected on their economic policy, and neither were the subsequent National party government. There is a also a lot of evidence that the devaluation and currency crisis were essentially precipitated by the Labour government.
Where as the standard today is voting for some party who thinks that the Macarina should be played in every office, a lower standard. Obviously if there is such an idiot running for office they are going to be running on personality, not policy, so you will not be finding out about their most stupid ideas before voting them in either. If you vote for the Macarina to be played in every office yourself then thats a higher standard of responsibility for that policy.
Seriously, I have to explain that?
I draw your attention to the fact that we were discussing the responsibility of voters, not the responsibility of politicians. In fact you make my point rather well, in a representative democracy you can just fob your previous voting choices off by accusing the office holders of being a bunch of tools.
Actually I feel I should not have to make the point either a) or b) at all. We see certain values, norms and traditions institutionalised by the government. Now of course in a society there will be a diverse range of norms traditions and values and these will come into conflict from time to time.
However I can see no way to independently select the best of these values from society, in fact I see a certain tendency to select your own values in the statement that the country should 'function well'. I assume that means everybody should contribute to the efficiency of the country as an economy in some sense. Thats not one of my values, but I don't begrudge it from you.
So if there is no independent criteria for selecting values, norms and traditions then there is no basis for applying the values, norms and traditions held by some to others without giving them a fair say in selecting the most appropriate ones. We can't pretend that they will never conflict with each other, but we do our best to mitigate the harm to this from the system of government. But in this sense there are no more able or more responsible people to lead.
I see one of the reasons that this doesn't evolve from a representative democracy is that the elected officials would frequently rather run on good looks or family history than on actual policy. But fundamentally I would measure representative democracy compared to the policy of an actual democracy, and its well known that representative democracy tends to select the policy of the wealthy from its society. There is no independent measure of if a particular policy is better or worse than another, in my mind whatever the country chooses to do collectively, that is right, and its even ok for the country to change its mind about that.
I really don't see how you can accuse voters of being inable or irresponsible. Is that a statement that the country is not following your values closely enough? Who would be able to make that judgement? and how can you accuse voters of being inable or irresponsible when they have so little information about what their elected officials are likely to do in the next term, and so little influence over actual policy.
You may need one of these , to help pass the time , whilst you watch the Swiss experiment ..
The reforms were not necessary, what other country followed us? How well did countries that didnt follow us do? say OZ? oh wait they are better off it seems.
We had the excess of Muldoonism to purge, in effect we used a different form of extremism to remove another.
Marginal tax rates, well there is good research that up to 70% high band tax rates is not detrimental.
We can see how in effect a lower company tax isnt doing the world any good....large corporations already pay close to 0% anyway, unlike small businesses.
regards
Strange but I had not considered that there is an effective tax avoidance tax rate. I will take it apon myself to inform Gummy about this concept, it shows the government commitment to Laissez-faire policy, so it adds to his positive news narrative. I guess we can anticipate Google will save the NZ economy any day now with their massive wads of cash and their effectively tax free profits incentive.
I dont understand why Google is allowed to book 100million in clear profit but our Govn is happy not to see that taxed at 30%....
Funny eh...they already dodge tax, so where is the benefit we should be seeing? it should be huge!!!! What is happening is of course the small local companies suffer at the expense of the big ones, but instead of asking for a level playing field where the big boys pay fair tax, they are busy asking to pay no tax....just like the "big boys"....
Personally I think we should be legislating to stop that. It cant be that hard to bring into line foreign preditory ownership that in effect pays no or little tax and uses that to beat up consumers and and help our own native businesses survive and thrive.
regards
Steven - The reforms were absolutely necessary. The 70% high band tax rate was detrimental as the 1970's Governments were still creating enormous debt. There was no money left in either the private enterprise system or the State system. The State could know longer afford the subsidies which it had paid. Tarrifs on imports kept prices of goods high and allowed local enterprise to be inefficient in their operations.
To say the reforms were not necessary is puerile. The IMF was having a huge amount of say, NZ suffered a credit rating downgrade. PM Lange had serious death threat problems, the Americans were extremely unhappy with us, the Russians had quite a presence in Wellington. Unemployment, Inflation and Interest rates were all very high.
Protectionism doesn't work and the only thing that should be protected is the Bill of Rights of the citizens and residents of a country. Protectionism creates the worse sort of inequality for people. Foreign Investors are given far more freedom than the citizens of NZ the platform is so unbalanced that NZ'ers are sinking into the quagmire and it is Govt legislation that gave the foreign investors the free ride at the expence of the citizens of NZ.
The key element of Douglas’s economic thinking was implemented after Labour won the 1984 election but before it was formally sworn into office. This was the 20 per cent devaluation of the New Zealand dollar. The announcement of the snap election immediately provoked selling of the dollar by dealers who anticipated that a change of government would lead to a substantial devaluation. The result was a currency crisis that became a matter of public knowledge two days after the general election. Muldoon refused to accept official advice that devaluation was the only way to stop the currency crisis and provoked a brief constitutional crisis when he initially declined to implement the incoming government’s instruction that he devalue. Both crises were soon settled when Muldoon accepted that he had no choice but to devalue. Although devaluation was a contentious issue in the Labour Party and was not part of Labour’s election policy, the decisiveness with which the incoming government acted won it popular acclaim and enhanced Douglas’s standing in the new cabinet.
http://en.wikipedia.org/wiki/Rogernomics
Sounds like Douglas actually instigated the currency crisis.
Robby 217 - You are correct we have never had Laissez Faire Capitalism in NZ !!!!
I don't think people understand Laissez Faire and that is where the problem lies. The fact that Hugh Fletcher should even use the word Laissez Faire so frequently in his interview tells me a thing or too. So Hugh is blaming a system that has never been operating for the economic problems - this then deflects attention away from the Crony Capitalist system that has been operating and which he has been part of.
Socialism is what causes Crony-Capitalism. When Socialists coerce people into voting for their policies using monetary advantages, when Socialists get into bed with business and business gets into bed with Socialists all for monetary gain then all freedoms and liberty are destroyed and both the Socialists and Crony Capitalists lay blame at the feet of Laissez faire because that is the system that they fear the most as it would expose their lies and deceipt.
Please do tell, we know what Roger Douglas did and that that's not Laissez-Faire, and that we don't want that either. So far we have found out that 'Laissez-faire' has a 15% lower tax rate than even Roger Douglas would go for, which sounds more extreme than Roger Douglas to me, so what else...
So far I am against a 15% corporate tax rate and even more against Laissez-Faire. But since I don't understand what this mystical system is, maybe there is something in there I really would go for...
Rogernomics was basically a programme of liberalisation coupled with commercialisation. Commercialisation included both corporatisation and privatisation. One can implement economic/market liberalisation without commercialisation.
Brian Easton's "The Making of Rogernomics" is an excellent book covering this period of reform in NZ.
Laissez faire in he sense that Hugh Fletcher uses it relates more to "hands off" regulation - more neoliberalism (i.e. Chicago School economics) which was the theory which Treasury was wedded to during the Rogernomics period. Had he used neoliberalism it would have been a much more appropriate term. To my mind, NZ has never moved on from Rogernomics and neoliberalism. But Key's government has indeed moved very notably toward crony capitalism (back to "picking winners") with a renewed focus toward privatisation of the social services side of the government ledger.
I am still searching for the essence of this mythical system, the key difference from Rogernomics which means it would have succeeded where that failed. So far it seems the key technical difference in policy seems to be that its pretty much the same but appart from that it would have worked, though that sounds a bit like wishful thinking for my tastes...
The best example (perhaps in the world) of a laissez faire market was the telecommunications market in NZ post liberalisation (deregulation) and commercialisation (privatisation).
Basically we opened up the industry to all comers and the government entirely divested itself of every aspect of the market and rather than regulate matters such as access/portability etc. - the idea was that all market matters would instead be resolved through competition policy - or rule by the courts. Witness the outcome - 10+ years of Clear fighting Telecom via the courts - with the courts largely refusing to rule in place of regulation.
Hence, we have since regulated (moved to a mixed model - regulation + competition policy) and consumers finally are beginning to see the benefit of competition (number portability etc).
I think it's a good example of why purist laissez faire is indeed an ideal - but fraught with difficulty in practice.
Kate - So the Government sells a State owned asset in it's entirety and you come up with an opinion that that is Laissez-fair capitalism at work. Laissez-faire capitalism is not about monopolies ! It was the Government who sold Telecom off yet under your anology it is the Capitalist who is fault and you then blame Laissez-faire rather than the incompetents in Government who actioned the sale in the way that they did and then label this as a "good example of purist laissez-faire". In practice the difficulties experienced came from the way Telecom was sold and shows exactly why Govt shouldn't involve itself in business.
Clear reached an agreement with Telecom in about 1995 on the local service inter-connection this is only 5 years after Telecom was fully privatised which was 1990. Clear entered the NZ market the same year.
Regulation that has now been implemented requires that Telecom customers must now wait in the queu with competitors when wanting to access new services. Telecom cannot push one of their service orders through ahead of a competitors order or they will face a hefty Government fine.
Read it again, Kate was more than clear, what we have seen is neo-liberalism. But I am still looking for a serious differentiator of laissez-faire from neo-liberalism. Its almost like laissez-faire is a good marketing scheme for the implementation of neo-liberalism.
I know that for example the various finance company bailouts are suppost to not be a part of laissez-faire, but then a lot of the same people are appologising for them and saying oops, won't happen again, market is always right. It will happen again, the un-regulated market is constantly suffering issues and constantly needs to be bailed out, and for political reasons the wealthiest can almost always count on the government to clean up after them at great public expense, and thats only discussing the financial disasters it creates.
A lot of what you are talking is gibberish,
Laissez-faire capitalism is not about monopolies !
Yay, so you have some mechanism in laissez-faire to prevent monopolies? No? What, so the whole strategy is to ignore that they exist? So laissez-faire is about pretending that monopolies don't exist, oh, I think we are starting to see the nature of the beast here. Its nothing more than a marketing strategy to promote ignorance of the market excesses.
Nic the NZer - Free trade would have worked very well as any discrimination of goods and service within the import and export market would have been removed. The problem has been that free trade was not only applied to goods and services but has allowed all physical assets within a country to be traded as well.
Roger Douglas promoted the Free Trade of all goods and services along with the physical assets of a country knowing that the playing field was far from balanced and all other Governments have since followed in his footsteps of allowing this to continue. I have absolutely no problem with free trade in goods and services.
If a country is to prosper it needs business and business must be free to trade and run that business without interference from the State. Individuals must have the right and responsibility for the direction of their life under their own esteem in a competitively neutral market.
The market for physical assets of a country is not competitively neutral as different regimes operate within different States and Territories and this is why I dislike free trade including physical assets becoming tradable under the free market concept.
Manorialism and feudalism kept the majority of people in poverty - I see similarities between modern Government models and these old systems of Manorialism and this is why more and more people are struggling financially. Govt and it's Agencies practice modern day manorialism. The legislative process places the controls on an area and the bureaucrats administer as they interpret without acknowledging the Bill of Rights or the Universal Declaration of Human Rights.
Capitalism was born from the problems associated with Manorialism and Feudalism which eventually led to the famous Habeas Corpus. There has always been a power struggle between those wanting to control others and those who want to take control of themselves and their affairs.
Laissez-faire Capitalism (Wikipedia definition)
Laissez-faire French: is an economic environment in which transactions between private parties are free from tariffs, government subsidies, and enforced monopolies, with only enough government regulations sufficient to protect property rights against theft and aggression. The phrase laissez-faire is French and literally means "let [them] do", but it broadly implies "let it be," "let them do as they will," or "leave it alone." Scholars generally believe a laissez-faire state or a completely free market has never existed.
I do not believe it is the intention that Laissez-faire was ever intended to have the ability to sell the physical assets within a Country on the open world market for this would expose that country to international monopolies, reduce property rights etc.
Citizenship is significantly important under Laissez-faire Capitalism. The rights of citizenship have been completely eroded by the Socialist and Crony Capitalist regimes that have Governed and formed monopolies and these same Socialist and Crony Capitalists who disregarded the Bill of Rights and the Declaration of Human Rights have allowed the physical assets (like land) to be sold from under the feet of the citizens. If property rights were enshrined to the individual then one would need to assume that the individual needs to be a voting citizen otherwise the land and it's physical assets can be traded globally and the citizens finally end up being displaced in their own homeland.
In regards to your tax issues above. Tax has to be reduced to stop fraud, force and coercion and helps to ensure that Government and it's Agencies does not take action against the very people and the rights of those people that the Govt is supposed to protect at all times. Government and it's Agencies have continually meddled as they have not understood the roles and functions that are required under a Laissez-faire Capitalist system, hence we have the Socialist, Crony Capitalist ruling regime.
Ahh sorry you must have miss-understood. What I meant by mystical is that its never been actually implemented before during any time period which anybody can identify, and nobody seems able to describe it in concrete terms (or differentiate it from neo-liberalism) so I really don't understand it. Its kind of a fuzzy non-descrept concept to me.
It sounds kind of nice, no monopolies, no coercion everybody autonomous. I am just having trouble seeing how that comes about from almost no rules and almost no taxes.
Go ahead, de-mystify and differentiate it for me.
Nic the NZer - I really don't think I can de-mystify you as Libertarians and their Laisses-faire capitalist system is somewhere you arrive at after seeing failure, reading enormous amounts of literature, experience and I think it has something to do with DNA - mine must have freedom, independence and self responsibility encoded into it.
I will attempt and start with Anarchy as some people confuse this with Libertarians and Laissez-faire. You might also want to listen to the Reith lectures.
Medieval Iceland is a very good read - plenty of links on the internet that you can research.
http://wiki.mises.org/wiki/Iceland
Medieval Icelands Anarchy system failed after apporximately 290 years. Why? Compulsion of tithing to the Churches and the Chieftan system was monopolised. There are probably other causes as well. However libertarians dislike compulsion and monopolies as it leads to failure and that is one of the fundamental differences between Anarchy and Libertarians.
This next link gives a good constitutional guideline on what is necessary for humans to live good lives. Read it and understand what it would mean for you personally as an individual and also how you would have to act towards other individuals. There are other similarly worded constitutions around - so have a search.
http://www.libertyzone.com/NeoActionsConstitution.html
There are rules with Libertarians and they are the most important rules for a proper functioning society. These rules follow through with the individual to Laissez-faire Capitalism. A Laissez-faire Capitalist system cannot operate when True Libertarianism is not present. True Libertarians hold up the individuals Rights and Responsibilites under A Bill of Rights which then flows through to the Laissez-faire Capitalist system.
I suggest you read the NZ Bill of Rights and the Universal Declaration Of Human Rights (both easy to google) then ask yourself, Can you live your life abiding by the articles?
If not Why Not? Can you trust yourself to live by those principles? Can you trust others to live by the principles?
Even if you can't trust others to live by the principles - you have recourse under a true Libertarian system and this recourse is protected and enshrined along with your individual rights.
Our current system while it has a Bill of Rights it does not recognise property and the Bill of Rights has no watchdog unlike the Privacy Act - Privacy Commissioner arrangment.
Kim Dot.com is one very interesting legal case as it is testing the Bill Of Rights.
NZ Govt has been reprimanded numerous times over breaches to the Universal Declaration of Human Rights. And this declaration was meant to be taught in all schools across NZ. Read the declaration history link. This document was to stop oppression, tyranny etc from happening in countries who signed it. Oppression and tyranny are something every human needs to be vigilant about and ensure it does not creep into our political system. Both are present. The self-employed are oppressed and tyranny being the unrestrained exercise of power using the legisative process is a form of control by Tyrants. Socialism is being forces upon the self-employed who are also the ones enforced to foot the bill of the Socialist elites.
The use of taxes by Politicians allows them to coerce the voter. Emotional tactics, carrot dangling is nothing more than bribery with tax payers money which they then call economic management.
I would suggest that if you are really interested in de-mystifying yourself that you start reading and challenging yourself and your beliefs. Aristotle, Plato, Socrates, Rand, Wallace, if you read something mainstream read opposing opinions for we cannot trust all that is written, History, Theology, psychology, philosophy etc. Challenge yourself and your thinking and the authors thinking also.
Libertarians start with the Individual and empowers them to prosper in all areas it is rational and objective. Socialism is collective and emotional based and makes promises, is restrictive and doesn't use rational thinking, it is subjective it lowers everyone as it disempowers the individual and promotes the emotions of the collective.
Thanks, I find this very illuminating. Unfortunately I do not have time right at this moment to really critique this, though I have a few brief comments.
I particularly enjoyed the first paragraph above, I would prefer that you include one in every comment from you to me, because I find it particularly amusing that you claim I am simply too ignorant. But you should not feel that this will in any way effect my compulsion to read what you are actually saying, I read every word you have written and most of the links because you can't debate somebody elses point of view by any other means (such as implying that they are just too ignorant to understand).
Frankly I think that the von Meises piece on Iceland is missleading, I think the main stream historical point of view is that society in Iceland collapsed due to climate change, I agree with the main stream.
I believe that Hayek would have found the neo-actions constitution to be a socialist document, smart guy. But I don't have time to fully write my argument for this here and now. Maybe you will get the gist of this however, and you might want to sit down for this because I am about to accuse you of being a socialist, deep breaths now.
Citizenship is significantly important under Laissez-faire Capitalism. The rights of citizenship have been completely eroded by the Socialist and Crony Capitalist regimes that have Governed and formed monopolies and these same Socialist and Crony Capitalists who disregarded the Bill of Rights and the Declaration of Human Rights have allowed the physical assets (like land) to be sold from under the feet of the citizens. If property rights were enshrined to the individual then one would need to assume that the individual needs to be a voting citizen otherwise the land and it's physical assets can be traded globally and the citizens finally end up being displaced in their own homeland.
You know I find this a strange comment because the places where land reforms (I mean the Nationalistic ones) have actually been carried out recently have all been called Socialist. I am talking in particular about Venezuela, Cuba, Nicaragua, Guatemala and pre-coup Chile.
I leave you with this,
notaneconomist - I really do hope I can de-mystify you as Fascists and their neo-liberal capitalist system is somewhere you arrive at after being confronted by illusory failure, reading enormous amounts of propaganda, experience of loss of entitlement and I think it has nothing to do with DNA.
Check this out Nic - might help you to better grasp the personality/belief systems from which the various political positions come from;
http://www.politicalcompass.org/test
I'm with Ghandi.
haha - no, notaneconomist sees all socialists (left leaners) as authoritarian - because you see, socialists cannot believe in liberty .. as by and large, according to nae, socialists see a rightful place for taxation beyond funding the protection of private property rights, the rule of law; no harm done to others mantra.
Therefore, according to the discourse nae reads, there can be no such thing as the bottom left quadrant. "True" libertarian's can only be self-interested objectivists in the Randian tradition. You are simply a top left quadrant masquerading as someone who purports to believe in individual freedom.
Socialism is what causes Crony-Capitalism.. when Socialists get into bed with business and business gets into bed with Socialists all for monetary gain..
Interesting theory - have you got a real world example of what you refer to as socialists getting into bed with business and vice versa?
If you mean Gummy referring to "Key and the Gnats" as socialists - well I think he thinks they are given they have left Helen's WFF in place, for example. Gummy oft mistakes Key's "populist" political tactics with socialism. The opposite of a "populist" politician is an "elitist" (e.g. Obama vs Romney difference in tactics) - but they are both capitalists - neither are socialists or social democrats.
That makes the "connection" clear as mud. Suggest you read Gareth Morgan's "Health Cheque";
http://garethsworld.com/health-cheque/
No, we're looking for evidence of how socialism breeds crony capitalism. Pharmac is the perfect example of the opposite - meaning it is an excellent example of how socialised medicine has prevented crony capitalism from entering our health system. Which is why "Big Pharma" wants it gone and are lobbying for just that via the TPP agreement.
Big Pharma want it gone because it's big enough to fight them and set short time limits on drug formulas.
It's not big enough to fight them - hardly - we are only a population of 4 million all up -smaller than many big cities in the US. What they don't like is how Pharmac decides what treatments/medicines are funded - given this model excludes any prospect of lobbying/crony capitalism having an impact on purchasing decisions.
Or do you really think basic locum services are worth $70+/hr,
$70/hr equates to $145,000pa revenue - which as you have pointed out elsewhere - differs from profit (after expenses). Are you suggesting a locum has no expenses associated with the conduct of their professional business? And even if they didn't - it takes a whole lot of years of education and practice to get to qualify to become that kind of professional - the salary is certainly not OTT to my mind.
and medical insurance should cost the earth even for small things.
What do you mean - that insurance premiums cost the earth - or that overly high prices are charged to the insurance company for minor treatments when done within the private sector?
I'm not disputing that our health system is costly. The State subsidises a lot of stuff that it shouldn't. Largely because a Pharmac-like formula isn't applied to all medical treatments in the same way as it is applied to drug treatments. If we used the Pharmac model across all treatments the sustainability of our socialised medicine system would improve. As it is - without making those hard decisions we will just see more and more indiscriminate user-pays creep in.
PS - what/how do midwives get paid? I have no idea but would be very interested.
.
Kate midwife salary http://www.careers.govt.nz/default.aspx?id0=60103&id1=j35172
So I suppose it's the $80-$150K for the self-employed midwives that's seen by mist to be too high? But again, these are private practices with offices, transport costs, equipment and other overheads - and those amounts are likely earnings before such time as the overheads are paid. Some births happen quickly, but lots don't and so I'm guessing a busy midwife might do well in excess of a 40 hour week. And they are always on-call; unless actually on holiday.
The $45,000 starting salary post a three year qualification is a pretty standard graduate wage across many NZ professions - if anything might be a bit lower than the private sector pays, say for an accounting grad.
Gummy - that's gross earnings - not net. But heck, a good realestate agent can earn that too! Easy! And they'd have to sell a great deal less houses than the number of babies a midwife would have to deliver to get there!
But then what would you rather - that they were all employed by the DHBs? So are you saying the public sector can likely deliver the babies cheaper? It probably can!
Really...yet arguably they are a professional with a lot of training behind them and ongoing.....go to a lawyer see what they charge or an accountant etc....
"Midwives often undertake postgraduate study for a Master's degree or PhD."
I'd be surprised if the mid-wife is 9 to 5, so anti-social and short notice work....lots of responsibilty literally for life....
Of course what are your quals? and responsibility?
regards
I already have a $900 bill (so far) for "repairing" a rabbit....thats one expensive stew and jock strap. Damn it, <$35 for a new one on trademe and we have a garbdge grinder anyway.........I even offered to get 2....somehow the wife and sprats didnt see it that way...
:/
regards
Most others don't get such help, eg the plumber - if you can't afford him, he doesn't work.
mist - give it up! Plumbers work for teachers, policemen and women, local councils and their officials, doctors, nurses, government servants, politicians and all other in sundry who get paid via the public purse. They plumb government built infrastructure and engineer, dig and lay drainage systems associated with taxpayer funded culverts, roadways and flood protection schemes. All these folks can "afford him" (the plumber) for all the same reasons why those in the doctors waiting room can afford a doctor.
And think on it - you work for these very same people in producing milk! You're sucking off the government teat like everyone else - you crony capitalist, you.
Do you have any shred of actual evidence that the left political parties are significantly funded by health-care professionals?
Last I heard the most major scandal was Kim-dot-com and the exclusive Bretherin, and the left were accused of influence from unions. Maybe you should clear up just how much of the lefts funding actually comes from say the ASMS.
Its those damn socialist dentists isn't it!
..... it was steven who said he'd been in medical care for 10 years ...
But to demonstrate the parlous state of medicine in NZ , even after a decade in their care , they still couldn't clear the exploding turtles from his mind ...
.... sad really ..... 'cos turtles make bloody brilliant soup .....
So your main evidence for this 'political funding conspiracy' (BTW, draw the left political party line anywhere you like) is that the health care system/market doesn't function the way the consumption market does? Maybe you should consider the possibility that the health care system/market doesn't function the way the consumption system/market does. BTW, You actually said there were political donations involved somewhere...
I think that the idea from economics that all markets are exactly the same is what is known as a theory, and evidence that the health care market is not like other markets is evidence that this theory is incorrect. In fact if you really wanted to get into it there is pleanty of evidence from economic theory that a lot of this theory is incorrect (not inexact, but fundamentally wrong).
Actually you seem to have your own theory, which I will state as health care should cost pretty much the same amount as plumbing, I don't think that notion is even supported by economic theory, even the theory which says that all markets work exactly the same way.
I spent 2 years contracting inton NZ hospitals and frankly they were a mess....usually because they employed half wits in the IT arena who had no clue, but then employ the son of a surgeon or an ex-hospital porter and what do you expect....but they were cheap. The mess was also heavily influenced by the Health dept who insisted the hospitals had to buy huge HP or Sun servers to deal with maybe 20 concurrent users....crazy...
regards
You need to read the book. And as the research points out - our system could be significantly improved but fundamentally what is good/preferable about it is that it is a socialised medical system - as opposed to a free market based system - for both fiscal and moral reasons.
As to graft and horizontal bullying - sounds more a comment on organisational culture, but what are you saying - that this doesn't exist in the private sector?
Well mist you have obviously never dealt with a private sector insurance company in the US with respect to your health care. You certainly DON'T get a choice there - the insurance company decides what treatment you can and can't have. It's a real complaint of doctors - they prescribe something and the insurance companies regularly deny it.
Folks are denied cancer treatment alternatives alot - often proven life saving treatments.
http://www.mskcc.org/cancer-care/hospital-information/steps-take-if-denied-coverage
I'd rather deal with a government anyday - and I'm from the States so have lots of first hand experience where my extended family are concerned. Indeed healthcare is such an issue for them that their entire lives are driven by decisions made in respect of it. We talk about the weather - Americans talk about their healthcare, or lack of it.
And who with our banking industry?
New Zealand's major banks made a net profit of $914 million for the three months ending June, up a whopping 45 per cent on the previous quarter, according to a KPMG report.
More correctly GBH, Key is a crony capitalist who sees the pragmatism in pandering to the social welfare vote in order to achieve crony capitalist agendas during a term that may have now become more tentative.
By virtue of El chubbo's reforms in social welfare of late , targeting only the lowest common denominator with cheap headlines and little in the way of thoughtful reforms.
Did we ever do the cycle track thingy......cause Miss Paula could do with a lap or two.
Yes Gummy - you confuse socialist (philosophical direction regards governance or the organisation of society) with populist (political tactics - or as Foucault described it 'governmentality' - the 'art' of governing).
Key is a crony capitalist (capitalism as the basic tenet in societal organisation, with favours given to preferred sectors/organisations in society) who employs populist political tactics to retain power.
Like a liar's loan - he signs off the 'mortgage' on the social policies in order to make his crony mates richer during his time at the helm.
He's the worst of all deficit increasers/spenders because he spends on both sides of the ledger as our government debt shows in respect of his term(s) in office.
He is a fiscal nightmare for NZ - not to mention his lack of intellect which is quite detrimental given the complexities of our predicament.
Oh..I don't think he confuses John Boy's intent at all Kate...he's just popping the bait is all...The pandering our beloved P.M does is just another form of contempt really, a necessessary grubby undertaking to assure the Yob Mob vote.......he would make a great Shylock should a local production arise.
So am I.....it seems the Libertarians in here throw socialism about like confetti whether its justified or not. It seems if you are not one of the lilly white 1000 libertarians in NZ then you are a black socialist, all 3.999million of us....no matter in the real world the shade of grey....
Crony Capitalism, well violiating natural justice, law or not....think of them as amoral....they recognise no constraint on themselves. For practical purposes from my point I look at them and libertarians and think 'twins".
regards
Kate - I think Gummy and Mist have both given good examples. Now take a look at some of the other Bailouts that have occured. AMI, South Canterbury Finance, The Governments depositors guarantee was a large lifeline to banks. BNZ has received bailouts in the past, Air NZ etc.
Fletcher Building Ltd -
http://www.business.govt.nz/companies/app/ui/pages/companies/110417/sha…
New Zealand Central Securities Depository Ltd
http://www.business.govt.nz/companies/app/ui/pages/companies/1104175/sh…
And who own the New Zealand Securities Depository Ltd - None other than the RBNZ
http://www.business.govt.nz/companies/app/ui/pages/companies/644859/sha…
ACC funded via Business and Government invests in Farmland, Property, Shares, Private prisons etc with money raised by levies on private enterprise and taxes paid by everyone. ACC states it is one of NZ's largest investment fund managers. ACC suffered a 2.4.Billion deficit in 2008 and 4.8 billion deficit in 2009. So in 2009 ACC was actually technically insolvent. So private enterprise levies went through the roof and Kate you might like to consider that the secretary or office people of business's like building, farming, forestry etc have to have the same levy rate applied to their office job as if they worked in the physical side of that industry.
http://en.wikipedia.org/wiki/Crony_capitalism
Well by this above definition Crony Capitalism is alive and well and obviously fully supported and endorsed by the majority of the public.
How many more examples of Crony Capitalism would you like???
notaneconomist, I do not disagree - crony capitalism is everywhere - all the bailouts are proof of it ... but you are confusing socialism with the expression 'privatising the profits and socialising the losses'. That action has not been taken by socialist governments - it has been taken by crony capitalists.
The original question was how does socialism breed/lead to crony capitalism?
Crony capitalism has arisen, particularly obvious recently, as a result of neoliberalism, not socialism as a political/societal/State organising premise;
This one is easy. The Chch 'rebuild'. Why did the govt have to basically hand a monopoly to Fletchers?
As far as I know they're not the only capable construction firm in the world.
Why couldn't the govt set the rules (ie rebuild standards etc, monitor them, and enforce them. CERA could have played the role of data manager, ie reporting on which companies were providing the best service etc.
Instead, look what has happened
Only in the minds of extremists such as yourself who only think in black and white. It either is or it isnt....there are no shades of grey.
ie we have not had Laissez faire because we didnt have it 100%....therefore you cant blame it for failing. This is the same argument used by the "real" socialists in the 1970s...."we didnt take socialism far enough hence it failed" doctrine....
Its simple really crony-capitalism has really come about because it has been able to thrive in sufficient a vacuum of control that it could exploit short term gains at the expense of the longer term.....
Socialism doesnt cause crony....lack of morals by those who are handed the opportunity by others does....hence libertarianism as indeed any extremism etc is doomed to fail and why it has simply never grown up organically it simply doesnt work, or at least work better than anything else...the else is what we have....its darwin again.
regards
Could it be that an expect checking your potentially explosive housing adaptation is justified authority.
Lets look at this because I think it highlights some important differences. I assume you mean't 'expert'.
What is wrong with "let the buyer beware"? i.e. if you buy a house with explosive adaptations without employing your own expert to check it, then that is your own fault. (Assuming a homeowner would put explosive adaptations on his own house)
Who is to say the council expert is more expert than someone in a private consultancy.? Indeed how well did the council inspectors do with the whole leaky housing debacle?
At least in the private market for building engineers, they would have a reputation assessable by everyone who has paid for their expertise. With the council you get whatever clown happens to show up, and they're certainly not working for you as the buyer.
Furthermore if building engineers don't do a good job you would have recourse via claims courts, and reimbursed via the insurance policy of the engineer/inspector. Contrast this with trying to sue a council, basically doesn't happen w/o massive cost or reliance on a wider system failure like leaky houssing debacle and the large govt bailout that further reinforces moral hazard as any private interests who caused the debacle and would be punished in a private market are bailed out. There needs to be this feedback system to eliminate/reduce the bad actors.
Of course these are considerations when assessing if the council should have authority over this issue, in my opinion certainly in the case of a BBQ then their authority is justified. There are other cases where I would draw the opposite conclusion.
Clearly the issue is not simply "let the buyer beware" in this case either, I could live with that quite ok myself, but obviously there are potentially other people who are severely impacted by this issue. I think it should also be considered that checking the adaptations of previous house owners is likely to be extremely complex, and would become virtually impossible without any kind of standard building records.
I think trying to argue the leeky homes debacle as a justification is pretty shaky.
The Building Act 1991, passed by Jim Bolger's Fourth National Government, which came into effect about 1994, reduced controls and standards (such as allowing the use of untreated timber and monolithic claddings) under the assumption that building quality would be mostly assured by market-driven forces
Isn't this market driven stuff suppost to work better, not worse?
Numerous local authorities are implicated as having failed in their inspection duties, and now share significant financial responsibilities with the builders (which in many cases has closed or otherwise removed themselves from liability) and the owners. Court cases have generally assigned around one third of the financial responsibility to the local authorities.
It would appear that its quite easy to beat a hasty (and profitable) retreat in the event of legal liability (unless you are the council, which is why they are stuck with most of the bill), so how anybody could conclude that legal liability will clean up the market place is beyond me. In fact to encourage buyer beware attitudes (not saying this needs to be encouraged), it would seem that what is needed is limited council liability for their building consents failures. Though as you said it is relatively difficult to sue the council.
http://en.wikipedia.org/wiki/Leaky_homes_crisis
reinforces moral hazard as any private interests who caused the debacle would be punished in a private market are bailed out
I think you are getting confused between the home buyer and seller and the council. The people who caused the debacle were the contractors who didn't follow even the existing building regulations. The council should have made them, but that still doesn't make them the cause. The people who were bailed out were the home owners, who didn't cause the crisis, though they probably relied on the council and building regs too much. In either a public or private market its pretty clear that the people who caused this hopped it with the profits get away with it scott free.
Yep, well said.
Actually the un-treated timber is probably Ok as long as the design actually makes leaks "impossible". ie its kept dry. Older building had H1 only anyway, didnt protect against rot just boroer, rot takes H3+. Now they want to do H3 on some sections, however thats like bolting the door after the horse has bolted.....water in the walls is a disaster for health and the linings if nothing else....water in power points isnt great either of course.....its probably not that bad an idea given the small cost difference between H1 and H3 anyway.
Another reason for not using H1 was teh worry that builders were in-haling treated wood dust, kind of like chalk and teachers.....only probably worse.
So the monolithic clading that in an earthquake prone country with flexible wooden structures just screams stupid, but wait its cheap!
I have sympathy for leaky home owners, really they did everything reasonable for non-experts ie they had professionals, regulations and legislation that should have protected them by and large, it didnt.
"scott free" yes, exactly....
regards
Yes, substantially correct, hence it has to breath...however a building does have openings...so it can and indeed, must breathe. What I am commenting on is leaking from rain, ie a different thing to water vapour moving in and out via Boyles law....
So a traditional galvanised steel roof that overhangs walls by 600mm is in effect "leak proof" to the extent that its effectively keeps the walls dry from excessive moisture.
Traditional wood boarding/clading with an overlap and building paper uses gravity to clear water...etc....all these designs and techniques have been arrived at orgainically, ie trial and error to determine what does and doesnt work....we ignore those at our peril IMHO.
regards
"the whole leaky housing debacle" From my dealings with some housing inspectors they were un-happy with what was the "new" regs, the problem is developers and builders will do their utmost to minimalise costs and that means inspectors cannot do anything but follow the regulations. When I did my extensions I spent time working with them and we got on well and I got their many years of experience in faults and "safe" and acceptable shortcuts....but then I was building for the long term and not to build it cheap and flick it off. Another thing about the developers, their stated goal was to build and have 100% clear profit margin or more.....so the so called flat or apartment selling for say $400k cost at most $200k to do....and more like $150k. Hugh never seems to mention his ilks obscene profit margins and cowboy practices....just others.
NB many developers and builders use the legal system to protect themselves, ie form a company and go backrupt....no one left to sue. Sueing the engineer/concil is really like sueing the WOF inspector for a failing of Mazda....
regards
In terms of duty of care though, really I'd assume you have to prove that that was not fullfilled. If for instance the item meets the regulation which is supposed to be a guide of best practice then if it does it should be very hard to sue successfully, no one is perfect. I'd also suggest engineers and inspectors are generally doing a good job......what has failed is backing them up and the less competant interferring. For instance architects demanding the freedom to design without restraint.
regards
yes...indeed....so the problem comes back to almost bottom of the cliff....really how much say did / do the inspectors have in saying "these regulations suck"? bear in mind they are really th lostest rung on the ladder, so many architcets and vested interests higher up are calling the shots. Maybe after the legal dust has settled there will be a realisation that you have to complain upwards no matter he outcome. Certainly I do that and make myself un-popular, but Im old enough to realise that if I dont cover my ass I will be used as the sacrificial lamb at the first opportunity a manager needs to do so. Writing down you concerns focuses manager's minds wonderfullly for a while. Then they make a point of not asking you of course that way they cant get an answer they dont like or want to hear.
regards
Hugh Fletcher. Horrors. Read the book 'Clash of Titans'. It will give you nightmares. Hugh and his cronies flying about the world (DC8s probably). Doing the worst deals imaginable - but having an exciting time. Characters like this destroy business and wealth in New Zealand.
Yeah Fletcher has a pretty special angle on things doesn't he?
He comes from a very priveliged family with access to power that truly is of the "1%", yet seems quite prepared to apportion blame elsewhere.......for example he bemoans the sale of NZ Co's offshore, but says the directors had to do it because they were offered good prices. I call bullshit on that. While I agree that the reforms of the last 30 years have some very real failings, I find his criticisms fail to take much responsibility for the errors he and his cronies have made.
It's very popular for people to talk about personal responsibility, but you almost never see people really truly taking ownership of their mistakes.
But is the highest offer the best one? Maybe the benefit for the company/shareholders is to hold on. Even if the benefit might take some time. Given the Kiwi mindset of going for the short term gain over the long term benefit of continued ownership it might be that Directors are prone to that as well. I think you could sue directors if they did not regard the long term as they often don't seem to do.
"Offered good prices" the Q has to be asked why someone offshore thought the company was worth more than the owners/directors.
1) Were the directors lazy?
2) Less competant?
3) knew the company simply wasnt worth that much?
Got to wonder just why these ppl are or were worth their renumeration.
regards
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