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Oliver Hartwich on capitalism by another name, explaining Trump, the perils of health hype, understanding inequality, Brexit's language barrier, Ikea economics and more

Oliver Hartwich on capitalism by another name, explaining Trump, the perils of health hype, understanding inequality, Brexit's language barrier, Ikea economics and more

Today's Top 10 is a guest post by Dr Oliver Hartwich, The New Zealand Initiative's executive director.

As always, we welcome your additions in the comments below or via email to

And if you're interested in contributing the occasional Top 10 yourself, contact

See all previous Top 10s here.

1. Don’t like capitalism? Call it something else.

Capitalism: If that sounds too much like ruthless exploitation, steam mills and a dog-eat-dog society, then perhaps the economic system based on free trade and property rights only needs a different name. I am just not sure that “Trade-tested permissionless innovation” does the trick.

A recent survey of millennials reveals some results that should be of interest to those of us who care about free enterprise and the market economy. Slightly more 18-29 year olds (58% vs. 56%) had a favorable view of socialism than of capitalism. That’s a disturbing result.

There’s some evidence that the term “capitalism” is getting in the way of communicating effectively with millennials. However, if the wording was changed to a comparison of a “government managed economy” to a “free market economy,” the results change dramatically with 64% viewing a “free market economy” favourably and 32% viewing a “government managed economy” favorably.


2. Inequality of respect and the rise of Trump

Everybody talks about inequality and the rise of Trumpism. But there’s a discrepancy in the data. It isn’t the poorest who have been lauding Trump. The data instead shows it instead to be a lot of higher income, lower education, white working class supporting Trump. Why? It isn’t the usual income inequality story. It’s an inequality of respect: urban elites versus the countryside.

I was born and raised in Trump country. My family are Trump people. If I hadn't moved away and gotten this ridiculous job, I'd be voting for him. I know I would.

3. Don’t believe the hype

Tired of the latest health headlines out of the newspapers? They’re almost all wrong. Vox reminds us not to believe the hype. I was reminded of Jenesa Jeram’s helpful guide on how to read a health study in her report, The Health of the State.

In 2003, researchers writing in the American Journal of Medicine discovered something that should change how you think about medical news. They looked at 101 studies published in top scientific journals between 1979 and 1983 that claimed a new therapy or medical technology was very promising. Only five, they found out, made it to market within a decade. Only one (ACE inhibitors, a pharmaceutical drug) was still extensively used at the time of their publication.

4. Understanding Inequality

Equality good, inequality bad. Inequality rising, equality falling. If you read most papers, that’s what you think you know. Except you may not have the faintest idea of what inequality actually measures and where it is trending. Well, you can find out how much you really know by taking a quiz.

In 2015, what percentage of total household wealth in New Zealand was owned by the top 1%?

  • 8%
  • 18%
  • 28%
  • 38%

5. Why study hard for no gain?

Poverty matters for academic performance. We all know about the differences between Decile 1 and Decile 10 school performance. But does that mean that we can’t expect better outcomes in poorer schools until society has become more egalitarian? Hardly.

Here’s the latest from Torberg Falch and Fischer Justina. More generous welfare states result in worsened performance on international student tests. Why? Because strong welfare states mean high tax rates at the top end, so less reason to aim for higher education in the first place.

This paper studies the relationship between welfare state generosity and individuals’ investment in human capital during compulsory education. We estimate differences-in-differences models accounting for unobserved country heterogeneity for the period 1980-2003 using international test scores in mathematics and science that we have made comparable across testing institutions and test years. Our results clearly suggest that the generosity of the welfare state has a deteriorating impact on student performance.

6. What’s Brexit in French?

The official divorce talks between the EU and Britain haven’t even begun and they are already discussing which language should be used for the negotiations. English, say the British. French, says the EU’s (French) chief negotiator. I for one believe that a good compromise would be … German.

The European Union’s lead Brexit negotiator wants British and EU officials to work in French rather than English during the divorce talks, an EU official familiar with Brussels’ Brexit task force said on Friday.

Michel Barnier, the former French foreign minister running the complex separation with London, is keen that his native tongue be used in meetings and documents, the source told Reuters during a EU summit at which Theresa May was making her first appearance as prime minister at the European Council.

“Barnier wants French to be the working language in Brexit negotiations with Britain,” the source said.

7. Green lies

A former convener of the Royal Society’s Scientific Committee on Problems of the Environment has a bit of rant on “false Greenie science scaremongering”.

They have long spread misinformation and lies about genetic engineering (GE), claiming it has never done any good, only harm. But these claims fly in the face of scientific evidence.

In separate reports, the OECD and the American Academy of Sciences reviewed more than 1000 scientific studies of GE earlier this year. They found that farmers using GE got bigger crops, made more money and used less insecticide than conventional farmers. They concluded that GE has never harmed anybody, nor harmed the environment.

Greenie Luddites so put the wind up the New Zealand government that it passed ludicrous restrictions on harmless GE imports and GE research here. We are the poorer for that.

8. Euro impoverishes Europe

Just because we are not hearing much about the euro crisis these days doesn’t mean it’s over. In fact, monetary union keeps impoverishing many European countries and their peoples, as the Daily Telegraph reminds us.

Not being able to afford a phone, or to eat meat three times a week, is no fun. But thanks to the euro that is now the fate of millions of Europeans – and it will not change until the currency is taken apart.

9. Your chance to win £250,000

The world’s second-highest prize in economics (after the Nobel Prize), the Wolfson Economics Prize, has just been announced. If you feel you can answer the following question, you might have a chance to win a quarter million quid: “How can we pay for better, safer, more reliable roads in a way that is fair to road users and good for the economy and the environment?” Good luck.

I am delighted to support this competition, the third that we have run. There is no charge for entering and anyone can win this open and ambitious competition.

This time, the prize addresses an issue at the heart of every country’s economic future: road infrastructure.

It should be possible to improve roads without increasing the cost of using them. Now is our chance to come up with answers that can help road users, protect the environment, and support our economy — ideas needed not just in Britain, but around the world.

10. The economics of the Poäng chair

Imagine a store where stuff gets cheaper every year. Welcome to Ikea! It’s the world leading furniture chain that seems to have created its own version of economics.

Ikea is a behemoth. The home furnishing company uses 1 percent of the planet’s lumber, it says, and the 530 million cubic feet of wood used to make Ikea furniture each year pulls with its own kind of twisted gravity. For many, a sojourn to the enormous blue-and-yellow store winds up defining the space in which they sit, cook, eat and sleep.

All that wood is turned into furniture that tries to bring a spare, modern aesthetic to the masses. “We’re talking about democratizing design,” Marty Marston, a product public relations manager at Ikea, told me.

The furniture is also sold according to some unique economics. In many cases, Ikea’s famously affordable pieces get dramatically cheaper year after year. In others, prices creep up. In some cases, products disappear entirely. The result is an ever-evolving, survival-of-the-fittest catalog that wields an enormous amount of influence over residential interiors.

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Number 5 is a real concern.

How many people don't contemplate putting all their assets into trusts and then living on the dole (supplemented to the maximum pre-abatement level by doing administrative work for those trusts in order to get work and income off your back about seeking work), every once in a while. It looks mighty fine as an early retirement tool, especially if the trust pays for quarterly staff retreats / business meetings overseas as well as unlimited tea, coffee, biscuits & cakes while renting you a house at the minimum rate required to get the maximum accommodation supplement (coincidentally including all utilities & sky in the rent).

Why the concern? I'm planning on doing just that next year and I'm only 51.

Print me some dole dollars, Mr Wheeler and be snappy about it.

Aren't they saying that we can't afford super unless we raise the age of entitlement? That would be undermined if we just used the dole instead. To put this into context I was born in the 90s and occasionally think of retiring onto the dole ( supplement as described above ).

The concern is that I don't want my children to be underachievers due to the perception of an unlimited Government safety net. They will need to work for the better part of a decade in order to build up their asset base before they look to retire.

Had kids young and they are going very well - no worries there.

Where this falls over is that as a lazy parasite, you're assuming that everybody else is a lazy parasite. But that isn't actually the case.

Oh well better close this loop hole by abolishing the dole so that us lazy parasites have to start working again ;p .

If the choice is between paying 1/3 of your earnings to those who elect not to work and getting free money for not working, which do you reckon is the logical path that people will follow?

There you go again, thinking like a useless parasite and assuming it's universal.

...that would require a fraud, as a trust does not offer protection from welfare testing.

#9 - The more roads that are built, the faster they get filled to capacity with more cars and trucks. The only roads it makes sense to build are railroads.

Railroads. Fine for freight.
But for passengers, it is communism on iron wheels.

it is the perfect example of the inadequate thinking behind the current management system (that sort of capitalist democracy thing). It is impossible to get the right answer if you ask the wrong question. Impossible to get the right outcome also.

Roads are historically about the movement of goods for trade. Or sometimes the movement of military assets. They will return to that once the fling with private motorvehicles is over.

Then it is easy, we already have the system operating in New Zealand. Road user taxes based on distance and weight. Perhaps, that is an off the cuff answer. Maybe the question is leading towards tolls for everyone.

(edit: You could say a road feeds goods into the centre of an empire, and soldiers out to protect the sources of those goods).

"...The more roads that are built, the faster they get filled to capacity with more cars and trucks..."

Where is the data that supports that assertion? In fact it doesn't even pass the smell test.

Auckland and Wellington are great examples to use because they have pathetically low per-capita amounts of highway lane-miles, arterials and streets. Therefore they should have the least congestion, right?

The TomTom congestion index shows both of them to have a congestion delay at peak, of around 45 - 50 minutes per 1 hour of driving. Comparable US cities of 1 - 2 million population have a delay of
around 15 minutes - eg Indianapolis, Kansas City, Nashville, Richmond. Comparable US cities of around 500,000 population have a delay of 5 to 10 minutes. These cities have something like 4 to 5 times the highway and arterial lane-miles per capita of Auckland and Wellington.

This is not cherry-picking, either - the correlations in the data strongly run in the direction of the intensity of the per-capita space for cars. Even Helsinki has twice the highway lane-miles per capita that Auckland does, and Wellington might be the world's most pathetically outlier-low. It is certainly the world's most Kafka-esque outlier-high small (500,000 population) city for its congestion delays.

#1. the 'capitalism' term. Good comment about terms. But most capitalists don't want a bar of a 'free markets economy' They want crony driven market control, that is why capitalist have a bad name. Look no further than New Zealand where the big money suppresses markets to make millions.

“Competition is a Sin!” — John D. Rockefeller

I don't read the Daily Telegraph (or any other UK print media) .... so I don't have a clue what the back-story of #8 is ... it's meaningless

After reading this article all I can do is recommend Adam Curtis' BBC documentary 'the century of the Self'.

#2 - Who is voting Trump and who is voting Hillary

Going by these charts

The Hillary voters are

By education - The highest educated:

By income - The poorest people (as stated in #2)

By race - Blacks

By gender - Females

Trump supporters are

By education - High school, College or less

By income - Middle income

By race - White

By gender - Male

Michel Barnier, the former French foreign minister running the complex separation with London, is keen that his native tongue be used in meetings and documents, in this way the supremacy of the French Bureaucracy can be demonstrated and can ascend to it's rightful role of world domination, I mean leadership. I suppose if you get to be a French Bureaucrat you have been indoctinated all your life that you are personally destined to rule over lesser mortals.

I think we can call you the resident French expert Roger, from what I know I agree. Pompous bunch.

Not the French people in general, they are generally delightful, it's just that their education system selects and trains the brightest for the state bureaucracy, who end up with a rather strange worldview.

This is the tiniest elite of any large country. It lives in a few select arrondissements in Paris. Its children attend the same local schools, starting at age three. By their early twenties, France’s future leaders know each other. They progress from “classmates” to “caste mates”,

#1 - Left, Right, Capitalist, Communist, Libertarian, Socialist, Anarchist, Free Marketeer, blah blah.

So many to choose from. What am i? How can i really tell?

At the end of the day it all comes down to Money and Power which breeds Greed and Corruption.

You can have an Authoritarian Capitalist just as you can have an Authoritarian Socialist
You can have a Corrupt Capitalist just as you can have a Corrupt Socialist
And so on.

Either way we need less Power and Less Corruption.

Let us return more power, much more power, to the people. do the test and you should be able to pinpoint what you are


The above quote comes from Linus Pauling, Ph.D, and two time Nobel Prize winner in chemistry (1901-1994). He is considered one of the most important scientists in history. He is one of the founders of quantum chemistry and molecular biology

Mike B,

I am not sure what point you are trying to make here. I have been looking at CE's website and found some stuff on alien invasions. I quote "Remember,our non violent ETI(extra Terrestrial Intelligence) from the contiguous universe are helping us bring zero point energy to Earth. They will not tolerate any form of military violence on Earth or in space"
Any comments on this garbage?

#7, while I see some truths in their messages I just can't greenies seriously. They tend to be a bit gratuitous with their assumptions and hypersensationalist and wild eyed in their forecasts of likely outcomes. They have a naiveity and lack of perspective which is like children explaining what they want to be when they grow up. In many cases their efforts have done more harm for their movement than good. I guess it is shown by the polling of green parties around the world, they started at a certain level and have remained there-abouts since they have been around. It seems a steady portion of the population have always and will always think this way.

I problem I have been green groups whether environmentalists or politicians is that they have no understanding of environmentalism and no understanding of science. That undermines any chance of taking them seriously.

Asking children what they want to be when they grow up can be quite interesting. Some friends asked their son what he wanted to be. The response: Optimus Prime.

Well when you see the term "greenie" used, you already know you are dealing with a dickhead that will use the very same idealism over logic. A derogatory term used for rhetoric you could say. But I do get what you say, the idealism often blinkers the logic.

This guy is one who has a very good gift for sifting to the information to determine the facts.

His intellect is superb, and would walk all over anyone on these forums on environmental matters. I know, I see of lot of him. Now a qualified Captain he is also BE (mech) BSc (applied math) and MBA.

My observation of green party voters in NZ is they are mostly middle class young people, lots still financially dependent on their parents. They are young and idealistic but I suspect many grow out of it which is why the green vote stays around 10 - 15%.

No they don't all grow into self serving right wingers, check out the age groups among the Green Party in parliament, my observations tell me that greenies are a mixture of people, bright people as a rule, who are able to see the consequences of various actions down the track, and to consider what actions might need to be taken down the track. I know this, I count myself among them, I am 64. Not for them is it business as usual, as it is business as usual that is destroying this planet.

I wouln't mind if luddite greenies just stuck to virtue signalling to their friends - the problem is all the needless deaths they cause . "Genetically engineered crops could save many millions from starvation and malnutrition [not to mention blindess] — if they can be freed from excessive regulation. That is the conclusion I’ve reached from my experience over the past 11 years chairing the Golden Rice Humanitarian project (, and after a meeting at the Vatican last year on transgenic plants for food security in the context of development.",16641,20000731,00.html

Yes I'm pretty sure to solve the problems of the world we need more technology and science, not less.

Unfortunately the scientific process is not as rigourous as it once was. "Last year, Richard Horton, editor of the Lancet, referred to fears that ‘much of the scientific literature, perhaps half, may simply be untrue’ and that ‘science has taken a turn toward darkness.’"

Nature hates monocultures which the exact direction all this engineering is leading us. Bananas are in danger because we reduced just about the whole production of them down to the "offspring" of a single variety.
I think we are very foolish to think we can overcome nature, we HAVE to live with it.

Got this from the Internet
Our Phones are Wireless,
Our Cooking is Fireless,
Our Cars are Keyless,
Our Tyres are Tubeless,
Our Food is Fatless,
Our Dresses are Sleeveless,

Our Relationships are Meaningless,
Our Attitudes are Careless,
Our Feelings are Heartless,

Our Babies are Fatherless,
Our Children are Mannerless,
Our Education is Valuless,
Our Youth are Jobless,

Our Country is Godless,
Our Leaders are Shameless,
Our Politicians are Worthless,
Our Government is Clueless,

We are Speechless,
and i am scared Shitless

Yes, typical internet junk. Broad brush smears pretending to be 'facts'. Too Trump to mean anything worthwhile.

Yes exactly David.
Best to ignore the Internet and follow the Main Stream media.
Much better to watch the media giving Peter William Whittall of Pike River a standing ovation
Much better to watch the main stream media pissing on David Bains leg when he was released from prison
Much better to watch main stream media telling us all about weapons of mass destruction in Iraq
Much better to read economist in the media (a year ago) telling us to fix interest rates as they were about to go up

And much more

Oh so better to back Donald Trump who throughout the years has absolutely benefited from what the establishment had to offer.
The world may well be in need of a Lone Ranger figure, Donald Trump is most definitely not it.

In actual fact David this was just a bit of Friday light-heartedness on my part. \
You took it too seriously

The Decay of Growth.

If you look at the rate of growth over the past, say 60 years, you will see a close relationship with Mergers to Monopolies and the decline in both jobs and Growth

Back in the 50's New Zealand was made up of lots of small companies. We made everything for ourselves. There was plenty of work with virtually no unemployment.

From about the 60's on we started to see mergers and the rise of monopolies.
Watties bought out all of the other food producers and became a food monopoly.
All the beer brewers were taken over and we ended up with two big breweries and so on.

Then came the eighties
From this point on these local monopolies were taken over by international monopolies.

From the 60’s on we can see the decline in jobs and the decline in the rate of growth. That is the “Rate of Growth over time”

To bring back growth we need to break up all those monopolies and get back to the fifties style of workplace with lots of competing businesses.
More needs to be said on this subject but not here.

It takes energy to centralise power and resources, as energy declines the process will reverse. As a hobbyist craft brewer I see some of this happening in the craft beer scene, a return to smaller breweries. For now they are using a flawed model though, and trying to distribute widely rather than locally. I mean you don't get much more unsustainable than shipping about alcoholic water in glass bottles using non renewable fuels. But the foundation is there.

Ecocomies of scale are not always the economies they are believed to be. Robust energy analysis should always be conducted.

In another comment, I mentioned the rubbish contractor from my youth who owned the business and of course owned his own property, now we have waste management running everything and people now not being paid enough to do the same.

How did this become the 'email forwards from my granddad' thread?

#9 “How can we pay for better, safer, more reliable roads in a way that is fair to road users and good for the economy and the environment?”

Roading infrastructure is a complex issue that impacts on all parts of a society at a most fundamental level while also being crucial to successful economies. To fully understand the requirements for paying for roading infrastructure one must understand accurately where the costs come from, not just to create, but also to maintain. But there are other factors to consider as well. There are interest groups with money to lobby Governments, manipulating perceptions and perspectives on benefits, costs and impacts.

Competition to roading infrastructure comes from alternate forms of transport; aircraft, rail and shipping. Ecologically, two of these are better options than roads, but all have limitations. None of them can reach to all areas that need transport options. Rail is subsidised, not to make it competitive, but more to avoid the political cost of closing it altogether. Never the less, Kiwi Rail operates at a loss.

Setting aside the creation of roading infrastructure, the most significant cost to communities is their upkeep. The repair and maintenance required from the use of roads, and multiple studies from around the world identify that this is primarily caused by heavy transport. In NZ it is clear that the transport lobby has some effect on Government with Road User chargers being spread across all users rather than biased towards those who actually cause the damage. This despite Government acknowledging some years ago that heavy transport is the primary cause of road damage and wear. This results in heavy transport being effectively subsidised through not having to pay the full cost of their required infrastructure, to the standard that they require it. In addition in NZ the current Government recently relaxed rules on heavy trucks, allowing them to get bigger, thus further exacerbating their impact on the roads.

The lobbying also hinges on other factors such as transport firms creating employment for a significant number of people.

There is no doubt that road transport has a significant impact on the ecology, with internal combustion engines introducing numerous toxic substances into the atmosphere.

Regulatory authorities could consider actually charging those who cause the costs of maintaining the roading infrastructure. This would result in heavy transport firms facing significantly increased costs, making the alternatives more viable. The most common shift would be towards rail, making it more self sustaining. The impact would be loss of jobs in heavy transport, but would be countered slightly by an increase in jobs in rail. Heavy transport would not be wiped out completely, but would continue as feeders to rail depots and shipping terminals.

So in the end the answer is simple, make those who create the costs pay, forcing many off the roads, reducing maintenance costs, and those who are more efficient get a bigger share, reducing the overall ecological impact.

An even easier answer - privatise roads!
There won't be any need to subsidise rail if people pay the true cost of driving. And we will get a heap of valuable land that is currently wrongly allocated to roads being reallocated to housing.

In the UN Habitat Program Report, "Streets as Public Space and Drivers of Urban Prosperity", Auckland is an outlier-low, data-bottom city for proportion of its surface area devoted to streets. Alone among "first world" cities, it was down with St Petersburg and third-world cities. The authors found it so unusual, they devoted several paragraphs of discussion to it.

So the idea that Auckland is over-provided with street space is one of the biggest lies ever successfully put over the public, in the history of propaganda. In fact the authors of this study suggest from the evidence they find, that more street space correlates with both prosperity and cultural vibrancy.

Re people "paying the true cost of driving".

They already pay for: their own car
Their own petrol
Their own insurance
Their own parking space at home
Their own repairs and maintenance
Many people do pay directly for parking space at trip destinations and almost everyone else happily pays indirectly, in the cost of goods or in slightly lower pay
When it comes to the only "free" element in the cost of driving, roads - in fact the petrol taxes, rates and other taxes paid by the drivers of cars do cover these costs.

So it is BS that people "don't pay the costs of driving".

When it comes to public transport, especially commuter rail: the fare cost covers around 40% of the cost of the energy, repairs, and staff. The other 60% of operating costs, the riders do not pay for.

The capital costs - the actual trains, the stations, the bridges, the tunnels, the depots - are not covered at all by any part of fare revenue.

Conclusion: car drivers do pay the costs of their system. Commuter rail riders pay possibly 25% of the costs of theirs.

Breaking this out into cost per person-km of travel, the commuter train rider is getting subsidised to the order of around 30 cents. The car driver might be getting subsidised by half a cent.

It is a pity that voters believe so much falsehood on this subject.

As far as the roads are concerned.
What ever happened to "Glide Time"

The idea was that instead of everyone starting and finishing work at approximately the same time people could be flexible and change their starting times and avoid congestion on the roads.

Another thing that was supposed to happen was that more people would work from home.

Had kids young and they are going very well - no worries there.

When the government puts out a contract to build a road does anyone know what the specifications and guarantees are?

For example driving on roads can be a mixed experience in terms of road noise. Some roads are very noisy to drive on.

My understanding is the road noise is proportional to the size of surface chip used.

The larger the chip, the noisier the road.

Most roads are noisy because the larger chip (the noisy one) is much cheaper.

Some roads you cannot enjoy the radio, like driving on a shingle road.

#1 Capitalism = Free Market and Socialism = Government Planning is just plain wrong.

Capitalism incorporates free markets (or at least it is supposed to), but free markets have been around for thousands of years. The defining feature of capitalism is actually wage labour. In fact there is such a thing as Market Socialism.

The essence of socialism is actually workers owning/controlling the means of production, which can be achieved via worker cooperatives, which are perfectly good and viable, and have nothing to do with state control.

You have hit on the obvious solution to the looming jobless future as probably just about all work becomes mechanized or taken over by technology. It is the only solution in my mind.
It would also facilitate our gradual population reduction to preserve what we manage to leave untouched on this planet, what wildlife makes it through this critical time, and closer to home, it will solve the problem of an aging population.

#2 is the best analysis on Trump supporters that I have read. So much more perceptive than the standard narrative trotted out by progressive media outlets.

I have lived in cities all my life and would never vote for Trump but have a lot of sympathy for the people described. At least they are making their protest at the ballot box. I wonder if he got in, would the progressives be so respectful of democracy?
Us election becoming a joke. FBI looking at pressing charges over new email findings 11 days before the election. Hillary looks to be calling their bluff. But how can she run if they are contemplating pressing charges against her? The FBI has obviously become aware of some damning emails and have been forced to make this announcement as withholding until after the election will not look good.