Those much admired northern European welfare states tax families and individuals much more than do the Anglo-Saxon welfare states.
Source: Taxing Wages 2015 – OECD 2015.
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
04 Mar 2016 Leave a comment
in comparative institutional analysis, constitutional political economy, politics - New Zealand, Public Choice
After reflecting far more than I should on some conspiracy laden testimony at Parliament yesterday, one of the things I recall was a demand that the approval of the TPPA be put to binding referendum. The conspiracy theorist at hand was deeply concerned about how that treaty was encroaching on New Zealand’s sovereignty.
Why did this conspiracy theorist assume that a binding referendum will go his way and that opposing conspiracy theorists will not put up their own binding referendums in which he will lose?

The major drawback of citizen initiated referendums is any bunch of people can put them up much to the annoyance of those who will be a victim of the law to be passed.

Just as rotation of power is inherent to Parliamentary democracy, the ability of the crazies to the either the left or the right of you to initiate their own binding citizen initiated referendums. The first referendum is likely to be on one of the following:
Binding referenda are unworkable. Parliament can’t amend them later as we learn from the implementation of the law and unintended consequences arise. Every new law is riddled with unintended consequences and blow-backs.
Do you really want to have to have another referendum to undo a binding referendum that turned out to be a bit of a mistake? One of the few redeeming features of the Parliament that is sovereign – a parliament for can make or unmake any law whatsoever – is it can repeal its mistakes quickly.
The first citizens initiated referendum was held on 2 December 1995. The question was
Should the number of professional fire-fighters employed full-time in the New Zealand Fire Service be reduced below the number employed in 1 January 1995?
Turnout was low as the referendum was not held in conjunction with a general election, and the measure was voted down easily, with just over 12% voting “Yes” and almost 88% voting “No”.
The key to constitutional design is not empowering you and yours – it is how to restrain those crazies to the Left or the Right of you, as the case may be, when they get their hands on the levers of power, as they surely will in three, six or nine years’ time.
The one inevitability of democracy is power rotates – unbridled power and binding referenda lose their shine when you must share that power with the opposing side of politics who put up their own referendum question.
Constitutions are brakes, not accelerators. Much of constitutional design is about checks and balances and the division of power to slow the impassioned majority down.
Conspiracy theorists that pretty much sore losers. The last thing they want is a binding referendum on a topic on which they are going to vote no.

The problem of constitutional design was ensuring that government powers would be effectively limited. The constitutions were designed and put in place by the classical liberals to check or constrain the power of the state over individuals.
The motivating force of the classical liberals was never one of making government work better or even of insuring that all interests were more fully represented. Built in conflict and institutional tensions were to act as constraints on the power and the size of government.
Modern democracy is government subject to electoral checks. Citizens do have sufficient knowledge and sophistication to vote out leaders who are performing poorly or contrary to their wishes. Modern democracy is the power to replace governments at periodic elections.
The power of the electorate to turn elected officials out of office at the next election gives elected officials an incentive to adopt policies that do not outrage public opinion and administer the policies with some minimum honesty and competence.
Too many want to remake democracy with the faculty workshop as their model. Such deliberation has demanding requirements for popular participation in the democratic process, including a high level of knowledge and analytical sophistication and an absence, or at least severe curtailment, of self-interested motive. The same goes for citizen initiated binding referendums.
The rotation of power is common in democracies, and the worst rise to the top, so it is wise to design constitutional safeguards to minimise the damage done when those crazies to the right or left of you get their chance in office, as they will.
State power was something that classical liberals feared, and the problem of constitutional design is insuring that such power would be effectively limited. Conspiracy theorists lose all their fear of power by drinking on the heady wine of citizens initiated referendum. Be careful for what you wish for.
03 Mar 2016 Leave a comment
in economics of education, politics - New Zealand, politics - USA
03 Mar 2016 1 Comment
in international economics, politics - New Zealand Tags: conspiracy theories, ISDS, New Zealand Greens, TPPA
One of the cathartic things about leaving the public service is I do not have to be deferential to politicians anymore. I can treat them like ordinary people and tell them where to go when they annoy me. In consequence, I am not in any way nervous about appearing before a parliamentary committee.
This Parliamentary committee was very unlike the last. Staying on after giving my submission was a pain rather than a learning experience.
A parade of conspiracy theories about the investor state dispute settlement process followed my testimony, which was first of the day. I left after about 45 minutes.
In my testimony, I got a standard question from David Clark, a Labour MP, about whether more time should be that given to make submissions because the complexities of the intellectual property chapter.
Kennedy Graham, the Green MP, then asked a bizarre question about how could New Zealand sign a trade agreement that would compromise environmental standards. His example was a trade agreement where it is agreed to start using coal as a power source again in New Zealand.
So weird with this question that I did not give the obvious answer which was this parade of horribles is so unlikely that it is not a serious question. What I did say was it is very unlikely New Zealand would ever sign such an agreement.
If a parade of horribles and weird hypotheticals is the best you can do, you do not have much of an argument against the TPPA.
28 Feb 2016 Leave a comment
in economics of bureaucracy, environmental economics, global warming, politics - New Zealand, Public Choice, transport economics Tags: carbon footprint, carbon offsets, Left-wing hypocrisy, New Zealand Greens, rational irrationality
Living the clean, green lifestyle means more than just buying carbon-offs in the same way that indulgences for sins were sold by the mediaeval Catholic Church. Russell Norman was an MP for 9 of the 12 months covered by this chart. He consistently had one of the smallest carbon footprints of a Green MP even when he was still co-leader of the Greens and not just a backbench MP.
Source: New Zealand Parliament – Members’ expense disclosure from 1 October to 31 December 2015.
28 Feb 2016 1 Comment
in economics of bureaucracy, environmental economics, global warming, politics - New Zealand, Public Choice, rentseeking, transport economics Tags: carbon footprint, New Zealand Greens, rational irrationality
10 of the 14 green MPs have above-average air travel expenses – have an above average carbon footprint for a member of the New Zealand Parliament. It is not easy to be Green.
Source: New Zealand Parliament – Members’ expense disclosure from 1 October to 31 December 2015.
28 Feb 2016 Leave a comment
in environmental economics, global warming, politics - New Zealand, transport economics Tags: Green Left, Left-wing hypocrisy, Leftover Left, New Zealand Greens, rational irrationality
Source: New Zealand Parliament – Members’ expense disclosure from 1 October to 31 December 2015.
Source: New Zealand Parliament – Members’ expense disclosure from 1 October to 31 December 2015.
27 Feb 2016 1 Comment
in environmental economics, financial economics, industrial organisation, politics - New Zealand, public economics, survivor principle Tags: agricultural economics, privatisation, state owned enterprises
As cash cows go, Landcorp has had $2.25 million more in capital injections from taxpayers than it returned to them in dividends since 2007.
Source: data released by the New Zealand Treasury under the Official Information Act.
Those $1.5 billion in assets in Landcorp do not appear to be worth a cent in net cash to the long-suffering taxpayer.
Source: data released by the New Zealand Treasury under the Official Information Act.
Landcorp is a state-owned enterprise of the New Zealand government. Its core business is pastoral farming including dairy, sheep, beef and deer. In January 2012, Landcorp managed 137 properties carrying 1.5 million stock units on 376,156 hectares of land.
27 Feb 2016 Leave a comment
in health economics, politics - New Zealand Tags: vaccination
26 Feb 2016 Leave a comment
in economic history, economics of education, politics - New Zealand Tags: education premium, Maori economic development
25 Feb 2016 Leave a comment
in economics of bureaucracy, international economics, politics - New Zealand
What gave Amnesty International its strength, appeal and political credibility was most could agree with its opposition to the imprisonment of prisoners of conscience and to torture and that political prisoners should be put on trial.
Including child poverty as part of its most recent international annual report proves Robert Conquest’s 3rd law of politics: the behaviour of any bureaucratic organization can best be understood by assuming that it is controlled by a secret cabal of its enemies

Source: 2015/16 Annual report – The State of the World’s Human Rights | Amnesty International NZ.
Amnesty International should not be giving people reasons not to join. It should stick to its original mission, which most people support. An NGO with members from across the political spectrum has much more credibility and influence.
24 Feb 2016 Leave a comment
in applied price theory, comparative institutional analysis, economics of bureaucracy, industrial organisation, politics - New Zealand, Public Choice, public economics Tags: anti-market bias, New Zealand Greens, privatisation, rational irrationality, state owned enterprises

Green MP Gareth Hughes today nailed the case as to why governments should never run businesses. Too many MPs simply do not understand what dividends represent and what the profits from asset sales represent.
Hughes was reported today saying that taxpayers lost nearly $1 billion in dividends since the recent privatisations of power companies. He is the Green party spokesman on state owned enterprises.
Source: Asset sales cost hits $1 billion | Green Party of Aotearoa New Zealand.
Does the Green Party understand that an asset sells for a price equal to its risk-adjusted discounted net present value of the stream of dividends. When you sell a financial asset, you cash out the net present value of the stream of dividends that might have come from those assets.
The Greens, who are prissy about government transparency and dishonesty of their opponents, did not mention the $4.7 billion in revenue from the asset sale. Taxpayers now receiving more in dividends as a part owner of the privatised power companies than they did as a full owner.
Hughes had the cheek to complain about the politicisation of those privatisations such as favourable terms for small share buyers. That inability of governments to even sell an asset competently is a strong reason why governments should never run businesses in the first place.
If an asset cannot be sold in the full light of day – a major issue in an election campaign and a referendum – without the sale price that is politicised, what is the chance of good management of any state-owned enterprise when it is not the central focus of opposition scrutiny?
It is been many years since dividends from the state-owned enterprise portfolio has been a net positive cash flow for the taxpayer, as the chart below shows.
Source: New Zealand Treasury – data released under the Official Information Act.
KiwiRail and Solid Energy gobbled up whatever dividends came out of the power companies. Aside from power companies, state-owned enterprises not really offer much in the way of dividends to the taxpayer as the chart again shows.
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