Quote of the day

November 25, 2015

A country that relies on aid? Death is better than that. It stops you from achieving your potential, just as colonialism did. – Imran Khan who celebrates his 63rd birthday today.

Subsidies blind producers to market signals

November 24, 2015

Dairy producers overseas aren’t getting low price signals which have prompted New Zealand farmers to reduce production:

New Zealand dairy farmers’ pay packets continue to be thin because overseas farmers haven’t yet received the price signal to cut milk production on the back of a market glut and low demand, says Rabobank’s top dairy analyst.

“Current global commodity prices in dairy are easily low enough to shut off taps globally. The problem is those low prices have not been passed onto farmers in many regions of the world,” said Tim Hunt, the global agribank’s head dairy strategist on a visit from his New York base.

“(With) these current (GDT) auction results of low US$2000 a tonne, there is no farmer in Europe or the US or Latin America who can make money on that. The problem is that New Zealand farmers are the only ones who are at the moment getting the farmgate signal that reflects that. . . 

New Zealand producers have had the very strong market signal that supply is outstripping demand. The price we’re getting is low, in response to that we’ve cut costs and production.

Subsidies in other parts of the world are protecting farmers from the low prices and blinding them to market signals.

People, like us

November 16, 2015

September 11th in the USA.

July 7th in the UK.

And now November 13th, a really black Friday, in France.

If we think back we might remember a few more places where terror struck, if not the dates – Bali, the Boston marathon, Paris earlier this year . . .

But how many other places can we name in the very recent past – the last few months, weeks, even days, where people were killed or injured by acts of terrorism?

How much attention do we pay to news bulletins which tell us of other people in other places for whom terror isn’t a rare and aberrant occurrence but a constant companion?

Indian poet Karuna Ezara Parikh wrote in response to the Paris attacks:

Stalin said: The death of one man is a tragedy. The death of millions is a statistic.

Big numbers, particularly in places with which we’re not familiar and where sudden and violent death is not abnormal, are hard to grasp, particularly if we know and understand little of the geography, history and politics.

The events of 9/11 (or 11/9 for everyone outside the USA), 7/7 and 13/11 got our attention because terror struck in places with which many of us are familiar where the culture is similar, where we might have visited and/or know people, and the people are like us.

They also had the potential to affect us directly because we knew some of those affected, and through increased security measures and the consequent, though not large, loss of freedom.

These many other deaths and on-going terror are far less likely to affect us directly.

But do they not have an impact in the way that the tragedies in New York, London and Paris do because differences in language and culture emphasise what we don’t share and blind us to what we do – our common humanity?

Just because they aren’t people like us, we should never forget that they are people, like us.


All jobs not equal

November 9, 2015

Labour’s proposal to use the government’s $40 billion in buying power to create jobs and back local businesses by requiring suppliers to make job creation in New Zealand a determining factor for contracts might be good politics but it’s bad policy.

The government, like any other entity, should be guided by price and quality when buying goods and services.

Unless businesses can adding job creation while competing on both of those factors, the requirement is a subsidy by another name.

If a future Labour-led government pays more, or accepts lower quality, to purchase from a business which creates more jobs it will not be not using public money wisely.

It will  be spending more than it needs to and to do that it has to take more tax, some of which will come from businesses with which those subsidised might be competing.

It could also lead the businesses which get the subsidies into difficulty when the government funding runs out and they find themselves with more staff than they can afford.

All jobs aren’t equal. Those created by government requirement are more expensive and less sustainable than ones created by businesses through their own efforts.

As Bill English said:

“We wouldn’t be chasing around the unemployment number [every] three months to three months – what we want to do is reinforce and encourage the industries that are doing well to invest, employ more people and grow.”

English said it was “not that easy” for the Government to create jobs, and any intervention would be unlikely to get value for money. . .”

The Wellington Chamber of Commerce is taking legal action against the City Council over its decision to require contractors to pay their staff the so-called living wage.

Labour’s policy is in the same feel-good- theory, bad-policy-in-practice territory.

The best thing a government can do for employment is keep a tight rein on its spending and enact policies which enable businesses to prosper which will give them the confidence to employ more people without a subsidy.

TPP text released

November 6, 2015

The full text of the Trans Pacific Partnership Agreement (TPPA) has been released just as the government always said it would be.

The usual suspects, at least some of whom are opposed to any trade, will continue their opposition. Some might even trawl through all of its 6,000 pages to base their opposition on something which is actually in the agreement.

But one of the measures of the importance of being in this particular tent was what happened soon after the 12 countries to it reached their agreement.

Indonesia said it wants to join and the EU approached New Zealand to start negotiations on a Free Trade Agreement.

The TPPA is not perfect but we have too much to lose by not being part of it and enough to gain by signing up to make it worthwhile.


Human progress ‘goes beyond economics’

November 4, 2015

New Zealand is fourth in Legatum Institute’s Prosperity Index which compares much more than economic performance:

In the foreword Sian Hansen Executive Director of the Institute writes:

The Prosperity Index tells us that the story of human progress goes beyond economics. It tells us that for nations to flourish they must provide opportunity and freedom to their citizens. It shows how access to quality healthcare and education provide the foundations on which nations can grow. It proves that effective and transparent government empowers citizens to take control of their lives. And it shows that protection from violence and oppression, as well as strong social bonds, are crucial to a thriving society. . . 

She also warns the world is becoming more dangerous:

Last year the Prosperity Index struck an optimistic tone, explaining that the world was becoming increasingly prosperous. This remains true, but the 2015 Prosperity Index reveals that the world is becoming an increasingly dangerous place. The rise of Islamic State has changed the nature of global security, particularly in the Middle East. The prelude to this in both Iraq and Syria was the fragmenting of social bonds. Worryingly, other countries in the region are seeing similar fissures emerging. A dramatic decline in the Safety & Security subindex in Africa and the Middle East has been driven by increased tensions and violence between different social groups as well as an increase in refugees and internally displaced persons.

Falling levels of safety and security also blight the United States’ performance this year. The US has fallen one place in the overall rankings to 11th but one finding stands out: the US ranks outside the top 30 in the Safety & Security sub-index, down two places to 33rd this year. In contrast, Canada has risen to first place in the Personal Freedom sub-index this year, reflecting high scores in measures of tolerance and civil liberties. . . 

New Zealand’s rankings were:  economy: 14; entrepreneurship and opportunity: 17; governance: 2; education: 6; health: 19; safety and security: 11; personal freedom: 2; and social capital: 1.

Not when but how

November 4, 2015

Fears that opening bars to allow people to watch rugby World Cup games would lead to major problems have not been realised:

Allowing bars to open during Rugby World Cup games didn’t turn the country into the drunken shambles that had been predicted, say the backers of the law change that made it possible.

Police communication centres today said the local aftermath of the All Blacks win over Australia in the Rugby World Cup final in London was quiet.

A law change was made two months ago to allow bars to open early during the tournament, rather than having to apply for special licences. Under the changes, hoteliers had to give police seven days’ notice they would be open.

The change was enabled by a bill from ACT’s sole MP David Seymour, who watched the final at a bar in Auckland’s Mt Eden.

He was happy there had been no major problems and it showed New Zealanders were actually responsible people.

“The picture that was painted when the bill was debated was that New Zealanders are infantile and if there’s not a law made to prevent it happening there would just be drunk people pouring out into the street and harassing children,” he said. . . 

While longer opening hours of bars and other licensed premises provides a greater opportunity for drinking, it’s not when people drink but how and how much that is the problem.

There is a problem with immature and unhealthy attitudes to alcohol which lead people to drink too much, but that is not a problem for most of us.

Legislation should be aimed at anti-social and abusive behaviour and allow the majority who drink without causing themselves or anyone else problems to do so when they want to.


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