Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 


David Cunliffe's proposed crony capitalism

Jamie Whyte
ACT Leader

David Cunliffe's proposed crony capitalism

On Friday David Cunliffe declared that in government Labour would plan the economy. “Government should back positive Kiwi businesses, not leave it to the wolves of international trade … That also means attracting industry to New Zealand regions that need it most. Industry policy has become a dirty word. It isn’t. Regional development has also fallen by the wayside. Labour will bring it back. We want good jobs in every region of New Zealand.”

The obvious folly in this policy is the wilful misallocation of resources. The regions that most “need” government help in attracting investment are those that, for whatever reason, are least attractive to investors.

Investors do not act from feelings of regional malice. If they prefer region A to region B, that is because they think the return on the investment will be higher if made in A than in B. To make them instead invest in B, Mr Cunliffe will have to give them enough taxpayers’ money to compensate them for the loss this entails.

The taxpayers' money spent on this regional subsidy is then no longer available for other investments or to consume the output of other firms. So, to get the regional distribution of investment that suits his tastes, Mr Cunliffe will reduce aggregate economic output.

The less obvious problem with the policy is the explosion of "rent-seeking" or crony-capitalism that this policy will cause.

In a free market, firms must attract capital from willing investors and make profits from sales to willing customers. In Mr Cunliffe’s planned economy they will be able to relieve themselves of this burden provided they can convince government bureaucrats that they will promote regional development or are a “smart green business” or possess some other virtue that willing customers and investors have allegedly overlooked. Then the crony firms can extract their profits from helpless taxpayers.

Corporate head offices will start relocating to Wellington. And Courtney Place restaurants will boom on the lobbyists’ expense accounts.

ENDS

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Parliament Today: Parliament Adjourns

The 50th Parliament has adjourned for the final time.

After the completion of the adjournment debate, MPs left for the campaign trail with Parliament to be dissolved on August 14 ahead of the September 20 election.

Speaker David Carter thanked staff and MPs for their work, and in particular the Clerk of the House Mary Harris saying his job would be near impossible without her wise advice on a daily basis. Harris has signaled she would retire next year and would leave a large gap. More>>

 

Parliament Today:

Novopayout: Government-Owned Company To Take Over School Payroll

After lengthy negotiations, the Ministry of Education and the existing school payroll provider, Talent2, have settled both on the amounts payable by Talent2 towards the costs of remediating the Novopay service and a new operating model for the school payroll system. More>>

ALSO:

Employment: Labour Will Raise Minimum Wage, Restore Work Rights

A Labour government will raise the minimum wage $2 an hour to $16.25 and restore work rights to ensure the benefits of economic growth are shared fairly by all New Zealanders, Labour Leader David Cunliffe says. More>>

ALSO:

Police: Crewe File Review Released

No new evidence has come to light implicating any specific person as being responsible for the murders of Jeannette and Harvey Crewe... The review identifies there is a distinct possibility that Exhibit 350 (the brass .22 cartridge case) may be fabricated evidence, and that if this is the case, that a member of Police would have been responsible. More>>

ALSO:

Werewolf Issue #49: Gordon Campbell Interviews Laila Harre

For 25 years, Labour and National have been in virtual agreement about the basics of economic policy, and differed mainly on how to go about managing its social consequences. More>>

ALSO:

Greens: Plan To Protect Our Maui’s Dolphins

1. Protect Maui’s from being killed in the sanctuary set up to protect them... 2. Extend fishing protections to the entire Maui’s range... 3. Help protect the livelihoods of affected fishers by supporting them to adopt dolphin-safe fishing methods. More>>

ALSO:

Gordon Campbell: On National’s Electorate Deals

For all the talk yesterday from Prime Minister John Key about National being transparent about its electorate deals in Epsom and Ohariu, that transparency is entirely front-loaded. More>>

ALSO:

Greens: Oil Drilling Face-Off With Labour

The key policy points in the Green Party’s plan to protect our beaches from oil spills are to:
1. Prohibit deep sea oil drilling; 2. Implement compulsory shipping lanes for coastal shipping; 3. Build Maritime New Zealand’s oil spill response capability; and 4. Introduce a stronger legal framework so that when accidents do happen, the New Zealand taxpayer does not have to pay for the clean-up. More>>

ALSO:


Nick Smith v Fish & Game:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news