Free Press

ACT’s regular bulletin

Good and Bad Economists
ACT exists in part to advocate sensible economics from the cross benches. ACT starts from Henry Hazlitt’s Economics in One Lesson: “The bad economist sees only what strikes the eye; the good economist also looks beyond. The bad economist sees only the direct consequences of a proposed course; the good economist looks also at the longer and indirect consequences. The bad economist sees only what the effect of a given policy has been or will be on one particular group; the good economist enquires also what the effect of the policy will be on all groups.”

Muldoon Economics from Labour
Labour want the government to buy higher cost goods from firms that employ New Zealanders. Who could oppose? What if, for example, Kiwirail had bought locomotives from Dunedin for $1.4 billion instead of sending $1.3 billion to China?

The Fallacy
The $1.3 billion Kiwirail actually sent to China in return for locomotives must come back to New Zealand eventually (nowhere else accepts NZD). It’ll come back to Kiwi exporters, but they’ll have to be efficient and they’ll have to earn it. So Labour would increase our tax bill and make things tougher for those who export overseas if it provides a few politically visible jobs in less efficient industries.

Put it on my Rates
Just as bad is Phil Twyford’s suggestion councils should borrow to fund infrastructure then pay it back through an additional targeted rate. Phil thinks it will drop house prices because the cost of new homes will be approximately $100,000 lower in Auckland. He’s right, but it’s not clear why he thinks that having a cheaper home and higher rates leaves anybody better off.

But the Council can Borrow Cheaper?
The left love the old fallacy that the government/Council can borrow cheaper so if the government owns/builds/runs something it is cheaper. The problem is that interest rates reflect the risk of the investment, not the investor. You may have a great credit rating but casinos are just as risky for you as anybody else. The risk premium on suburban infrastructure is no different whether borrowed by a mortgagee or a council so councils and banks should charge the same amount for taking on the risk of funding it.

One Policy Labour Should have kept
At the 2006 census there were five workers for every retiree. By the time current university students retire there will be only two. That’s not a sustainable dependency ratio. Labour were campaigning to raise the age of entitlement to NZ Super, now they’re not. As a result of both major parties failing to ‘get some guts’ on the issue there will have to be another alternative or we can’t even announce making Super sustainable until 2020 at the earliest.

One Policy National can now Dump
Free Press has previously pointed out that National’s Bright Line Test on residential property is the acorn that will grow into a residential capital gains tax. It exists only to foil Labour’s agitation for a capital gains tax. Now that Labour have ruled out the CGT, National should let the Bright Line Test fall off the Parliamentary agenda and quietly die. Watch David Seymour speak on the Bright Line Test here.

What Does it All Mean?
Labour’s economics are just as kooky as ever, just in new and different ways. Keeping them in opposition is as important as ever.

Press Gallery Leaves Crucifixion Half-Finished
We at Free Press are great admirers of the Parliamentary Press Gallery but their reporting of Ron Mark’s racist outburst allowed him to get off lightly. By focusing only on Mark telling Melissa Lee to go back to Korea, the press opened up the defence ‘oh well, she asked for it by raising her experiences as a foreigner.’ Nobody reported his more objectionable attack on Kanwal Bakshi in the same speech. Mark singled out Bakshi for being Indian despite Bakshi not having spoken in the debate. Those who can stomach it should watch his fake Indian accent from about 5:30 minutes into this video. He is a disgrace to Parliament.

The New Zealand Values Statement
Several weeks ago Free Press argued that New Zealand should require new immigrants to sign a New Zealand Values Statement modelled on the Australian Values Statement. We noted that people want to come to New Zealand precisely because we have an open, liberal, tolerant society, and it’s not much to expect people who want citizenship to sign up to these values.

The Australian Values Statement
New Australians must sign up to “Respect for the freedom and dignity of the individual; freedom of religion; commitment to the rule of law; Parliamentary democracy; equality of men and women; a spirit of egalitarianism that embraces mutual respect, tolerance, fair play and compassion for those in need and pursuit of the public good; equality of opportunity for individuals, regardless of their race, religion or ethnic background.”

Ron Mark would Fail
The great irony of Mark in particular and New Zealand First in general is that, in their intolerance and race obsession, they resemble the very characteristics they perceive in immigrant groups. Ron Mark couldn’t sign the Australian Values Statement in good conscience.

The Greens and the Super Rich
The Greens want to give tax breaks to those who purchase electric vehicles. The party that claims to be concerned about inequality is proposing to tax everybody for the sake of the wealthiest New Zealanders. A California study of who buys electric vehicles found “83% of the households have yearly income higher than $100K, 46% of the households have incomes higher than $150K (which was the highest category in the survey)”.

Third Car
The study also found that 95 per cent of these buyers lived in single family homes (the kind the Greens hate). As one Silicon Valley magnate recently put it to Free Press “everybody in my Menlo Park street has a Tesla Roadster, but it’s their third car.” Only the Greens could subsidise the rich to buy high-tech and highly toxic batteries as a toy. ACT supports sensible economics for lots of reasons, including that bad economics wastes resources and damages the environment.

ENDS

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