Free Press: ACT’s regular bulletin

Bad Economists Make Bad Environmentalists

The Green Party is all over the map this week, threatening to sabotage capitalism while capitalists are saving the planet.

Have Electric Cars Finally Arrived?
The Nissan Leaf is no longer sold new in New Zealand, the Holden Volt appears to be a flop, and reports are in that the BMW i3, in many ways an impressive vehicle, has a disappointing range. Is the weekend announcement by Tesla the game breaker?

The Tesla 3 by the Numbers
Serial entrepreneur Elon Musk launched the Tesla 3, saying it will be available in New Zealand. It is an electric car for $35,000 USD that has a range of 350km and can steer itself. 250,000 people put down a $1,000 deposit for one in the first 48 hours. If they come through, the total order may be worth $13 billion with extras.

Experiments in Living
In his launch video (link) Musk explains how he funded the Tesla 3 by selling the Tesla Roadster and Tesla S (each over $200,000). Air travel was once a luxury, now many airfares are cheaper than getting to and from the airport. As economist F.A. Hayek said, rich people fund experiments in new technology by paying a small fortune to do things first.

Which would the Greens Fund?
The all-electric Leaf, and the petrol-electric Volt and i3 all seemed as revolutionary on launch as the Tesla 3 does now. Which one would the Greens have funded?

Trick Question
Last election the Greens were promising to give cheap loans to people installing solar power, not buying electric cars. Then a report pointed out that solar doesn’t have much environmental payoff. The sun shines when electricity use is low, and demand is already met by base load from renewables such as hydro dams whereas electric cars are more efficient regardless of power source.

The Use of Knowledge in Society
A Green government would have put taxpayer money into early edition electric cars that didn’t quite make it (they called for subsidies because the Leaf bowed out of New Zealand), and into solar panels that did even less. That is, the taxpayer would have played the role of decadent experimenter. Meanwhile a capitalist entrepreneur may have just revolutionised transport. How many Green MPs have put down the $1000 deposit for a Tesla?

Winston Could be Safer!
The Greens have tried on a pro-business gloss but are as dangerous as ever. They want to give Kiwibank $100m of taxpayer money to drive down mortgage rates. What would happen?

If the Competition’s Colluding
What if the big four banks and every other mortgage provider, that is everyone except Kiwibank, are all colluding to hold rates artificially high? First, the Greens really should tell the Commerce Commission. Second, Kiwibank has an extraordinary opportunity. Just offer lower mortgage rates and increase market share.

But They Can’t Get Capital?
If the bank needs equity capital then the simple way to achieve the Greens’ goal is to float Kiwibank on the share market. They could sell 49 per cent as a Mixed Ownership Model company and retain Government control.

If They did Force Down Interest Rates
With no increase in housing supply (there’s little on the horizon), lower interest rates will translate into higher house prices. A Government gift to existing homeowners. (And you thought ACT was the party of the rich?)

If They’re Not Colluding
On the other hand: If the mortgage market is already competitive, then Kiwibank cannot force interest rates down because lenders are already offering their best deal. The Greens’ policy would amount to giving $100 million in mortgage discounts to Kiwibank customers, that is to homeowners, a group wealthier than the average. How is this fair?

Opportunity Lost
Nick Smith failed to show up and defend his Building (Earthquake-prone Buildings) Amendment Bill in Parliament last week. The House voted down David Seymour’s amendments to exempt areas of low earthquake risk such as Northland and make earthquake risks comparable to other risks Kiwis face. See David speaking on the amendments here.

The Squeeze of Private Schools
David Seymour spars weekly with Jacinda Ardern in the Sunday Star Times. This week David explains how the government could expand choice and save the taxpayer money by funding private schools slightly more. Jacinda just says she wants to make every school better without explaining how.

What Jacinda Could Have Said
Free Press has decided to help Jacinda with friendly suggestions. She could have said: “Labour is first and foremost committed to the dictum of the second Labour Prime Minister, Peter Fraser: Every child should be extended to the best of their ability. Second, we are committed to the strongest possible state education system. We all know there is never enough education funding. If increasing independent schools’ funding might mean more parents choose them, in turn freeing up even more resources for state education, then it is something a pragmatic Labour Government would consider.” Alas.

School of Practical Politics
ACT is committed to improving the standards of political campaigning in New Zealand. If you’d like to learn about cutting-edge campaign techniques, you can express your interest in ACT’s School of Practical Politics here. It is open to all but there is a significant discount for ACT members.

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