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Monday, October 7, 2013

Debate between Wanganui councillors - James Penn and Michael Laws

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Last night the people of Wanganui were treated to some rare entertainment – a match between ‘David and Goliath’. Ok, better still, David’s son and Goliath. Interestingly, recently Malcolm Gladwell has given new meaning to the tale of ‘David and Goliath’, and this tale is analogous in some respects. The combatants are candidates in the running for Wanganui District Council. James Penn, is a local 19yo graduate of Wanganui High School, and a NZ Debating Champion, who is a 1st year university student in Auckland, studying law and commerce. Michael Laws is a sitting councillor of Wanganui, a former mayor of the city, and a former National Party MP.
It was a match between ‘the old guard’ and ‘a young buck’. There were several interesting issues about this contest:
1. The disparity in values – It struck me as a contest between an old conservative and a young libertarian; though based on Penn’s policy, arguably a conservative with a preference for smaller government  (utilitarianist). Penn looked professional throughout the debate; his open-mindedness plausibly a redeeming appendage to his youthful ignorance.
2. The disparity in debating styles – Penn is strictly correct whilst Laws is intimidating and plays dirty, at times losing credibility and respect with the audience. His attacks were often straw arguments or red herrings, and on one occasion he conflated his discredited argument with Penn's rebuttal. So much for intellectual honesty. He'd on occasion had to temper his outrageousness.
3. The value proposition offered by both candidates – Old people are important because of their historical knowledge; but youth brings new ideas and methods. There is a role for both.

James Penn is a star pupil, so despite his tender years, you’d expect some ‘fight, both in terms of factual content and ‘worldly experience’. James is not without worldly experience. He comes from an upwardly mobile family, has travelled extensively, and lived abroad (UK). More poignant is the following. Ignorance or the lack of experience (as you’d expect in an 19yo) is not necessarily a bad thing. Earlier in the week I was talking to a sitting councilor Rangi Wills. A knowledgeable man whom we could all learn a lot from. You want that type of knowledge on council. The problem I have, conveyed by both Rangi Wills and Michael Laws, is their ‘presumption of knowledge’, whereas a ‘young buck’ like James is less likely to presume facts and arguments. Particularly a star pupil like James, who is less likely to defer to other people’s views. He is more likely to go off and research topics. You can make much of his need to focus on studies, particularly since law is an area of study that requires a great deal of reading. Unless he can make case studies of Wanganui, I wonder if he will be able to serve Wanganui effectively, particularly given the 'role' I see him filling. He will need reading in order to develop 'arguments' against the old guard. One of the reasons why star pupils are stars is because most people don’t develop aptitude in critical thinking. In many schools, its only taught to the best students, if at all. James would have developed these skills as a debater in school. It was evident last night against a formidable and intimidating opponent.
In the case of Rangi Wills early in the week, my topic was ‘waterworks’. I’d read in the Wanganui Chronicle that there was a requirement to spend $40 million-odd on flood mitigation to protect housing/urban areas in Wanganui East. I emailed my solution to Rangi over a year ago. I never got a reply. He said he gets 90 emails a day. I can’t believe its rate payers, so he must have an active social life, or perhaps he is a busy career man. In any respect, he wasn’t addressing my concerns. In our conversation, he played down my suggestion, arguing that there would be a lot of public opposition to a dam on the Upper Wanganui River, and that the area had been investigated in the 1970s, and the area found to be ‘geologically unsuited’ for a hydro storage. Currently there is an oversupply of electricity in NZ thanks to the imminent closure of the Rio Tinto smelter (which I actually foresaw), however irrespective of the market context, a producing/profitable asset is better than simply a flood mitigation scheme that 'protects' what already exists. You could argue a flood would only 'immerse' houses, and not write them off. I'm not in a position to know. They are issues that should be addressed. The fact is that new engineering solutions are being developed all of the time; and we need young people who are prepared to find them. Maybe its not an issue for a 'young prospective lawyer' so much as a 'young engineer'.

Now, this is the useful technical knowledge that you want on council. Local governments need good technical knowledge. It does not have to come from the inside; however outside consultants also have a tendency to offer 'safe' proven solutions. There needs to be a tender and project team to entertain alternative solutions. A mayor hydro scheme might actually win private-national government support; particularly if such a scheme could function as a load balancing reserve like the Snowy River Scheme in Australia. But I’d also be interested in knowing if any technological innovations have occurred in the last 30 years to challenge this ‘accepted wisdom’ because most things are ‘bad ideas’ until a new engineer comes along and proves otherwise.
In this particular debate, Michael Laws, older and more experienced, was telling James Penn that ‘innovation funds always fail’. A woman from the audience cited ‘her evidence’ that micro-finance worked in Africa. I too know that micro-finance has worked very well in third world countries. No idea should be dismissed out of hand, however it must be acknowledged that the context is different. Third world communities are 'low-skill' countries that can afford to work with low-cost capital. They struggle to buy a sewing machine. This is not the nature of the Western 'capital hurdle'. The greater concern is that Western kids, and rural kids particularly, are not as 'commercially astute' or savvy as they need to be. Financial literacy is at a low point. Its not just about 'backing winners'; its about ensuring that your 'youth capital' has the right values to actually want to succeed. As Michael indicated, its little point helping youths if they are inevitably going to leave, and they should leave. I went to Japan and the Philippines, and now in my 40s, I'm in Wanganui as Michael said.

The problem with old people is that they are accustomed to being right; that they can struggle with the possibility that they are wrong. They are always armed with more factual evidence to convince themselves that they are right. Pretty soon they are only reading materials that actually supports their view, if they read at all. Sometimes they'll read contrary views and find some rationalisation to reject it. Michael was adamant that ‘innovation funds never work’. The reality is that ‘government funded custodial funds’ usually do fail, and there is good reasons for this to be the case. The point being that Michael Laws never saw the ‘black swan’ to know that not all swans are white. This is not a justification for James Penn's innovation fund; its reason to look at its merits. This is where youth and critical thinking are useful. Now, you might question whether James is too young. Well, there is another issue and that is context. We live in an internet world now. There is so much knowledge online these days, that youths are exposed to such a diaspora of information, that they are far more knowledgeable than these old folk when they were of equivalent age. More importantly, they are more adept at researching in the modern era. James brings that dynamism as well as critical thinking to the table. He will however have his limits however because he is barely out of school. Don't expect him to be a Fullbright Scholar from the get-go; but does he offer something on Wanganui Council...I think so.

Not everything went well for both candidates. Both candidates failed to pick up on a flaws in their ‘economic policy’. Wanganui Council is struggling with high debt levels. The response of both candidates conveyed some ignorance of finance. Laws wants to ‘peg rates to inflation’ whilst Penn wants to index them to ‘inflation plus’. Penn did qualify that by saying that he would use more discretion. The reality however is that it should only be about ‘cost vs benefit’ to rate payers; most particularly when debt is so cheap. If you are going to use debt, now is the time. You would think debt is therefore an opportunity. The problem is that councils are 'democracies' and democracies are majoritive rather than rational, and the clowns are usually in the majority. We need more critical thinkers like James Penn, Michael Laws and Rory Smith, and fewer populists like Phillipa Baker-Hogan and Hamish McDouall.
You can argue that there is an assessment about ‘which ratepayers’ given some level of cross-subsidisation across the electorate, but inflation is not a good barometer, and it should never have been flagged as a benchmark of suffering because ‘inflation’ is not a benchmark of purchasing power. This is mythology. There is no correlation between inflation and cost of living. Consider:
1. Monetary policy changes need not pass through to ‘cost of living’ inflation; but rather through to ‘asset inflation’. Clearly people on a pension are most vulnerable to the latter; and that people in Wanganui are less exposed to ‘asset inflation’ because of depopulation.
2. There is an over-supply of labour and competition from Asian labour markets, so there is no growth in ‘unskilled’ wage costs. People living on benefits and pensions are therefore vulnerable; so that is probably a starting point for rates. Maybe the selling argument for Wanganui is a 'rates regime that is indexed to the pension', as opposed to inflation. Would that not give certainty to a lot of rate payers and lifetime pension collectors. Of course, these are not high-income recipients, but at least it would fill vacant housing stock and get the construction industry going.
So both candidates did poorly on this issue; and both candidates failed to address the ‘elephant in the room’, which is the poor perception of Wanganui – thanks to crime. Unless any candidate is prepared to address the social issues in the town, then people are simply going to avoid Wanganui. Laws unfortunately has a track record in this arena as former mayor. More problematic perhaps is the fact that he ‘still has a voice’. In fairness to Michael, he is a very articulate and good critical thinker; the problem is that he is not ‘self-critical’. His deference to his own ego is immeasurable. This is a problem for Wanganui because ‘as a leader in the community’ he becomes a ‘significant danger’ for the following reasons:
1. Andrew Wilson was not a threat to Wanganui. Media coverage had ‘exposed it’. Laws took the issue national, and made Wanganui a ‘pedophile haven’ when in a broader ‘weighted’ perspective, we ought to realize that 75-85% of pedophilia occurs within the family.
2. Laws, and others like Hamish McDouall, our local Labour Party candidate gave this a profile it did not need, in order to fight ‘a not-in-my-backyard’ (NIMBY) campaign. They were even prepared to take it to the High Court. This is one way council mayors and councillors have been wasting rate payer money. In James hands, Wilson would have been probably treated as any other paedophile….given that they are all around us. Laws created a false stereotype…but it gets worse.
3. Laws was engaging, along with other councillors, and they should all be identified by the Wanganui Chronicle, in fear-mongering for populist reasons. Philippa Hogan-Baker is out doing the same over illegal highs. Laws actually was critical of Hogan-Baker, and rightly so, but again, he simply lacks the ‘self-critical’ quality that has him ‘pinned as an autocrat’, yet he stands ready to identify Penn as so. Pot...Kettle from Laws. The problem with Laws fear-mongering is that people in the streets of Wanganui are now vulnerable to accusations of incest simply by talking to a child or walking along the street. He has created that much fear. Laws has precipitated a witch-hunt. I know of one case; it would be interesting to know from police if there had been an escalation in ‘reported incests’ since this issue became a national scandal. Awareness is great - but let it be cased on facts and understanding; not fear and loathing.

In terms of debating skills, James Penn was far more dignified and respectful to his counter-party, but Laws was able to land some ‘illegal punches’ so to speak, as well as some 'solid blows'. James did allow Laws to lampoon him on seemingly a simple issue of ‘h’ in Wanganui. He should have more strongly argued that Laws made the ‘h issue’ a national issue by holding a referendum on it. Moreover Penn allowed Laws to attack him as ‘undemocratic’ because he would not have funded the referendum on the ‘h word’. He needed to reiterate that it was a small issue that needed a decision from the council, not populist mandates from  a costly referendum. People don't know what they want until they are educated. Michael Laws rendered a 'straw argument', that its democracy or not. Not that simple Michael; its a question of the 'type' of people participation. So Michael peddling false dichotomies.

Laws did convey a better awareness of the dynamics which shape Wanganui. He correctly realizes, as in other rural cities worldwide, that youth tends to leave for the big cities, and likewise it can be argued that most immigrants tend to prefer cities for the greater support for their respective cultures. Laws therefore wants to target former residents when they have children. Which poses the question – why is he making Wanganui about Wilson? He might well argue that Wilson has a threat to that image. I would argue he blew the issue out of perspective. We are surrounded by paedophiles. Risk is managed; not avoided. Laws created unrealistic fears; precipitated scaremongering (along with other councillors) and failed to even observe the evidence related to paedophilia. He ditched the ‘selling point’ he had identified for Wanganui for populism. He was however right on another issue. Wanganui cannot match the cities for night-life; but by the same terms, Wanganui could do a lot better to cater for youths. Maybe it only requires an inter-city bus at opportune times. i.e. What if drunkards could be taken off the road at night by being given a ‘low-cost bus service’ to and from Palmerston, and vice versa, so that folk here would have a ‘cheap’ means of taking in other restaurants and pubs, and Palmerston can do vice versa. Even if it was a ‘pre-booked’ opportunity offered infrequently. This would partially see more people spending money in other cities, but at least it would mean ‘intra-regional’ opportunity and dynamism, and it might serve to keep people in the community. Maybe it might see people living in Wanganui, but working in Palmerston North. Likewise people in Palmerston North might welcome a trip to Wanganui and its beach. Such a means might even be a means of increasingly services from their respective airports. A one-hour bus to Wanganui airport for a flight to Auckland, or a one-hour bus to Palmerston North for a flight to Christchurch. It might be the better alternative to a poor transfer in Wellington en-route to Christchurch or Sydney for business people who these days don't need to live in these high-cost cities. These are the type of ‘flexible’ work-arounds that allow business and their families to locate in Wanganui. Being from Sydney myself, it is a very hard commute to East Coast Australia. If there were more flexible arrangements for business and regular commuters, Wanganui would attract more people. We already have pretty seemless arrangements to Australia, so better connections might be a precursor to more Australians, and for 'Big Oil' seeking oil & gas offshore NZ, better flight connectivity might actually pip Wanganui over New Plymouth as a regional office serving these offshore fields, given that Wanganui is closer to the centre of government.

I’d love to see James Penn on the council. More concerning however is that he is only one voice. We need 6 other James Penn’s, well perhaps somewhat older, in order to ensure a ‘reflective’ critical perspective of city issues. One of the huge problems for cities in NZ is keeping skilled persons, and Wanganui is more vulnerable than most communities because its small and depopulating.

You can view the entertaining debate at Wanganui Online.

Michael Laws for mayor?
One of the pressing issues with respect to Laws is the fact that he is also one of 3 candidates looking to become mayor. The problem is that he simply lacks credibility for a number of reasons – least of all his track record on mayoral issues. He has supplanted the prospect of a healthy image for Wanganui with a deference for his own ‘pseudo-ego’. On the issue of gang patches and Stuart Murray Wilson, he placed the image of Wanganui in the media for all the wrong reasons. Now, in fairness to him, Wanganui has social issues, but he made no progress resolving those. The greater issue is that no leader is making a difference on this issue. They simply don’t because there is little insight on this issue, inside and even outside the community. Wanganui needs to find its own innovative solutions. Laws acknowledges ‘the lack of leadership in social services’, but he did not deliver as councillor or mayor in this respect. Frankly, the city is without a capable leader, so I'd argue that it needs 'by default' Annette Main with a more capable CEO who can actually tackle those issues. Clearly that is not a person to be elected; its an appointment.
The other problem with Laws as leader is that he is simply an egomaniac who needs to be the centre of attention. Humorous until you receive your rates bill and wonder where does it go. He is a capable contributor as a councillor, but he’s utterly destructive as a community spokesperson. Even his role as a radio host is ominous. For this reason, I’d prefer to see Annette Main as mayor and both Michael Laws and James Penn as councillors. I think there are other capable people as councillors, but I’d like to see Penn elected most particularly for what he can become as a ‘future mayor’? He might instead be a future MP for Wanganui in a few years when Chester Burrows retires. Who knows.

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Friday, September 27, 2013

Finally media awareness of Auckland volcanic threat

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This is the third time we have written about the threat posed by a volcanic eruption in the Auckland Volcanic Field, that underpins much of Auckland City, New Zealand. We first wrote about it in March 2013, then again in April 2013, and again in this article. Finally, today, the NZ Herald has decided to write about the issue, which is critical, not just to alert people, but for government to actually take steps to avert castastrophe. What people need to consider is:
1. There is no reason not to expect another eruption. They have been so periodic that it gives high causal justification to expect another at some point.
2. Volcanic eruptions when they underlie or adjoin a city pose a huge disruptive force; far more catastrophic than earthquakes.

The reason why this is so is because:
1. The sonic blast from the volcano is going to shower the city, or parts of the city with rock debris, killing people, destroying a lot of popular. The impact would be akin to an earthquake. Less damage to the structural integrity of buildings, but more damage to their cladding/facade.
2. The volcaniclastic material and dust will blanket the city. The implication is that it will be a huge disruption to the city. Compared to an earthquake, where the people can get on with their lives within a week, i.e. Businesses can keep going, if they are psychologically prepared, and where there is relatively less disruption to transport, and only 'certain zones' are affected. Widespread dust will stop everything. Its akin to a snow storm; and even if you move the dust, it will wash back with rain. It will be redistributed by train. In contrast, an earthquake spreads no debris, aside from liquefaction (sand) along fault lines, and often it does not even rupture land/highways, so its simply undermining buildings/foundations in certain zones. It was rather unlucky that the central CBD of Christchurch was even hit. The other issue was the 'shallowness' and 'intensity' of the quake, and the fact that Christchurch was not designed for such events. i.e. It had many relict 'brittle' structures. In contrast, Japanese earthquakes are 80-100km deep, the earth 'rolls' and buildings sway accordingly.

Now, the good news is that it might not be central to Auckland, but rather on the fringes, so having less effect, and possibly not blocking major transport corridors. It might be a relatively small eruption with insubstantial dust. The win has a good chance of carrying the dust out to see, and strong wins will serve to disperse the dust further afield...though for a major eruption, that could actually be a problem. A greater problem is perhaps that there is no precedent for this event. It has no modern comparison. It will be not as severe as the Pompeii (Italy 11th Century?) or the Mt Pinotubo eruption in 1984 (with its 11 feet of ash). These are different styles of eruption. So, we are really in the dark as to the precise nature, however much can be garnered from exposed ash deposits. After all, that's how they are able to calculate the historical significance of these fields. NZ is one of the few countries to build a city on a volcanic field. I'm not aware of any other, aside from Iceland, where the entire island is a volcano. Even then, its not so much an explosive style of eruptive volcano, but generally a non-viscosity, fission-style type of eruption.

Now, in commercial terms, you generally build infrastructure with a 20-40 year life. So it might make sense to build a city on a volcanic field. Sadly, that concession only works if the eruption is after your 40 year project life. You might otherwise feel a bit jaded if you did not take a threat to your property seriously if you'd just made improvements to your property and then an eruption occurred weeks or a year later...even 5 years. The reality however that, its not so much a problem of infrastructure loss as:
1. Looting and vandalism in the wake of it, as you flee for safety
2. Destruction of gardens, external façade, windows
3. Damage to internal windows. Recognise that there will probably not be materials to board up your house windows, if that will even make a difference. It will depend on the size of the blast and your proximity to an unknown centre within the field, or close to it.

It becomes apparent that Auckland will be disrupted for several months. Food will need to be flown in until arteries are cleared. Rain will play havoc with that. It will be a different, even unique type of emergency.

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Thursday, July 4, 2013

Just one of the many great companies I have identified over the years - Xero Ltd (NZE:XRO)

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In Jan 2010 I recommended a NZ stock called Xero. Based on the Google Finance chart it was $1.64. Anyway, 3.5 years later its $17.64 and worth $2 billion dollars, and its NZ's largest listed company apparently...that's hard to believe. Normally its hard to find such stocks in a small market like NZ.
Anyway I wanted to convey the appeal of managing your own money, and dumping the 'dumbed down' investor belief that you should passively outsource your money to some fund manager who takes you for a commission. Here is the recommendation. There are few sectors which offer that scale of profits. Mining is one of them; online services is another, but that is generally a sector that does not need money. Mining needs money, and it pays nicely. Now is good timing for gold, and a good time to prepare for industrial minerals. Companies like MLX are good examples of the types of company, but you wait for the right time for these companies. Let me explain how to do it - start with Global Mining Investing.
At the time I was less than enthusiastic about NZ Windfarms (NZE:NWF), but thought that they might be worth a punt at 22c. Today they are 7.5c, though if I invested, I am sure I would have long abandoned that one. The reasons it was not a good option:
1. It was investing - always a less scalable option given the high capital cost
2. It had a major strategic partner who as a controlling shareholder could probably care less about capital optimisation
3. It was competing with China
4. Lack of local subsidies for wind
5. The problem with Resource Management Consent - I believe matters are improving in this respect
6. Not much growth in electricity demand - but then incremental capacity additions are well-suited to wind
7. The fact that grid stabilisation is currently not well-suited to a strong reliance on wind, particularly with the under-capitalised NZ grid, though I suspect that problem has since tipped in the other direction.

The reasons to like it were:
1. Prospects for technological innovation
2. Strong local support for wind
3. Appealing local market conditions for wind
4. The possibility of new wind subsidies

I note that Oceana Gold might be a stock to look at because its high cost, so has leverage to gold price incease, but I doubt it has a good resource base to interest me..so I'll steer away from it. I'll stick to the deeper 'Australian' fish bowl.

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Sunday, June 2, 2013

New Economics Party - a new hope for NZ?

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New Zealand has the makings of a new political party. Well, its early days for this one because it seems to have no substantive backers. Its called the 'New Economics Party' but my evaluation will demonstrate that its not 'new' just 'ignorance of economics', and that's far from new. The problem with any new political party, or  group with such ambitions is that they inevitably convey a lack of understanding of economics and psychology.
Their idea is to tax 'resources' rather than 'production'. This is a rather silly idea because any tax on resources is passed through to work, so is there any distinction? A resource is nothing without preparation or reticulation/distribution, so its a moot point. Someone has to pay, and its not the resource. So 'resource rent' is not a magical escape from the cost of supporting a welfare state, if that is implied.

There is actually some value in this thinking, though I cannot sanction a collectivist notion like 'the Earth (or resources) are for sharing'. This is not substantive enough as an intellectual foundation, however I would argue or support the notion that people did not 'make' or create' resources. They were already there. So what are we to make of resources which are there, but someone makes them marketable. There is some value in their 'potential' value. The question is:
1. Should private persons be allowed to develop them at zero cost. This is not reasonable because resource assessment and exploitation entails impositions on competing land uses. Do people have a right to expect no impedence from competing land users. i.e. Does your lifestyle property have a right not to expect explosive vibration from a nearby development, even if its not on your land? Clearly, resource development is inextricably linked to other issues.
2. Should private persons be able to develop them after related costs. This makes the most sense simply because it recognises the value created by individuals who didn't create the value, say gold mineral, but they did identify it, spend money appraising it, carrying the risk of plant, capital and labour in order to extract it. The argument is that they are making 'super profits', but those profits arose only because of the boom-bust economy created by governments. A private 'unfettered' market would be more predictable, and more boring. Spculators love contemporary market uncertainty because they manage it full time. Fund managers love uncertainty too because they get to manage the funds of apprehensive salarymen. They get to buy out cheap those small resource companies small investors are scared to invest in.
3. Should a 'middle-man' government to able to act as a custodian and tax those resources or any resulting income for the benefit of others. The implication is that these resources are a 'public good' and that the government can impose high royalties upon these resources so that the miner only extracts a 'nominal' return. The implication of this would be that the governments of the world would effectively be planning resource development and production, and inevitably prices. Might the world benefit from resource planning? No question. Its in fact already there, though it could be argued that the information distribution is less than 'fair'. That is another question, insofar as markets need to appraise market information. What is the public's right to know? What is the implication of not knowing. Risk = ignorance. The implication of not knowing is higher cost of capital. This is not good for resource developers, and thus the justification why resource developers have a vested 'common' interest in disclosure. The flipside is that they might perceive themselves to have a vested interest in misleading information, i.e. Not disclosing or minimalising information about a project. This however does require an act of faith by the investor, and this should not be accepted even if corporate custodians are considered 'trustees', their interests are split between corporation and shareholders. Remember that they are employed by the corporation, which is considered a 'separate entity'. Individual shareholders are therefore collectivised in their interests. You might wonder about how to balance new versus existing shareholders.

The rationale for this 'new economics' is the cliche of resource overuse, resource depletion and climate change. This is reactionary populism. i.e. Politics chasing 'pseudo-science'. Resource depletion is nonsense; long ago discounted. There is no shortage of resources; their presence is essentially infinite. The rhetoric is that there is a fixed quantity of metal in the universe. The stupidity of this argument is that:
1. There is not a fixed number of humans
2. Its an incredibly large universe
3. Our per capita resource use is actually falling in the West whilst rates are still high in the third world, and their population growth rates are rapidly falling. The concerns of today will be the opposite in 30 years time. Then we will be complaining about lack of consumption. i.e. We might be compelled to stimulate people to consume. In fact I doubt this will be the case because I think we will have shifted to a new philosophical system.

This party suggests we need multiple currencies; but in fact this is precisely what we have. There is nothing wrong with that; the problem is that they are supported by the arbitrary power of the government to tax.
"Equality, according to research, makes everyone happier"
This is absolute nonsense for two reasons. The concept of happiness is a rather 'arbitrary' measure of well-being simply because it relies on people's honesty in being able to appraise their happiness. I'd argue that people are surprisingly successful in their capacity to delude themselves into thinking they are happy. I would challenge you to ask people 'who say they are happy' to actually tell you why. I think you might find it enlightening. Its often a wish rather than the true state of their apprehensions about their lives, and their suspicions and disdain of others. The other problem is the contemporary measure of 'equality'. This conception is very often a false dichotomy.

Inequality is actually a non-issue. People don't need to be concerned about 'inequality'; they need to be concerned about 'rights', and basic needs. The richest people are found in 'prosperous' societies; so what threat do they pose. They don't unless given an extortionary sanction by governments. So government is the threat. Money can be used for good or bad; its government which has a monopoly over the legitimatised use of force. The other issue is sustainability living to avoid destitution, and that generally requires some survival strategy and provisions for mishap. It does not require a great deal of wealth, simply a house and farm plot and a basic insurance scheme. We live in a world where people's living standards depend on other's capacity to avoid extortive taxation. This can only justify spurning civil society. They have been disincentivised to produce.

The notion of a state state economy is a nonsensical conception for a number of reasons:
1. There is no justification for renouncing success or security
2. Provisions for security are founded on 'forward-looking' provisions, not avoidance strategies
3.

This political party posits as some defence against 'dog-eat-dog' capitalism, but is precisely the implication of its incoherent values. It simply assumes too much.

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Wednesday, April 17, 2013

NZ Greens Party and Labour Party discover an 'over the horizon' election losing strategy

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Wow!!!! This is huge news. Labour and Greens together have raised minority party extortion to a new level. As far as I'm concerned, its great news because it highlights the nature of our useless 'representative' democracy. At stake is the spectre of a non-governing party threatening to subvert the existing government.
The Labour Party and Greens are saying in the midst of a power privatisation that they are going to change the rules of the game. An 'asset' is a capitalised stream of earnings. If you change the government, change the rules, you are going to change the expected earnings, or investors sense of vulnerability. The market is already uncertain about 'drought' (least of their worries), the closure of the Rio Tinto smelter, and now Labour and Greens are saying they will thwart the sale - in effect!
This effective curtails any hope of investment in the country (in anything substantive) as well as any hope of getting a sale of assets. Its the cheapest form of populism. Worse that 'minimum wages' and capital gains taxes by a country mile. Mind you, the policy was unpopular for National, and they were too arrogant to even deal with the broad-based apprehensions. This is of course just another reason for spurning 'representative' democracy. see and like us at www.meritocracy.org.nz. Join our mailing list.

This is actually worse that Julia Gillard's Mineral Resource Rent Tax (MRRT) because:
1. NZ needs the jobs and industry
2. Australia is a strategic and prized supplier of minerals
3. People kind of expect minerals to incur some rent
4. The mining industry was always very powerful, and thus a backflip was to be expected
5. The Australian Labor Party is just about to be dropped
The twisted aspect of this is that Labour and Greens just placed themselves in the wilderness....and ACT are looking more credible than ever. We have the socialists to thank for it....they really showed their true colours. Giving people sugar does not always work; most particularly when the market/media show you the implication of your decision-making. Shearer just retired permanently.
I guess we have to respect the 'honesty' (if not blatant stupidity) of the NZ Labour Party and the Greens Party. I guess they have locked in the support of the party faithful. But they might have just jettisoned any member or supporter with any sympathy or brain stem. To those people, I say welcome to ACT Party. John Banks, its leader is probably the only person with half a brain stem, and its a semi-impervious connection to God. So we live in hope. But you know; that's the price you pay for moral relativism. Get rid of representative democracy! Its not really 'democracy' in any meaningful sense. It does not give you 'real representative'. It takes from you power of attorney, vested in a person you will probably never meet or really know, who runs agendas you will scarcely understand because he is thinking full-time about thwarting your better judgement, and you are scarcely 'participating' to bearer scratch together a few brain cells. We need a meritocracy with a rational framework for political discourse. This is the only way that anyone can participate in a legislature. Visit us at www.meritocracy.org.nz. You want respect for your legitimate interests and rights - become a libertarian - we are not all Christians.


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Thursday, April 11, 2013

Auckland - living on the edge of a volcano - they didn't see it coming

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On the 17th March 2013 I wrote about the risks posed by a volcanic eruption in the Auckland Volcanic Field. I posed a number of questions as much as anything, since as a geologist, I go on evidence, and frankly, I was at a loss to find any. I don’t live in Auckland, so I don’t have any particular interest beyond an odd-hours research, but since writing this story, I’ve seen an escalation in interest in the issue. Might it be that there is more evidence than originally reported? Well there is a follow-up story in the NZ Herald today which raises several more issues which I want to address:
1. Focus of activity – The story probably creates unnecessary fear because it suggests that each of the old active volcanic craters in the Auckland Volcanic Field is active. This is unlikely. More probably an eruption is going to be in the Rangitoto Island area, if not the existing cone.
2. Eruption history – It suggests that Rangitoto has a sporadic eruption history of up to 1000 years. This is less important than the nature of the eruption. Really the threat posed is from an early blast rather than a later flows of liquid, highly fluid magma. Since the eruption is probably going to be offshore, I suggest the greater threat is a mini-tsunami in the bay, as well as a volcanoclastic surge blasting your windows to smithereens. You might want to rethink that bay-side waterfront apartment acquisition; if only for the high rents and the surge risk.
3. Eruption activity – The evidence suggests that volcanic activity has increased in intensity, i.e. the latest eruption some 500 years ago from Rangitoto Island was the most activity in terms of lava flow and ash.  Where does that leave us? Maybe more explosive coming? Maybe simmer or subside.

It goes without saying that Auckland is unique in the world. It is not unknown for cities to be built adjoining volcanoes. The problem for Auckland is that it is probably the only place that I know which is actually built on top of a volcanic field. Having said that; the next eruption is probably going to be offshore. Let’s not forget how ‘recent’ human arrival was; and I’m including the Maoris.

Does it make sense to rethink the focal of NZ development? Does it make sense to keep developing Auckland? Well, given the characteristic of these types of volcanoes, I think it does make sense to keep developing Auckland. Does it make sense to retain it as the centre or focal point for NZ development? Perhaps not; but then expensive housing prices are probably destined to drive people out. Who wants a bird’s eye view of a volcaniclastic surge? Not me.

The reality is that there is a great deal to question about the nature of this volcanic phenomenon. Does one lead one’s future in the hands of academic volcanologists with a limited understanding of geological events? Such volcanologists are really learning as they go, largely on the basis of empirical evidence. They have not even observed an eruption from any field with this style of eruption; let alone from this volcanic field. Reason for caution? Not really perhaps until the evidence trail grows.
Associate Professor Phil Shane said: “Future planning would have to consider living with active volcanism for a long period of time….It is not as bizarre as it sounds, if you think about Iceland and Hawaii - societies have gotten used to living with volcanic activity for generations”.
I have a problem with this statement insofar as Hawaii and Iceland are a completely different type of eruption centre; both in terms of style and character. I doubt there is even the evidence to suggest that Auckland is even a ‘hot spot’ in the conventional sense. Certainly not like Hawaii with its flood basalts, or Iceland for that matter. I suspect its origins are more tectonic than is appreciated, with activity arising from a fractures opening up offshore of Auckland. The evidence is simply not there. There is a major kink in the tectonic plate at Wellington, and you can bet no work has been done interpreting earthquake activity offshore from Auckland.
The problem too often with ‘empirically-driven’ scientists is that they only start questioning convention when some event jumps up in front of them to tell them how little they know about the world (having an incomplete geological account due to erosion and limited observation) and not a great deal of knowledge about the cause of the Auckland Volcanic Field. In this last respect, these empiricists are largely ‘talking blind’. There are not too many geologists around who say ‘I don’t know’. Neither are there many people who define themselves as ‘critical geologists’. Everyone wants to fall back on convention to convey how much they know. The flipside is that unpopular academics seems to be a contradiction in terms, hence you cannot always expect volcanologists (indeed any scientist with unconventional ideas to get taken seriously). Can you imagine how safe one must get with life-time tenure? Can you imagine how annoying a person could become if you worked opposite a professor you did not like for a lifetime? My sense is that they grow to get along; much like the Japanese, defined by their own sense of safety.


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Monday, April 1, 2013

Focus NZ Party: A struggle for identity

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The prospect of yet another libertarian party in NZ. I don't know whether to laugh or cry? I do know that I'm leaving the country, so what's the difference. Well, its nice to think that there is some hope of a libertarian sovereign state somewhere; but given the values conveyed by these 'hicks', I do believe I will be crying. So what's up with them. Well, here is the problem as I see it....the list is a little long.


1. The prospect of a a new (Focus NZ) party is probably only going to increase the chance of a Labor-Green victory because it will mean no list seats for a libertarian party. This will of course spell the death of all libertarian parties. 'Divide and rule'....that depends on how you divide. Three libertarian parties is ridiculously too many, particularly since you make no point of differentiation. If they merge with Daniel Craig's Conservative Party (yeh that was a joke) or ACT, that would be better.
2. The other big problem is that they have pursued the wrong approach to credibility. ACT's strategy of digging up former National Party leaders is ridiculous for a party that should be trying to differentiate themselves. Find credibility within the business community and appeal to high profile people across the country to back you, not just business people....otherwise you look like a pack of hicks or vested interests. But don't just create the perception of being broad-based, actually change your mind-set from concrete 'vested interest' 'exporter of the year' myopia, to all issues. Not just fiscal, monetary and industry policy, but welfare, treaty, energy policies and besides.
2. Another big problem for libertarian parties is that they have no clear identity. This is perhaps the hardest pill to swallow, but 'libertarianism' as a concept is rife with problems. You have to pick a winner. If you accept to 'pick the package' then you diminish your credibility. You are positing yourself as the 'honest party', but you can't be if you are contemporary libertarian, which means, only caring about advancing 'small government' agendas, but being indifferent to the divided philosophical values that divide people. This 'packaged' attempt to be all things to all people works for the 2 major parties; but it won't work for ACT or Focus NZ. The reason is clear I hope - the 2 major parties are 'extortion' based parties - both peddling fear. Labour is peddling concessions based on extorting wealth from the rich; and Conservative-Centre National Party, is peddling a defensive 'we'll protect you strategy', or 'we'll allow you to grow' on a good day. They are entrenched in this extortion-based two-party model. Trying to be the balance of power is not going to work given that the Maori Party is already doing that. This means the libertarians need to differentiate themselves, and that means 'growing market share', and that means being something the other parties are not. But since its different, you need to convey integrity. It does not matter if you have to divide your market share; at least you will convey a coherent system of values the people can trust.
3. Identity - The problem with 3 parties is that there is no point of difference. Libertarianism is a political philosophy that advances 'small government'. Your problem is that people support small government for basically 3 different reasons (i) Indulgent, reactionary, subjective anarchistic reasons, (ii) intellectual Randian objective 'natural law' type reasons, (iii) intellectual utilitarian reasons, (iv) divine/Conservative party reasons.
The implication is that its very hard to integrate that set and preserve integrity because at the end of the day, the Labor Party, and National Party and even Greens, have a fair claim on these people.
4. Broad based policy is needed. Just looking at your website, and that's where journalists will look, one observes the following errors, aside from the pitiful website....
(a) Right wing is not a good term to adopt...its meaningless...better individualism, prosperity,
(b) Focus on 'producers and exporters' - its a mistake. You may as well call yourself an irrelevant farmers party. Farmers are the 'backbone of the country''. Perhaps, but the problem is they are 3% and you have not found a way to teach sheep to vote. Labour has. 

(c) Talk of 'foreign exchange rate' controls is the wrong way to go about policy for a party that purports to be 'free market'. You need to ask yourself why the currency is high and deal with the problem from that respect. All commodity currencies are high...to give you a hint.
5. Criticising the outsourcing of jobs. There is already a 'nationalist party', why are you going that path. That's not 'broad-based', that's just idiotic. Winston Peters already panders to the ignorant. Jobs are going offshore because its cheap to make things in China. If you increase the costs of living in NZ, then you have inflation. You will diminish jobs in NZ...the exact opposite of your intention. The cost of living will rise. It is true that there is a false economy in outsourcing jobs which will come back in 20 years, but the solution is not simply protectionism. The solution is not to identify the problem and not have a solution either.

The policy position of Focus NZ is actually not bad, at least from their opening page; the issue is more on the strategic positioning of the party. Of course there will be a need to see the detail. The problem with such small parties is that they tend to lack the lack of analytical skills to make a credible effort, and then they tend to fail on public presentation, which the major parties handle convincingly. Most voters are not analytical; but journalists will be voracious, so party speakers need to be. Going after list seats makes sense as a policy strategy until they identify credible public speakers.

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