Who's to blame for high power prices? It's the usual suspects, of course.

"[I]it frustrates me that our politicians have become victims of short-termism and tribalism. ... But those with the biggest chequebook in town are still responsible for the decisions they make. And this includes 100% responsibility for our high power prices.

"Why are politicians to blame? Because they retain 51% public ownership - and 100% control - of our three biggest power companies - Mercury, Genesis and Meridian.

"And, since they were listed on the stock exchange, no subsequent Government, blue or red-led, has allowed the gentailers to raise the money required to meaningfully expand the supply of power. And this has meant higher power prices. It’s a simple supply and demand thing. ...

"[S]uccessive Crown Ministers have become addicted to the juicy gentailer dividends. Treasury estimates them to have been a combined $5.4 billion since listing. Quid quo pro. And successive Governments have (cunningly) left any political fallout from higher power prices to be their successors’ problem.

"There is a horrible irony in all this. Politicians, with 51% ownership and 100% control of the gentailers, get to blame their management and directors for our high power prices. But, as the majority owners of the gentailers, it’s actually their fault. It’s like your manager making a mistake, but publicly shaming you.

"And there is only one loser in all this: everyone who pays their power bill. ....

"[We have neither] 100% Government ownership of our power companies ... [nor] 100% private ownership. ... Instead, we have a horrible middle ground. 51% ownership by the Government -- with 100% control -- yet starving them of the capital to increase power supplies. Yet, if you were to believe the politicians, high power prices were the greedy gentailers’ fault. Rubbish. ...

"Make no mistake, high power prices are 100% the fault of our successive governments, blue and red. They’ve been starving our power companies of the food they require -- capital -- while also milking them for dividends. Ask any dairy farmer how that works out."

~ Sam Stubbs from his op-ed 'Who should we blame for high power prices?' [Emphasis mine]

Auckland can't afford a second crossing ... or can it?

OVER SUMMER ONE ALWAYS gets a few ideas. Some good, some questionable. Some that just seem obvious once they've occurred to you. 

Here's one of those.

Let's start with three propositions: 

1. Auckland can't afford new infrastructure.

2. But Auckland would like to move its port. (But Auckland can't afford new infrastructure.)

3. Auckland will soon need a second harbour crossing. (But Auckland can't afford new infrastructure.)

Auckland can't afford that new infrastructure. Can't it? Perhaps it can.

Let's see what happens if we put those three problems together. As architects like to say, the solution is often contained within the problem ....

LET'S START WITH A CONTROVERSY from a few years ago when then-mayor Phil Goff complained about the Ports of Auckland steadily encroaching on the harbour with its ongoing reclamation work at the Ferguson container wharf. We joked that if they kept going, the Port would eventually end up in Devonport ...

A good joke.

But what if the wharf—or some part supported by the wharf—somehow did end up there?

Might that be a good thing?

Let's think: at the moment (see below) 

• the gap between Devonport and Port is just 800 metres -- that's compared to the 1000 metre length of the existing Harbour Bridge
• the rail line to Britomart passes right beside the container wharf
• the Grafton gully motorway points in a straight line down to the container wharf
• RNZ Navy land takes up some of the best land in the country to house the world's most ineffective navy
• existing tidal wetlands and greenspace on Belmont/Devonport (Charles Reserve, Hauraki Primary, Philomel Reserve, Bayswater Park, Plymouth Reserve, Hill Park, Ngataringa Park) offers scope to avoid simply dumping traffic on Lake Rd, and instead to link up with existing Northern Motorway at Takapuna.

Could we all win?

I think we could.

So the project could feature

• elegant new 'gateway' bridge for road, rail and foot
• new spur rail line from existing Quay Street rail line to Devonport
• new Devonport railway station, with platform under bridge (with a later link to Takapuna as well?)
• new road connection to existing motorway at Takapuna and at Grafton
• new apartments and marinas on and around existing container wharf (southside) and on former naval base (northside)

The latter (i.e., apartments) would pay for the former (i..e, everything else) --- and for the port and the naval base to move. They would have to.

The port is important, make no mistake. But viable plans for the port to move have already been drawn up. And there's no reason for New Zealand's Navy, who would be second in a fight with Switzerland's, to be there at all—squatting on some of the country's most expensive real estate rather than hanging out somewhere much less expensive. If you must keep them in Auckland (why?) then dredge the Manukau. Removing them will help to some small extent in removing pressure from Devonport's housing market -- as will new apartments built around what will be a new transport hub there.

IN ITS FAVOUR:

• very little distance to build the crossing (just 800m at present, compared to 1000m for the existing bridge, which could still be further reduced)
• done well, the bridge and apartments together become a gateway to the city's inner harbour, framing it and re-defining it
• curved bridge which, like San Diego's renowned curved Coronado Bridge, would be high enough for ships to pass under, 
• and/or, like Santiago Calatrava's magnificent structures, delicate enough to enliven the harbour, which would be both structurally elegant and appropriate as a harbour-side gateway to the city
• even a 'utilitarian' suspension bridge or cable-stayed would suit (we have plenty of great bridge designers here)
• removes some proportion of traffic from existing Harbour Bridge 
• easier Devonport road connection, removing congestion from Lake Rd
• immediate foot, cycle, and rail access to/from Devonport
• high-density apartment living on former container wharves, enjoying spectacular harbour views, a new marina, and easy walkable access to city wand waterfront
• high-density apartment living on former naval base waterfront living enjoying spectacular city views, with a marina, an easy commute to city and beyond (and public transport direct to city via new spur rail line!), and easy walkable access to both the waterfront and to Devonport...

What's not to like? Even Wayne Brown should like it, because he'd get to bully the Navy, the Port authorities, AT and ministers of transport and defence.

San Diego's renowned Coronado Bridge

Sharq Crossing, Doha, by Santiago Calatrava

PROBLEMS?

• Nimbys, of course, in Parnell, in Devonport and in Belmont
• some property in Belmont and in Devonport will need to be bought, voluntarily -- or perhaps the air rights bought
• Parnell owners already regularly whinge about the existing container wharf anyway
• work on coastal wetlands
• that said, this would be an ideal opportunity to fix (properly this time) some of the drainage issues around these areas
• new location needed for the container port, and imported cars...
• not an insignificant cost, but relocation also paid for from apartment sales...
• bridge needs to allow large cruise ships underneath
• so it needs to have some height!
• cost

Cost is always the biggest problem. And too much taxpayer money has been wasted already. But that's the benefit here: these apartments on both sides, sit on over 100 Hectares some of the most valuable real estate in the country -- currently occupied only by cars, containers and a Navy that needs to bugger off. At even just 50-100 dwellings per Hectare that's still between 5-10,000 apartments to be sold. Multiply that number by a few million dollars or so, and you're in the ballpark for your project budget.

The revenue from the new development (apartments, marinas, hospitality etc.) should more than pay for the project -- and have the added benefit further helping intensify the central city (a god thing), and bringing down house prices all over the(a great thing!). 

The only major problems I foresee, apart from the bureaucratic haggling about which branch of government owns what, is that government (central or local) would set themselves up as the developer. Which never ends well. And that, inevitably therefore, given the glacial rate of progress of recent projects around the city, it will be the next half-century before anything is ever completed.

Doug Casey's advice on distributing assets

"My hobby, for many years, was sitting down with the rulers of basket-case countries—preferably military dictatorships—to give them a plan that I promised would make them loved by the people, internationally famous, and legitimately a multibillionaire without stealing.

"Basically, I proposed taking 100% of all State assets (land, parastatals, the works) and putting them in a corporation. 70% of the shares would then be distributed pro-rata to every citizen, 10% put in trust for the next generation, 10% taken public internationally, and 10% reserved for those who could make it happen.

"There’s much, much more to say. But it would get the government out of the economy, and liberate dead capital. By giving the people what they theoretically own, it would be very hard to steal the shares back. I had some wonderful adventures pitching the deal in a dozen countries.

"How does that relate to Argentina? It’s the only way to solve the problem of what to do with the Vaca Muerta oil deposits and Aerolineas. Barring a distribution of shares to the citizens, the assets will just be stolen when the next leftwing government is elected [anyway]. And used as a piggybank for the political caste."

~ Doug Casey from his post 'Doug Casey on How Milei is Flirting with Failure in Argentina'

Javier Miliei's victory in congressional elections means his free-market reform agenda can continue, says guest poster Marcos Falcone, and even accelerate ...

A Resounding Win for Milei’s Reform Agenda in Argentina

by Marcos Falcone
Argentine President Javier Milei won a clear victory on Sunday (October 26) over the opposition in the midterm elections, ensuring that his ambitious reform agenda will continue. With almost 99 percent of votes counted, Milei’s coalition, La Libertad Avanza (LLA), obtained 40.7 percent of the national vote, whereas the Peronists, who competed under the name of Fuerza Patria, received 31.7 percent. LLA carried 15 of 24 provinces.

Milei’s victory is significant for two reasons. First, he won by a large margin. Though most polls favored LLA, some still favored the Peronists. Additionally, virtually all polls indicated that Milei would lose the province of Buenos Aires, Peronism’s stronghold, which he ultimately won by a margin of half a percentage point. In fact, the province of Buenos Aires had been a source of trouble for Milei in September, when his coalition lost a state election 47 percent to 34 percent against the Peronists. This triggered a wave of pessimism in the markets, as well as a run against the peso, which should subside for now.

Second, Milei’s victory will enable him to withstand opposition pressure in Congress and, particularly, to uphold his vetoes of bills that threaten budget stability or of any bills that go against his reform agenda. The LLA coalition (which includes his ally PRO, the party of former President Mauricio Macri) is set to obtain107 seats in the House, or about 42 percent of all seats. This is a much higher figure than the 86 seats (or 34 percent) that the government had set as a goal. Under Argentine law, vetoes can be overridden by Congress only with a majority of over two-thirds. At least until the next election in two years, the opposition will not be able to reach such a figure. In practice, the Peronists’ power has been significantly reduced.

Last night’s results, while not giving Milei a majority in Congress, will put his party and allies much closer to one. Besides being only 20 votes short of a majority in the House, Milei and his allies will now have 24 senators and thus control one-third of the Senate—exactly the same proportion as the Peronists. For Milei, this is unexpectedly good news. But for the Peronists, who held an absolute majority in the Senate from 1985 to 2021 and a near-majority until last night, this is catastrophic news.

Because of yesterday’s results, Milei will be in a stronger position to negotiate with Congress in implementing tax and labour reform, which he announced two weeks before the election. Although the opposition has recently tried to overturn some of his vetoes, there are still a few precedents of collaboration between the Milei government and non-Milei factions. Ley Bases, an omnibus bill named after classical liberal Juan Bautista Alberdi’s most famous book and passed in 2024, is one of them. The government has recently signaled it wants to further deregulate the economy through a second version of Ley Bases. Political compromise by some segments of the opposition is more probable today than before yesterday’s election, given the strong mandate Milei received. This is the case, for example, of the centrist Provincias Unidas, a party that obtained 7 percent of the vote on Sunday.

Finally, Sunday’s results also give Milei a chance to advance a broader reform agenda that includes dollarisation, trade liberalisation, the end of remaining capital controls, and the privatisation of state-owned enterprises, among other measures. Those pro-growth reforms will only strengthen Milei’s now improved position to be reelected in 2027 and further solidify his market revolution.

* * * * 

Marcos Falcone is a policy analyst focusing on Latin America at the Cato Institute’s Center for Global Liberty and Prosperity. His post first appeared at the Cato Institute blog.

"If TV3 is worth only $1, what is TVNZ worth."

"'Sky TV is buying Discovery NZ Ltd, whose business centres on free-to-air television channel Three, for $1 in a debt-free deal.' ...

"That begs two questions:

"If TV3 is worth only $1, what is TVNZ worth.

"[And] why is that business still publicly owned?"

~ Ele Ludemann from her post 'What’s TVNZ worth?'

"Sub-soil privatisation should eclipse ‘climate change’ as the number one policy initiative of the 21st century"

“'The case of Guillermo Yeatts (1937-2018) for subsoil privatisation should eclipse ‘climate change’ as the number one policy initiative of the 21st century. This friend of private property, free markets, the rule of law, and civil society, a successful entrepreneur in his own right, a thinker and doer, has set up an excellent opportunity for a new political era in his beloved Argentina.'

Here are some quotations from Yeatts’ book Subsurface Wealth...

“'The history of oil production in Argentina has been characterised by a continuing tug-of-war between the state as owner of the subsurface and private producers in the pursuit of profitable production of the resource. ... The effectively monopolistic position of the federal oil corporation displaced the private sector ... '

"'[P]ublic ownership of the subsurface has been the foundation of a model of forced redistribution of rent in the oil industry. [Government] institutions are the royalties system, public oil production, and the establishment of reserves, quotas, regulations, registries, permits, etc. They have also caused stagnation in the industry and relegated the country’s oil resources to oblivion.'

“'Privatisation … is the institutional change required to reduce risk and allow internalisation of externalities through private, voluntary, and mutually beneficial agreements. Privatisation of the subsurface will ... encourage innovation among surface owners and oil prospectors. ...'

"'This change is about unobstructing minds and freeing them from restrictions. It appeals to the initiative of thousands of surface owners who will discover new business opportunities and new means to obtain profits.'”

~ Robert Bradley Jr. from his post on 'Argentinian Reform: Subsoil Privatization (Javier Milei, meet Guillermo Yeatts)'

PS: It goes for the US too. (See post Transferring Public Lands to Productive Private Ownership Will Unleash America's Abundant Natural Resources) And it would go just the same for us, with our islands' abundant resources. 

"The National Party's Monty Python health (non) reform is a comedy. In order to cut layers of management, new layers are being introduced."

"The National Party's Monty Python health (non) reform is a comedy. In order to cut layers of management, new layers are being introduced. ...
    "First, old man Levy ... has been brought back to be the super-duper CEO boss of existing Health NZ CEO boss ... Four new 'Deputy CEOs' have just been appointed below [that] to manage each of four regions NZ has been divvied into. ... The funniest part of National's Health Minister Reti's 'plan' to get health back on track is that [not one] is a doctor. ...
    "What's most amusing is how Minister Reti is trying to portray these moves as a profound reform in which more power is being returned to regions. Bollocks. Both National & Labour supported abolishing the 20 District Health Boards that existed in 2020 to 'centralise' health-care. The only difference is National argues the system should not be quite as centralised as Labour wants. Big Deal.
    "The thrust of the reforms both parties are pushing is to keep our existing single public payer-single public provider system intact (bar a limited role for private provision). Whether one decides to have it administered by 20, 4 or one Board wont change service provision quality. ...
    "Luxon and Reti better get their head around the idea of centralised payment yet decentralised (private) provision fast, or our system will fully implode. The current reforms, based around calling everyone a super CEO, a CEO or a Deputy CEO, titles which are dishonest in the public sector since its a private sector title, will go nowhere."

~ Robert MacCulloch from his post 'More Layers of Management Kick in under National as the Frontline of NZ's Health System is wiped out - Not one Doctor is Appointed to Lead a Region'

"Ownership provides clear incentives for people to care for their resources. "

"One of my most memorable lessons about incentives came during college. My university, Berry College, purchased dozens of bikes to distribute throughout campus. The red-painted 'Berry Bikes' were free to use, intended for students to ride easily between buildings to and from class.
    "The programme famously flopped. Shortly after it launched, the student newspaper reported that 'chains have been broken, tires punctured, handlebars bent, and seats torn.' Appeals to 'treat the bikes as if they were your own property' were ignored. Two months in, the project was abandoned.
    "Dozens of universities launched similar bike-sharing projects around that time, all with the same result. Two-thirds of Northern Arizona University’s free 'yellow bikes' were stolen or vandalised during the project’s first semester. Purdue’s 'Gold Bike' programme lasted less than a month. At Florida’s Eckerd College, $25,000 worth of bikes disappeared. Students devised a clever way to use the few that remained—by taking the seats with them to class to ensure the bike would still be there later.
    "Several cities tried free bike programmes, too.In Portland, Oregon, community activists released 1,000 yellow bikes on city streets. Almost all were stolen or vandalised within a few months. Tampa’s 'Orangecycles' programme ended just weeks after it began. Another programme in Princeton, New Jersey, failed so badly that the local paper reported finding a free bike was 'kind of like seeing Elvis.'
    "The lesson is one that applies as much to free bikes as does to the conservation issues on which the Property and Environment Research Center (PERC) works: Ownership provides clear incentives for people to care for their resources. But when assets are freely available for anyone to use—or abuse—without consequence, those incentives disappear."

~ Shawn Regan from his introduction to a special issue of PERC Reports demonstrating the importance of incentives across a wide range of issues from rangeland health to water conservation.

Foreshore and Seabed issues aren't going away

So they're doing it again.

Anyone — anyone! — has the moral right to assert their ownership of something — and, under a common law system, they have the ability to go to court to try to prove that assertion. To make their claim. (Or try to.)

Common law recognises that not all legitimate claims to land or water use or ownership come as grants from a fictional entity called "the crown." Instead, it recognises the imperfection of that system, and allows claims to be made on occupation, on long use, on recognised practices.

Our common-law system however has been so buried by statute law that it's now hard to find it. And in recent years successive governments of both hues have been desperate to avoid anyone — anyone! — making any sort of common-law based claim of ownership.

That seems to go double for iwi.

The kerfuffle over foreshore and seabed began when Helen Clark rejected the right to Ngati Apa to go to court to try to assert its right to part of the Marlborough foreshore and seabed based on long use and occupation. She decided instead to nationalise it, trumping both court and claim. Ironically now, she sent out John Tamihere to sell the poisonous solution to unwilling Māori buyers.

Bear in mind Ngati Apa were simply arguing for the right to appear in court to try to make a claim. (As they and others of every hue were fully entitled to.) But that was enough for Clark.

The rights rort continued with the John Key Government's further politicisation of the foreshore and seabed, coming up with a bastardised replacement of the Clark Government's Foreshore and Seabed Act that tried to square an illegitimate circle.

Didn't work, said the Court of Appeal last year. Property rights remain legitimate even in the absence of government recognition, they suggested. And iwi, they agreed, are entitled the chance to claim legitimate rights in court (even if National's replacement Act bars full recognition).* And so the Luxon Government is now all a-scramble trying to keep the illegitimate cork in the bottle, acting to legislate away the court's decision.

It's not a good legal look.

Ironically (ironies abound here) the politician promoting the politically-expedient pre-emption, Paul Goldsmith, is a historian by profession. I can't help wondering how different New Zealand's history may have been if principled common law had won out over political expediency over the last one-hundred and eighty-five years.

We may be a different, and better. place for it.

* * * * 

* No Right Turn summarises the court decision, and National's (over) reaction: 

"The decision ... basically reinterpreted section 58 of National's Marine and Coastal Area (Takutai Moana) Act to make it consistent with its purpose clause and te Tiriti o Waitangi by allowing "shared exclusivity" according to tikanga. The upshot is that it would become significantly easier for iwi and hapū to gain customary marine title over their foresore and seabed - a fact confirmed in subsequent court decisions. National doesn't want that to happen - in fact, they don't want Māori to be able to gain customary title at all, despite what they promised Te Pāti Māori when they passed the law in 2011 - and so they plan to legislate it away (which they disguise as "restoring the intent of Parliament" - which is effectively an admission that they dealt in bad faith with their coalition partner in 2011). Of course, they're pitching this as being about beach access, like they always have, even though that is not and never was under threat. But they're quite open in the Herald about what its really about: protecting the aquaculture industry. So Māori rights are going to be sacrificed to protect National's donors and cronies. Which sounds just a little corrupt."

It does a bit, doesn't it.

As I've said before, when the Foreshore & Seabed Act was repealed, it should have just been left where it was at before.

And where it was at before was with Maori needing to prove to the courts that they possessed a common law property right in their portion of NZ’s foreshore & seabed. And if they could prove such a right to a legal standard of proof, then why on earth should anyone object?

What could possibly be wrong with recognising the right of people to claim the property in which they have a right? Everyone, including divers, miners, aquaculture owners, and iwi.

What could possibly be wrong with the protection of property in which people can prove that right, which is all that a repeal of the Foreshore and Seabed Act could have done.

And that’s all there really is to it. See how uncomplicated it really is? Or could still be.

#ThreeWaters: "The fear of privatisation is pathetic, weak and disappointing." #Luxon

"If it were up to me I would take water off of local government, I'd vest it in companies, owned directly by ratepayers, required to make a profit and transition income away from rates, towards user fees (even if it is a flat fee). The bogeyman of privatisation, so carefully cultivated in the 1990s, and spread through the education system and much of the media is so stultifying that even ACT is quiet on it, but I think water should be privatised by handing it to property owners....
    " BUT... National is terrified of the 'p' word. 'The public ownership of water is not up for debate [says National]. Councils will not be able to propose water service models that involve privatisation [says National].'... Even Rob Muldoon once considered selling minority shareholdings in Air New Zealand. This is a pathetic surrender to left-wing scaremongering....
     "The fear of privatisation is pathetic, weak and disappointing, when there should be no reason to not argue for the right of local authorities to choose privatisation if they wish."

~ Liberty Scott, from his post 'Is National's proposed water reform enough?'

 

State Investing, Not ESG, Is the Problem

"[What's the problem with] the left wing policy fad/clever corporate power grab once known as 'corporate responsibility' and now known — for the moment, at least — as environmental, social and governance (ESG)? ...
    "[T]he problem isn’t so much that a company takes ideological considerations into account in its business practices so much as that governments — such as state-run pension funds — are imposing ideological agendas on businesses via this financial control. ...
    "[And] government has no business forcing an ideology ... on anyone.
    "Let’s consider how this applies to ESG....
    "[W]hen state pension plans ... start making or 'encouraging' companies to change how they operate based on ideological issues (such as causing oil companies to get behind green anti-fossil fuel initiatives), this amounts to the state adding the further injury of lower profitability for such companies to the original one of what amounts to nationalisation by stealth.
    "These are both bad, but they are not the essence of what is wrong with ESG, which is a further wrong than state ownership and mismanagement.
    "State interference in ideology is the real problem with ESG. A truly free market would allow investors to make clear-eyed decisions about where to place their money and whether they want to earn higher returns or support political causes with their money.
    "But when the state sets up a retirement fund with the supposed purpose of reducing taxpayer costs of a pension plan by high returns, it should not then use that money to support causes the retirees may or may not outright oppose, and finance the shortfall by taxes on others (wrong to begin with!) whose opinions also aren’t being consulted.
    "Of course, any investment strategy has to have an implicit basis, so there is no way for a state to run a pension plan without running afoul of separation of ideology and state.
    "The proper response by lovers of liberty is not ... merely object to the particular ideas that underly some state investment strategies, but to work towards the real solution, namely to privatise the investment sector.
    "This won’t eliminate ideologically-driven companies from the marketplace (although a free market would cull unprofitable ones), but it will end the gross abuse of government officials improperly forcing their political beliefs into corporate boardrooms throughout the economy all at once, as we see them doing today."

~ Gus Van Horn from his op-ed 'State Investing, Not ESG, Is the Problem'

"As if it were sufficient for a government to 'fully finance' something on a stack of paper called 'budget' for the stuff in question to be produced in the required volume"

Those who still believe that government ownership of things like water and supermarkets would help produce more goods and services "might learn something from a report in today’s Wall Street Journal," says Pierre Lemieux at Econ Lib. "It explains the Russian government’s problems in boosting production of military supplies for the war in Ukraine," even when (not to say especially when) the Russian government owns and controls everything in the supply chain.

"A 2021 report from the Swedish Defence Research Agency describes the industry as 'top-down controlled and primarily government funded'.” In other words, the wet dream of every nationalising politician and plunderer around and about our Parliament.

And yet, in this central planner's paradise, the chairman of the defense committee in Russia’s Duma has just had to send "a request to the country’s prosecutor general to investigate why the Defense Department couldn’t properly outfit the mobilised troops given it was fully financed to do so, according to state media."

It's similar to something the Ardern Government has been gradually discovering, in everything from building houses to centralising health and water to fixing mental health to remedying child poverty: that spending alone isn't enough. That including something in a budget doesn't just make it happen. That even in a full centralised production system, it takes more than issuing orders and throwing cash around to make something happen.

As if it were sufficient for a government to 'fully finance' something on a stack of paper called 'budget' for the stuff in question to be produced in the required volume and at an acceptable quality! The difficulty of a government to milk its subjects is of course as true in civilian as in military matters.

And it's not just the corruption problem. This is not unique to Russia. Nor is it due to war. Without the price signals and incentives of private ownership in a relatively unhampered market, those productions decisions just can't be properly planned -- and so the 'production possibility frontier' (what an economic system can ultimately produce) necessarily shrinks.

"So what's actually wrong with private companies providing water infrastructure and services?"

"Even the Government's own report acknowledges that
it is PRIVATE water companies that perform well."

"What virtually NO-one in the media has asked ... is: why the fear of privatising water? ...
    "It is thanks to muddled-headed Marxists like [Pennie Bright and] Eugenie Sage that water remained the most unreformed infrastructure sector [in the 1990s], leaving it in the idealised world of 'local democracy' ... largely staying away from people paying for what they use, but rather taxing everyone so the biggest users of water (typically businesses) get subsidised by the smallest users (typically people living on their own). That's socialism for you.
    "Yet what does privatisation of water look like? DIA's own report ... has a handy chart [comparing] the relative performance of ten [privately-owned] English water companies, with government-owned water companies in Northern Ireland and Scotland, and New Zealand council-owned water providers.
    "All of the private water companies outperform the others.... In other words, not only are private water companies in England performing better than the New Zealand council owned examples, but they have been outperforming Scottish Water - which has been the pin-up case study for the Ardern Government....
    "So what's actually wrong with private companies providing water infrastructure and services?
    "Why wont any Opposition MPs say there are benefits ... ?"

~ Liberty Scott, from his post 'The horrors of water privatisation are largely imaginary hysterics in the heads of leftwing politicians'

"Governments ought to run stuff!"

"What explains the cognitive disconnection in those who say both 'Governments ought to run stuff!' and 'Oil companies are evil!' ? 

    "In the energy world, governments are by far the largest operators." *

~ Stephen Hicks, from his post 'The Biggest Oil Companies in the World'

* Note that the four largest by far are state-owned. Then, after the fourth and a drop of about $100 billion in revenue, comes Exxon Mobil corporation, the largest privately owned corporation.

More than 1 million refugees have already fled Ukraine., and that number could easily double. Fortunately, says  Thibault Serlet in this guest post, there’s a concept called refugee cities that may be able to help these people help themselves -- help them, he explains, by seeing them as more than just mouths to feed. Can these cities help fleeing refugees? Yes, he says, if they are done right...

Image Credit: UN Women Europe and Central Asia - Flickr | CC BY-NC 2.0

Can Special Economic Zones Help Ukrainian Refugees?

by Thibault Serlet

More than 1 million refugees have already fled Ukraine. Experts warn that number could double if the conflict continues to escalate. Fortunately, there’s a concept called refugee cities that may be able to help those fleeing the conflict.

The idea goes something like this: first, create a Special Economic Zone (SEZ) near a refugee camp. The SEZ will have incentives to facilitate doing business—such as tax incentives, less-restrictive labour laws, exemption from currency controls, and such. The goal would be to incentivise businesses to hire refugees and generate economic growth by enhancing economic freedoms.

The most well-known advocate of refugee cities is Dr. Michael Castle Miller, a well respected SEZ legal consultant who has contributed towards the creation of many of the best known SEZ frameworks in the world. He is the director of the Refugee Cities foundation dedicated to promoting the concept.

International support for refugee cities is growing. The World Bank has created a $2 billion USD fund to “support refugee haven countries.” A new European think tank called Solidarity Cities is also advocating for individual cities to step up and offer incentives to businesses who hire refugees.

There are a number of high profile success stories around the world, such as the Kigali Free Zone in Rwanda or Shenzhen in China, where SEZs have been used to promote economic freedom and have achieved incredible results.

Having said that, it’s important to caution that more government support might increase attempts at central planning, destroying the core principles of economic freedom required for a project like this to be successful. The third of SEZs that are not state funded are already doing great. According to an International Labour Organization and World Bank study from 2008, more than half of the world’s manufactured goods are produced in SEZs. That same study found that SEZs that are privately managed have lower vacancy rates, are less corrupt, and more efficient.

As one example, the government of Jordan has already created SEZs to create jobs for Syrian refugees. The programme has received significant support from the international community, with development finance institutions contributing more than $1.7 billion USD. The Jordanian government announced in 2016 that it hoped that its SEZs would create 200,000 jobs for refugees by 2021; however as of 2022 only 80,000 jobs have materialised. This is still 80, 000 more than would have otherwise been created.

Critics however argue that the infrastructure in the refugee zones is of generally poor quality, the incentives do not go far enough, and that without adequate job training programmes the zones can only act as low-wage labour camps. One critic explained that:

Even when opportunities have been advertised through job fairs few Syrians have taken up roles. Part of the problem is that the jobs available in these industrial parks are often in the garment sector or similar areas, low-skilled, low-paid jobs that commonly employ women. Many Syrians don't want these jobs: they'd rather take work in the informal sector, where pay and conditions are better.

The problem seems less to do with the concept, than with the general level and type of capital investment in Jordan itself -- and the 'institutional' reasons that this is so limited.

Ethiopia is also considering a similar programme, although it has yet to formally take off.

Refugee Cities Can Help Ukrainians… If They Are Done Right

With better institutional support -- more secure property rights, sounder contract law etc. -- European countries are well placed to consider reviving and revamping the idea of refugee cities to help Ukrainians fleeing the Russian invasion of their country -- to help them by freeing them to help themselves.

Refugee SEZs also have a major geopolitical advantage: neutral countries that want to avoid taking sides, like Switzerland, can safely create them without fear of compromising their neutrality.

To avoid repeating the mistakes Jordan made when attempting to create SEZs for Syrian refugees, they will need to ensure that:

• refugee Cities / SEZs have adequate infrastructure
• employers enjoy strong incentives (tax breaks, labour law exemptions, etc…)
• there is adequate coordination with global development finance organisations (World Bank, UNHCR, and ERDC)
• the focus is on creative private-sector jobs, not government-driven growth
• there is a path for refugees to return to Ukraine when the war ends

The problem with past attempts at creating refugee SEZs or cities is that they did not prioritise economic freedom. They will succeed if refugee cities enshrine liberty, rather than infringe on the freedoms of investors and refugees. More money from the government will likely be counterproductive, yielding far worse outcomes for the people that these projects supposedly try to help.

In order to both improve the economies of their home countries and advance freedom -- and to give the best long-term support to fleeing refugees -- SEZs only need to do three things:

1. Be entirely privately funded and managed
2. Be located on land that is purchased on the market rather than seized through eminent domain or privatisation of informally owned land
3. Be allowed to fail if market conditions do not favor the development of certain zones

Zones that follow these three rules will either succeed or fail, depending on whether or not market demand exists for what entrepreneurs therein have to offer. They will not become bloated state-sponsored leviathans that continue to survive year after year despite high vacancy rates. Only then, when zones are truly subject to market forces, will they begin to do what they are supposed to do, and quietly advance freedom.

Hopefully, there will soon be peace in Ukraine. But if the war continues, then hopefully refugee cities along these lines can help mitigate some of the human suffering.

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Thibault Serlet is the Director of Research at the Adrianople Group, a business intelligence firm that focuses on Special Economic Zones and master planned cities. He is also the architect of Open Zone Map, the world's largest SEZ dataset. He advises for Pronomos, a VC fund that invests in new city projects and co-founded the Startup Societies Network, a charter cities think tank. He frequently writes about SEZs, economic history, and the open data movement.

A version of this post previously appeared at the Foundation for Economic Education.

People are losing their minds #ThreeWaters

 

People are losing their minds -- and it's not just about the virus.

According to half the internet, several advocacy groups who should know better, and much of parliament (who never will), this morning we witnessed the central government nationalising local government's water assets.

"The great water theft is on," screams Davis Farrar's hyperbolic headline. National's Chris Luxon, spokesman on the local branch of government, hurls out a claim that transferring water assets from local to central is "tantamount to state-sanctioned theft of assets.” "Make no mistake," says the Taxpayers Union, "this is an asset grab."

An asset grab!

State-sanctioned theft!

Nationalisation!

There was a time when words meant something.

Since the National party is already a lost cause, I'll focus on the words of that last organisation, one representing (so they say) the interests of all those making forced contributions to all branches of government -- so that you might think they may realise the difference between what happened to (say) the British motor industry in the seventies, and what's happening now.

Because what happened then was nationalisation, i.e., state theft of privately-owned assets. And what's happening now is simply this: moving the management and water assets out of the hands of the country's 67 councils, to four large water entities that will be effectively controlled by central government and iwi. 

So it's not a state-sanctioned theft. And what difference does it really make if it's central government rather than local government who's making an expensive balls-up of things?

Oh, but it will lead to "higher water costs" and "inefficiencies" says the Taxpayers Union at its new protest website. Yet you could hardly say that water costs under current council management are in any meaningful way "constrained," and anyone under Watercare's care over the most recent period of undersupply could hardly vouch for them being efficient.

But it will lead to "unnecessary bureaucracy," says the Taxpayers Union. All bureaucracy is unnecessary; its' not clear to me that 67 council water entities is any less (or more) unnecessary than four? Hard to see this as a reason to be so opposed?

But councils will "lose their rights of control," says the Taxpayers Union, who argue that "decisions around selling assets, receiving dividends, and setting charges will [now] be made by unelected entities." So what? It's not clear that those who have actual rights, i.e., you and I (councils qua councils don't have rights), are any better served whether decisions about these things are put beyond us at local govt level, or beyond us at central govt level. In either case, we're not part of the bureaucratic management involved. So how is this new plan worth opposing so savagely?

It's not really clear from their protest website why they're so incensed enough to start a protest campaign -- one involving a dedicated website, a petition, TV commercials, for all of which they're asking for crowd-funded. It's very far from the Bolsheviks storming the Winter Palace. And like I say above, it's not even anything like the nationalisations that crippled post-war Britain.

Indeed, it's not nationalisation at all -- and in the way the minister is spinning off these 67 creaking and partially shambolic entities into just four, and partially transferring of control to various iwi, it could in the future lead to something more like the sort of privatisation that happened to water in Britain in the late eighties. And since I'm very much in favour of that sort of thing -- and have advocated before for iwi to have greater property rights recognised as a pathway to that sort of thing -- I find it hard, myself,  to understand why so many seem so opposed.

Perhaps they're losing their minds?

"Muh roads!"

A young Jeremy Clarkson interviews a few even younger Kalgoorlie, West Australia, locals about the time that, "without permission, the townsfolk built themselves a bypass."

[Video from the BBC, hat tip ABC Goldfields-Esperance and UK Libertarian Discussion Group]

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MoW 2.0?

 

There is a lot of work to do post-earthquake, and political commentator and lifelong socialist Chris Trotter wants to get the red flag flying again by suggesting (by all accounts seriously) that the organisation famed for long lunchbreaks, sizeable cost overruns, and a lot of leaning on shovels be rebuilt, resurrected and let loose again on the unsuspecting taxpayer to do all (or at least a sizeable chunk) of that work.

Mr Trotter has considerable expertise in the texts of Marx and Lenin and in the blowing around of windy rhetoric – but very little else, it must be said, and certainly not in contracting of the sort he hopes a new state-run Ministry of Works would do. Christchurch engineer Mark Tammett however has considerable expertise in contracting, so is in the ideal position to set him straight about his dream: There are several holes, he begins, listing five before concluding:

You'd think that after the lessons of the 20th century, such as the fall of Communism, the failure of Socialism anywhere in the world to deliver anything but poverty; and to a lesser degree what's happened post earthquake with Christchurch -  that people would have learnt that government control of the economy never works, and never will. But judging may many comments on his thread, who enthusiastically support Trotter's suggestion, it looks like that lesson may need to be learned again in the 21st century.

Read his post here: Ministry of Works 2.0: Have the lessons of the past been forgotten? – Mark Tammett, PROCON

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100 celebrities are wrong. Save the elephants ... by owning them

 

100 “leading” conservationists, politicians, and celebrities just addressed an open letter to the UK government begging for a ban on ivory trade. If they wanted a better way to produce an Al Capone of the ivory trade, argues Bill Wirtz in this guest post, they couldn’t do better. [Your editor apologises in advance for the frequent use of the word ‘incentivise.’ – Ed.]

100 leading conservationists, politicians, and celebrities addressed an open letter to Theresa May’s Government asking for a ban on ivory trade. They want the UK to become a “global leader” on the prohibition of wildlife trade and help combat African poaching groups. Since we know how beneficial prohibition is for criminal gangs, the only group rejoicing over this leap forward will be the poachers themselves.

The alternative lies in the private sector.

Were I presented with the opportunity to become the Al Capone of the ivory trade, however, never would the temptation be as strong as now. Governments are immensely successful at making products under prohibition enormously valuable. As Milton Friedman said regarding drug prohibition:

If you look at the drug war from a purely economic point of view, the role of the government is to protect the drug cartel. That's literally true.

Every time there is a major call for an outright ban on ivory products, prices skyrocket, which ends up incentivising poachers to shoot more elephants. This has created a sort of cat-and-mouse game in which the volatility of ivory pricing is interdependent with outcries by NGOs. When the Chinese ivory prices tripled in 2015 due solely to increased calls for bans, wildlife NGOs said that the market was out of control and that "there is need for immediate action." There was no change in legislation, and yet when the public call for bans subsided and Chinese prices fell back to their original level five months later, the same NGOs claimed their work to be going in the right direction!

Conservation from Private Property

If we want to talk about the preservation of endangered species such as elephants, then let's not engage polemic assertions destined to sell a newspaper or get donations shipped in. Some African countries have taken action regarding poaching: the privatisation of elephants is provably effective.

Let's take the example of trophy hunting.

Unpopular it may be among the twitterati, but this hunting sport has gotten increasingly popular over the years. As National Geographic reported, these hunters imported more than 1.26 million trophies to the United States between the years 2005 and 2014, which is an average of 126,000 trophy imports a year, or 345 every single day.

Trophy hunting, however, is not the reason these species are endangered in the first place. They suffer considerably more from loss of habitat and poaching. In the case of loss of habitat, the endangered animals are driven out due to agricultural expansion for the harvesting of timber, wood, or fuel.

The local population can be incentivised economically to protect these animals. In Namibia, the revenue from trophy hunting is the main revenue source for the funding of wildlife conservancies, and in South Africa, trophy hunting reportedly incentivised locals to give rhinoceros land to live on that protected them from poachers (Conservation Magazine, 2015). This evolution has led the number of existing rhinoceros to jump from 100 in 1916 to over 18,000 today (World Wildlife Fund, 2016). According to South Africa’s Department of Environmental Affairs, the total revenue from trophy hunting was close to R807 million (59.3 USD) in 2012 and just over R1 billion (73.5 USD) in 2013.

Elephants are victims of the tragedy of the commons: poachers maximising profits from the commons results in them shooting as many animals as possible before they’re all gone. The best protective measure in response is private property rights through the rule of law. If elephants possess a certain utility, notably harvesting ivory, then we should prefer they were owned privately, since their owners would be incentivised to protect them.

No ban on the international trade of a good could ever do the same.

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Bill Wirtz studies French Law at the University of Lorraine in Nancy, France.
He blogs at Wirtz Bill, where this post first appeared (and subsequently at FEE.)

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Cronyism in Niue and National

 

I may be mistaken, but I haven’t seen anyone so far ask the obvious question about the management contract allegedly gifted by the McCully-appointed Niue Tourism Property Trust to Earl Hagaman’s Scenic Hotel Group just after Hagaman had made a substantial donation to the National Party.

That very obvious question is this: why is the NZ Government (or a NZ-government appointed board) in any position to granting management contracts for hotels in Niue?  Indeed, why is the government in the position of granting management contracts anywhere, ever, at all.

Yes, yes, the obious answer is that the NZ Government has been putting money into Niue resorts in an effort to “boost tourism.” And since the hotel[s] in question are owned by the Government of Niue in order to “ensure oversight” the contracts are supposedly let at some minimal kind of arm’s length.

But still, to have the government’s contracts let by a group of government-appointed cronies simply invites either cronyism, or the whiff of it.

If it’s not corrupt, the process certainly invites it.

If it is corrupt, it should be receiving all the oxygen of the present publicity.

And given that every similar letting of government contracts invites the same kind of cronyistic corruption, to me it invites the even more obvious question of all: why should any government be in the position of letting contracts at all. The same whiff of cronyism arises with every so-called public-private partnership—just once reason there should be none.

Put simply, the government not be in the business of investing either in hotels – either here or in Niue – or in the tourism business, or in the job of letting contracts therein. That is properly the job of tourist operators themselves, who risk their own money not the taxpayers.

To paraphrase PJ O’Rourke: when the buying and selling of contracts is at the discretion of politicians, the first ones to be bought and sold are politicians.

And that means politicians of evry hue.

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