Letters to the Prince

The Dark Arts of Power

The right wing portion of the blogosphere is aghast and agog over the appointment of Michael Cullen, destroyer-of-other-people's-wealth extraordinaire, to the board of New Zealand Post. Adam Smith canvasses the spectrum of reactions here.

There are two possible scenarios to explain this deed--both of which turn around the person and nature of one John Key, Prime Minister of New Zealand.

Scenario one argues that John Key is the most apolitical Prime Minister this country has ever seen. He is running the country like it were a business, with a focused, objective, and detached perspective that measures results and results only. Consequently, the fact that former Deputy Prime Minister Cullen, former political opponent, has called Key a "rich prick" and slandered him in the most extreme derisory language in the past is unimportant. Getting the job done is what is critical. According to this scenario, Key will not be interested in what Cullen thinks of Key or of the new government. He will only be considering whether Cullen could serve effectively as a director of NZ Post (a government owned business.)

There is much to support this view of Key. Having being one of the world's best currency traders means that he had to learn to face up to the markets with brutal realism, dealing with the world as it was, not the world of preference or sentiment. This forces one to be both humble and disciplined. Currency traders who have a view of the world and seek to superimpose it upon their trading, tend to blow up. Traders who put aside their views or relegate them to the back room whilst dealing with what actually faces them day by day, tend to be more successful. In this view, present reality is everything. The past is irrelevant and a distraction.

If John Key is operating in this vein, he will indeed be the most apolitical Prime Minister this country has ever seen-or will ever likely see again. It will also make him the most pragmatic Prime Minister--which of course is a double edged sword.

However, there is another scenario. This represents John Key as the subtle, clever web-weaver, who is thinking three or four steps ahead, and is playing a long, long game. In this scenario, the appointment of Michael Cullen to the board of New Zealand Post is the ultimate payback.

Now before we describe the possible Machiavellian nature of this appointment, we note in passing that there is a body of evidence to suggest that Key plays a very long game. The rapprochement with the Maori party, when there was no electoral reason to do so, is a clear sign that Key is thinking in terms of decades, not the next election. Most acknowledge that this move has probably changed the political landscape in New Zealand for years to come.

But what of the dark arts? Well, NZ Post is in a parlous position. The post is now last century's communication paradigm. Postal volumes are shrinking drastically under competition from e-mail. This is true for postal services globally. It is a dying business, awaiting its coup de grace.

NZ Post, however, has two other businesses which offer some commercial hope. The first is a courier business--which is not dying, since it is not under threat at all from electronic communication. Goods and parcels cannot be sent by e-mail. They have to be delivered--and volumes will continue to rise as commerce increases. Secondly, NZ Post owns a small populist bank--Kiwibank.

The dark arts scenario runs like this: NZ will continue to run far too big a deficit for the next two or three years. Key and his deputy, Treasurer Bill English will use this deficit as a lever to build political and public support for the sale of non-core state assets. This will become a major theme at the next election.

After the election, NZ Post will be split into three operating units. The postal service will be separated to run at a loss, partially funded by the Crown, but with rising postage rates to help minimise the loss, until finally it becomes prohibitively expensive to post anything, and it is wound up.

The courier business (which is a joint venture with DHL) operates in a competitive market. It will be sold off to very willing buyers to reduce the deficit.

Kiwibank will be floated on the New Zealand exchange. It will be floated as a majority New Zealand owned bank, with foreign ownership being restricted. Sold off under a euphoric "buy-New Zealand" campaign, most of Kiwibanks 600,000 customers will become shareholders.

Now picture Dr Cullen (by this time Chairman of NZ Post). His company is hung, drawn and quartered as he watches from the galleries. As Chairman he will have to support the spectacle. He will become an unwilling participant in the sale of state assets, which he patently abhors. He will have to watch as the dirty capitalists make off with the courier business and as his little bank is privatised. But he is unable to oppose the concept of selling it to mums and dads. He has to get out there and promote the sale to the public. Ah, the delicious irony.

Finally, he is left with just a declining moribund postal business, where losses mount by the year. It is eventually shut down as a commercial disaster. So passes Michael Cullen--whose legacy will be failure. Growing old, sitting on the rotting carcass of NZ Post, will be an apt end for the politician who did so much to impoverish New Zealand.

So, which is it? Is Key the ultimate apolitical pragmatist? Or, is he the Machiavellian practitioner of the Dark Arts? Or, both?