Friday, 22 June 2018

Back To the Bad Old Days

Dumb and Dumber

There is nothing more ludicrous than the re-emergence in New Zealand of  what economic historians call Muldoonism.  For our overseas readers, Robert Muldoon was a dominant Prime Minister in New Zealand in the late sixties and seventies.  Muldoon commenced with a self-stated belief in free markets, only to end up with an economy more controlled and regulated than Poland and Hungary, which at that time were Communist states.  

Ironically, it was an incoming Labour government which stripped away Muldoonism's  awful costly failures and re-committed the country to free markets.  Now, however, the present government is acting more and more like Muldoon and actively returning the country to centralist control.  If allowed to continue, this will wreak a terrible price. 

Here is the latest example of economic distortion, waste, and inefficiency championed by our political masters.  As is always the case, it "picks winner" which means that the government now queers the pitch in favour of its specially favoured flavours-of-the-month.  Here is where the high cost of government meddling stamps inefficiency and rising prices upon society.

The bill stopping foreigners from buying houses in NZ has emerged from select  committee study with   significant   amendments.  Associate  Finance  Minister  David Parker   says the  new law will ensure the  market  for homes  is a  “NZ  market  not  an international  one”.  He  contends  Kiwis  should not be outbid by  “wealthier  foreign buyers”.

But the same bill now includes a move to encourage  “foreign direct  investment”  in forestry.   Forestry Minister Shane Jones says the legislation –  by bringing forestry rights into the overseas investment regime – will help promote high-quality foreign investment  which puts more emphasis on genuine benefits for New Zealanders.

So – foreign money  for  NZ homes  is  dirty but  foreign money for  NZ  trees is clean?  Well, not  quite.  Jones  says  for forestry  the foreign money has to be  “high quality” investment.  To some NZers – probably most – a  dollar is a  dollar and the difference  between a  “high  quality”  dollar  and  an  ordinary dollar is hard to spot.  If a mate told them  the difference is obvious, he  would be in danger of  being accused  of  displaying undue  hubris.

But as the ministers see it, the proposed legislation, as it is now written, “rationalises”  forestry  investment.  [Point of Order]
Note the word "rationalises".  By this, the Government means an industry which conforms to its peculiar view of reality.  Only then does it become rationalized.  But what it actually represents is  bias and prejudice on the part of government.  It involves the government in "picking winners" just like Muldoon attempted, to the eventual detriment of all but the owners of Muldoon's "think big" projects.  [Incidentally, minister Shane Jones represents an eerie recrudescence of Muldoon in his bullying, blustering, big-noting, and empty pontificating.  Jones represents "think big" in all the worst ways.]

One of the "winners" enjoying government largesse and favour is telecommunications. 
The opposition MPs also found fault with the arbitrary way exemptions and amendments have been introduced.  They cite the exemptions for telecommunications, gas and electricity lines companies – which often have more than 25% foreign ownership – but not for retirement village developers.
When locally owned, NZ sharemarket listed retirement development companies want to buy land to build retirement service complexes, it must go cap and hand to the State for special permission.  Why?  Because some of the shareholders are furreigners.  But not if you manufacture and supply electricity to the national grid.  Go figure. 

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