Of Market Signals, Toilet Paper and Electronic Bidets. Power & Asset Sales.

Every policy being spoken up by New Zealand’s Left-centric parties make it necessary to repeat the point of this post over and over.

Leaving aside the fact that economics can never be separated from philosophy and politics - that planned economies can only be imposed on planned lives – the evidence of history, and of today, continues to show that centrally planned economies do not work, cannot work, and with a dreadful price exacted: human hardship.

Statists from both the Left and Right, though in every case regarding the Left, too often view the ‘free market’ as some type of cold, impersonal machine that rides cruelly over individuals, thus must be regulated by the caring hand of government. This could not be further from the truth. The market is, indeed, that most intensely personal thing: it’s you and me. It is as simple, but complex, as the expression of all the needs and desires of every individual in a market community searching for resolution, and the means by which those needs and desires are first matched, then priced and allocated as to the resources available. This wondrous social meeting place, based on the voluntary transaction, not the cold dictates of the machine of state, has increased the standard of living of all those communities that have embraced free markets, as well as bringing those communities the concomitant freedom that free markets exist on: there is no free market without freedom, and no freedom without a free market. It therefore follows, put the oafish fist of the central planner into that complex, living market place, that is, into the lives, hopes, and desires of individuals, at this crucial micro level, and despite it can take one hell of a shellacking, ultimately a market, and with it liberty, plus the community, will be destroyed.

Economist Donald Boudreaux explains the reason for failure behind central planning well:

… I deny that behavioral economics strengthens the case for government regulation.  Indeed, I believe that it weakens that case.  Because the regulators have the same psychological foibles as the regulatees – yet face far less direct feedback on their decisions than do those whom they regulate – turning more decision-making power over to government increases the frequency of human error and amplifies its ill-effects.  Markets keep those errors less numerous and their effects more confined.

Human beings are not laboratory rats to be controlled and conditioned by some elite of their number who, somehow and without explanation, manage to become higher-order creatures simply by working for government and professing deep concern for the welfare of their lab animals.

(Note again from this quotation the impossibility of separating economics from philosophy.) 

Regarding the topical issue of privatisation versus nationalisation and central planning of the power industry in New Zealand, how much more evidence of this do the Cunliffe’s, Shearer’s, Norman’s et al need?

A quick real-world refresher for them:

For an historical example, click through to this link to see the centrally planned poverty and food queues behind that first Iron Curtain before it went down: Poverty, prostitutes, and the long, slow death of the Soviet Union: haunting pictures show desperate struggle to survive in last days of the USSR.

And if still not convinced, to the present day, look at centrally planned Venezuela, where their politicians can’t even organise enough toilet paper:

Venezuelans are used to going without staples like milk, coffee and butter, thanks to the country’s frequent food shortages. But now they’re dealing with a much more urgent crisis: a lack of toilet paper.

Stores have run out, and each new delivery sees a rush on supermarkets. The demand is so great the government has now been forced to order 50 million rolls to appease desperate shoppers. One woman standing in line at a Caracas supermarket that received a fresh delivery told the Associated Press that she had been scouring the capital city’s shops for two weeks. “Even at my age, I’ve never seen this,” another, 70-year-old shopper told Sky News.

Economists blame Venezuela’s shortages partly on price controls, initiated by the late President Hugo Chavez, to make goods affordable to the poorest people in society (in a government store, a kilogram of pasta costs $0.30, writes the BBC). But that has also led to country-wide shortages of staple items, and Venezuela’s “scarcity index” is currently at 21% – meaning that out of 100 basic products, 21 aren’t available in stores, notes the BBC. “State-controlled prices—prices that are set below market-clearing price—always result in shortages,” said Steve Hanke, professor of economics at Johns Hopkins University, told the Associated Press. “The shortage problem will only get worse, as it did over the years in the Soviet Union.”

Say what you like, but as much as our Left politicians hate free markets - and thus an individual's freedom from the arrogant theocracy of themselves - in the market economy, with the feedback loop of market signals, you’ll always have toilet paper. The Left need to take off their ideological blinkers that keep them in this ignorance of emoting about issues rather than thinking on them.

For Labour and the Greens, who have promised if winning the 2014 election to force us all ever quicker into that sewage pit called socialism, starting with renationalising power, and placing it under central planning, please learn the lesson. And if you’re wondering on the link to toilet paper, specifically, well for purposes of hygiene the Hubbard household has wholly converted to electronic bidets – think of warm toilet seats at 4.00am on a wintry morning – and so sadly to employ a dreadful, because its grossness offends me, but necessary metaphor, centrally planned power can only eventually mean brown-outs.

Coming to this blog on Tuesday: State Housing – You’ve Just Got to Be Kidding … in which I introduce to the debate on state housing, the notion of the cork.