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.

2013 New Zealand Budget: View from Behind the IRon Drape

Forgive me not getting excited about a budget that puts more money into the surveillance state, an extra $6.65 million to IRD audit year on year (** see update 1 below); provides for thin capitalisation rules to make it more expensive, thus less likely, for foreign investment doing business here; and a future tenuous government surplus – we’re still accruing debt in the meantime - based only on a tax take increasing at a higher rate than GDP growth.

Core tax revenue is forecast at $62.4 billion, or 27.4 percent of gross domestic product in 2014, rising to $72.8 billion, or 28.3 percent in 2017 as the economy grows. Growth in tax revenue is expected to strongly outpace forecast nominal GDP growth over the forecast horizon, with all tax types picked to rise, especially tax from employees, the Treasury estimates.

I put it to the Minister of Finance that GDP growth is being constrained by the increasing tax take. Imagine a country where the reverse would be true: a lower tax take allowing faster GDP growth, and so higher living standards for all of us. That would be a classical liberal country moving toward the freer society, rather than the road to the planned economy, based on tax slavery, that this budget promises, as with every Bill English budget that has talked up spending constraint, but never spending cuts, and has seen a higher government dollar spend still in each successive budget as the size of state grows under the political party standing for small government.

Mind you, looking at the opposition benches, it could be so much worse from 2014:

“@deloittenztax: What do we think of #NZBudget thin cap tax announcements? bit.ly/13n7JH1” trivial
— David Cunliffe (@DavidCunliffeMP) May 16, 2013

When Labour quite possibly take over the chains to our lives from 2014, yes, doing business in New Zealand won't look like an attractive option for foreign investment, and we'll all be the poorer for it. Plus David ought to be careful tweeting to Deloitte's like that: he's scaring the horses again.

Though in the meantime, only more statism to be seen here, move along please ...

Update 1:

Stop press: the surveillance state grew a whole lot more, by the looks of it, than is admitted in the announced $6.65 million figure …

Vote Revenue has got $54m more funding in 2014 for IR in part to chase debtors and do audits, much more than announced? #nzbudget ^GN
— PwC New Zealand (@PwC_NZ) May 16, 2013

Privacy & Statism: Associated Press US DOJ Intrusion. And Why Is NZ Paying Cost of Administering US Tax Base?

Here’s a maxim the Free West should’ve learned by now:

Every power the state assumes to protect you, will be used against you. This is the way of the state.

Another post documenting the ever swifter trip down the road to our serfdom in the West. This week we find just as the GCSB has been illegally spying on New Zealand citizens, so has the Department of (In)Justice in the US been secretly, and illegally, wiretapping the free press:

The US government reportedly secretly seized telephone records of reporters and offices belonging to Associated Press news agency for a two-month period last year, the agency has said.

The Associated Press on Monday described the action, which targeted its correspondents, as a "massive and unprecedented intrusion" into news-gathering operations.

AP Chief Executive Gary Pruitt, in a letter posted on the agency's website, said the AP was informed last Friday that the Justice Department gathered records for more than 20 phone lines assigned to the agency and its reporters.

"There can be no possible justification for such an over-broad collection of the telephone communications of The Associated Press and its reporters," Pruitt said in the letter, which was addressed to Attorney General Eric Holder.

An AP story on the records seizure said the government would not say why it sought the records.

And this on top of, as I covered in my previous post, underling staffers in the IRS inappropriately targeting conservative groups in the US, including the Tea Party movement, just as in New Zealand IRD have now moved into the political sphere of denying Family First tax exempt status due to its beliefs – no matter how bigoted those beliefs are.

All the while, our ministers have further concluded that some of the costs of New Zealand absurdly administering the US tax base, will now be shifted from the private banks, that is, you and me, customers of private banks, which and whom shouldn’t be responsible for the US tax base either, to the New Zealand taxpayer - that’s you and me again. This in reference to the US government enacted FATCA, which I’ve also written on before, that atrocity of criminal law-making whereby the US - one of only two countries to run a citizenship tax – has turned itself into an uber-surveillance state to hound its citizens no matter where they live in the world in order they cough up tax to operate a country some of them have never lived in, nor will do so, ever. My only comment necessary as I tweeted to the ministers (unanswered, of course).

@deloittenztax @craigfossmp #FATCA Where is principled argument that NZ business & taxpayer not front US IRS tax-base costs? @peterdunnemp
— Mark Hubbard (@MarkHubbard33) May 14, 2013

Regarding FATCA, my next post will be to highlight some sensible Canadians who are fighting this monstrosity of statism, via the Isaac Brock Society.

Privacy and the State: Government Intercept Bill (& Yet More Powers for IRD?) Also, Tax Exempt Status: Week's Theme - IRD and IRS.

Another weekly run-down of the police-states being grown in the West.

This is not specifically a post about the increasing erosion of our privacy and right to be left alone by an out of control surveillance state under this Government’s Intercept Bill – others have written on this well enough:

Vikram Kumar: A Jackboot Intercept Bill;

Paul Brislen: Intercept Bill Takes Cavalier Approach to Privacy.

My concern is the further powers this bill will, I assume, be giving to IRD.

I’ve already written on the breath-taking police state powers IRD wields: A Riposte to Jacinda Ardern’s Privacy Concerns Regarding the MSD. (Powers of IRD).

And I’ve written on the invasion of our privacy by the taxing authorities world-wide through their increasing analysis of Big Data: Privacy – Tax Authorities Can Only Be Mining Social Media for Thought Crimes.

In that latter piece I posed the following question about this proposed new intrusion in our lives from the Fortress of Legislation. In response to this from the Minister:

ICT Minister Amy Adams has just released a statement outlining how the government plans to "modernise" the Telecommunications (Interception Capability) Act 2004

Under the proposed changes, network operators such as phone companies and ISPs "will be obliged [newspeak alert] to engage [newspeak alert] with the Government through the GCSB on network security, where it might affect New Zealand’s national security and economic well-being."

Ms Adams says telecommunications providers are already required to have interception technology in place, to assist police and security agency investigations, under current legislation. The update was designed to make the process easier [newspeak alert].

I asked:

Amy, I don’t want it made easier for the state to share information on individuals, especially our incompetent spooks who've been proven remiss in even knowledge of their own governing legislation. And really, what can’t be justified under ‘economic well-being’? Going after tax evaders, or even those thought to be avoiders? Does this add to the considerable police state powers IRD already have, recourse to New Zealand’s other branches of secret police: GCSB and SIS?

Vikrum’s piece above seems to answer to this concern, with an ‘of course’:

On the application of a surveillance agency (Police, SIS, GCSB, and any government department declared to be a law enforcement agency for the purposes of the TICS Bill) the Minister can require a service operator (or a class of service operators) to provide full interception capability like a network operator. There is a provision for the Minister’s directions to be looked at by a three member review panel but, again, there is unbounded discretion.

When it comes to government believing it essential they have complete access to your life, enough is never enough, and having been brainwashed through the state school system that our liberty must be sacrificed to the bloodied altar of the common good, we're - in the numbers that matter under mobocracy - too stupid to defend ourselves anymore: result: our lives are owned.

And related to the increasing power of the IR’s as the uber-department that governs the country, which profligate politicians and ministers must bow down to and grant their every whim, I initially thought this story out of the US was a bit of a beat up, and it is, but there is an issue in this that reflects a story in New Zealand last week, relevant to every concern I have expressed above: when you hand the power of God to a government department, then everything becomes politicised: just as Family First have had their tax exempt status revoked in New Zealand, so the IRS has been targeting the Tea Party movement in America regarding their tax exempt status in that country. Surely, even the minister can now see that because of this politicalisation, we have to discard the notion of charity, for tax purposes, because it’s too vague: the only acceptable criteria must be if members of whatever group are able to make pecuniary gain from the operations of the group. But that won’t happen, of course. IRD and the state will simply keep assuming those political powers – upon the death of classical liberalism - by which they own your life.

And so to my final link from the MSM this week. Amidst an article wherein another state official now promotes citizen ratting on citizen (as in England, children are being taught to dob in adults to the theocracy of state), we have this further insight to how broad and widely the state now shares information on the individual:

Meanwhile, IRD remains an outlier because it is not allowed to share information. SFO will provide information to IRD, but IRD can't reciprocate.

However, a discussion paper now out could allow changes in that area.

"Our view is, confidentiality and privacy - yes, but not when there is a serious threat to the economy in bribery and corruption. There's a case to lift some of that secrecy."

Which is of course newspeak, Mr McArley, CEO of SFO (Serious Fraud Office), for ‘Our view is, confidentiality and privacy – no.’

These are black times, indeed, for the individual in the West. The state theocracy, fostered in every classroom, inserts itself every day ever more insidiously into The Lives Of Others. That movie, if you follow the link, is perhaps the most important work you have this week, watch it if you’ve not already seen it, for it shows where we are heading, inexorably. The sad thing being we are not forced to that dark place, again, by tanks on the street; we're voting ourselves there because enough of the clueless believe that in the prison cells of state, is the eternal free lunch.