Why There Must be No Compulsory Kiwisaver II: Inequality against Men and Maori – Personal Choices and Trade Offs. #Individualism

 

I finally get to use the term inequality for my side of the debate (any debate) for once. In my last post I wrote from an economic point of view on how Labour’s plan for a compulsory Kiwisaver will damage our prosperity. That is, a compulsory Kiwisaver via the then compulsory employer contributions, plus the higher income tax rates required to fund the government contribution, essentially drains (steals) the retained earnings that every small and medium sized employer can otherwise use – if they were left with their own profits - to innovate and grow their own businesses, and transfers it to a parasitic funds management industry trying to pick winners by investing this investment capital with an elite, small band of firms on the NZX. More crony capitalism, less innovation and diversity across the econosphere.

 

But I started that post with something that is unfashionable in the modern politick: political philosophy; namely the simple point that once the state introduces compulsion, the free and prosperous society is lost – there is no middle way on the form a society takes. Here’s the cost of that on individual lives; the below is breaking nothing new, but needs to repeated, often.

 

In research unrelated to Kiwisaver I happened to be looking at the 2010 Mortality and Demographic Data prepared and published by the Ministry of Health. Several things occurred to me upon reading this.

 

Firstly, males generally have a higher mortality rate than females: specifically 1.4 times that of females. Then I realised that when I looked at the main causes of male deaths, various forms of cancer and particularly heart disease, that I am a prime candidate. My father had his first open heart surgery when he was two years younger than I am now: 48 years old. More, I don’t do particularly much to help myself here: I drink way more than I probably should, I love food, plus while walking twice a day and kayaking in the Sounds, don’t really get the exercise I should. But here’s the thing: I’m happy with trade off in my own life of a shorter life, for being able to partake in that which I enjoy: food and drink, etc. Note, partly off topic, partly not, I also insure myself for the consequences (although from a public health point of view, my lifestyle is irrelevant to any debate over the dictates mandated by public health: indeed, I could argue that by dying sooner, quicker, I won’t be such a drag on the public health system, if I end up in that system at all. From a personal point of view, dying quicker will mean not having to find the increasing health insurance premiums generated from the actuarial tables as I progress through the age bands, (or not).)

 

And all this is fine, until I am forced by the state into a Kiwisaver that won’t payout until I’m 65, and possibly older as the goal posts are lengthened. There’s a very good possibility I won’t get to use the sum saved by that age, I’ll be dead, and it will be useless to me – though the SPCA’s gain, and noting further Mrs H, or I, are well catered for on the death of the other. For the purposes of this post, I am far better paid being able to spend this money now, or earlier, at least, than at 65 years old. The state has no right to deny me my shorter term pursuit of happiness, it’s my money, after all, and it’s immoral that it would seek to do so.

 

Now expand this out from me. Maori have a mortality rate 1.8 times higher than non-Maori. It is especially pronounced for male Maori who have a 1.9 times higher mortality rate over non-Maori males up to the age of 65. So, Maori males, whose main causes of death are heart disease and diabetes related afflictions, will be disadvantaged over non-Maori under a compulsory Kiwisaver, assuming they, like me, choose to not 'fix' their lifestyles either and thus the trade off of an earlier death. A compulsory Kiwisaver in this respect is a cause of inequality, surely? (He says, slightly mischievously.)

 

But this is how stupid we have become. I can guarantee, indeed, think I have already heard mooted the arguments from some groups who are mired in the slavery of identity politics that this means Maori should simply have a lower payout age. A different law is required, that is, to non-Maori. And so it goes on, as ever a proliferation of law upon law upon law to try and fix the unintended consequences of previous bad law, in this case compulsory Kiwisaver.

 

I end by simply pointing out the option the free society would take, the civilised society, is to leave such retirement decisions to the individuals who will me living their retirements: me, in other words. Do not force me into a savings plan that will be useless to me. I will plan my retirement and take the benefits of that and the consequences. I’m more than happy to do so. And don’t allow law makers, or the Labour Party, to be so patronising as to think Maori males aren’t just as well equipped and happy to do so, every individual one of them, indeed, statistics indicate it will be in their best interests. The only moral basis of law in a free society is according to this individualistic ethic, not a collectivist one, which is always the coercive boot of state in one's rump, which I'll grow to any width I like, thanks, it's only got to fit into my coffin and I'm paying the funeral costs.

 

 

Parker’s Plan is Anti-Innovation & Prosperity: Why There Must Be No Compulsory Kiwisaver.

A compulsory Kiwisaver works against prosperity for all of us, because it leads to a less innovative, less vigourous and less diverse economy. Thus David Parker’s announcement of Labour’s monetary policy this morning predicated on a compulsory Kiwisaver will be a needless drag on an economy which is currently growing faster than most world economies (including the economies of Europe and the US). In trying to fix something that is not broken in the way they think it is, Labour risks jeopardising our economic wellbeing.

Prob with compulsory Kiwisaver - other than the 'compulsory' - is every small/medium employer is forced to contribute their investment 1/x
— Mark Hubbard (@MarkHubbard33) April 28, 2014

@MarkHubbard33 ... capital 4 the largesse of 10 to 20 crony NZX firms. It's elitist policy from Labour, & a disaster 4 innovation in economy
— Mark Hubbard (@MarkHubbard33) April 28, 2014

To expand on my Tweets, I simply quote below the salient parts of an earlier post – the sixth most read post on this blog - which was in reaction to then CEO of The Financial Services Council, Peter Neilson’s calling for – with no conflict of interest I’m sure – a compulsory Kiwisaver (some may want to gloss over first paragraph because it’s … well, philosophy):

I don’t deny Mr Neilson makes some attractive arguments; obviously so because, yes, savings are vital to a thriving capitalist economy: if you could put the taxes you currently have extorted from you voluntarily into savings we would all be better off in every way. However, the minute the country has forced on it a compulsory savings into KiwiSaver from the Fortress of Legislation, then its philosophically lost every gain that has been made, because a capitalist economy is defined as a voluntary one – add compulsion, then there is merely another planned, big state economy. Capitalism can only work, and works better than any centrally planned mechanism, when individuals are left free to go about the business of bettering their lives voluntarily, following their pursuit of happiness, and rational self-interest. This is also the pre-condition of a free country. Unfortunately, however, because 99 out of 100 professionals and business people, and 100 out of 100 lobbyists and politicians, no longer understand the philosophical issues underlying a capitalist system, by which I mean classical liberalism, I am forced to break this Herald piece down on its own shallow terms:

Significantly, never mentioned in Mr Neilson’s lobbying, there is a huge cost to business via the compulsory employers contribution that employers must make, matching their employees contributions, that is ignored, completely, by him. He is advocating that every small and medium sized enterprise (SME), including farms, in New Zealand, that’s every entity which employs, is forced to give over the capital they could use to grow themselves, and employ, so a very minute, elite group of ‘favoured’ firms listed on the New Zealand Stock Exchange can use those extorted funds to further their own interests. Rational and fair people will rightly see this as first, philosophically repugnant, and after that economically retrograde. This is called crony capitalism, which, mixed with an uncritical MSM such as the lack of balance in this Herald piece, simply accelerates us all down the road to our serfdom.

Secondly, not only is every SME stripped of their own capital via the employers contribution, they also necessarily have to incur a higher incidence of income tax to fund the government contribution to each KiwiSaver’s scheme, being 50 cents for each $1 invested. Yet more money taken from business owners to play favourites and skew the open market for investment monies, given SME’s investing their own money in their own businesses is the major part of the investment market of any free country, and the KiwiSaver scheme is twice attacking that important source of investment funding, namely, retained earnings … (now repeat my philosophic arguments in above paragraph).

Finally, considering the KiwiSavers themselves, for many, compulsory savings into KiwiSaver will simply not be in their rational self-interest; they may well be prudent paying down their mortgages more quickly, than being forced to invest in risky start-up ventures such as Xero, Bliss, et al, as good as investment in some of those companies may indubitably be: investment has to consider both risk and return of each individual.

Thus, I end this post exhorting David Parker, as I did Mr Neilson:

… please leave businesspeople, many of them struggling, brave entrepreneurs, alone – don’t make your career one of … forcibly taking the money, and hence the choices and opportunities, of these people who are our economy.

There Must Never Be A Compulsory KiwiSaver

Save us all from crony capitalist government lobby groups. The Financial Services Council, led by chief executive Peter Neilson, are trying to head the government toward a compulsory KiwiSaver because it will be ‘good for New Zealand’s economy’:

An extra $52 billion could be injected into the New Zealand stock market by 2066 if 80 per cent of workers were in KiwiSaver and the contribution rate was raised to a combined 10 per cent, according to research commissioned by a financial services lobby group.

Infometrics figures provided by the Financial Services Council project that $312 billion would be channelled into KiwiSaver by 2066 if no change was made to the existing regime, of which $39 billion could potentially be invested in locally listed stocks.

[Snip]

The council wants all workers including the self-employed to start contributing to KiwiSaver from 2015, starting at 1 per cent a year and increasing by a percentage point a year to 10 per cent by 2024. Those who are already in KiwiSaver would also increase their contributions from 2024 from a combined 6 per cent a year to 10 per cent.

At present employees have to contribute a minimum of 2 per cent and employers a further 2 per cent. From April that will go up to 3 per cent each to a combined total of 6 per cent.

Last year the Government deferred a proposal to automatically enrol all workers who are not already in KiwiSaver until after 2014/15 …

I don’t deny Mr Neilson makes some attractive arguments; obviously so because, yes, savings are vital to a thriving capitalist economy: if you could put the taxes you currently have extorted from you voluntarily into savings we would all be better off in every way. However, the minute the country has forced on it a compulsory savings into KiwiSaver from the Fortress of Legislation, then its philosophically lost every gain that has been made, because a capitalist economy is defined as a voluntary one – add compulsion, then there is merely another planned, big state economy. Capitalism can only work, and works better than any centrally planned mechanism, when individuals are left free to go about the business of bettering their lives voluntarily, following their pursuit of happiness, and rational self-interest. This is also the pre-condition of a free country. Unfortunately, however, because 99 out of 100 professionals and business people, and 100 out of 100 lobbyists and politicians, no longer understand the philosophical issues underlying a capitalist system, by which I mean classical liberalism, I am forced to break this Herald piece down on its own shallow terms:

Significantly, never mentioned in Mr Neilson’s lobbying, there is a huge cost to business via the compulsory employers contribution that employers must make, matching their employees contributions, that is ignored, completely, by him. He is advocating that every small and medium sized enterprise (SME), including farms, in New Zealand, that’s every entity which employs, is forced to give over the capital they could use to grow themselves, and employ, so a very minute, elite group of ‘favoured’ firms listed on the New Zealand Stock Exchange can use those extorted funds to further their own interests. Whoops, note already how philosophy can’t be ignored: rational and fair  people will rightly see this as first, philosophically repugnant, and after that economically retrograde. This is called crony capitalism, which, mixed with an uncritical MSM such as the lack of balance in this Herald piece, simply accelerates us all down the road to our serfdom.

Secondly, not only is every SME stripped of their own capital via the employers contribution, they also necessarily have to incur a higher incidence of income tax to fund the government contribution to each KiwiSaver’s scheme, being 50 cents for each $1 invested. Yet more money taken from business owners to play favourites and skew the open market for investment monies, given SME’s investing their own money in their own businesses is the major part of the investment market of any free country, and the KiwiSaver scheme is twice attacking that important source of investment funding, namely, retained earnings … (now repeat my philosophic arguments in above paragraph).

Finally, considering the KiwiSavers themselves, for many, compulsory savings into KiwiSaver will simply not be in their rational self-interest; they may well be prudent paying down their mortgages more quickly, than being forced to invest in risky start-up ventures such as Xero, Bliss, et al, as good as investment in some of those companies may indubitably be: investment has to consider both risk and return of each individual.

Returning to philosophy, also note how when a society moves to planned lives by state coercion, we then arrive in the absurd, offensive circumstances where even free speech is curtailed, and that most certainly in the investment sector of our economy, for this very post is most likely, farcically, breaking our security laws (please note that’s a huge link to a stunning post by Stephen Franks). And that single fact alone, is appalling. I say it over and over, but there was a vital revolution for freedom in America that was waged over less than the issues in this post (and almost every post I make).

So Mr Neilson, whose self-interest in the issues discussed in the Herald article is never stated, assuming (?) he happens to work in the savings industry which is increased in size dramatically by a compulsory KiwSaver, it’s still the Christmas and New Year break: please take one, and leave businesspeople, many of them struggling, brave entrepreneurs, alone – don’t make your career one of convincing politicians their best course of action is to forcibly take the money away, and hence the choices and opportunities, of these people who are our economy. And while on businesspeople, to the real estate agent hassling me on New Year’s Day, and then chasing me up the day after, for an independent trustee’s signature on a sales document, that was rude; plain, old fashioned rude. Too many businesspeople and professionals need to gain a bit of perspective and a lot of philosophy.