Friday, 22 June 2012

Ideology and Asset Sales

It’s been a month or so since my last post.
The reason for this absence hasn’t been a lack of ideas or of things to write about but, rather, that in writing this blog I’ve had to wade through others people’s blogs and involve myself in discussions.

In doing so, I’ve come across some of the vilest people I’ve ever had the displeasure of encountering – not just vile but dishonest, snivelling, arrogant, self-important ideologues who lie, distort facts and ignore breaches of behaviour on their own side while demonising it from other.

This comes from both the Right and Left of the political spectrum and caused me such consternation that I had to back off for a while in wonder at how simple politics can turn people so ugly.
I am not concerned with what people say to me but and rather bemused at why they say it. 

On one such Left wing site I’ve been referred to as a “tory” a “conservative” and “Right-winger” and once – bizarrely – as “John Key’s boyfriend”.
Meanwhile, on Right-leaning site I was accused of being a “commie and a far Left Marxist” – with one nitwit even suggesting that, because I am misanthropically-minded, I must be a libertarian.
What’s the truth?  They can’t both be right, can they?
Well, truth be told, neither claim is right.  I am neither politically Left or Right.  I have the view that political ideology sours conversation and poisons the mind – causing one to dispense with reason and rationalise all actions into the Left/Right spectrum.
For example:

You disagree with me on point X? You must be a leftie Marxist greenie! 
You support policy Y? Get out of my sight you fascist Nazi!

That sort of thinking is not only unhelpful, but it is polarising to the point of making even the simplest choice in an election treasonous to a certain segment of the voting population.

In my time as a voter I’ve voted for nearly every political Party in New Zealand – outside a few single issue Parties like the ALCP – because I’m not one of those people who says “I’m a Labour man!” or “my family always vote National!” Rather, I spend a long time considering my vote and – even with the most concerned meditation on the topic – still have paroxysms of indecision in the polling booth on Election Day because I try make my choice as pragmatic as possible and in an election with so many variables that can be difficult at best.

I never like to tell people who I voted for because, as far as I’m concerned, it’s irrelevant.  Firstly: if I argue an issue I’m giving my opinions, not the position of the Party that received my vote.  If proven wrong, I’ll change my opinion on the issue – unlike the ideologue, who has the insane ability to ignore what they’ve been shown to be wrong and continue to spout the misunderstanding while knowing it’s wrong.

Secondly – and what bothers me most – is that revealing who you voted for allows strict idealogues to discount your opinions as ’Right/Left spin‘.  No matter how factual your comment, you’ve been placed in a box where you can safely be ignored because you are the opposition – meaning you’re automatically wrong and should only be addressed with scorn.
I try to be as a-political as possible and vote with my head, not with my emotion.

It is because of ideology that I am now very much against National’s proposed selling down shares in SOEs.  I was never too concerned by asset sales, and the main arguments against said sales – well, the most vocal of arguments at any rate – were pretty much off-base.

Some people scream quite loudly that National has no mandate which is – unfortunately for them – untrue.  National won the governance of New Zealand for a second term in a lawful, democratic manner on a campaign that included a promise to carry out these sales.  A main plank of Labour’s 2011 election campaign was: “A vote for National is a vote for asset sales” because they also knew that if National got in they’d gain the mandate to sell them.
Others complain that power prices will soar but – given that power prices have been shooting up for the past decade – this argument rings rather hollow to my ears, particularly when places like the US have much cheaper power and almost no publically-owned power supply (EDIT - Citation needed. Quite possibly not as I suggested...TheContrarian).

As I stated: the arguments against asset sales, and the sales themselves, never gave me much cause for alarm.  What has alarmed me is National’s insistence at going ahead when it looks more and more like a bloody stupid thing to do.  New Zealand is an indebted nation, like many, and if National wants to pay down debt there are several things it can do, quickly and pragmatically, before having to sell up.

I am in a high/top tax bracket and would be more than happy to have my tax go up a percentage point or two.  I’m not going to pretend I’m OK with paying more than 40 percent nor do I think the rate should be returned to where it was before, but I don’t mind paying a bit extra to slow New Zealand’s growing debt.  I can afford it and, while it wouldn’t dent my bank balance much, it would provide relief for others.  

I also think that the retirement age is going to need to increase at some point so you may as well begin staggering it now – when you can do so incrementally – instead of hitting a point in the future when you have to do it in one big whack (United Future actually has a very interesting Super policy).  Also, a capital gains tax isn’t all that bad an idea, though I think Labour’s method of implementing it while using the income gained from it before any had actually been gained was a complete disaster as a policy and I also think 15% is too high. If they had said 5% across the board the idea may have got a little more traction.

These policies, for someone like me who enjoys his low tax rate and doesn’t want to see a capital gains tax, are some of the decisions that need to be considered whether you like them or not.  To entertain the thought of something you may ideologically oppose, but realistically may need, is a reasoned and rational position to take in Government.  All I see from National, however, is blind ideology – a blind ideology that we didn’t see in the first term when National was arguably more centrist.

This is why I can no longer be OK with asset sales because to do so, for me, is to support an ideologically-driven policy that seems further and further away from a rational response to New Zealand’s debt.

I am aware of some of the potential responses that an ideologue could take with my pragmatic approach to politics.  The Right could accuse me of being a communist for wanting to raise taxes on the ’job creators‘, while the Left my view me a fascist for being financially comfortable and not wanting to increase taxes to level they see as appropriate for someone on my salary... but the people who think like that will do it anyway, no matter what you support.


  1. "I’ve come across some of the vilest people I’ve ever had the displeasure of encountering – not just vile but dishonest, snivelling, arrogant, self-important ideologues who lie, distort facts and ignore breaches of behaviour on their own side while demonising it from other."

    Well that sums up the NZ political blogosphere quite well i think. Definitely a perfect description of The Strandard, and some of the more loony KB and WO readers.

    1. It was mainly WO and Standard I had in mind. Been treated fairly well at KB but there are exceptions of course. You'll never get that from me over here

    2. True that. I'm fairly impartial about partial privatisation (asset sales). If done well then i think it's a win for the country. For me the "prices will rise" argument doesn't wash, and neither does the forgoing dividends argument. Rising prices has more to do with inflation and market competition than ownership.

      Prices doubled over the last 10 years, and that was in government hands. Increased dividends from SOE's just come out of the taxpayers pocket anyway leaving the masses with less money to put back into the productive economy (by spending). Power prices are more about the amount of competition there is in the market, and being able to generate power cheaper and smarter.

      With all the confidence smashed out of the sharemarket over the last few years, it would be nice to get some "safer" options for people to invest in. With KiwiSaver and the Cullen Fund there are literally hundreds of billions of $NZD looking for places to invest. Most of the SOE shares will no doubt be bought up by companies investing for the future retirees of NZ anyway.

      The ghost of the 1980's is what makes people fear the 'P' word. But this is far from the flog off fire sales of the 80's.

    3. "But this is far from the flog off fire sales of the 80's"

      Agreed and I have always been impartial to the MOM policy but it seems to be for the wrong reasons now.

    4. I don't know if i can agree that the reasons are now 'wrong', but i do think 'the sell' has been terrible, actually my biggest beef with this government is that it's communication of it's policy ideas and long term goals have been appalling, and i really have no explanation for that.

      Freeing up capital to spend in other more productive areas without the need to increase borrowing makes sense to me. It also deepens our financial markets which is another good thing now that the pressure is on to save and invest more for our retirements.

      back to work, have a good day :o)

    5. Yeah, maybe "wrong" was the incorrect word to use but the sell has indeed been atrocious and I still feel that there are easier, less contentious ways to free up capital.

    6. asset sales aside, we have not addressed the inequalities in nz society which used to be one of the most equal

    7. A little outside the scope of this particular blog piece

  2. On the open mike thread at the standard you stated "Anyone with KiwiSaver can invest" are you referring to taking money out of kiwisaver (not the easiest thing to do) to buy shares or is there another mechanism?

    1. I asked the question over there and got no answer so I thought I'd try my luck here, I'm just curious

    2. Sorry, I missed it.
      Your KiwiSaver funds can be directed toward purely NZ investments. Theoretically you should be able to invest your kiwisaver funds into the shares floated.

      Correct me if I am wrong, speaking off the cuff right now.

    3. I've sent an email to Bob Shearing so hopefully that will provide an answer. I'd rather invest directly in a power company then go through an investment company.

  3. " particularly when places like the US have much cheaper power and almost no publically-owned power supply."

    Hi Contrarian, have to say you are totally wrong here. Public ownership of energy (and water) assets is very extensive in the USA.


    Tennessee Valley Authority
    Hoover Dam (Department of the Interior)
    Army Corps of Engineers (owns 24% of Hydro Dams in the US)
    LA Water and Power Department (kinda like a power board)
    Imperial Irrigation District
    Nashville Electric Service
    New York Power Authority

    To name a very few. While there has been/is also a significant private involvement in power supply, public ownership is more widespread than you would suggest.

    And what's more, while all these public operations are self funding, they are not required to make a profit or return a dividend, placing the supply of electricity service front and centre of their objectives. Which is what it should be.

    And another thing, it is usally right wingers who say that they are 'neither left nor right'.

    And Andrew, we dont need to flog off our power to 'deepen financial markets' whatever that means, if we want more NZX investment buildings, then we should be looking at creating an investment fund that would buy up successful local companies, as opposed to sending them offshore...


    1. "public ownership is more widespread than you would suggest."
      Quite possibly, I did bang that in without proper research into the subject. I'll redact that...

      "And another thing, it is usally right wingers who say that they are 'neither left nor right"
      Are you suggesting that makes me a right-winger or merely pointing that out (without evidential support)?
      What that does sound like, to me, is that one is judged to be right-wing because they aren't left-wing.

  4. Government debt has risen sharply, but is not anywhere near the problem that private debt is. The power generating assets will not work better under different ownership, but power costs are likely to rise faster than many other costs as oil supplies reduce - they will gain in value well over time. The government can retain the assets for a later time; they are likely to increase in value by more than the cost of debt - and the amount of sale proceeds is trivial (say $6 billion) compared with government debt (say $70 billion) anyway. If Mum and Dad" investors do buy, they are likely to not pay down debt as fast - the sales aren't really doing anyone any good; and Treasury say we will be worse off from the sales. The $120 million already spent is waste, but that cant be helped now. There may be good reasons to sell some things, but National haven't given a good reason for these.

    1. "There may be good reasons to sell some things, but National haven't given a good reason for these."


  5. Totally agree with you about the left/right dichotomy, and about idealogues of all stripes. I too fall into the "neither left/right" category, being slightly left leaning liberal on most issues with the exception of crime/justice and a few others. I know I am not the only one either, I recall once having an interesting conversation with a Green voter who was ultra environmentalist, a supporter of gay marriage - and also wanted the death penalty! (not a position I personally share).

    I have some sympathy for the concepts around libertarianism, but life experience tells me that it wouldnt work in the real world. All parties have had excellent policies over the years, all have had some bad ones. Personally am ambivalent about asset sales, but find your arguments against it sound, and would be prepared to pay a bit more tax as long as I had some say in where it goes.

    I have changed the party I've voted for a few times based on policy, and like you often found it difficult to make a choice. One thing I do now which you may find helpful is to draw up a matrix of say around five most important policies to you, and rate each party on their positions, weighted according to priority and closeness of each party policy to the desired outcome. Something like this is a good way to arrive at a decision in a completely rational manner

    Peter J
    Webmaster for Sensible Sentencing Trust

    1. Libertarianism, in a social context, is what I believe both the left and right can agree on. We all want a life of freedom away from governmental intrusion. One should have the right to shape ones own destiny.

      Economically though the Randian free market won't work neither will the full brunt of regulation.


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