Monday 27 February 2012

Proceed With Asset Sales At Your Peril, Mr Key.

Transformer: From the benign Prime Minister of National's first term, to the dangerous Prime Minister of it second, John Key has startled those New Zealanders who'd convinced themselves they'd elected a new kind of conservative leader. Three months out from the 2011 election, and with long-forgotten numbers blasting out from the Treasury's juke-box, many New Zealanders are looking at Mr Key through new, less trusting, eyes.

NATIONAL'S MANDATE to sell state assets is indisputable. If a government goes into an election promising to sell up to 49 per cent of the state-owned energy companies' shares to private investors, and then wins more votes than its political opponents combined, well, it's hard to argue that it doesn't have a mandate.

The National Government's problem is that its mandate to "partially" privatise state assets is unusable. Prime Minister John Key may have earned the right to dilute the state's ownership of its energy companies, but it is becoming increasingly apparent that in exercising that right he would inflict so much political damage upon himself and his party that the project would become self-defeating.

The opposition to asset sales extends across the political spectrum, across all social classes, age groups and both sexes. National's election win has not changed the all-encompassing nature of this opposition. Clearly, Kiwis re-elected Mr Key's government in spite of – not because of – its policy on asset sales.

In his heart, I believe Mr Key knows this. His pollsters will certainly have registered a subtle but unmistakable shift in the electorate's mood. Like the low growl of a watchdog at the approach of an intruder, voters are signalling their displeasure at National's ideological belligerence. They hear long-forgotten tunes coming out of the Treasury's juke-box and are reminded of Roger Douglas and Ruth Richardson: people and policies they would rather forget.

New Zealanders warmed to Mr Key in his incarnation as "King Log" – the relaxed, ideologically-inert leader, who for three years floated inoffensively across the antipodean frog-pond. They are considerably less enthusiastic about Mr Key's new role as "King Stork". The last thing an electorate of frogs wants is a swift-striding leader with a murderous, spearing beak.

And Mr Key himself would do well to study the history of privatisation in New Zealand. It has never been popular, and governments which have taken advantage of their temporary possession of a parliamentary majority to strip the nation of its most valuable assets have paid a high electoral price.

When told that 90 per cent of the electorate had opposed the fourth Labour government's sale of Telecom, Richard Prebble is said to have remarked that New Zealanders should be grateful they had a government willing to resist such a large and vocal pressure-group.

That sort of arrogance is neither forgotten nor forgiven by Kiwi voters. Mr Prebble and his colleagues were thrown out of office for their disdain of democracy. And, when their National Party successors proceeded to repeat Labour's policy offences, the voters not only threw up two insurgent political parties to restrain them (the Alliance and NZ First), but they then for good measure, and as an insurance policy against future chicanery, changed New Zealand's electoral system.

Most New Zealanders, as Mr Key apparently warned the Americans in a "Wiki-leaked" diplomatic cable, are socialists at heart. Their political instincts tell them that certain industries and services should never be placed in private hands. National voters, however, should perhaps be reminded of the four great justifications for nationalisation.

One: Placing healthcare, education, energy, mass communications and transportation, and the provision of key financial services in private hands only, confers on their owners an unwarranted and potentially hazardous degree of economic, social – and so political – power.

Two: It redirects the vast revenues of these vital industries from their former private owners into the public accounts.

Three: It disperses these new revenues to the public good, especially to the protection of a natural environment despoiled by the ruthless quest for private profit.

Four: It establishes and extends the rights of employees to play a significant role in the development and management of all enterprises – public and private.

Privatisation, by reversing the direction of these progressive objectives, can only augment the wealth and power of private owners, diminish the public treasury, impede the public good, and suppress the rights of working people. It is risible to claim that your aim is to achieve these ends only "partially". Once private interests are recognised in the administration of state assets, the power to assert the public good, and defend the rights of indigenous peoples, is relinquished.

Proceed at your peril, Mr Key.

This essay was originally published in The Otago Daily Times, The Waikato Times, The Taranaki Daily News, The Timaru Herald and The Greymouth Star of Friday, 24 February 2012.

12 comments:

Anonymous said...

Yet to find anyone who is excited about this issue. My kiwisaver fund is 80% invested overseas because there is nothing here to invest in.
Key just needs to do a better sales job. Don't particularly want to buy my groceries from a state run store nor do I want to buy my power from a state run organization that ramped my prices up 72% in ten years. however I would like to buy some shares in something in NZ.

Anonymous said...

The days of the government running the means of production ended in the late 70s it's just taking NZ a little time to catch up.
Hell you have listed power companies in Russia, there is nothing to be scared of and it's not as if power prices didn't go through the roof during the benevolent stewardship of government control.

Mark Wilson said...

Your article is wrong on so many counts it is impossible to deal with them all.
Surely Greece and its fellow travellers have shown what happens to countries that follow your Stalanist "4 justifications for nationalisation".
1 - "Placing healthcare, education, energy, mass communications and transportation, and the provision of key financial services in private hands" actually provides inefficiencies that increase prices that harm the poor.
2 - Two: "It redirects the vast revenues of these vital industries from their former private owners into the public accounts."
Only at huge real cost to the state and it's dependents.
3 - "It disperses these new revenues to the public good, especially to the protection of a natural environment despoiled by the ruthless quest for private profit."
The "new revenues" are illusionary as state inefficiency take over.
4 - "It establishes and extends the rights of employees to play a significant role in the development and management of all enterprises – public and private."
Any organisation run by its employees destroys itself eventually.

The command economy you desire has been disproved by every socialist country that took on the Marx curse - look at Venuzuala whcih has been destroyed by your 4 "benefits of nationalisation."

And surely you are of the age that you can remember the huge price paid by the poor in NZ under Muldoons command economy.

The USSR, China, Eastern Europe and all the others failed at socialism and millions upon millions died because of that failure - why are you still arguing for such a disaster?

Unless you can convince the hard working multitudes around the world to stop trying to better themselves you would condemn NZ's poor to a middle ages level of poverty.

You are also wrong when you suggest that Keys partial privatisation program will cost him politically - by the time the next election arrives and the voters can see that the sky hasn't fallen in the left will look dumber than usual.

And how is Air NZ working out for you?

The real issue you should be dealing with is the dawning realisation by voters that 50 + years of social welfare has proven that we now have an entrenched peasant class that cannot be saved no matter how much money is spent on them. There is no evidence any where in the world that spending more and more on the poor is doing anything other than destroying their ability to succeed at even the most basic level.
How long before NZ teachers start reporting that Children are being sent to school at age 5 in nappies because their parent believes that it is the schools job to toilet train them as is happening in England?

The world has run out of money - the more socialist the country the poorer it is and you want us to destroy our economy when extra money will not improve the lot of the poor.

guerilla surgeon said...

In all this push for efficiency, and it's by no means certain that private enterprise is more efficient, everyone's forgetting about effectiveness. Look at the American health system for god's sake. Supremely efficient - hardly effective at all. PS is it just me or are those damned words getting harder to read?

Olwyn said...

@ Mark Wilson: What a lot of rot you talk! Social welfare did not create entrenched poverty, neo-liberal reforms did. And the world cannot run out of money, as one can run out of tea: money is not a natural resource it is a human invention.Right now, it is quite likely that there is more debt in the world than the world can ever pay, while at the same time the actual resources in the world remain roughly the same as they would be with or without the notion of debt involved.

And even if you were right in your assessment of socialism, it would not follow that it was right to subject people to privation and then blame them for their plight. Rejecting socialism does not free you from all obligation to your fellow human beings.

More pertinently to the original post, for how long can this game of replacing productive business with the private acquisition, or the private management of public resources, go on? Eventually, the demand for returns must collide with a shrinking tax base in a low-waged, underemployed economy.

Nick said...

Mark Wilson, you do talk rot: "Stalinism" "Hitlerism" is exactly the end result you will get when you allow either the state or the private capital to have a monopoly on the control of the economy. More importantly you need to read the classical economists upon the role of "rent". Allowing capital to take "rent" from the provision of services etc that underpin an economy (power, water etc) is generally agreed to be very counter productive to the health of a market system: capital for new "risky" enterprises ends up being siphoned off for safe returns. Result stagnation.

Anonymous said...

Chris,
I'm from a little deep blue province and have heard a meme repeated, by a few quite different persons, which seems to be a grassroots National extension of English's debt threat; goes along the lines of: 'We all seem to think London's just round the corner when really we're just a small pacific country, therefore [whatever asset-stripping or exploitative policy National is pushing at the time] needs to be done to keep our standard of living up.'

To my mind it reads as though they're bluffing our first-world status on some ideological flop--if everyone buys the bluff it's privatization time, and if not then Greece or worse is the implicit apocalypse.

Maybe destroy this before it gets any oxygen. It's the sort of glib one-liner which gave the tories so much room to move last term.

Anonymous said...

Mr. Wilson you are in error. The states you use as an examples were never 'Socialist (or even Communist)' they were Fascist. Some still are.

Essential services such a electricity generation should never be in private hands. Our whole economy relies on such a service and a profit motive reduces a service to increase profits. The result is that ordinary people and small businesses lose out.

Anonymous said...

@ MarkWIlson

"The real issue you should be dealing with is the dawning realisation by voters that 50 + years of social welfare has proven that we now have an entrenched peasant class that cannot be saved no matter how much money is spent on them."

Nice try. The "peasants" were surely responsible for the economic crisis, being hedge fund traders and what not...

You speak as if you won't find yourself on the wrong end of a pitchfork.

cheesefunnel said...

The way in which sweeping generalizations are thrown around in the comments section of this blog (and the blog entries themselves for that matter) is really rather depressing and certainly unhelpful. Did it ever occur to you people that the causations and remedies of the problems you 'discuss' may have been more complex than whatever grab-bag of dogmatic slogans you have chosen to define yourselves by? For instance: To claim that the former Soviet Union is either 'Fascist' or 'Socialist' is just intellectually lazy, it had aspects of both, isn't this transparently obvious? The real world is more subtle and complex that any ideology.

guerilla surgeon said...

Godelpus, will you people stop quoting classical economists - given that physicists have shown that their equations are rubbish, and psycologists have shown that people don't behave the way they assume.

guerilla surgeon said...

Greece is in trouble partly because people didn't pay taxes. Just goes to show you can only afford RICH people to not pay their taxes :-).