Hickey on playing by the rules

130 comments on “Hickey on playing by the rules ”

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1. James Henderson 1

   5 February 2012 at 9:23 am

   grow up.

   here’s a summary of the parties’ monetary policies.

   http://www.interest.co.nz/news/54193/election-2011-party-policies-economy-reserve-bankmonetary-policy

   the ownourfuture website is offline now the election is past, that’s all.
2. Pete George 2

   5 February 2012 at 9:23 am

   Perhaps we should be looking for parties* that are actually offering real policies to reform the currency

   Do you mean like this party?

   “At the heart of our vision for New Zealand is a fundamental reform of the monetary system.”
   • muzza 2.1

     5 February 2012 at 9:15 pm

     Hey Pete, hows does UF’s monetary policy explain how NZ can ever repay its debt before we go have a visit from the IMF!

     You can feel free to try explain that yourself if you like!
3. ChrisH 3

   5 February 2012 at 9:23 am

   Isn’t it obvious that policy in this country has been captured by a landlord / speculator clique for which the short-term gains from a higher dollar (=more money in pocket for overseas holiday, cheaper 4WDs, more inflows of foreign lending into the NZ property bubble) outweigh all other considerations? With Key as the arch-banker in charge?
   As in Bjelke-Petersen’s Queensland, said to have been run by “white-shoe developers,” the litmus test of all policy since 1984 has been “Is this good for property speculators?” Or to be more precise, perhaps, “Does this increase the profits of the banks and finance companies that lend the money to the New Zealand property investor?” Anyhow the two are much the same in practice. Related litmus-test outcomes include the deregulation that led to leaky buildings. Whatever dodgy developers wanted, dodgy developers got.
   Because of the obvious power and influence of this clique, I have long felt that New Zealand was fated to end up as the East Germany or Romania of neoliberalism; that the tight little developer/banker mafia, that has so obviously run this country into the ground, would maintain a mindlessly hard line for years after the speculative system began to fall apart elsewhere.
   It is vital that Labour challenges this regime without fear or compromise, and that there is a revival of social-democratic trade unionism, not least because of the possible consequences if this doesn’t happen.
   Which in New Zealand might not be revolution so much as a hardening ethnic-class conflict spiral in the North Island between Pakeha and Maori who are each after the same piece of land, sounds familiar?
   Absent a serious progressive challenge the right will be hang onto power to survive by spinning everything in ‘lazy brown people’ terms and getting those who still vote to rally around a white redneck laager, that’s already the dog-whistle message behind bene-bashing and getting rid of Section 9 in the privatisation context, a deliberate provocation. I call this the Ian Paisley scenario whereby the 2/3 are united against the 1/3, as in 1960s Northern Ireland, though the Milosevic scenario is probably more up to date.
   • Carol 3.1

     5 February 2012 at 9:47 am

     In contrast to Hickey lumping all European economies together, there’s an interesting article here arguing that the German Labour relations model differs from that of British/Anglo-Saxon “hire and fire” deregulation model, and that Germany’s economy is the stronger for it:

     http://www.guardian.co.uk/commentisfree/2012/jan/26/hire-and-fire-destroyed-uk-jobs

     There is a much more fundamental gulf, hinted at by Angela Merkel in her Davos speech yesterday: between countries with organised industrial training systems such as Germany, the Netherlands, Belgium, Scandinavia, Austria and Switzerland – all currently with jobless rates of between 3% and 7% – and those with much higher rates of unemployment, often in double digits, in peripheral Europe.

     The issue pits Anglo-Saxon precepts of free market regulation against the Germanic “Rhineland” system of managed capitalism, with modern apprenticeship systems built on a long-term compact between labour and employers.
     • rosy 3.1.1

       5 February 2012 at 10:03 am

       “there’s an interesting article here arguing that the German Labour relations model differs from that of British/Anglo-Saxon “hire and fire” deregulation model”

       I like this bit too:

       Funded by an employment insurance levy, it pays for firms to keep workers for six to 12 months, provided employers can show their businesses are in a cyclical and not a structural downturn. Imagine a small engineering firm that ran into financial trouble in 2008: rather than letting go of the 17-year-old apprentice who had recently joined the firm, it would have been able to keep employees on board and then benefit from their experience when the economy was back on its feet. Even if the company had gone bust, the apprentice would by law have been sent to another company.

       I also like the approach to labour indicated in this little story…

       Tony Blair, the former prime minister of Britain, once asked German Chancellor Angela Merkel why her country’s economy was so resilient. Her response was at once playful, a bit chiding and very matter-of-fact: “Mr. Blair, we still make things.” Indeed, over the past decade, Germany has emerged as Europe’s dominant economic power because it has chosen to stake its fortunes on manufacturing and exports when many others were feasting on a profligate financial industry and debt-fueled domestic consumption. Even more interesting is that Germany did so while pursuing labor-friendly policies that limited outsourcing and unemployment and gave most German workers healthy salaries and benefits, high job security and a real voice in their companies’ boardrooms.

       The article continues with a bit more detail about Germany’s manufacturing culture.
       • Colonial Viper 3.1.1.1

         5 February 2012 at 10:20 am

         NB Germany manufacturing culture in the last 5 years has used (manipulated) the Euro system to outcompete and improverish countries in Europe’s periphery. Normally a lower currency would keep the manufacturing industries of those less developed countries safe from more expensive and higher quality German imports.

         However because they are all tied into the Euro, German exporters have been winning big at the expense of Greek, Spanish and Italian manufacturers.

         This is why Merkel is so insistent on multiple rounds of bailouts, austerity measures etc for these Eurozone countries.

         The German economy is the primary beneficiary of the Eurozone system and Germany is attempting to delay its falling apart as long as possible.
         • foreign waka 3.1.1.1.1

           5 February 2012 at 11:17 am

           CV – No, Germany’s strong currency has supported the Euro. The D-Mark was a very strong currency before the Euro. That Merkel supports the bailouts has more to do with the domino effect of having Greece, Italy and Spain excluded. From that it would follow that Hungry and other eastern countries will be affected. This in turn will leave Germany with huge debts and a return to the DM. There is a war going on if you haven’t noticed. It is precisely the financial manipulations that got the Euro where it is. It has more to do with the ailing US$ and its speculative selling of bonds to China than any manufacturing issues. Greeks have always been in this situation and the Drachma was such cheep currency that years ago I was able to take 2 weeks holiday for NZ$ 1200.00. Of cause if you want to set the Drachma against the DM you have got a problem, and you don’t even need a Uni degree to figure that one out. The US $ has been artificially reduced in value to aid exports, the Fed has made no secret that the have printed billions to do just that.China is owning large amounts of the US bonds and the Euro was preferred currency instead of the US$ because of that. This had to be changed. Can you see where this all is going? China will be ultimately the winner, as it will now move predatory into the Euro Zone.
           • Colonial Viper 3.1.1.1.1.1

             5 February 2012 at 11:46 am

             I think you’ve stated facts that I agree with but conclusions miss the point I was (perhaps unclearly) trying to make.

             The facts you state that I want to draw attention too are these:

             The D-Mark was a very strong currency before the Euro.

             and

             Greeks have always been in this situation and the Drachma was such cheep currency that years ago I was able to take 2 weeks holiday for NZ$ 1200.00.

             and

             Of cause if you want to set the Drachma against the DM you have got a problem, and you don’t even need a Uni degree to figure that one out.

             now I do find it interesting that you understand that a cheap currency assists a country’s real productive economy

             The US $ has been artificially reduced in value to aid exports, the Fed has made no secret that the have printed billions to do just that.

             but you don’t seem to have applied that same logic to the relationship between say Germany and Greece and Germany and other peripheral EU countries.

             So where I do disagree with you is your leaving manufacturing on the side of the equation – in fact if you read any commentary over the last 12 months about the strength of the German economy it is based on Germany’s very strong export led economy, whose main trading partners are EU countries.

             Now going back to your statements above.

             1) A strong DM hinders German manufacturing exports. It makes their products more expensive in foreign markets like Greece, Italy, and Spain. The German economy is handicapped.

             2) A weak Drachma helps Greek exporters. It makes Greek products much more competitive with say German products across Europe and Greek products will appear cheaper. The Greek economy is advantaged.

             In terms of currency wars, the Euro removes Germany’s strong DM impairment, and also removes the Greek cheap drachma advantage.

             And this is exactly what we have seen: German being an even stronger exporting powerhouse now that it does not have the liability of the expensive DM relative to other European currencies, and the Greece productive economy being smashed because Greek exporters now have to compete on a 1:1 currency footing with more advanced Germany.

             By the way, how is it that the Bundesbank and other German banks lent so much money to these broken peripheral EU countries? Well its fairly simple – Germany lent that money to those countries in part to help those countries continuing to buy goods and services from Germany.

             Up to and including Greece buying German supplied military weapon systems at huge cost, on tick using German supplied credit.

             In response to your final conclusion that China will be the winner – yes I agree with you but only in so far as winner being defined as “last man (somehow) still standing”. In the short term, China has for instance benefitted from the EU crazily moving to ban energy imports from Iran, creating damaging fuel price spikes in vulnerable EU countries like Italy, Greece, Portgual, Spain. Thinking about it a bit more however, you’ll see that the EU has precious little of what China is actually strategically interested in. Iron ore, coal, oil, gas, other industrial metals, farm land.

             In the final analysis no one is going to do well out of the ongoing financial calamity. The smart money is already moving out of derivative paper assets and into real assets like Wairarapa farms and Mighty River Power shares.
             • foreign waka …

               5 February 2012 at 1:22 pm

               You are trying to measure the EU with the Anglo Saxon way of thinking and this is where you get it all wrong. I may have to point out at this junction that I am Mainland European by birth and have in large parts experienced first hand the economic and educational way the economies are functioning. So take it from me, the Mediterranean countries were since the second world war the main holiday destinations for Europeans. This was their main foreign currency income. In latter times Olive oil and other agriculture products were exported but were only some 3-4% of GDP. Greece was also for a long time in turmoil and had in 1973 a dictatorship.I experienced this first hand. Turkey invaded Cyrus and still is there causing a lot of tensions.The people of the Mediterranean also have a complete different mentality as i.e the Germans or Scandinavians (I traveled there too). It is not the first time that an attempt is being made to unite Europe. It is far more difficult to unite 30 languages and as many cultures than the USA with one language and one culture (MAC)- yes, I have been there too. So to make a European Union work takes a little bit more. And it is quite obvious that the US had to suppress the Euro – this has hit Greece, Italy and the former Balkan states harder than Germany with a still intact industrial base. China will benefit once the US hits the next wall with inflation as they have printed money like there is no tomorrow. China is not necessary after goods alone, it wants to prove that their way of living is the right one. Ref Chiang Kai-shek vs US imperialism. All the events need to be seen in context, it is not only about economy it is about loosing face, pride, winning etc.Of cause the Anglo Saxon way is to see every thing in oil gold and diamonds. Has that helped?
               • Colonial Viper …

                 5 February 2012 at 1:29 pm

                 Thanks for your explanation, its always fascinating to see things from a different perspective.
           • ghostwhowalksnz 3.1.1.1.1.2

             5 February 2012 at 11:51 am

             The currencies werent aligned by par when the euro was created.

             There were a lot more drachmas ( 340 ) than D mark about 2 )for each euro .
             • foreign waka …

               5 February 2012 at 2:03 pm

               Very true, and the drachma was in Greece 1:1 value (note: not nominal but value in Greece) to the the Euro. One can now easily see where the conversion problem originated.
     • foreign waka 3.1.2

       5 February 2012 at 11:00 am

       And this is 100% correct. The training models employed in these countries not only provide an outcome well above the average but it also aids industry, either existing or emerging. There is a greater focus on the need of the future and the approach to reach best outcomes starts at primary school level. No dodging the bullet, if you haven’t reached the standard you have to repeat the class. The more often that happens the less likely one can enter University. Education is free and no “donations” are required, albeit there are noises to bring in charges for University with a lot of opposition. University is not a replacement form of apprenticeships but is truly academic. It runs by a numeros clausus system that allows only students with an average of 1-1.5 (1 equals excellent) to gain entry. It has nothing to do with how much money the student has but how much talent and effort has been applied. There is more involvement by parents and the attempt is there to have every child educated either through to an apprenticeship or University. Therefore, the level of general knowledge, spelling and grammar, mathematics, languages, art is a lot higher and as such give in the long run bigger returns.
   • dave brownz 3.2

     5 February 2012 at 12:41 pm

     I don’t see Labour as challenging anything. Shearer was chosen to steer Labour to the right. That’s playing into the hands of the white settler laager. Labour was the first to sell NZ out in the 1980s. Today NZ is basically a poor state of Australia with none of the benefits. We will never ‘catch up’ and never be allowed to join it as an official state. US/Canada, Britain and Aust between then already own NZ they don’t need to annex it. We are basically a commodity producing colony with tourism and luxury retreats thrown in.
     The political vehicle for the left, Mana, has been launched but is barely afloat. It has the program to meet the needs of the working majority, but the global system will not allow NZ to break out of its semi-colonial trap via parliament. The working majority will have to break with the global capitalist system and take ownership and control of the country’s resources to survive.
     This is class war. We are in for a torrid time. And I wouldnt want it otherwise?
     • Olwyn 3.2.1

       5 February 2012 at 1:10 pm

       The problem is, Mana will take a long time to be in the position to pose a real challenge, and also has a narrow focus. ChrisH has said, “It is vital that Labour challenges this regime (property developers and banks) without fear or compromise, and that there is a revival of social-democratic trade unionism, not least because of the possible consequences if this doesn’t happen.”

       The nettle is somewhat bigger than that – it involves finding ways of honouring, and perhaps in some instances altering where possible, agreements that have already been made, while doing as ChrisH suggests, and at the same time keeping productive businesses in NZ. This is no small challenge, but I will be disappointed in Labour if they evade it, and instead stick with image politics and focus groups.
4. stephen 4

   5 February 2012 at 9:29 am

   [deleted]

   [lprent: you already have a ban as ‘rob the dog’. Now permanent. ]
   • Colonial Viper 4.1

     5 February 2012 at 10:09 am

     I suppose you mean to be dismissive that class warfare even exists.

     Keep the 99.9% dumb and ignorant of tha fact they are being screwed by the 0.1%

     I notice that Westpac has started destroying middle class employment positions in Australia, outsourcing the work to India where educated workers will do the same roles for 1/10 the price.

     What happens when the 0.1% create an economy which don’t need to the rest of us, and where they are the ones which profit greatly from that.
     • Lanthanide 4.1.1

       5 February 2012 at 11:45 am

       The future of low-skilled jobs:
       http://www.youtube.com/watch?v=CWNuaPE4DTc

       You don’t even need to be literate to operate this system, just able to read numbers.
       • Colonial Viper 4.1.1.1

         5 February 2012 at 11:53 am

         Nice system. Interestingly the top 0.1% aren’t even (on a whole) what I would call skilled. They control, move funds and manipulate. But they can’t design, make or fix anything in the real world. They own but are not productive.
         • Draco T Bastard 4.1.1.1.1

           5 February 2012 at 2:49 pm

           Yep, the rich are the biggest set of bludgers ever known.
       • foreign waka 4.1.1.2

         5 February 2012 at 1:53 pm

         Ever seem the IKEA system? Unbelievable. Robots do everything.
       • Draco T Bastard 4.1.1.3

         5 February 2012 at 2:49 pm

         I really like technology like that as it allows us (humans) to do more with our time. Unfortunately, the capitalist system will take that benefit and give it to the capitalists increasing poverty instead.
5. Descendant Of Smith 5

   5 February 2012 at 10:09 am

   http://www.moneynews.com/StreetTalk/Aftershock-survival-summit-unthinkable/2011/10/06/id/413486
   Here’s how some American’s are thinking about the future.
   This from one of the economists who accurately predicted the meltdown.
    
6. ghostwhowalksnz 6

   5 February 2012 at 10:10 am

   So by allowing big spending foreign owners who want to buy our assets ( and just rent them out to kiwis) just like the Pengxin – Crafar farms deal is driving up the value of the dollar ?
   • foreign waka 6.1

     5 February 2012 at 2:14 pm

     NZ dollar is a fiat currency and subject to a lot of influences. No easy answer but here is a website that explains a lot. Would be too long to write about here:
     http://www.rbnz.govt.nz/research/bulletin/2002…/2004june67_2munro.pdf
7. Colonial Viper 7

   5 February 2012 at 10:16 am

   Its sad to see how our manufactured export industries have been destroyed over a 30 year period due to poor leadership in government. No matter how much dairy we export, it will only be as much needed to slow down the slide in living standards, and as much as is needed to heavily pollute the majority of NZ natural waterways.
   • KJT 7.1

     8 February 2012 at 6:39 pm

     Dairy export returns about $4 billion. Losses offshore from assets given away in the 80’s and 90’s 14 billion. Losses from tax cuts to millionaires spent in Hawaii ?????
8. Janice 8

   5 February 2012 at 10:40 am

   Why worry – we are going to “muddle through” OK. If our glorious “leader” says so it must be right becasue the news media don’t question it.
   • mik e 8.1

     5 February 2012 at 11:04 am

     lazy fair she’ll be right ecocomics where have all the right whingers gone today no credibility no examples of successful right wing laissez fair economies.
     • Draco T Bastard 8.1.1

       5 February 2012 at 2:55 pm

       And 5000+ years of them crashing and burning.
9. oftenpuzzled 9

   5 February 2012 at 10:40 am

   http://hat4uk.wordpress.com/2012/02/04/us-job-stats-why-the-americans-are-getting-excited-about-nothing/ The libertarian leaning slog supports comments of Aftershock writers referred to in DOS
10. Colonial Viper 10

    5 February 2012 at 11:05 am

    The EU debt crisis explained in under 10 minutes.
11. Fortran 11

    5 February 2012 at 1:10 pm

    Why is your leader picture showing the burning of US$ ?
    Have we not got any to burn ourselves ?
    • James Henderson 11.1

      5 February 2012 at 2:27 pm

      I can’t find an image of NZD being burned on google.

      you can burn some of your and send us the pics if you like.
12. tsmithfield 12

    5 February 2012 at 1:44 pm

    “Well, what happens when everyone else ‘cheats’ by printing free money to drive their currencies lower and we sit on our hands?”

    But this particular “hands on” policy (printing money) is not without negative consequence; rampant inflation eventually being one of them.

    The fact that these countries are printing money hand over fist is really just indicative of how fucked their economies are. We should be grateful we are in a position that we don’t have to print money. As an agricultural commodity producer, we couldn’t be much better placed. No matter how bad the world economies get, people still have to eat and the world population keeps on increasing.
    • foreign waka 12.1

      5 February 2012 at 2:00 pm

      The Treasury of the US is not government owed. It is an independent company. It beggars belief that a currency cannot be set by government/people of the country. This happened when the Bretton Woods was disestablished (gold being the measure to US$) in 1971. From then on the US$ became officially fiat currency. The Bretton Woods system was established for stability of world currencies after the war and the experiences of the depression in the 30’s. We may just need such a system again.
    • mik e 12.2

      5 February 2012 at 2:03 pm

      Tsm the commodities bubble is going to burst sooner than later all other trading bubbles have burst.We don’t have to print money, This government hasn’t got the balls to print [our inflation rate at the moment could handle a reasonable amount of printing but it would be better if we isolated the Canterbury rebuild and used it there instead of borrowing and allow the govt to purchase the bulk materials required for the rebuild to keep prices down]bring down our Dollar because its funded by the big four look at the National party website economic policy then look at Westpacs economic policy for NZ no difference except the colour of the type.
      China is not going to revalue its yuan ,the US are going to keep pressure on the Chinese by printing to devalue reducing imports increasing exports plus improving import substitution in the us which is taking off again not with the huge job creation because mechanisation of manufacturing . This scenario was predicted 30 years ago by many well respected economists.
      • tsmithfield 12.2.1

        5 February 2012 at 3:28 pm

        Commodities aren’t a bubble. They are the only true currency, as they were in the time of bartering.
    • James Henderson 12.3

      5 February 2012 at 2:29 pm

      money printing is a beggar they neighbour strategy that forces foreigners to hold the cost of their debt by devaluing their currency.

      We’re the neighbours and we’re getting beggared.

      I don’t see that as cause to celebrate.
      • tsmithfield 12.3.1

        5 February 2012 at 3:29 pm

        The fact we don’t need to be doing it shows we have cause to celebrate.
13. Draco T Bastard 13

    5 February 2012 at 2:24 pm

    Perhaps we should be looking for parties* that are actually offering real policies to reform the currency and keep us competitive in a world where only losers play by the ‘rules’.

    Why are we even looking at being competitive? It’s physically impossible to export our way to prosperity (effectively producing far more than we need) due to every other country doing the same. If we want prosperity then we need to develop our economy so that it produces what our society wants and no more. We have the resources and capability to do this but the capitalists want us to produce far more so that they can have more while the rest of us have less.
    • muzza 13.1

      5 February 2012 at 10:11 pm

      Exactly! Why we are borrowing ourselves into oblivion, selling assets, lands and resources, with councils bypassing laws by handing out mining consents.

      So far as it looks to me as though we are having our ability to self sustain stolen out from in from of us.

      We need to look at how we start to function in a way that is best for NZ, and we are quickly losing the assets we require to make that possible, and parliament is not changing course, not with the Expenditure Select Committee of – http://www.parliament.nz/en-NZ/MPP/MPs/MPs/Default.htm?pf=CommitteeShortName&sf=Finance+and+Expenditure&lgc=0

      Printing out own money…unlikely
14. RedLogix 14

    5 February 2012 at 3:44 pm

    Another real policy that rarely gets mentioned yet it is the obvious one which is the development of a single trading global currency. I’ve advocated for this before, here , here and here for instance.

    The problem being discussed by Bernard Hickey (and ignored by our currency trader Prime Minister) is exactly analogous to what would happen if every village, town and city in New Zealand printed it’s own currency. Leaving aside the obvious question of each such piffling entity managing it’s own monetary policy.. the absurdity of the arrangement is obvious.

    Well so is the present arrangement among the nations. It only survives because it’s easily manipulated and is rich picking for currency trading parasites.

    A single global currency, at the least something similar to what Keynes outlined back over 60 years ago, is the only real solution to this. Each nation trying to combat the challenge by impotently fiddling with it’s own internal policies achieves little on a global scale; and certainly cannot guarantee long term stability. It only needs one or two big governments to change policies and the whole thing unravels again.

    Because this is the only solution, it is therefore inevitable. This is one of those cases where really There Is No Alternative.
    • foreign waka 14.1

      5 February 2012 at 5:00 pm

      RedLogix – Perhaps, but there are always alternatives. We should not forget that every system is an invention by men and not a natural phenomena. Any such system can be altered and changed. The real question is: will this be done peaceful or with war. So we will in the next few years learn how civilized we really are.
    • muzza 14.2

      5 February 2012 at 10:27 pm

      So far it looks like the single global currency is the globalist desired outcome! Imagine what could be achieved if you had total control over a single global currency…

      You can’t seriously be an advocat for this in anything other than a theoretical sense?
15. tsmithfield 15

    5 February 2012 at 4:32 pm

    James Henderson: “…money printing is a beggar they neighbour strategy that forces foreigners to hold the cost of their debt by devaluing their currency.

    We’re the neighbours and we’re getting beggared. ”

    If currency debasement is the answer, then Zimbabwe must be the world’s economic super power.

    If we were to debase our own currency, everything we import or export would become more expensive here. People are poorer with a weaker currency, as people will find out if they convert $1000 NZ to Auzzie next time they go on holiday there.

    “A single global currency, at the least something similar to what Keynes outlined back over 60 years ago, is the only real solution to this.”

    I agree entirely.
    • McFlock 15.1

      5 February 2012 at 4:44 pm

      Rather shallow interpretation of currency differentials.
      Sure, if we were to take it to the absurd degree of Zimbabwe you’d be right. But NZ tends to do better if its dollar is valued in the bottom half of the us dollar and the euro. Yes, imported goods are more expensive, but we have an export led economy, e.g. dairy and tourism. And those distribute funds throughout the entire economy, not just circulating arond Auckland, so you get a multiplier as the money flows from the regions towards the CBD.
        
      I think the Zimbabwe tourism industry is struggling, and its primary production sector is . . . poorly managed, shall we say?
      • tsmithfield 15.1.1

        5 February 2012 at 6:54 pm

        “Rather shallow interpretation of currency differentials.
        Sure, if we were to take it to the absurd degree of Zimbabwe you’d be right.”

        I agree that Zimbabwe has its challenges. However, so are those nations that are aggressively devaluing their currencies also have their challenges. Currency devaluation by these countries is desperation rather than strategy.

        “But NZ tends to do better if its dollar is valued in the bottom half of the us dollar and the euro.”

        Our biggest trading partner is Australia, and the NZD is valued quite favourably for exporters against that currency. The NZD also had quite a nice dip against the USD recently that would have given exporters an opportunity to hedge. But I don’t think there is much merit in trying to keep our value adjusted to the Euro or the USD. Those currencies are doomed toward terminal decline. I don’t think there is any benefit in following them into the abyss.
        • McFlock 15.1.1.1

          5 February 2012 at 6:57 pm

          no hope for america or europe then?
          • tsmithfield 15.1.1.1.1

            5 February 2012 at 7:53 pm

            No. Not while they continue to spend trillions more than they earn.
            • McFlock 15.1.1.1.1.1

              5 February 2012 at 8:27 pm

              That does not equal a permanent collapse.
        • Colonial Viper 15.1.1.2

          5 February 2012 at 7:12 pm

          Those currencies are doomed toward terminal decline. I don’t think there is any benefit in following them into the abyss.

          Look dude, don’t be an ass, you know that if their currencies decline against ours even further all our exporters are going down the tubes.

          The NZD also had quite a nice dip against the USD recently that would have given exporters an opportunity to hedge.

          Our exporters need the NZD to be under US70c, otherwise they will continue to bleed. Did it do that? No of course not. Not even close.
          • tsmithfield 15.1.1.2.1

            5 February 2012 at 7:54 pm

            “Our exporters need the NZD to be under US70c,…”

            So, how do you propose to do that without causing intolerable inflation within NZ?
            • McFlock 15.1.1.2.1.1

              5 February 2012 at 8:25 pm

              It’s a balancing act. I’d suggest that governmentt and reserve bank policy should restrict inflation and unempolyment to 0 to 5%. Not sure about including GDP in that.
              • tsmithfield …

                5 February 2012 at 8:33 pm

                That would merely fuel the carry trade in the NZ dollar which would drive up the currency more.
                • McFlock …

                  5 February 2012 at 8:56 pm

                  including or excluding the GDP target?
                  • tsmithfield …

                    5 February 2012 at 10:11 pm

                    I don’t really see the point in including GDP in the mix. All roads end at the same destination.

                    The problem with the economy being able to grow at a faster rate (up to 5%) is that it creates a greater demand for money to fund the growth which means more foreign fund coming into NZ, thus boosting the value of the dollar. This is precisely what happened in the US on Friday with their better than expected unemployment figures. Compared to Europe, a very low benchmark, the US seems to be going gang-busters. Therefore, when the unemployment figures were released both the stock market and USD increased in unison, whereas, the trend for the last few years has been for the two to move in opposite directions.
                    • McFlock …

                      5 February 2012 at 10:37 pm

                      I’m honestly too pissed at the moment to calculate the the affect gdp would have if included in the 0-5% target range. But the point is that the range itself is not a maximise/minimise thing – it’s a “get everything int he range thereof”. So 0.5% GDP growth is okay (if at the shitty end of a C-), but if unemployment is 6%  and inflations is 7% then the government has failed. Obviously this involves some tweaking to the RBA 🙂
                          
                       
            • Colonial Viper 15.1.1.2.1.2

              6 February 2012 at 12:04 am

              So, how do you propose to do that without causing intolerable inflation within NZ?

              1) Increase interest rates.
              2) Increase mandatory savings rates.
              3) Increase assistance to small and medium enterprises to ensure high levels of market competition and efficiency.
              4) Increase Government ownership and control of all basic economic infrastrructure.
              • tsmithfield …

                6 February 2012 at 6:14 am

                Your point 1 will of course drive up the exchange rate.
    • RedLogix 15.2

      5 February 2012 at 4:47 pm

      ts.

      Finding points of common ground has to be the most worthwhile thing I get out of blogging here.

      The ironic thing of course is that apparently while willing to advocate for a form of global currency, and all that implies… I’m also a xenophobic racist. This is getting to be hard work 😈
      • tsmithfield 15.2.1

        5 February 2012 at 10:24 pm

        Of course, a global currency implies a lot more freedom of trade between countries. I am not so sure that is very helpful for your patriotic ownership ideals.
        • RedLogix 15.2.1.1

          5 February 2012 at 10:32 pm

          It also implies some mechanism to impose some fairness and equity to the system.. for ALL nations and ALL peoples. Essentially I have always argued that problems which are global in nature demand solutions which a global in scope. That implies some form of global governance.

          At that point most people spit their nationalist dummies.

          Consider. You are a citizen of New Zealand. Therfore you are bound to some degree or another by it’s laws, practises and customs. Has that obligation added to or subtracted from your personal freedom?

          Consider. You are a citizen of no country. I’d suggest you ask a stateless person about how much personal ‘freedom’ they feel.

          Essentially my response is that while maintaining a sane and committed loyalty to the land I love and live in; it is in all of humanities best interests to embrace some form of truly global governance … that is both accountable and that ordinary people have some sense of democratic participation in. At this present time that’s a challenge… hell we don’t even get much of that sense from our national governments.
    • KJT 15.3

      8 February 2012 at 9:09 pm

      “”If currency debasement is the answer, then Zimbabwe must be the world’s economic super power.””

      Working fine for China.

      Zimbabwe destroyed their own productive sector.

      Just like New Zealand. Destroying local production for ideological reasons.

      Why is it more inflationary for a government to increase the money supply, than an overseas bank? At least we do not have to incrementally increase the money supply to pay interest offshore.

      We already have intolerable inflation anyway. 25% in basic foods this last year.
16. Rusty Shackleford 16

    5 February 2012 at 10:49 pm

    “While the rest of the world is moving away from the ‘hands off’ monetary policy…”

    Not true. Business cycle targeting as preached by the monetarists is not “hands off”. Bernard is calling for ramping up the printing presses. The Standard fails logic again.
    • McFlock 16.1

      5 February 2012 at 11:00 pm

      Rust Shackleford: Somalian Finance Minister. Well, for the bits that aren’t controlled by Al Shabab.
      • Rusty Shackleford 16.1.1

        5 February 2012 at 11:04 pm

        So, you agree the premise of the article is incorrect?
        • McFlock 16.1.1.1

          5 February 2012 at 11:20 pm

          nah. You’re a fucking moron.
          • Rusty Shackleford 16.1.1.1.1

            5 February 2012 at 11:22 pm

            You guys crack me up. You demonstrably suck at econ but I’m the moron.
            • Colonial Viper 16.1.1.1.1.1

              5 February 2012 at 11:24 pm

              If you believe in orthodox econ then yes, you are the moron. If part of the Austrian school, then just partly moronic.
              • Rusty Shackleford …

                5 February 2012 at 11:28 pm

                I probably should have said logic rather than econ. Main stream econ fucking sucks. They got us into this mess.

                The Austrians consistently logically explain and presciently predict financial crises. They were the only ones to predict this one in advance. More importantly, they have the best explanation of why it happened and why it will continue to happen.
                • rosy …

                  5 February 2012 at 11:45 pm

                  I really wish you wouldn’t say “the Austrians”… I get confused – the social democracy I’m living in would never support the ‘logic’ you use.
                  • Rusty Shackleford …

                    5 February 2012 at 11:51 pm

                    In a discussion about econ, it’s a perfectly acceptable term. If you want to discuss economics, you have to be familiar with the terms. If we were talking about physics, you would be expected to recognise common terms and phrases. If you couldn’t then it wouldn’t be unreasonable for you to be expected to excuse yourself from the discussion.
                    • rosy …

                      6 February 2012 at 12:03 am

                      If you don’t understand a little subtlety then maybe you should excuse yourself from replying.

                      I was quite aware that you were talking about the Austrian school of neo-lib economic thought. Using the term ‘the Austrians’ to support a neo-lib argument is like saying NZ is egalitarian (because it once aspired to be).
                    • Rusty Shackleford …

                      6 February 2012 at 12:07 am

                      ‘…the Austrian school of neo-lib economic thought.’

                      This exemplifies your ignorance. There are only a few similarities between the Austrians and the neo-libs.
                    • rosy …

                      6 February 2012 at 12:17 am

                      Sorry (not really) – the Austrian school analysis might be more extensive than neo-lib, but I just get hung up on how the probable results of Austrian school economics and those of the neo-libs (if they subtracted the political machinations they’re so fond of) appear to me to result in very similar outcomes.
                • Colonial Viper …

                  5 February 2012 at 11:54 pm

                  More importantly, they have the best explanation of why it happened and why it will continue to happen.

                  I think what you say here has some substance.

                  But don’t tell us why this is going to continue, tell us what your theory says that the people, global governments, and the private sector must do to get the best possible end result for modern society.
                  • Rusty Shackleford …

                    6 February 2012 at 12:00 am

                    Global govts need to stop overtly murdering people and committing violence against their citizens. At the same time govts need to prosecute members of the private sector who do the same (a much smaller number). The best way to do this is to severely restrict the power and scope of centralized govt.
                    • Colonial Viper …

                      6 February 2012 at 12:06 am

                      The best way to do this is to severely restrict the power and scope of centralized govt.

                      But central govt must play its role to regulate and enforce high standards of fair play and transparency in the corporate and financial sectors.
                    • Rusty Shackleford …

                      6 February 2012 at 12:11 am

                      That’s exactly what I just said (up to a point). The govt doesn’t need to do the myriad of other (destructive) stuff it does in order to achieve what you just stated (up to a point)
                    • Colonial Viper …

                      6 February 2012 at 12:35 am

                      Just remember that the government’s role is to get things done which society needs and will benefit from, and which individuals cannot do effectively one on one, and which the private sector either can’t or won’t do.
                    • Rusty Shackleford …

                      6 February 2012 at 12:38 am

                      ‘…which society needs and will benefit from, and which individuals cannot do effectively one on one,’

                      I don’t think many of these things exist.
                • KJT …

                  8 February 2012 at 9:16 pm

                  Very debatable.

                  The Austrians and the Neo-Liberals are identical in their antisocial Darwinian meanness. They justify it with different hypotheses, that’s all.

                  I suggest Marx. Capitalism collapsing under the weight of its own inconsistencies.

                  Or Adam Smith. Tax the owners of capital, not the workers and entrepreneurs, because they produce the wealth.

                  Rutherford is also relevant here. “If you cannot explain what you are doing to the cleaning lady, then you do not understand it”. Most Neo-Liberal economists, the Austrians and Rusty.

                  Mind you if they did understand it, and they explained it truthfully to the majority, they would be headed for the guillotine.
            • McFlock 16.1.1.1.1.2

              5 February 2012 at 11:29 pm

              you’re not saying I’m the most intelligent person who has ever contributed to the standard are you, you fucking moron?
              • Rusty Shackleford …

                5 February 2012 at 11:33 pm

                I don’t know what you’re talking about.
                • McFlock …

                  5 February 2012 at 11:45 pm

                  I called you a moron, you then went off about the relative intelligence of”You [guys] demonstrably suck at econ [or logic] but I’m the moron.”
                  I just assumed that the most recent calling of you as a moron was the king-hit you were referrring to. Otherwise you would have accepted that you were a moron beforehand, yes? By force of logic?
                   
                   
                   
                  • Rusty Shackleford …

                    5 February 2012 at 11:53 pm

                    Shut the fuck up you fucking clown.

                    That wasn’t really as satisfying as I thought it would be. I’m confused as to why you get so much pleasure out of it. Small minds/easily amused, I guess.
                    • McFlock …

                      6 February 2012 at 12:04 am

                      Nah, at 11:57pm on the night before a stat hol i’m pissed off my fucking nut.  and you reappear from the ether.
                         
                      Rusty,
                      yu are a stupid fucing moron who advocates policies that kill babies. You sleep at night just because you believe in the mirage of 100% social mobility. You are a fucking moron. I’ve met a hundred of you. Every single time your arrogance outweighed your intelligence. When I read your philosophy, I feel like I need to drain the festering pus from my eyeballs. Go fuck yourself, you fucking sociopath.
                    • locus …

                      6 February 2012 at 12:06 am

                      well i found mcflock’s analysis amusing 🙂 perhaps big minded people (and i don’t mean that in the sense of high iq) don’t have a sense of humour
                    • Rusty Shackleford …

                      6 February 2012 at 12:08 am

                      Heavens above.
                    • McFlock …

                      6 February 2012 at 12:25 am

                      Yes indeed – this is the heavily-non-sober semi-cosncious pesudonymous-psyche talking at you, Rusty.
                      At the best of times I might try and debate points of policy. But you know what I really think you are, in real life seperated from these debates by meeting agendas and policy manifestos and press releases and  policy documents and national health reports and evidence-based reviews and all the sum of human knowledge as it is now, in the deep dark base of my brain, in the whisper I might hear when I close my eyes, in the shadow the flicks across the blind?
                            
                      You’re just a fucking baby killer. You apologise for killing babies, you almost give the impression that you give a shit. But you still fucking want it to happen.
    • Draco T Bastard 16.2

      5 February 2012 at 11:20 pm

      I think you failed reading – again.
    • Colonial Viper 16.3

      5 February 2012 at 11:25 pm

      Not true. Business cycle targeting as preached by the monetarists is not “hands off”

      No more ordinary business cycles. A balance sheet recession combined with energy depletion characterises a secular change in the global economy.
      • Rusty Shackleford 16.3.1

        5 February 2012 at 11:31 pm

        The laws of econ change as often as the laws of physics (never). The problem is, it’s possible to measure and test the physical environment. It’s much more difficult to measure economic fluctuations.

        ‘energy depletion’
        As far as I know, energy production is still increasing year on year.
        • Colonial Viper 16.3.1.1

          6 February 2012 at 12:00 am

          Economics is a pseudo science and economists are faux experts.

          A nuclear engineer can tell you how to build a nuclear reactor and make it happen. A nuclear engineer is a kind of expert who can deliver what is promised.

          An economist – can an economist tell you how to build a prosperous and sustainable economy for all??? An economist is a faux expert – cannot deliver what is promised and usually delivers the opposite.

          As far as I know, energy production is still increasing year on year.

          Too crude a measure. Count barrels of oil available per dollar per capita mate. That gives you a very different picture.

          Also gross energy production does not detail the distribution of that energy. Many growing and developed countries which need the most energy in the next 10 years – are not the countries which own or control those resources.

          That is a recipe for conflict.
          • Rusty Shackleford 16.3.1.1.1

            6 February 2012 at 12:04 am

            “An economist – can an economist tell you how to build a prosperous and sustainable economy for all??? An economist is a faux expert – cannot deliver what is promised and usually delivers the opposite.”

            100% agree with this. But, this doesn’t give anyone carte blanch to then make proscriptions on how a prosperous economy should be built because no single person or group of people knows how to do this. Not one. Which is why the Austrian (economists)s make very few positive comments on what should be done. Only pronouncements on what certain groups shouldn’t do.
            • Colonial Viper 16.3.1.1.1.1

              6 February 2012 at 12:07 am

              Negative advice is quite valid so I appreciate what you are saying.
            • locus 16.3.1.1.1.2

              6 February 2012 at 1:23 am

              Amongst their “very few positive comments”, Austrian school economists argue/pronounce that governments should not get involved in an economy (taxes, interest rates, money supply, investment decisions etc) because this undermines the efficiency of the ‘laissez-faire’ price mechanism. From what I’ve read it seems that the Austrian school has deduced a “law of economics” namely that the price mechanism is the most efficient means of governing an economy.
              Apparently ( http://en.wikipedia.org/wiki/Austrian_School ) the Austrian school is increasingly outside the mainstream of economic thought. I wish this were the case, but I can’t help thinking that their ideology, sorry “economic law”, has helped to give justification to the neo-liberals in their aim to transfer control of economies from the public to the private sector,
              In my opinion the best examples of countries that have both the healthiest economies and happiest citizens are those where the governments have strongly regulated against the excesses of the free market, and where regulators have had the courage to step in.
              • Rusty Shackleford …

                6 February 2012 at 1:28 am

                “Amongst their “very few positive comments”, Austrian school economists argue/pronounce that governments should not get involved in an economy.”

                This is a negative statement.

                “Govt SHOULDN’T do this or that” is a negative statement.

                The govt should “regulate the excesses of the private sector” is very much a positive statement that the people saying it need to back up with evidence and stats. Then when the regulation inevitably makes the situation worse they need to stfu and say sorry. Which they never do. All they do is call for more regulations.
              • Rusty Shackleford …

                6 February 2012 at 1:36 am

                “but I can’t help thinking that their ideology, sorry “economic law”, has helped to give justification to the neo-liberals in their aim to transfer control of economies from the public to the private sector,”

                Neither the public nor the private sectors should be in control of the economy. The people who provide for the needs of the people should be in charge of the economy.

                This rules out the govt for a start as the govt can’t exist without the people who actually produce stuff. This leaves entrepreneurs whose success has to be measured by how much value they provide to people. Not by how much money, power and influence they can convince the govt to give them.
                • Rusty Shackleford …

                  6 February 2012 at 1:40 am

                  “In my opinion the best examples of countries that have both the healthiest economies and happiest citizens are those where the governments have strongly regulated against the excesses of the free market, and where regulators have had the courage to step in.”

                  Like China under Mao, North Korea, Cuba etc? Those countries eliminated the free market entirely and look how they turned out.

                  The “excesses” (like what? these problems can usually linked back to govt action) of the free market pale into insignificance when compared to the excesses of unrestrained govt. http://en.wikipedia.org/wiki/Democide
                  • KJT …

                    6 February 2012 at 2:30 pm

                    LOL. Like Sweden, Norway Switzerland!

                    http://www.alternet.org/story/153929/How_Swedes_and_Norwegians_Broke_the_Power_of_the_%271_Percent%27/?page=3

                    You mean.

                    The excesses of Government power always occur when the rights of ordinary citizens are abrogated by a minority.
                    Whether by a totalitarian Government, or a Government totally controlled by a few wealthy people.

                    UK, USA, and the way NZ is heading, and North Korea are more similar than you think.

                    Countries where ordinary citizens still retain democratic control are doing just fine.
                    • Rusty Shackleford …

                      6 February 2012 at 2:33 pm

                      100% agree.
17. Rusty Shackleford 17

    6 February 2012 at 1:30 am

    “the Austrian school is increasingly outside the mainstream of economic thought.”
    Ever heard of Ron Paul? He could be a racist coot, but he’s running for the Republican nomination. I would hardly call that outside the mainstream.

    Thinkers (well, business men) like Peter Schiff were pointing out that the economy was going to crash in 2006. He is a proponent of Austrian Economics.
    • locus 17.1

      6 February 2012 at 1:41 am

      Just about anyone could have predicted the economy was going to crash in 2006. Back then we told our kids to wait to buy their TVs on Trademe because the credit chickens were going to come home to roost.

      You missed my point, I said I ‘wished’ that they (Austrian school) were increasingly outside the mainstream.

      The ‘positive comment’ from the Austrian school is that the economy will run itself.

      Are you implying that there should be no regulation of the excesses of the private sector?

      As for stats, why don’t you find some stats which show that the laissez-faire economies are doing the best. Come back and talk when Somalia is doing as well as Germany.
      • Rusty Shackleford 17.1.1

        6 February 2012 at 1:47 am

        “Just about anyone could have predicted the economy was going to crash in 2006.”
        But, they didn’t. Especially the mainstream of economic thought.

        “The ‘positive comment’ from the Austrian school is that the economy will run itself.”
        I don’t think Austrians say that. I think most of them agree that certain prerequisites need to exist in order for a free market economy to prosper. Which is why cracking out the old “Somalia” canard is so dumb and pointless. They don’t have those prerequisites (though they did more without a govt than when they had one and those prerequisites are starting to erode now that outside forces are attempting to enforce “governance” on them).

        “Are you implying that there should be no regulation of the excesses of the private sector?”
        What do you mean by excesses? If you mean fraud or violence, then yes.
        • locus 17.1.1.1

          6 February 2012 at 2:53 am

          Here are a few more who predicted the crisis: http://www.economicpredictions.org/who-predicted-the-financial-crisis.htm
          Schiff is Austrian school, but Alan Greenspan appears to have been a fan of the Austrian school and he didn’t predict it. Hmmm maybe that was due to the influence of Ayn Rand (sarc.)

          Countries that have the ‘prerequisites’ … what do you mean by this? Developed countries? Here’s a list of how countries stack up regarding ‘economic freedom’ http://www.heritage.org/index/ranking

          Somalia v Germany, yes a canard, but how about Ireland v Germany – which do you think is doing better?

          By regulation of the private sector I don’t mean violence or fraud – those are not economic regulations. What I mean is regulation for example on the quality and safety of products, regulation on monopoly power, regulation to make the private sector pay for the social, environmental and ultimately economic costs of their products or means of production. My opinion is that the extreme view that laissez-faire is ultimately more efficient negates the ability to see any advantages arising from government intervention, which is plainly ridiculous.
    • rosy 17.2

      6 February 2012 at 2:48 am

      “He is a proponent of Austrian Economics” .

      That reminds me – so was Alan Greenspan! (until he found there was a flaw, too late). I guess the Mises Institute will be explaining that away…. of course we can pretend he was simply neo-liberal.
      • Rusty Shackleford 17.2.1

        6 February 2012 at 3:09 am

        There’s a slight problem with this line of thinking. Austrians abhor the monopoly right of central banks to issue currency,
        • rosy 17.2.1.1

          6 February 2012 at 8:00 am

          and yet….

          ALAN GREENSPAN: Well, remember that what an ideology is, is a conceptual framework with the way people deal with reality. Everyone has one. You have to — to exist, you need an ideology. The question is whether it is accurate or not.

          And what I’m saying to you is, yes, I found a flaw. I don’t know how significant or permanent it is, but I’ve been very distressed by that fact.

          REP. HENRY WAXMAN: You found a flaw in the reality…

          ALAN GREENSPAN: Flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak.

          REP. HENRY WAXMAN: In other words, you found that your view of the world, your ideology, was not right, it was not working?

          ALAN GREENSPAN: That is — precisely. No, that’s precisely the reason I was shocked, because I had been going for 40 years or more with very considerable evidence that it was working exceptionally well.

          He held that ideology for 40 years – right up until the house of cards that was the American economy collapsed under his light-handed approach to regulation. 40 years that was when he was an Ayn Rand* acolyte and learned about the ideologies the Austrian school espouse. He was a central banker implementing ‘your’ Austrian school ideologies. You have no credibility.

          * http://mises.org/daily/1790 (note the reference)

          Ayn Rand was essentially an Austrian and a Misesian… When Mises read Atlas Shrugged, he was so impressed by her criticism of bureaucrats that he wrote her a “fan letter”
          • Rusty Shackleford 17.2.1.1.1

            6 February 2012 at 1:24 pm

            This is the same as me claiming to be a vegetarian for 40 years but continuing to eat meat. Would I still be considered a vegetarian or have any respect from vegetarians?
            • Colonial Viper 17.2.1.1.1.1

              6 February 2012 at 1:29 pm

              The problem is Rusty as far as I know there are zero examples of successful economies which were built on the foundations of Austrian economic principles. No failed economies either, since Austrian economic principles have never been used in the ‘pure vegetarian’ forms that you might support.

              Countries like Japan, South Korea, Hong Kong, Singapore had economies which were all built on highly interventionist, government supported, bureacratically determined foundations and strategies. (As you know).
            • rosy 17.2.1.1.1.2

              6 February 2012 at 9:34 pm

              Interesting – given the deregulation that was going on in the States, I consider Greenspan in charge of the Fed ‘a fox in charge of the hen house’ rather than a betrayal of beliefs situation.
18. Rusty Shackleford 18

    6 February 2012 at 3:08 am

    Did some googling, huh? (jokes ; ) )

    “Alan Greenspan appears to have been a fan of the Austrian school and he didn’t predict it.”
    This doesn’t really mean much. He didn’t follow Austrian economic proscriptions in action. It’s not what you say, it’s what you do. Also, the very notion of a federal reserve is anathema to Austrians.

    “Countries that have the ‘prerequisites’ … what do you mean by this?”
    Why didn’t you google this?

    Basically, rule of law and private property. Look on the libertarian wiki page. Or read a basic text. Liberalism by Mises is my favorite and you can download it free from Mises.org.
    http://mises.org/resources/1086/Liberalism-In-the-Classical-Tradition

    “By regulation of the private sector I don’t mean violence or fraud – those are not economic regulations. ”
    They are economic regulations and they are really the only necessary ones.

    “What I mean is regulation for example on the quality and safety of products,”
    This is already provided for under the common law. http://en.wikipedia.org/wiki/Donoghue_v_Stevenson
    Besides that. People don’t tend to shop in stores that have low quality or unsafe goods. If they do, it’s by choice because those stores are cheaper.

    You could also argue it falls under the definition of violence and fraud. You sell some one ginger beer that is faulty and they become sick, that’s violence. You claim your ginger beer is safe and it’s not, you are committing fraud.

    “regulation on monopoly power,”
    Only govt can dispense monopoly power. It’s where the word comes from. It was a form of royal prerogative in Britain in the middle ages and early modern era. Probably a long time before that in the rest of the world.

    In a free market, the only way a firm can become a monopoly is if they sell the best product at the lowest price. A good example of this is John Rockefeller and kerosene. He was prosecuted under antitrust laws for driving down the price of heating and light oil (kerosene) thus making heat and light infinitely cheaper for America’s poorest people. How is that a bad thing? Not mentioning the fact he hadn’t monopolized the kerosene business (about 40%) and it was only a political ploy by his competitors.

    “regulation to make the private sector pay for the social,”
    Like smoking? This is a voluntary exchange. The smokers who voluntarily smoke should pay for the consequences of their actions. As an example.

    “environmental and ultimately economic costs of their products or means of production.”
    This can be cleared up by enforcing private property rights. These problems usually occur on public land eg rivers, lakes, parks etc. If you own the river, I can’t dump pollution in it unless I pay for the costs.
    • Colonial Viper 18.1

      6 February 2012 at 1:31 pm

      In a free market, the only way a firm can become a monopoly is if they sell the best product at the lowest price. A good example of this is John Rockefeller and kerosene. He was prosecuted under antitrust laws for driving down the price of heating and light oil (kerosene) thus making heat and light infinitely cheaper for America’s poorest people. How is that a bad thing? Not mentioning the fact he hadn’t monopolized the kerosene business (about 40%) and it was only a political ploy by his competitors.

      Uh…if you think that playing fair in the market using lower prices was how the Rockefellers made their fortune and entrenched their dominant economic position…you need to do a bit more historical reading.
19. Rusty Shackleford 19

    6 February 2012 at 3:12 am

    “advantages arising from government intervention”

    What advantages? Beyond defense (debatable), rule of law and the enforcement of property rights.
20. locus 20

    6 February 2012 at 5:14 am

    wow you can write a lot quite quickly RS, and thanks for the advice to read Mises. Someone warned me about engaging in a debate with you 😉

    Yes I love googling. Blog discussions would be much less interesting without it. Though wikipedia tends to be my start point if i’m on new ground.

    “ He didn’t follow Austrian economic proscriptions in action.” Which proscriptions? I thought you mentioned that the Austrians “make very few positive comments on what should be done. Only pronouncements on what certain groups shouldn’t do.”

    “It’s not what you say, it’s what you do.” Well I partly agree with you in this respect since Alan Greenspan has ‘done’ more than most, though ideas (what people say) ultimately have the greatest effect since they are the main reason why people do what they do.

    I’ve now googled ‘prerequisites’ … and so i guess you are referring to “complete information, interchangeable goods and services, and lack of market power” If this is the case then there’s not much point in pursuing proscriptions of Austrian school laissez-faire or free market theory since none of these prerequisites can be achieved in reality.

    Your view that violence and fraud – “are economic regulations and they are really the only necessary ones” is so far beyond what I personally believe that I don’t want to debate with you but… regarding your argument that selling faulty ginger beer is ‘violence’ …you really are stretching logic and the English language.

    “People don’t tend to shop in stores that have low quality or unsafe goods. If they do, it’s by choice because those stores are cheaper.” So why did all those people buy leaky homes or kill people through the effects of passive smoking? .. C’mon you know perfectly well what I mean when I talk about regulation. Without standards set by the state we’d end up with a lot more misery, injury and early death due to unscrupulous businesses looking for a quick profit.

    I’d like to know whether you think monopoly power, in the sense that a business can have complete control of a market, be defined as violence? If so, how what sort of regulation do you suggest? And before you argue that a monopoly would not occur without govt dispensation, or that Rockefeller was unfairly prosecuted – think on how many of today’s global oil companies would drive the price of their product down to the lowest level. The reality is that companies with control over a market charge what they like and produce what they like in order to maximise profits, not because they have humanitarian notions of helping the poorest people.

    So you think smokers, because they “voluntarily smoke” should pay for the consequences e.g the cost to society of non-smokers suffering the effects of passive smoking? Sorry, I cannot agree with you. I think that it’s absolutely right (in many many areas) for the state to step in to control the power of suppliers rather than punishing the consumer or simply saying buyer beware.

    I’m a bit confused by your view that enforcing private property rights” would prevent or pay for the environmental impacts arising from the means of production, e.g. the production of aluminium, or use of a product e.g plastic bags. Perhaps you can explain?
    • RedLogix 20.1

      6 February 2012 at 7:16 am

      Nah. Quite literally only thing of value in Rusty’s miserable world is private property. Think about that for a moment.

      Because while he derides every other possible function of a state… his philosophy demands that it still exists, but solely to protect his property rights. Note carefully; the one thing he thinks is important, is the one function he demands from the state.

      Any other value that anyone else might hold, is simply derided and insulted.
      • Rusty Shackleford 20.1.1

        6 February 2012 at 1:18 pm

        Total straw man. It’s not a binary view point, all other considerations are not subordinated to the one consideration of property rights. More that all the other good things in life flow from those prerequisites, which are; rule of law, property rights and national defense. It’s kind of hard to have a prosperous nation if some people are gaining favors under the law at the expense of others. If your land or goods is being disposed of by someone other than the owner or if foreign or civil actors are attacking your nation.

        Nice try.
        • Colonial Viper 20.1.1.1

          6 February 2012 at 1:24 pm

          You forgot community spirit and social cohesion as important prerequisites rusty.

          And how do property rights enforced by the state help those who have not; it only seems to give state powered help to those who have. And the more they have, the more state power (or power delegated to private interests by the state) is on their side.
          • Rusty Shackleford 20.1.1.1.1

            6 February 2012 at 1:26 pm

            How is central govt supposed to impose community spirit?
            • Colonial Viper 20.1.1.1.1.1

              6 February 2012 at 1:36 pm

              Come now man…use your imagination. You don’t “impose” community spirit, but you do fund facilities and avenues for people to meet, learn and grow together. Its in how you design the layout of cities and buildings, the emphasis of shows you put on TV, the experts you choose to listen to, its in how you locate schools and community facilities, how you ensure that peoples from every strata of society are mixed in and understand every other strata.
        • RedLogix 20.1.1.2

          6 February 2012 at 3:26 pm

          In other words Rusty, given that you define all social good as flowing from private property and security… therefore you define the sole function of the state to provide them.

          This makes you 100% a statist.

          Nice try yourself.
    • Rusty Shackleford 20.2

      6 February 2012 at 1:23 pm

      locus, I’m happy to help. Do you reckon you could put your questions into one post, please. ie 1,2,3,4,5 or some such? A little sleepy this morning to pick through your post and pull out your questions. First day back at school after a fortnight of skiving off.

      Chances are this book will answer your questions. It’s the go to text for internet libertarians. http://www.fee.org/pdf/books/Economics_in_one_lesson.pdf
21. foreign waka 21

    6 February 2012 at 9:40 am

    Re Austrian School of Economics: One should not forget in what setting this theory was first perceived.
    Here are some quotes on the origins:

    One should also not forget that Europe was a functional Monarchy at that time and the first world war was 40 years away. A lot of experimenting was going on and theories were abound. Adam Smith Theory has then been taken up by America. Please Guys, read up on History. Everything has to be seen in context. To just take one section and manipulate it to ones end makes the person just as bad as the so called perpetrators.

    Classical economics focused on the labour theory of value, which holds that the value of a commodity is equal to the amount of labour required to produce it. French classical economists Jean-Baptiste Say and Frédéric Bastiat considered that value was subjective. In the late 19th century, attention then focused on the concepts of “marginal” cost and value. The Austrian School was one of three founding currents of the marginalist revolution of the 1870s, with its major contribution being the introduction of the subjectivist approach in economics.
    Classical economics is widely regarded as the first modern school of economic thought. Its major developers include Adam Smith, Jean-Baptiste Say, David Ricardo, Thomas Malthus and John Stuart Mill.
    Adam Smith’s The Wealth of Nations in 1776 is usually considered to mark the beginning of classical economics. The school was active into the mid 19th century and was followed by neoclassical economics in Britain beginning around 1870, or, in Marx’s definition by “vulgar political economy” from the 1830s. The definition of classical economics is debated, particularly the period 1830–70 and the connection to neoclassical economics. The term “classical economics” was coined by Karl Marx to refer to Ricardian economics – the economics of David Ricardo and James Mill and their predecessors – but usage was subsequently extended to include the followers of Ricardo.
22. McFlock 22

    6 February 2012 at 12:51 pm

    To my surprise, I prefer the method of dealing with Rusty I – erm – “stumbled upon” last night. Much more cathartic, and without the feeling that I’m trying to thread a moving needle with a live snake.
        
    Although I apologise to the mods and any readers whom my comments upset.
    Except Rusty.
    • Colonial Viper 22.1

      6 February 2012 at 1:36 pm

      You were even more readable than usual, last night, McFlock! How’s the head haha.
      • McFlock 22.1.1

        6 February 2012 at 2:20 pm

        aspirin is my friend 🙂

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1. Fran O’Sullivan: a shill with diversions « The Standard: posted on 5 February 2012 at 2:11 pm

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