NZ Inc: Frightening the invisible horses of the market

Written By: - Date published: 12:15 pm, September 16th, 2014 - 15 comments
Categories: capitalism, Economy, election 2014, infrastructure, labour - Tags: ,

Today’s anonymous Herald editorial is scathing of Labour’s NZ Inc policy, which defies all logic and reason by assuming that there are better ways to build our economy than flogging off profitable assets, built by New Zealanders, to foreign investors.

One of the arguments is literally that Labour shouldn’t pass laws which future governments might overturn! If only we’d heard the same when the GCSB Act was being passed.

I’m not an economist, sure. But I’m a political observer. And asset sales have never benefited this country – they’ve benefited private speculators (very few of them Mums and Dads) who pursue profit, and cost our country both in terms of the future dividends from those assets and the basic level of service you get when an organisation is run to serve the public interest instead of to make money for the sake of money.

The core conflict between the NZ Inc policy and the anonymous writer at the Herald is about public interest. It’s about believing that there are some fundamental things which are more important than money, and being a country which can stand on its own two feet and isn’t beholden to private interests is one of them. Believing that assets are strategic, and have a value to our community beyond their ability to earn money.

The Herald’s editorial says deciding which ventures to invest in should be left to private investors who are “willing to take the risks”. That’s another myth. We’ve seen more than enough examples of private investors demanding bailouts from the government, or covering their own asses with trusts and cunning accounting, or simply funding rightwing parties to get into government and sell them the assets which we built up over the years so they can skim the cream off the top.

NZ Inc challenges a lot of the received wisdom about the supremacy of private market manipulators. And that’s one of the best things you can say about an economic policy.

15 comments on “NZ Inc: Frightening the invisible horses of the market ”

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  1. Sable 1
    16 September 2014 at 1:44 pm

    Do you think perhaps the anonymous author was our good friend at Whale Excrement? After all he is a journalist now…

  2. hoom 2
    16 September 2014 at 2:01 pm

    The only real problem & legitimate complaint is that $100 mil per year is pretty small.

  3. 100% Pure NZ 3
    16 September 2014 at 2:07 pm

    Efficient market hypothesis – is a discredited, anachronistic con-job rolled out by the likes of JK at a moments notice.

    Markets are never Rational. They are therefore, by definition, not able to be Efficient.

    Rational, efficient markets would allow that everyone has access to the same information, at the same time with the same resources. Therefore, there could be no arbitrage.

    So, how did JK make his money? – not through any arbitrage surely, just by being “good” at his job – if you believe his spiel.

    Every individual (and, by that I also include the famous Mitt Romney quip “Corporations are people, my friend”) – is perversely incentivised to pursue the outcome which favours themselves – over and above any other party.

    The JK argument goes along the lines of: “in a free, democratic capitalist society, I’m able to decide for myself if I wish to consume 80 cigarettes a day – freedom of choice – stop restricting my human rights!”

    However, in sovereign states such as New Zealand (NZ) – with universal healthcare and other societal contracts, such as exist currently in NZ – you do not have that choice, not if it results in a net. cost to society.

    Therefore, the same goes for not contributing to the IRD Tax base via Tax evasion, diminishing legal protections for pecuniary gain, perverting democratic process, etc.

    Vote positive – vote for a humane, caring society – which offers assistance to those who require it. That is what Human Rights are about. One the provides the same free education opportunities for all. That is a good start to growing the economy. Not through Austerity.

    Over time NZ will come to understand that the JK Government has been a criminal Government. One that has betrayed its fiduciary obligation to serve the people – for the Good of society.

    • blue leopard 3.1
      16 September 2014 at 3:06 pm

      +100 100% Pure NZ

    • Draco T Bastard 3.2
      16 September 2014 at 3:36 pm

      Markets are never Rational. They are therefore, by definition, not able to be Efficient.

      Check out the Fallacy of Scale, also called the Fallacy of Composition and then consider that economists had to invent the rational actor that they then based everyone’s behaviour on.

      Over time NZ will come to understand that the JK Government has been a criminal Government.

      Considering the evidence already out and that Labour and all the other present opposition parties have said that there will be a Royal Inquiry into things and it may not be all that much time.

  4. Claris Moses 4
    16 September 2014 at 3:03 pm

    Must have been written by Slater,.

  5. blue leopard 5
    16 September 2014 at 3:03 pm

    From said article that noone was willing to put their name to:

    “That is far less likely if it must must invest in an area that often defies commercial rationale. Indeed, if there is a swag of clean-energy companies just waiting to deliver investors strong returns, it is reasonable to ask why the Super Fund has chosen not to put money into them. Obvious reasons are the experimental nature of many and a high failure rate overall.”

    Yeah, commercial rationale is simply focused on profit – too bad if wider considerations get shafted.

    If it kills people but makes profit – do it.
    If it creates ill health yet makes profit – do it.
    If it causes poverty for many – even starvation – but makes profit – do it.

    Commercial rationale says it is better to speculate with money than invest in productive enterprises.

    Commercial rationale likes less workers, not taking into account what unemployment does to their custom base.

    Labour are encouraging a culture of healthy, sustainable form of investing and also finding sources of revenue alternative to income tax.

    Commercial rationale probably wouldn’t like healthy, sustainable form of investing, because Commercial Rationale acts like it has a death wish. Commercial Rationale screams for less taxes but anything that might lead to less of a tax burden it screeches about. I guess Commercial Rationale has a split personality along with a death wish.

    I just worked out who wrote the article:
    Commercial Rationale – An ephemeral illogical idea that gets trotted out to deliver poor excuses when business people and investors are being asked to shift their attitudes for the good of all.

  6. Draco T Bastard 6
    16 September 2014 at 3:29 pm

    The Herald’s editorial says deciding which ventures to invest in should be left to private investors who are “willing to take the risks”.

    As Mariana Mazzucato points out in The Entrepreneurial State it’s the state that takes the big risks, chooses the winners (and that they’re better at it than the private sector) and then the private sector rushes in after the government have taken the risks to scoop the profits while also structuring their finances so as not to pay any of the taxes required to keep the Golden Goose going.

    All that the privatisation is doing is taking us back to the Gilded Age and feudalism where the few owned and controlled everything and everyone else was in poverty. It has never been the rich that paid for anything – it has always been the poor.

  7. Ant 7
    16 September 2014 at 4:10 pm

    Sounds like Fran is still a bit shitty because she thinks she owns the term “NZ Inc” and Labour stole it off her.

  8. tricle up 8
    16 September 2014 at 6:04 pm

    NZ INC is a good start. All assets profits left to average do maintain a positive return, why sell the most profitable assets..Sadly this article is fair comment..Corporate raiders unlocking the value. Social benefits are in the equation but are ignored.