Those who do not learn

Written By: - Date published: 4:20 pm, August 11th, 2009 - 15 comments
Categories: national/act government, overseas investment, privatisation - Tags:

Those who do not learn from history are doomed to repeat it. National has learned nothing from the failure of the neoliberal policies of the late 80s / early 90s (when gaps in growth and income opened up with Australia). So they are gearing up to repeat them:

[English] and other ministers’ utter single-mindedness of purpose was evident at the weekend’s National Party conference. They are like bees drunk on pollen. In their case, the tipple is a commodity called power. National intends major reform across what English called a “broad front”. … His theme was reinforced by Justice Minister Simon Power, who warned of the dangers of governments losing momentum. In short: full steam ahead.

High on the agenda will be privatisation of publicly owned assets. Recently appointed “Productivity Czar” Don Brash is already signalling this, listing as one of the impediments to foreign investment in NZ (pdf link):

The capricious way in which the Labour Government over-rode the rights of the shareholders in Auckland International Airport and the rights of two major international investors wanting to buy shares in that company…

What Don sees as capricious others see as principled. And the lesson of history is that it was also wise. A takeover by the Canadian Pension Plan (CPP) would probably have been a fiasco, for the reasons described in this excellent piece by Gordon Campbell:

… CPP’s fortunes have plummeted in the wake of the global economic crisis, and CPP directors have been taking a hammering in the Canadian press and in the Canadian Parliament for awarding themselves huge bonuses even while the fund’s fortunes shrunk by 18.6 % during fiscal year 2009. Is this the sort of enterprise that would had any inclination or ability to put fresh productive investment money into growing its assets in New Zealand? Hardly.

On the evidence of what has happened to CPP, New Zealand should be thanking its lucky stars that its prime tourism and transport hub did not pass into the hands of a pension plan in crisis. The lesson being – not all foreign investment is virtuous. Some of it can be about extracting monopoly rents from captive New Zealand customers. Back in the 1980s, it might have been possible for the naive market zealots of the Lange government to treat the private sector and foreign investment as being inherently virtuous. In this day and age, it is almost criminally stupid to do so.

Thanks to the Labour led government we dodged a bullet. Will National learn any lessons, or is it “full steam ahead”?
-r0b

15 comments on “Those who do not learn ”

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  1. bobbity 1
    11 August 2009 at 4:57 pm

    I don’t know who is the bigger moron Gordon Campbell or you for repeating his bullshit

    • r0b 1.1
      11 August 2009 at 5:56 pm

      I’m sure that joins a very long list of things you don’t know bobbity.

      • bobbity 1.1.1
        11 August 2009 at 6:53 pm

        Yes I freely admit there’s lots I don’t know.

        I do know, however, the size of the CPP and its performance vs the Cullen Fund and similar funds worldwide – I can also recall the size of the investment they were prepared to make in AIA and what percentage stake they were going to take.

      • vto 1.1.2
        11 August 2009 at 10:13 pm

        so r0b, if you had had someone savvy on board you could have allowed the sale to CPPdicks at $200m, or whatever it was, and then bought it back now for probably $20m. Kerry Packer meet r0b.

    • So Bored 1.2
      11 August 2009 at 6:02 pm

      You are the biggest moron Bobbity, its turkeys like you who support this type of nonsense.

  2. Zaphod Beeblebrox 2
    11 August 2009 at 5:38 pm

    What is this ‘broad front’ and ‘regulatory reform’ they keep crapping on about? So far all they have done is take away a few programs and reduce a few departments. As far as I can see they are a typical do nothing conservative government.

    Ok they’re planning to open some of our assets to foreigners but that is hardly ‘reform’. That’s just a way of increasing foreign capitaI by creating a highere current account deficit. I can’t see them having the guts to sell much- they will know selling government assets is not popular (except for the 3.8% who are ACT voters) and I doubt that they will do much that Brash suggests as his suggestions are likely to be either impractical or too toxic to either National or Labour voters.

    Lets wait and see but I suspect the rhetoric is just merely an attempt to cover up the fact that they have no original ideas and very little creativity or political nous to do anything significant or memorable during the eight years that they will be in power.

    They’re a bit like a teenage schoolgirl, they love following the prevailing fashion (Yes Mr Obama, we’ll commit our SAS, lets have a 10-20% emissions target to make us look good at Copenhagen, lets get tough on crime people will like us, lets get rid of provocation as defence- that Weatherston guy used it, lets crush boy racers cars etc etc), when the herd moves they will too.

  3. Tim Ellis 3
    11 August 2009 at 9:23 pm

    What a good thing it was for the CPP not to buy into AIAL. After all, had they done so, given they’ve lost so much money in the last year, they might have been tempted to rip up the runway, haul it back to Canada and use it in Ottawa instead of New Zealand. Then where would we be?

    As for foreign investors extracting monopoly rents in New Zealand, there isn’t any evidence that foreign investors are more likely to do so than domestic investors. Secondly we have a commerce commission which should have the teeth to regulate monopolies. If they don’t have the teeth to do that then the Labour Government failed to give them such teeth after nine years.

    Thirdly, if AIAL was a “principled decision” on the basis that it was a monopoly, then how was it principled to allow the sale of a major lines company to a Chinese investor?

    • BLiP 3.1
      11 August 2009 at 11:26 pm

      More bullshit from Timmy:

      they might have been tempted to rip up the runway, haul it back to Canada and use it in Ottawa instead

      This is probably an attempt at humour to mask the real consequences of having the Auckland Airport owned by a foreign company in financial difficulty. Actual consequences would include ramping up of rents, higher costs to airport visitors and travellers, degradation of safety, and local suppliers having to wait longer to get paid while foreign investors got their dividends and other foreign operations were subsidised by New Zealanders.

      As for foreign investors extracting monopoly rents in New Zealand, there isn’t any evidence that foreign investors are more likely to do so than domestic investors.

      So what – does that make it a good thing? It was the very prospect of monopoly rent that attacted CPP in the first place. Without it, they would never have showed up.

      Thirdly, if AIAL was a “principled decision’ on the basis that it was a monopoly, then how was it principled to allow the sale of a major lines company to a Chinese investor?

      Apples and oranges are not the same thing but, given Timmy’s staple diet is most likely bananas, how would he know that? Poor dear.

    • Draco T Bastard 3.2
      11 August 2009 at 11:47 pm

      As for foreign investors extracting monopoly rents in New Zealand, there isn’t any evidence that foreign investors are more likely to do so than domestic investors.

      Yes, we agree, privately owned monopolies are bad for the economy. Foreign owned ones are worse though due to the profits going overseas. At least with domestically owned monopolies the money will stay here.

      Secondly we have a commerce commission which should have the teeth to regulate monopolies. If they don’t have the teeth to do that then the Labour Government failed to give them such teeth after nine years.

      It’s a rubber stamp organisation – It approves anything businesses want. Yes, Labour are culpable for not changing that but so are National because they didn’t make it any better in there previous nine years.

      Thirdly, if AIAL was a “principled decision’ on the basis that it was a monopoly, then how was it principled to allow the sale of a major lines company to a Chinese investor?

      It wasn’t.

    • lprent 3.3
      12 August 2009 at 9:45 am

      So Tim, you’re expecting that NACT will issue such teeth to the commerce commission. Didn’t they just force someone to resign from there for being too effective (ie interfering with the rights of business plundering?).

      Having a owner in financial distress wouldn’t have exactly help the exporters who use the airport.

      • Roger Randall 3.3.1
        12 August 2009 at 9:53 am

        Yeah, little Markie Weldon appears to have shafted wide body Janey Diplock – although word on the street is she hadn’t made many friends with the other kids so it may have been coming anyway.

        However Labour has done nought to purge the monopoly duopoly routing of the NZ citizen by such luminary companies as Telecom/Vodafone, ‘lectrcity’s r us, REINZ, Banking AU et al. Or AIA.

  4. Greg 4
    12 August 2009 at 2:04 pm

    “Those who do not learn from history are doomed to repeat it. National has learned nothing from the failure of the neoliberal policies of the late 80s / early 90s (when gaps in growth and income opened up with Australia). So they are gearing up to repeat them:”

    You have a very one sided view of history. The policies weren’t failed, they were a success. They increased productivity, increased GDP and bought NZ into the 21st century. Do you remember the price of rugby boots before Douglas’s reforms?

  5. Greg 5
    13 August 2009 at 1:54 pm

    Its not slave labour blip, but it is appalling. Its not slave labour because people work in sweat shops by choice. They make this choice because they have no better alternative. Yes we should be doing all we can to help developing countries. But not buying the goods they produce is going to make them worse off, not better off.

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