That any marketing executive would stoop to crass tricks like full-frontal nudity (male and female, even!) and dirty puns just to sell some face wash is a deplorable spectacle and we're sure that the rest of their more respectable peers in advertising community will take them to task, perhaps even shunning them for besmirching the respectability of their profession. Plus, we only have basic cable so we'll probably never get to see these ads on TV...
Monday, 21 May 2007
Is this a serious offer? Or another flip flop in a long line of past and future flip flops, one calculated only to drown out the confusion caused by John Boy's deputy?
- Start at 1998, and you'll see global surface temperatures stable. (Yes, that's right Josephine, "According to official temperature records of the Climate Research Unit at the University of East Anglia in the UK, the global average temperature did not increase between 1998-2005...")
- Start at 1860 and you'll see that temperatures have been rising.
- Start one thousand years ago, and depending on which graph you look at, and how the data has been compiled and used, you'll see a temperature record that has been rising and falling.
- And now, start back 425,000 years (using results from the Vostok Ice Core, complied by NOAA), and what do you see?
We see that temperatures have been falling and rising and falling and rising and falling and rising and falling and rising and falling and rising ... In fact, notes the site that hosts this last graph, "there’s quite a bit of fluctuation":
First of all, There are long periods of time when the average global temperature was as much as 9°C colder than now. These were Ice Ages. Much of the northern part of the world was covered with thick sheets of ice, much like we see today in Greenland and Antarctica. The most recent Ice Age ended about 12,000 years ago. There were also times when it was warmer than today. On the whole, we are in a relatively warm period. What causes these changes in climate?
The results of that attitude can be seen every weekend on the streets of New Zealand. Young adults who are still kids are killing each other, and themselves.
Not educating kids for adulthood is not preparing them for life in the adult world, and for some especially tragic cases, it's killing them. Why shouldn't kids be stretched in the safety of classrooms and the home, especially when "new research suggests some of the brain's basic building blocks for learning are nearing adult levels by age 11 or 12." [Story here.]
So by the age of 11 or 12, children's brains are at adult capacity, "suggesting a foundation necessary for higher learning is in place by puberty," says John Gilmore of the University of North Carolina School of Medicine. Yet modern educationalists steadfastly refuse to use that capacity; they fail to fill that enormous capacity for knowledge and and for learning, leaving these young students (even as they reach adulthood) adrift in a world they can barely understand and with brains that have never automatised the skill of actually thinking. George Reisman berates educationalists for this signal failure.
Magnetic Resonance Imaging (MRI) scans of the brain and other tests to determine IQ, verbal ability, mental processing speed, spatial ability, memory, fine motor dexterity, psychosocial function, reading and calculation ability, and other measures of psychological function were conducted revealing that a child’s grasp on such cognitive tasks improves rapidly between age 6 and 10, but levels off thereafter and improves very slightly or not at all during adolescence because before attaining the age of 12 years the brain makes more connections between nerve cells that in turn enlarge vital regions. After puberty, the process slows and the brain "prunes" itself, focusing less on installing new wiring than on programming and refining what is already there.
"The basic building blocks seem to be in place by the time someone reaches 11 or 12," [said Dr. Deborah Waber of Children's Hospital Boston, who led the analysis published in the Journal of the International Neuropsychological Society.]
Now, properly, education is a process by means of which students internalize knowledge: they mentally absorb it through observation and proof, and repeated application. Memorization, deduction, and problem solving must constantly be involved. The purpose is to develop the student’s mind – to provide him with an instantaneously available storehouse of knowledge and thus an increasingly powerful mental apparatus that he will be able to use and further expand throughout his life. Such education, of course, requires hard work from the student. Seen from a physiological perspective, it may be that what the process of education requires of the student through his exercises is an actual imprinting of his brain.Simple uneducated men and women who have very little ability to understand the world in which they live and, in a world awash with moral relativism, few moral signposts along the way to help them understand how to act in this world. (This is exacerbated by the fact that, as Jordan Grafman of the NIH's National Institute of Neurological Disorders and Stroke points out, "the region responsible for things such as impulse control and moral judgment is the last to mature, sometime in the early 20s.")
Yet, under the influence of the philosophy of Romanticism, contemporary education is fundamentally opposed to these essentials of education...
With little exaggeration, the whole of contemporary education can be described as a process of encumbering the student’s mind with as little knowledge as possible. The place for knowledge, it seems to believe, is in external sources – books and libraries – which the student knows how to use when necessary. Its job, its proponents believe, is not to teach the students knowledge but “how to acquire knowledge” – not to teach them facts and principles, which, it holds, quickly become “obsolete,” but to teach them “how to learn.” Its job, its proponents openly declare, is not to teach geography, history, mathematics, science, or any other subject, including reading and writing, but to teach “Johnny” – to teach Johnny how he can allegedly go about learning the facts and principles it declares are not important enough to teach and which it thus gives no incentive to learn and provides the student with no means of learning.
The results of this type of education are visible in the hordes of students who, despite years of schooling, have learned virtually nothing, and who are least of all capable of thinking critically and solving problems. When such students read a newspaper, for example, they cannot read it in the light of a knowledge of history or economics – they do not know history or economics; history and economics are out there in the history and economics books, which, they were taught, they can “look up, if they need to” ...
Properly, by the time a student has completed a college education, his brain should hold the essential content of well over a hundred major books on mathematics, science, history, literature, and philosophy, and do so in a form that is well organized and integrated, so that he can apply this internalized body of knowledge to his perception of everything in the world around him. He should be in a position to enlarge his knowledge of any subject and to express his thoughts on any subject clearly and logically, both verbally and in writing. Yet, as the result of the miseducation provided today, it is now much more often the case that college graduates fulfill the Romantic ideal of being “simple, uneducated men.”
In the words of the poet, contemporary educationalists have left young adults "alone and afraid in a world they never made," and are unable to understand. Little wonder then that so many lost teenagers try to find whatever they can in drugs, emo, delinquent driving, gangs and whatever else they can find. Modern educationalists and their factory schools have a hell of a lot to answer for.
Saturday, 19 May 2007
- The US Center for Public Policy Research is turning Greenpeace's insistence on climate skeptic organisations revealing their funding back on Greenpeace, "challenging Greenpeace and its affiliates to disclose the sources and amounts of its 2006 donations exceeding $50,000," and revealing some of those donors.
Greenpeace - perhaps based on its own behavior - assumes that donations influence the stands groups such as ours take. They do not. So that the public can judge for themselves, we're challenging Greenpeace to complete transparency through disclosure of major gifts... If Greenpeace expects its call for public disclosure of grants of other groups to be taken seriously, they should lead by example. If not, they're the real "denial industry."If Greenpeace agrees, says The Center, then they will do the same. See Think Tank Challenges Greenpeace to Meet Transparency Standards.
- John Stossel makes a point, which as usual is a point worth making:
Whenever someone is hurt in an accident, people say, "There ought to be a law!" Politicians rush to oblige them and then take credit for all the lives they saved. But shouldn't they also accept blame for the lives lost because of those laws?
Lives lost? Yes. A joint study by the Brookings Institution and American Enterprise Institute found that government regulations that are supposed to save lives actually end up killing more people. Why? Because safety laws almost always have unintended bad consequences.See John Stossel: Hazardous Safety Regulation.
- Hate Crime. Ed Cline has the real oil on so called "hate crimes," and here's the nub:
The first and most crucial thing to grasp about what can be deemed a “hate crime” is that it is, essentially, a political crime.He's right you know. Read Ed Cline: The Genesis of Thought Crime.
- And read Ed too on Jamestown -- the first successful American colonial outpost -- and Why Jamestown Matters,.a letter correcting a politically correct account of the colony that appeared in a national newspaper. As you'll see, Ed's account has relevance both to New Zealand colonisation, and to recent arguments about politics and religion. Historian Eric Daniels fleshes out Ed's response in a more detailed exposition of the Jamestown colony. Jamestown, he says, was The Birthplace of America's Distinctive, Secular Ideal.
- David Bain is the new David Beckham, or so you would think from all the media coverage he's received this week. When will he be on Dancing With the Stars? Notes the Kiwi Pundit,
The 'miscarriage of justice' referred to in the [Privy Council] decision is not that the verdict was likely to be wrong. The point is that justice requires that the defendant be convicted by a jury that has seen all the evidence. The Bain jury didn't see all the evidence, therefore there is a miscarriage of justice. There is no inference that the jury would have, or should have, decided the case differently based on the new evidence.It's too easy to forget that David Bain is still a suspect -- one of only two suspects in a multiple murder -- and as such he needs a proper trial to either clear his name or determine his guilt. Guilt in this case should be easier to prove than in many other cases, since there are only two suspects, and for the other one to have "done it," then you have to be able to show that he subsequently suicided -- a difficult job by all accounts. Meanwhile, Falufulu Fisi reminds us of the leading evidence against David Bain in this comment.
- Increasing illiteracy is not unique to the products of NZ's factory schools -- it's a worldwide failure due to the signal failure of a leading literacy theory, the stupid "whole language" method of not teaching reading -- a method that "teaches children to memorize and guess at words, using pictures and other clues, instead of using phonics skills to sound them out." It's worth reminding ourselves that "the experts" responsible for this abject failure still rule the roost at the world's teachers' colleges, pumping out new teachers to teach illiteracy to new generations of students every year.
Martha Brown names names in this article, pointing out some of those responsible for both introducing and maintaining a method of teaching that has ensured that in New Zealand a staggering 66.4 percent of Mäori were below the minimum level of “ability to understand and use information from text,”and an equally tragic 41.6 percent of non-Mäori, and "that the United States, like Haiti, is among the seven out of 39 Western Hemisphere nations entering the third millennium with a literacy rate below 80 percent."
Why do we face this elementary problem? Read Brown's Poor Reading-Instruction Methods Keep Many Students Illiterate to begin finding out, and to see what part "NZ's own" Marie Clay has to play in the whole scam. Have a look at this local page for a brief introduction to the difference between whole word, whole language and phonics, and read some of Patrick Goff's articles at this index to get some of idea of how phonics really does works for reading. Brown's conclusion is worth quoting in full. Explaining why Marie Clay's Reading Recovery programme still continues despite both research and practical experience of failure that discredits it, she concludes:
Writing separately, [literacy researchers] Groff and Lyon both speak of poor teacher preparation and (in Lyon's words) of "the tendency for educational practices and policies to be guided by philosophical and ideological factors rather than scientific factors." Groff notes educators' ignorance and distrust of "what experimental research actually indicates about reading instruction."
He adds, "There has been no easy or regular accommodation for grievances from the courts for the malpractice in reading instruction that has taken place. The monopoly over teacher education that is now held by university departments of education has allowed them to train reading teachers wrongly with impunity. Ideology about reading teaching thrives in this hothouse of irrationality."
Burning down the teachers' colleges is long overdue.
- While Syrian and Iranian sponsored terrorists are blowing up people in Iraq and Israel, Condoleeza Rice looked the other way and went to the Middle East to talk to those who train, arm and supply the terrorists. What did she think she was doing? According to Dr. Yaron Brook, executive director of the Ayn Rand Institute,
Talking will not convince the Iranian theocrats to give up their support for terrorism and their feverish quest for nuclear weapons. Quite to the contrary, any such 'dialogue' will only demonstrate America's weakness and encourage the Iranians to sponsor even more terrorism, especially against Americans in Iraq.He's right, isn't he. When one side is saying "Death to America!" and America responds by "seeking dialogue," aren't you just inviting more of the same? See Yaron Brook: Iran Sponsors Terrorism, US Seeks Dialogue.
- In fact, when it comes to the threat of Islamic Totalitarianism, as John Lewis says There is No Substitute For Victory. Hear Lewis make the argument in a controversial presentation at George Mason University: a link page is here. (And here, just to remind you, is his fantastic article on the same topic.)
- But surely the threat of Islamic Totalitarianism isn't a real threat, I hear some of you say? This isn't a real war? Well, perhaps you need to understand a different way to declare war. In the modern world with only one major superpower, there is more than one way to declare war. James Joyner lays out in detail the reality of so-called Fourth Generation War, a new kind of war in which we are presently engaged, and which is as difficult to fight as it is for many people to identify.
We now face a foe that cannot be defeated with a few guided missiles, smart bombs, or shock and awe. We’re not simply fighting “terror” or “terrorists,” but, as Barnett puts it, “those who want to isolate large chunks of humanity.” These people are, quite literally, enemies of freedom and of its underlying values. The global economy, its rules, and its attendant culture threaten their way of life, and they will stop at nothing to cut themselves off from the reach of Western values.
The good news is that this enemy doesn’t have the ability that the Soviet Union had to wipe out the planet. The bad news is that this enemy may be harder to defeat. And remember: the Cold War lasted more than forty years.
- But isn't it easier to just put your head in the sand about the threat and just blame others for imagined vices? Well, maybe. It's certainly something that's going around. In fact, there's even a leading psychiatrist who's identified it as a syndrome. University of Michigan psychiatrist Pat Santy suggests that the phenomenon of "displacement" is at work.
Displacement is the separation of an emotion from its real object and its redirection toward someone or something that is less offensive or threatening in order to avoid having to deal directly with what is frightening or threatening...Visit "Dr Sanity" here: More Displacement, Less Reality. [Hat tip Orson at SOLO]
This pyschological manouever disguises obvious self-delusion or self-deception]: It is, for example, behind most of the more vicious attacks on President Bush for anything he does; and for anything he doesn't do. He is behind every evil like some modern-day Moriarity, a criminal and godlike genius who is simultaneously a moron and incompetent. We are not talking about a mere dislike of the President; nor is this simply "politics as usual". Rather, it is an unreasoning and implacable, visceral hatred of George W. Bush for the sin of existing.
- Meanwhile, Lubos Motl at The Reference Frame has news of what looks to be a fabulous book by Czech president Vaclav Klaus, Blue , Not Green Planet -- including a great interview and reaction from climatologists. Klaus views the environmental movement and specifically the global warming hysteria as a Green "revolt of mobs." From the interview (translated from the Czech):
Could you please tell our readers who obviously haven't yet read your book why you wrote it?
Because I am very worried about some people's far-reaching attempts to reconstruct the world and revolutionize the behavior of the society. These people use some highly questionable data and hypotheses to deduce what is happening today and what will be happening in the world. And I view it as a threat for freedom... this issue has the capacity to mobilize larger groups of people: that's why I say that environmentalists are able to initiate a "revolt of the mobs".
This topic is likeable and understandable for most people. Catastrophes are always sold well and the extrapolated catastrophicity is now even higher than it used to be in the context of Marx. I don't think that the goal of these people is to reduce freedom deliberately. When I am going to talk to Al Gore, he will deny it. But I insist that what he proposes does suppress freedom. And it is sad he is not thinking about the consequences.
- I've just discovered and enjoyed a 2005 speech from Alan Greenspan, a quick walk through American economic history of the last two-hundred years, concluding with hs view of the health and resilience of the contemporary economy, which is changed fundamentally he argues by the ability of crucially important price signals to be disseminated so rapidly by your new information systems, and by a new flexibility in the economic system. It's worth quoting a substantial part of it since it explains the value of economic freedom so succinctly:
Whether by intention or by happenstance, many, if not most, governments in recent decades have been relying more and more on the forces of the marketplace and reducing their intervention in market outcomes. We appear to be revisiting Adam Smith's notion that the more flexible an economy, the greater its ability to self-correct after inevitable, often unanticipated disturbances. That greater tendency toward self-correction has made the cyclical stability of the economy less dependent on the actions of macroeconomic policymakers, whose responses often have come too late or have been misguided.Read the whole speech, starting here: Alan Greenspan speech, Oct 12, 2005.
It is important to remember that most adjustment of a market imbalance is well under way before the imbalance becomes widely identified as a problem. Individual prices, exchange rates, and interest rates, adjust incrementally in real time to restore balance. In contrast, administrative or policy actions that await clear evidence of imbalance are of necessity late.Being able to rely on markets to do the heavy lifting of adjustment is an exceptionally valuable policy asset. The impressive performance of the U.S. economy over the past couple of decades, despite shocks that in the past would have surely produced marked economic contraction, offers the clearest evidence of the benefits of increased market flexibility....
Most recently, the flexibility of our market-driven economy has allowed us, thus far, to weather reasonably well the steep rise in spot and futures prices for oil and natural gas that we have experienced over the past two years. The consequence has been a far more stable economy.
Flexibility is most readily achieved by fostering an environment of maximum competition. A key element in creating this environment is flexible labor markets. Many working people, regrettably, equate labor market flexibility with job insecurity.Despite that perception, flexible labor policies appear to promote job creation, not destroy it...Although the business cycle has not disappeared, flexibility has made the economy more resilient to shocks and more stable overall during the past couple of decades.
- As many readers will know, Alan Greenspan was an enthusiastic admirer of Ayn Rand. Which links nicely to this post at the Leitmotif blog, answering this question: Why is Ayn Rand Respected More in India?
Ayn Rand is rather well-known in India, though of course not as widely known as she is in the US; however, it can be argued that Rand is certainly viewed more respectfully and with admiration here in India than in the US.
The reasons for that are probably not quite straightforward: it’s not just because Rand’s reputation in India has escaped the lies, mischaracterizations, and attacks of the intellectual and academic elite in the US...
And one might say the same of the lies, mischaracterisations, and attacks of the intellectual and academic elite here in New Zealand. One might, but one wouldn't.
In my opinion, the main reason for this is that the Indian people who read her actually understand the truth of her arguments, for the most part. Because Indians live in the collectivist, pseudo-statist, tradition-bound, mystic society that India is, the readers grasp the validity of Rand’s ferocious criticisms of these states and agree with her description of life under these conditions.
- Speaking of Rand, if you've never seen her sparkling appearances on the Phil Donahue Show in the last decade of her life, then you should. YouTube has them, starting here: Ayn Rand - Donahue Interview (Part 1).
- "Powdergate." Like a zombie emerging from our dark pre-1984 past, the recent trial of business executives for selling milk powder -- a product over which the government had decreed that the Dairy Board should hold a monopoly -- serves as a reminder that the gains and economic freedoms so well addressed in Alan Greenspan's speech above should not be taken for granted. Our Muldoonist past is not so far away.
What about them Scientologists, huh? Yeah, they're fruit cakes for sure, but Alexander Cockburn argues they're no more nuts than are most religious fruitcakes.
There’s probably more psychic oppression in every ten seconds of the life of the Roman Catholic Church (or — let’s be ecumenical — the Mormons, Lutherans, Baptists and Methodists) than in the career of the Scientologists since L. Ron Hubbard got them launched. Last time I heard, the Vatican (which has to OK every deal) was settling sex abuse cases against priests in the U.S. at about $1 million per.He points to the dangers of the political demonisation of religionists. (Think Exclusive Brethren.) See Alexander Cockburn: Scientologists Take Offense in Reich Land. As always, this blog will continue to personally demonise religionists insead.
- "Why is it okay to make fun of Christians but not Muslims?" asks Jim Woods. Well, he says for a start, "every adult that talks to their imaginary friends are either a prime candidate to be the object of humor, or institutionalized if they are a direct physical danger to themselves or others. "
This includes Muslims, Christians, and all other devoted followers of the Invisible Sky Daddy. Fortunately, it generally isn’t necessary to make the effort to make up jokes about them as they do that themselves when they open their mouths.Making fun of people who actually respond verbally to your ribbing is always far more fun than making fun of people who blow up your transport.
In addition, especially outside of this country, Muslims live in cultures where Aristotle is now completely absent. To find something similar in this country you would have to go to a Protestant church or a university faculty lounge. No wonder they act illogically, they don’t even know that logic was invented. Humor would go right over their heads; non-contradiction, what is that?
- The danger of mixing politics and religion is highlighted over at Thrutch, with a post on the worrying rise of religiopolitics in Europe, and news of a limited atheist fight back.
Passive indifference to faith has left Europe's churches mostly empty. But debate over religion is more intense and strident than it has been in many decades. Religion is re-emerging as a big issue in part because of anxiety over Europe's growing and restive Muslim populations and a fear that faith is reasserting itself in politics and public policy...See Theocracy Watch: The Re-emergence of Religion in Europe.
..."The battle over religion is restarting. It is going to be a difficult one," says Terry Sanderson, president of Britain's National Secular Society... The most potent force driving activist atheism is concern that Islam, Europe's fastest-growing religion, is jeopardizing the principles of the Enlightenment -- and emboldening other religions to raise their voices, too, and re-fight old battles... Such faith-based agitation, says [University of London professor Anthony] Grayling, threatens a "dark ages for free enquiry and free speech."
- Some of you might have seen the recent issue of Time magazine which baldly stated as fact many myths about global warming that your average tin foil hat wearer would reject as too outlandish, including for example the bald claim about so-called "climate refugees," people -- "about 25 million" -- displaced by global warming-induced disasters, "such as those in the Papua New Guinean Carteret Islands, who have been forced to relocate due to a rising ocean level." Trouble is, that's just not true. It's just as untrue as a similar claim in Al Bore's film about "climate refugees" flooding into NZ (have you seen them?). The problem in the Pacific, such as it is, is not rising sea levels but sinking islands.
- And finally, if surgery was like Wikipedia, here's how little surgery would get done. Hilarious!.
Friday, 18 May 2007
Just getting to Galbraith’s Ale House proved interesting in its own way. The taxi driver nodded sagely when I said "Galbraith’s Ale House," and then proceeded to head off in what even my limited Auckland geography knew was completely the wrong way.
It turned out he thought I said Galbraith Street, but as he didn't actually know where that was either he was apparently planning to drive to the Viaduct and look it up on his map there. I guess he figured I was just a tourist. What he hadn't realised was that I was a thirsty tourist.
Of course, Galbraith’s is worth fighting through bad taxi service to get to. Hell, it's worth fighting through a long workday to get to. In a fine old building which was originally a public library (and later a line-dancing night club!) it is now one of the country's finest brewpubs, and it remains the only brewery I've seen with an art deco plaster ceiling - perfect after a hard night when you manage to land face up instead of face down.
This is a place which has got the fundamentals right, a place where regulars can feel comfortable knowing it isn't going to change to meet every passing fad and fancy on the bar scene. As a result, Galbraith's regulars are incredibly loyal, and the core of the business. There is even a certain table where it doesn't matter who you are - a regular can kick you off with no right of appeal.
The owner and brewer, Keith Galbraith, is adamant he won't move away from the basics of good beer and good food, and given how busy his bar was on the three times I visited (that's three times in three days), he has absolutely no need to. Despite three lengthy visits, my tasting notes are sketchy, hard to read or just plain missing. Or perhaps that's because of three lengthy visits. In any case, here are some I prepared on my previous trip:
Named after Galbraith’s mentor, Bob Hudson’s Bitter (4%) pours with a thick, solid and persistent head. It has a medium body with a lovely long finish. Though technically a sweetish beer, the taste impression is actually quite dry and refreshing. It lives up to the brewer’s description of a “hop driven session beer.”After three days of in depth research I can confirm that these are comments I still stand by. There have been only minor tweaks to the range since I wrote them (mainly to the Pilsner and to the Resurrection, which is now bigger, fuller, stronger and - in my opinion - even better).
The best selling beer is Bellringers' Best Bitter (4.5%) which was named after a group of regulars who were bell ringers at a nearby church. It is darker and bigger than the Bitter and more flavoursome with plenty of strong fruit, malt and caramel flavour. To maintain the balance, the hop finish is stronger and longer.
Bitter and Twisted (5.3%) is Galbraith’s 'Extra Special' Bitter. If the Best Bitter is a bigger version of the Bitter, then this is a hulked up Best Bitter. It has a huge hoppy, floral nose with a massive malt body and long, smooth, bitter finish. It is a dangerously drinkable beer and my favourite of the range.
Brewed in the tradition of a stout porter, Grafton Porter (5%) is the darkest beer in the range. It has a strong toasty nose with hints of hop evident. The beer has plenty of chocolate and roasted notes in the body before finishing with some cleansing bitterness.
Recognising the demand for a good lager, Galbraith's have produced the tasty Bohemian Pilsner (4.3%). Made with plenty of good malt and hops, this quaffable beer is well balanced with yeasty, fruity notes in the mid-palate balance off by plenty of hop bitterness.
The strongest beer in the range is the Trappist-style Resurrection (8.7%). It pours a darkish – almost orangey – colour with a pillowed white head. The beer, reminiscent of Chimay White, has heaps of fruit and yeast notes and is very dry. It’s delicious.
My favorites remain the Resurrection and the Bitter and Twisted, but with such a fine range there is a good pint here for all to enjoy.
Society of Beer Adcovates (SOBA)
RELATED: Beer & Elsewhere
Here's one of the thirteen, scientist Tad Murty, who says, "If, back in the mid-1990s, we knew what we know today about climate, Kyoto would almost certainly not exist, because we would have concluded it was not necessary." Gus Van Horn, from whom I got that news, comments quote correctly,
This is good news, but it would be better news if we had a similar parade of politicians changing their minds about the proper purpose of government -- like Boris Yeltsin once did -- and taking firm public stands against the continued existence of the welfare state.UPDATE 1: The parade of scientists coming out against global warming hysteria is now joined by a politician and a major publication doing the same. Follow the links. That's "a Global Warming Trifecta," says Gus Van Horn.
It is the notion that the government should be doing anything besides protecting individual rights that makes it even possible for the mess that is global warming hysteria to exist...
If the scientific tide really is turning against anthropogenic global warming, the efforts of such scientists may help in the short term, but until people no longer seek government solutions for everything, we will remain vulnerable for the indefinite future to what the government might do to us after similar episodes of public hysteria...
UPDATE 2: David Evans at the Mises site explains why, in his words "I Was On the Global Warming Gravy Train" -- "making a high wage in a science job that would not have existed if we didn't believe carbon emissions caused global warming" -- and why he jumped off the train.
The short reason for jumping is that the warmists' arguments don't stack up. The "pieces of evidence," he says, just kept falling away. The gravy train is now more about politics than it is about science.
A: No, not health. Not education. Definitely not law and order or defence! No, the area is welfare. With 266,000 working-age people already on benefits, and already the largest single drainhole down which our money is poured without our permission, welfare payments are projected to increase by a a further 25% by 2011, to $18 billion! And that's without including the massive middle class Welfare for Working Families sinkhole, or the new middle class welfare of Kiwisaver "contributions"!
"The people may be sick and ailing," says Lindsay Mitchell who points out the huge rise, "but the welfare state is alive and kicking."
Perhaps it's just been a long week?
- There were no personal tax cuts. But neither are there any tax cuts on offer from the opposition -- in fact as Cullen pointed out, Billy Boy English has already ruled those out. So no difference there.
- The success or otherwise of Cullen's Kiwisaver scheme, a scheme devised by politicians, depends wholly on the degree to which people sign up to it (or, more accurately, don't sign out from it), and that decision will be made by savers based almost wholly on their expectation of future wealth to be delivered by the scheme including, crucially, that any wealth that won't be meddled with politically. Which means that the bureaucratic mare's nest that is Kiwisaver could be extinguished almost immediately by the simple political statement from either Key or English that if elected in 2008, they would deal to this scheme as Muldoon did to the last Labour compulsory savings scheme -- by scrapping it. Such an announcement would see future expectations of Kiwisaver wealth wither before they were born, and see Kiwisaver as a viable scheme gone by lunchtime. Which means if they really believed in their criticism of Kiwisaver, then it's within their own hands to extinguish it. But National's socialists aren't going to do that, are they, making their criticism about as shallow as Helen's bird bath.
- Most NZ businesses are sole traders or partnerships who pay tax at the personal rate. No tax cut there.
- Limited companies generally pass their profits on to shareholders, who who pay tax at the personal rate. No tax cut for them.
- Large corporates generally pass profits on to shareholders as dividends with tax credits attached; but those credits are then measured against the shareholder's own personal tax rate. No tax cut there either.
In an imputation tax environment, corporate tax is essentially a withholding tax. The important tax rate is the personal tax rate. Since this is not changing, then theoretically the amount of tax received by the NZ government (personal + corporate) will be unchanged. The quantity of personal tax paid to the government is going to go up. The failure of the business press to identify this is disappointing. The failure to highlight this in the budget yesterday is disgusting.Read on for the complete point. UPDATE 2: John Boy talks hoaxes to TVNZ:
"Perhaps the biggest hoax perpetrated in this Budget was on businesses, which on the one hand get tax cuts but on the other are forced to match their employees' KiwiSaver contributions in a cruel money-go-round," says Key.And perhaps the biggest hoax perpetrated by this opposition is that they could kill Kiwisaver with one sentence: "If elected, we will kill it and return your money." But they won't, will they. Watch him dodge that question on Close Up last night [video. UPDATE 3: Says one business owner who emailed me on this:
Incidentally, one of the questions I will be asking when interviewing a potential new employee is "Do you wish to participate in Kiwisaver? If the answer is "Yes", it is extremely unlikely they would be employed by us. How many other employers will do this? Interesting question.UPDATE 4: Cactus Kate takes exeception to Fran O'Sullivan's description of Michael Cullen's eighth Budget as "a fiscal money-go-round that would do a Virgin Islands tax-dodge designer proud." As a designer or Virgin Islands tax dodges herself, Cactus takes "a certain professional umbrage at comparing the fiscal finesse and rounded respectability of Virgin Island tax-dodging (legally referred to in the business Fran as "taxation minimilisation specialist") to Cullen's performance as Finance Minister," and notes that:
Theft and fraud was illegal in New Zealand last time I checked. Receiving proceeds of crime was also a criminal offence. Therefore those who benefit from the surplus are created criminals from Cullen's go round. Tax dodging has far more legal credibility.
will have to include details about the energy efficiency of a house and they are driven, in part, by the current focus on environmental issues. It is further evidence of how the green movement is replacing old-style socialism as a prime driver of regulation and tax.Blogger Tim Worstall makes the obvious point, that if these bloody packs and the whole bureaucracy that goes with them are such a great idea for buyers and sellers of properties, then surely the market would react accordingly.
Those who find (whether buyers or sellers) that they are worth £1,000 will get them or seek properties that have them, those that don't will not. If buyers value them more than sellers then the market will similarly pretty quickly sort that out.
There is, as ever, one slight problem with such elegant simplicity. The energy efficiency part of it cannot be made voluntary as it is part of the imposition of EU law upon us.
Can we leave yet?
Thursday, 17 May 2007
The only good news? The company tax rate drops to 30%, costing around $500 million a year, and there's a derisory 15% tax credit for (narrowly defined) research and development.
That's it. What's left?
- "Chewing gum" tax cuts: Cancelled.
- A new "payroll tax" on employers through the all but compulsory Kiwisaver (the derisory tax credits are not inflation indexed so over time as people earn more, notes David Farrar, employers will end up with more and more of the bill).
- A $6 billion surplus, and even more petrol taxes! Up to ten cents a litre to pay for roads, and for public transport that people don't use (a sop to keep the Greens in line).
At the end of the day, as David Farrar notes, "14% of taxpayers will now be paying the 39% tax rate, up from 5% in 2000. And those 14% will pay 53% of all income tax... The surplus for this year is projected to be $6.3 billion and over the next four years after that a total of $22.7 billion. And not one cent of it coming back to those who pay it. Tax revenue is projected to increase from $52.2 billion this year to $62.0 billion in 2010/11."
Where's the door?
UPDATE 1: NBR has the details, without all the spin.
And it's worth pointing out, to all those to whom it isn't immediately obvious, that it's not governments who make us wealthy, but it is governments who make us poor.
UPDATE 2: Labour Party hack Jordan Carter, naturally, has the spin, and spun as ineptly as always -- which makes it more transparent. Here, he says, are "the key point about today's Budget":
massive support for individual savings, to increase savings, generate deeper and more liquid capital markets (and reduce the budget surplus in a non-inflationary way), and a raft of measures (including company tax cuts, R&D research credits and infrastructure investment) to make the economy more productive over time.Clearly he's got no more idea than Michael Cullen does about either capital markets, inflation, what makes the economy more productive over time, or what a real tax credit looks like; no idea at all how real savings -- not virtually compulsory savings for poor people over which they have no control -- a regulation bureaucratic nightmare for employers -- how real savings are the key to genuine productivity.
UPDATE 3: Craig D. puts it perfectly in a comment made at Pacific Empire:
Everything Labour does makes me despair for the future.They absolutely hate the idea of anyone doing something independent of the government.UPDATE 4: From Dave at Big News:
Rather than give tax cuts, they put in place a massive welfare system, recycling tax money back to most middle class families.
Now, instead of giving our money back to make our own decisions, we are to save through another government scheme.
What is Labour’s ultimate vision? Where everyone works for, is paid by, saves with and is dictated to by the government deciding what’s best?
This budget is about encouraging people to save? Ummn.. no its not, it's about taking consumer demand out of the economy so the Government can spend and tax more without affecting inflation.To save, people must do one of two things: spend less or earn more. If you can't do either, it's a bit like asking someone to flush the toilet after using a long drop.
- Income tax, company tax and withholding tax are set at a flat 25% in year 1, decreasing 5% per year thereafter; the first $50k/annum income is made tax-free immediately. All other taxes, levies and fines are set at zero immediately.
- A program of asset sales is undertaken commencing from year 1. Only assets relating to the government's legitimate activities in law & order and defence are retained.
- All liabilities including overseas debt are paid off by the fifth year. Asset sales and additional defence expenditure are completed by the fifth year.
- Welfare handouts that have grown inexorably since their introduction as a temporary measure in the 1970's will be rolled back. It is worth noting that many of New Zealand's social ills including generational welfare dependency, violent criminal gangs and DPB-encouraged births have arisen in conjunction with rising welfare spending. Compulsory charity will be replaced by allowing natural charity to grow quickly with charities made tax exempt immediately.
- Libertarianz will give schools back to their communities - literally - with ownership in existing schools transferred to parents and teachers in the form of shares. Indoctrination of impressionable young minds by 'politically correct' social engineers will be ended as a matter of urgency.
- State health assets will be disposed of and private medical facilities will be encouraged to grow quickly by being made tax-exempt immediately. The ineptitude of the state to provide quality healthcare is recognised and the sclerotic wasting of the state health system, in spite of evermore funding, is put to an end.
- New Zealand's run-down military will be supplied with modern equipment and built up into a credible defence force for a country of our size and isolation.
- Letting go of Cullen's stodgy, tired old socialist ideals will unleash a wave of growth that NZ should have experienced 20 years ago. Roads, telecommunications and energy supply industries and infrastructure will grow quickly and naturally once the market incentives are in place free of state interference.
- With the Libertarianz budget, the ridiculous churning of money through the government's sticky fingers will generally be eliminated by the first-$50k-income-tax-free. The $50k threshold merely reflects the current $10k-tax-free threshold implemented in 1986, adjusted for inflation using house prices from that era. A flat tax on income over $50,000 of 25%, reducing 5% per year for 5 years, will fund a smooth transition.
- This will wind back the government's intrusion into the economy from the current 35% to a more sensible 1.5%. It is well worth noting that under Labour the large economic expansion of the state has been concurrent with New Zealand's plummeting productivity statistic.
- Unshackling the productive capacity of New Zealand's innovative, resourceful minds will lead to economic growth rates rising to around 10% in 4 or 5 years time. Libertarianz will see NZ growing in concert with other vibrant Pacific rim countries before Labour and National have a chance to drag NZ off the the bottom of the OECD table and into the third world.
If you want to see what libertarians value in government, go and have a look.
"To steal from one person is theft. To steal from many is taxation." - Jeff Daiell
"I think coercive taxation is theft, and government has a moral duty to keep it to a minimum." - former Massachusetts Governor William Weld
"See, when the Government spends money, it creates jobs; whereas when the money is left in the hands of Taxpayers, God only knows what they do with it. Bake it into pies, probably. Anything to avoid creating jobs." - Dave Barry
“The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.” - Jean Baptiste Colbert
"The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money." – Alexis De Tocqueville
"A society of sheep must in time beget a government of wolves. - Bertrand de Jouvenel
'We shall tax and tax, spend and spend, elect and elect.' - 'New Deal' luminary Harry Hopkins
"Most of the presidential candidates' economic packages involve 'tax breaks,' which is when the government, amid great fanfare, generously decides not to take quite so much of your income. In other words, these candidates are trying to buy your votes with your own money." - Dave Barry
“Taxation is just a sophisticated way of demanding money with menaces.” - Terry Pratchett
“For every benefit you receive a tax is levied.” - Ralph Waldo Emerson
"It's sad to realise that most citizens do not even notice the irony of being bribed with their own money." - Anon.
"[There are dangers in] the disposition to hunt down rich men as if they were noxious beasts." - Winston Churchill
"When Barbary Pirates demand a fee for allowing you to do business, it's called 'tribute money.' When the Mafia demands a fee for allowing you to do business, it's called 'the protection racket.' When the state demands a fee for allowing you to do business, it's called "sales tax." - Jeff Daiell
"Taxation is far greater an evil than theft. It is a form of slavery. If you cannot choose the disposition of your property, you are a slave. If you must ask permission to work, and/or pay involuntary tribute to anyone from your wages, you are a slave. If you are not allowed to dispose of your life (another way of defining money, since it represents portions of your time and effort, which is what your life is composed of) in the time, manner and amount of your choosing, you are a slave." - Libertarian writer Rick Tompkins
"The man who produces while others dispose of his product is a slave." - Ayn Rand
“We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle” - Winston Churchill
"Taxation without representation is tyranny." - James Otis
"Taxation WITH representation ain't so hot either." - Gerald Barzan
"Our forefathers made one mistake. What they should have fought for was representation without taxation." - Fletcher Knebel
"When a new source of taxation is found it never means, in practice, that the old source is abandoned. It merely means that the politicians have two ways of milking the taxpayer where they had one before." - HL Mencken
"What is the difference between a taxidermist and a tax collector? The taxidermist takes only your skin." - Mark Twain
"Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it." - Ronald Reagan
"Death and taxes are inevitable; at least death doesn't get worse every year." - Unknown
"When more of the people's sustenance is exacted through the form of taxation than is necessary to meet the just obligations of government and expenses of its economical administration, such exaction becomes ruthless extortion and a violation of the fundamental principles of free government." - former US President Grover Cleveland
"Rulers do not reduce taxes to be kind. Expediency and greed create high taxation, and normally it takes an impending catastrophe to bring it down." - Charles Adams
"The mounting burden of taxation not only undermines individual incentives to increased work and earnings, but in a score of ways discourages capital accumulation and distorts, unbalances, and shrinks production. Total real wealth and income is made smaller than it would otherwise be. On net balance there is more poverty rather than less." - Henry Hazlitt
"The poor of the world cannot be made rich by redistribution of wealth. Poverty can't be eliminated by punishing people who've escaped poverty, taking their money and giving it as a reward to people who have failed to escape." - PJ O'Rourke
"A government with the policy to rob Peter to pay Paul can be assured of the support of Paul." - George Bernard Shaw
"Freedom is the quality of being free from the control of regulators and tax collectors. If I want to be free their control, I must not impose controls on others." - Hans F. Sennholz
"There's only one way to kill capitalism--by taxes, taxes, and more taxes." - Karl Marx
"The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation." - Vladimir Lenin
"Giving money and power to government is like giving whiskey and car keys to teenage boys." - PJ O'Rourke
"A society of sheep must in time beget a government of wolves." - Bertrand de Jouvenel
"The power to tax involves the power to destroy." - former US Supreme Court Justice John Marshall
"Taxes are not levied for the benefit of the taxed." - Robert Heinlein
"Taxes are the sinews of the state." - Cicero
"Be wary of strong drink. It can make you shoot at tax collectors, and miss." - Robert Heinlein
- Gordon Copeland, Independent: mailto:firstname.lastname@example.org
- Phillip Field, Independent:mailto:email@example.com
- Rodney Hide, ACT: mailto:firstname.lastname@example.org
- Ron Mark, NZ First: mailto:email@example.com
- Pita Paraone, NZ First: mailto:firstname.lastname@example.org
- Winston Peters, NZ First: mailto:email@example.com
- Heather Roy, ACT: mailto:firstname.lastname@example.org
- Judy Turner, United Future: mailto:email@example.com
I'm talking to those sell-outs who voted for this Bill; National Socialist sell-outs like Bob Clarkson and Chester Borrows and Shane Ardern and Tau Henare and Maurice Wimpianson and Judith Bloody Collins who stood there on the steps of Parliament just a few weeks ago and told an audience passionately opposed to the Bill that they were too ... and who then showed last night with their pathetic acquiescence that they are liars. That their assurances and their promises are one-hundred percent worthless. As they are. As is their spineless, deal-making leader.
What are these entities worth? Nothing. Not a single bloody thing. They are pathetic sell-outs all of them. I'd suggest you remember this, and never trust them again.
[Oh by the way, if you're wondering what Gordon Copeland looks like, that's him in the top photo talking to Bob "Lost Without a Clue" Clarkson.]
UPDATE: You think it's over? You think this is all Bradford wanted? You poor amateurs: "This," says Bradford, "is very much the end of the beginning."
As my PC-Budget liberally uses PJ O'Rourke's ideas on cutting the budget to size, it seems only fair that I quote liberally from PJ O'Rourke now so you get an idea of what's here, this from his fine book 'Parliament of Whores' :
The secret to balancing the budget is to remember that all tax revenue is the result of holding a gun to somebody's head. Not paying taxes is against the law. If you don't pay your taxes you'll be fined. If you don't pay the fine you'll be jailed. If you try to escape from jail, you'll be shot. Thus, I - in my role as citizen and voter - am going to shoot you - in your role as taxpayer and ripe suck - if you don't pay your share of the national tab. Therefore, every time the govt spends money on anything, you have to ask yourself, ‘Would I kill my kindly, gray-haired mother for this?’Surely a good question to keep in mind this afternoon.
The Clark Government is keeping us all poorer than we need to be. In a recent NBR column, Owen McShane compared notes between ourselves and our wealthier Australian cousins: "Australian GDP per capita is now A$47,181. That’s about 40% higher than New Zealand’s A$33,682, at present market exchange rates. Even Tasmanians, their “Clean and Green” poor cousins, at only $35,253, are richer than New Zealanders. Western Australians, are the richest at $58,688, which makes them about 75% better off than New Zealanders."
We're poorer than we should be. We're poorer than we need to be. As I explained yesterday, in keeping our own money out of our own hands the Clark Government restricts private saving and private investment, and that severely restricts productivity. (The Govt's Kiwisaver just can't be taken seriously as a real investment vehicle, can it. It's just spin.)
Saving, by the way, is a good thing. Private saving, that is, since in a very real sense it's saving that fuels wealth. Here's how: You see, saving doesn't just reduce demand. Savings don't go into a hole in the ground. In fact, as all non-Keynesian's understand, saving is simply the flip-side of investment. Saving is not hoarding: saving one's income does not take it out of production; rather, it makes 'seed capital' available to build and grow productivity in areas in which entrepreneurs see opportunity. Savings don't just go into a hole in the ground, savings is where capital comes from, and it's capital that makes us all more productive.It's that necessary capital of which we're short,meaning we're becoming of necessity more and more reliant on the foreign capital coming here as a result of our over-inflated exchange rate. We're short of capital because we're too poor to save. In fact, NZ's private savings have now fallen well behind countries that we were ahead of in absolute terms in 2000 -- former Soviet Bloc countries, former dictatorships, and even currently Islamic countries (where investing money for profit -- ie., earning interest -- is actually considered illegal)... That's how poor this Government has made us.
- Turkey*, for example, which in 2002 had US$6 billion in investment funds, now has over US$15 billion -- that's about two-and-a-half times the amount. Not bad going.
- Then there's Chile, which in 2000 had just US$4.6 billion in investment funds. Now, the Chileans have $16.7, just over three-and-a-half times what they had then.
- Or Poland, which had a derisory US$1.6 billion in investment funds in 2000 now has over $23 billion worth of investments -- nearly fifteen times the 2000 figure.
That's how quickly the effect of pathetic economic management piles up.
While other countries' savings and investments have leaped ahead since 2000 -- countries such as Ireland (whose wealth and investments have increased by over five times in that period), Australia (by 2.2 times), Denmark (2.7 times), Norway (2.8 times), Mexico (3.1 times), Hungary (3.2 times), India (3.9 times), Finland (4.6 times) -- even a European Union awash in EU regulation has managed to double the figure -- even a South Africa enmired in violence has increased their global savings and investments by nearly four times!
But not us.
In this place that's slowly returning to the Polish shipyard David Lange promised to deliver us from in 1984, we've barely increased our wealth at all in the last two-and-a-bit-electoral cycles (which is all Cullen's fiscal settings are aimed at). Rather than climbing up the wealth ladder by virtue of investing and reinvestingwhat little wealth we have, as others have been doing with their own resources, here we are denied the use of vast amounts of our own money, the Government is running a $ billion surplus ... and we're falling behind.
There is no tax paradise on the face of this earth, unfortunately, but there are places which are far, far wealthier than we are, and unless we are allowed the means to make ourselves wealthier -- our own means that have been taken from us by force -- then this small paradise at the bottom of the South Pacific will just slip further and further behind, and more and more good New Zealanders will leave.
Meanwhile the Government's surplus is about NZ$7B and we're still not allowed tax cuts at all; not allowed them because those would be "inflationary" [bullshit] or -- worse -- because they might be saved and invested in new businesses, new machinery, or new economic projects, (thereby reducing demand, which would reduce infla… umm, don't worry -- spot the Keynesian contradiction).
Meanwhile the Government's surplus is about NZ$6B and we're still not allowed tax cuts at all. We're not allowed them because:
We are falling behind ... and the man most responsible .... the man who has taxed and taxed and taxed and spent and spent and spent our money, leaving us unable to save and invest and grow ....well, he will be delivering tomorrow's Budget.
What an ignorant, destructive prick. As the Free Radical cover asked way back in issue 67, will Labour's tax greed destroy it? Probably. Eventually. But whatever the answer to that question, it's clear it's destroying us.
Wednesday, 16 May 2007
That's what it looks like now that United's Gordon Copeland has announced he will be joining Phillip Field as the second MP to announce his departure from the ruling coalition, and his plan to set up his own independent party. [See: MP to Quit United Future over Smacking Bill - Newstalk ZB]
So with those two down and the Clark Government now completely reliant on the favours of minor parties to rule, will we see from the influence those minor parties wield over the next year-and-a-bit just exactly how power-hungry the Labour luminaries truly are?
Well, what do you think.
The idea of tax cuts appearing in the next Budget or in any Budget delivered by the Clark Government has always been summarily dismissed with the claim that "we" can't afford tax cuts now, or tomorrow or next week or next year. Well, maybe next year. There's an election next year and they're behind in the polls. So maybe. Just maybe. But we still can't afford them, says Cullen.
Now, the reason repeatedly given for spurning tax cuts is that "tax cuts are inflationary" -- more money in people's hands will supposedly just generate a big spend-up. (Meanwhile Cullen and Clark continue to peddle the illusion that the billions spent on Welfare for Working Families, student loan interest write-offs, and the Clark Government's annual $20 billion spend-up aren't inflationary. No, no no.) This "reason" was repeated as recently as yesterday in Questions in the House.
The reason is nonsense.
THE FALLACY BEING PEDDLED HERE obscures the simple economic fact that if tax cuts were implemented, total spending wouldn't change. All that would change is who spent it.
You see, the argument that tax cuts would be inflationary rests on the premise that tax cuts would "overheat demand." But the flaw in that premise is that the total amount that is spent in the economy now is no less under the Cullen/Clark status quo scenario of tax and tax and spend and spend than it would be if we could all keep what is rightfully ours; instead it is just transferred from the individuals who produced it and it is spent instead by the Wastemaster General on things you never said you wanted. The total amount spent either way is no more; all that changes is what your money is spent on, and who decides.
In other words, if taxes were cut as they should be, then the total amount being spent in the economy would be no more than it is now. To say it again: All that would change with, say, a billion-dollar tax cut is what it's spent on, and who's spending it.
With any sort of proper and substantial tax cut there would be a drop in demand for everything inflated by government spending. There would be reduced pressure on, for example, Wellington commercial property, where demand has increased exponentially to house the exploding number of bureaucrats employed since 1999; there would be reduced upward pressure on the salaries of consultants and higher-level bureaucrats; and there would be reduced upward pressure (hopefully) on the spin doctors who have to spin untruths to sell the lie that tax cuts cause inflation.
And since taxpayers would now have more of their own money back, there would undoubtedly be increased demand for a host of other products and services than those holes down which the Wastemaster General presently pours our money -- but that increased demand for those products and services would be balanced out by the commensurate reduced demand for the drainholes down which our money is presently poured.
The immediate effect of this shift of demand would be to depress prices in the already over-inflated sectors of the economy in which government largesse is the order of the day (you'd see a fall for example in the prices of Wellington commercial property, high-rent advertising agencies, state health care, state education provision, and in the salaries of consultants and bureaucrats) and a transfer of production to other goods that people actually want and that previously had to go unsatisfied (a newer or better car or computer, extra education, health insurance, better and more nutritious food, paying off the mortage).
Unless you're either a Wellington commercial property owner or a consultant or bureaucrat, that would be a good thing.
A SECOND POINT TO MAKE is that if tax cuts of $1 billion were implemented, then that would actually be less of a threat to inflation than is the status quo because unlike the tax and spend status quo, part of this $1 billion returned to taxpayers would be saved by those taxpayers. It's true. In fact if Treasury is correct, and there's no reason to suggest they aren't, "the proportion saved could be expected to be higher if they were focused mainly on reductions to the 39 and 33 percent tax rates." The bigger the tax cuts, the bigger the savings. (By contrast, all of the $1.6 billion spent on Welfare for Working Families is spent on increased consumption --and that includes the "consumption" costs of the extra parasites to administer the welfare -- pushing up prices; meanwhile Transit's shortfall of $600 million is caused mainly by the increased cost of construction caused by the roading industry working at capacity due to the inflated demand of Cullen's roading budget; and the same cost inflation is reflected in the state's die-while-you-wait health system, where both spending and prices have increased by about 8% a year for the last ten years, and in the state's factory schools where spending has increased by 6% a year for the last ten years, with consequential increases in prices.)
Saving, by the way, is a good thing. Private saving, that is, since in a very real sense it's saving that fuels wealth. Here's how: You see, saving doesn't just reduce demand. Savings don't go into a hole in the groun. In fact, as all non-Keynesian's understand, saving is simply the flip-side of investment.
Saving is not hoarding: saving one's income does not take it out of production; rather, it makes 'seed capital' available to build and grow productivity in areas in which entrepreneurs see opportunity. Savings don't just go into a hole in the ground, savings is where capital comes from, and it's capital that makes us all more productive. And paradoxically, it's tax cuts for rich people that would help most in the long term!
Rich people who like to remain rich do not consume the majority of their wealth on champagne, caviar, nights out with Paris Hilton and large donations to global warming skeptics -- more's the pity -- instead they invest their money, producing new capital goods. Explains Reisman:Now, as you'll have heard before, the chief reason for the lack of productivity of New Zealand workers is the relative lack of productive capital invested here; more tax cuts allowing more saving is one very simple way to change that, and to make investment capital available.The truth, which real economists, from Adam Smith to Mises, have elaborated, is that in a market economy, the wealth of the rich—of the capitalists—is overwhelmingly invested in means of production, that is, in factories, machinery and equipment, farms, mines, stores, and the like. This wealth, this capital, produces the goods which the average person buys, and as more of it is accumulated and raises the productivity of labor higher and higher, brings about a progressively larger and ever more improved supply of goods for the average person to buy.
But there's more!! If tax cuts do increase demand, then the increased demand caused by tax cuts will be met by the increased production brought about by this increase in capital -- the new capital allows producers to meet the new demand for goods that people actually want (or in reducing demand on mortage credit), which reduces any rise in prices caused by that increased demand.
It just keeps getting better. Tax cuts are not inflationary -- tax cuts are good! Good for strong non-inflationary growth! You want some of that?
IT MAY BE THAT Cullen is honestly mistaken in claiming that tax cuts would cause inflation, rather than just mendacious. That's possible. After all, there are supposedly eminent economists (starting perhaps with the supposedly eminent John Maynard Keynes) who fail to understand how production and consumption are related economically, causing them to completely misunderstand inflation, or even real-life economics.
If inflation is to be kept down, according to this mistaken view, then "purchasing power" must be kept either level with or below the level of production. In order to do that governments must mop up "surplus" purchasing power and put it under the mattress for a rainy day. That's what Cullen thinks he's doing. It's a view that fails to realise that just as savings and investment are two sides of the same coin, so too are production and "purchasing power. It's an error that Michael Cullen repeated in the House yesterday. It's a kind of Social Credit A+B theorem that finance ministers tend to subscribe to because it makes them look important.
They're not, except in a destructive sense.
The fact is, as Jean Baptiste Say and James Mill [pdf] pointed out many decades ago, is that it doesn't need a finance minister however highly paid to keep purchasing power and production in line. They don't need to because in reality they're part of the same thing: purchasing power grows out of production. As I say, they're two sides of the same coin.
Economist Benjamin Anderson explains the point in a way that even Keynes and Cullen could surely grasp if they put heir minds to it:
... purchasing power grows out of production. The great producing countries are the great consuming countries. The twentieth-century world consumes vastly more than the eighteenth-century world because it produces vastly more. Supply of wheat gives rise to the demand for automobiles, silks, shoes, cotton goods, and the other things the producer wants. Supply and demand in the aggregate are thus not merely equal, but they are identical [italics added], since every commodity may be looked upon as either supply of its own or as demand for other things. But this doctrine is subject to the great qualification that the proportions must be right; that there must be equilibrium [ in other words, that there must be a proper relationship between different kinds of production and different kinds of services that hasn't already been dislocated by government, but that is set by the relationship between prices and costs, and prices and wage-rates].So what would happen then if the finance minister were to let people actually keep the fruits of their production ... ? Well, you work it out. But I assure you, if the come up with the answer, "It would be inflationary," then you go to the bottom of the class.
NOW, THERE WILL BE some clever dicks who point out that if $1 billion is taken from the "surplus" and devoted instead to tax cuts, and that amount is not presently being spent but is instead just sitting around in the bank, then that does represent a real increase in spending. This argument has more legs but they're just as spindly, and it's impossible to see how anybody on the Government side of the aisle can really run it seriously.
You see, if there were an inflationary impact from" funding" tax cuts out of the enormous surplus that we're all presently paying for, then it would be an impact almost exactly the same as that from a monetary injection, and oddly enough a monetary injection is what we've been getting for the last few years -- a year-on-year 12-15% increase in the money supply -- and no one but the economists calling for tax cuts have been noticing!
That's right: The same people who argue against tax cuts because they are inflationary are the same people who totally ignore the enormous increase in the money supply! As Gerard Jackson says of the very successful Australian tax cuts, "One can only wonder at the intellectual powers of [people] who fear the so-called inflationary consequences of tax cuts while blithely ignoring the Government’s massive monetary expansion."
Reducing that monetary expansion on its own would be a good thing. Reducing it and funding tax cuts would be even better.
THE MAIN POINT TO make here is that tax cuts do not work simply by putting money in people's pockets. If they did, then just having government give money to people could guarantee growth, and we all by now that that doesn't work. But taxing or borrowing money from one group to give to another does not encourage productive economic activity. Quite the opposite. The basic moral fact is that tax cuts give you back your own money. And the basic economic fact (which everyone but Keynesians should understand) is that tax cuts work not by stimulating demand, but by increasing the incentives for new investment, and by providing the capital for that investment to happen.
And it's not like the Goverment has been doing anything productive with the $20 billion per year it spends in real terms over what it spent in 2000. As Phil Rennie convincingly demonstrated recently in his report on New Zealand's Spending Binge, the Clark Government has produced nothing with that spending binge -- nothing at all:
Core government spending is now almost $20 billion a year higher than it was in 2000, a 32% increase in real terms ... [yet t]he available social indicators we have show negligible improvements since 2000. Life expectancy, infant mortality, hospital outputs, literacy, violent crime, suicide, poverty and income inequality have barely changed despite a massive increase in social spending."Nothing at all," that is, beyond inflating demand in the sectors down which they've poured our money.
Further, as Rennie points out [check out his report either on the net or in the latest Free Radical], the $20 billion overspend is so much that if this extra $20 billion of expenditure was allocated to tax cuts, nearly all income tax could be abolished, and all remaining public services funded solely by a combination of GST and a low corporate tax rate.
That's something even (or even especially) low-paid and over-taxed Labour voters might care to consider.
SO WHY WOULDN'T YOU DO THAT? Why wouldn't you reduce taxes by at least $20 billion right across the board when it's never been so easy to do it?! Clearly, Cullen's objections to tax cuts are not based on economic sense. His objections are simply his own private ideological burp for which we're all required to pay -- and pay through the nose we have been.
Clark and Cullen tell us their spending binge represents "investment." What nonsense. Contrary to Keynesian myth, government spending is not "investment" at all (a cruel joke) -- unless you want to categorise it as misinvestment, or even malinvestment. In reality, it's not investment at all but plain old-fashioned wasteful "consumption" spending. The "consumers," in this case, are the politicians and government officials who leech off the productive private sector.
Reducing demand for these parasites would be nothing but a good thing for all of us.