Tuesday, 16 August 2011

Quote of the Evening: Sun Tzu refutes Keynes (& Krugman) [updated]

"What is essential in war is victory, not prolonged operations. No nation has ever benefited from a prolonged war." - Sun Tzu

UPDATE: Let's compare and contrast the common sense and sound reason of Ludwig von Mises to the dangerous hyperbolic fantasies of the Super-Krugman and his mentor Keynes (to whose intellectual influence virtually every politician and every mainstream journalist are slaves, whether they know it or not).


"In proportion as armaments increased the sales of munitions plants, they reduced the sales of all other industries.” [writing in Omnipotent Government]
"All the materials needed for the conduct of a war must be provided by restriction of civilian consumption, by using up a part of the capital available and by working harder. The whole burden of warring falls upon the living generation.” [writing in Human Action]
"At the breakfast table of every citizen sits in wartime an invisible guest, as it were, a G.I. who shares the meal. In the citizen’s garage stays not only the family car but besides, invisibly, a tank or a plane. The important fact is that this G.I. needs more in food, clothing, and other things than he used to consume as a civilian and that military equipment wears out much quicker than civilian equipment. The costs of a modern war are enormous." [Writing in Defense, Controls, and Inflation]

Krugman, on CNN this week:

"I mean, probably because you want to put these things together, if we say, 'Look, we could use some inflation,’ … which is, of course, anathema to a lot of people in Washington but is, in fact, what the basic logic says. It's very hard to get inflation in a depressed economy. But if you had a program of government spending plus an expansionary policy by the Fed, you could get that. So, if you think about using all of these things together, you could accomplish, you know, a great deal.
If we discovered that, you know, space aliens were planning to attack and we needed a massive build-up to counter the space alien threat and really inflation and budget deficits took secondary place to that, this slump would be over in 18 months. And then if we discovered, oops, we made a mistake, there aren't any aliens, we'd be better." (http://bit.ly/nqrXjO)

Keynes, in his General Theory:

"If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing."

Buffett goes gaga

Even the front page of the Royal NZ Herald’s Business section went gaga this morning over Warren Buffett. Why? Because the billionaire is calling for bigger taxes on billionaires like him and Bill Gates.  Tim Carney reminds us however:

As most of the media goes gaga over Billionaire Obama fundraiser Warren Buffett calling for tax hikes, (like he did in 2001, and 2004, and plenty of times in between), let’s remember a few things. 

Buffett Profits from Taxes He Supports
Buffett regularly lobbies for higher estate taxes. He also has repeatedly bought up family businesses forced to sell because the heirs’ death-tax bill exceeded the business’s liquid assets. He owns life insurance companies that rely on the death tax in order to sell their estate-planning businesses.

Buffett Profits from Government Spending
Buffett made about a billion dollars off of the Wall Street bailout by investing in Goldman Sachs on the assumption Uncle Sam would bail it out. He also is planning investments in ethanol giant ADM and government-contracting leviathan General Dynamics.

If your businesses’ revenue comes from the U.S. Treasury, of course you want more wealth.

Buffett can give great advice on how to make money. His advice on how to steal it should be put where the sun doesn’t shine.

[Hat tip Economic Policy Journal]

ECONOMICS FOR REAL PEOPLE: “Democracy & the Tragedy of the Commons”


Here’s the note from our friends at the UoA Economic Group about tonight’s seminar, featuring another guest speaker:

Hello Everyone.

Hope you’re surviving the wintery blast.  Speaking tonight we have David Seymour, a Senior Policy Analyst and Director of the Saskatchewan Office of the Frontier Centre for Public Policy.  He will be talking about think-tanks and examining the claims that “Capitalism has failed”—and (as a former resident of one of the coldest places in Canada) answering timely questions on how to survive when the snow is thigh-deep.  Here’s what he plans to cover:

"Two years ago we were told again and again that capitalism had failed.
    “Now it seems that the welfare state is failing in a much more profound way. In the United States, Italy, Greece, and to a lesser extent New Zealand, the political systems produce expectations around taxes and entitlements that do not balance, leading to deficits, debts, and disruption.
    “I will argue that these expectations are the logical consequence of leaving too many decisions up to political process. Drawing on public choice economics, ecology, and the history of collapsed societies, I'll argue that our current democratic process is a case of the tragedy of the commons. Like environmental commons tragedies, the solution is to return more decision making to the private realm."

Sound interesting?  Come along and find out.

Date: Tuesday August 16th
Time: 6pm
Location: UOA Business School.  Case Room 1, Level 0

Check us out on the web at http://uoaecongroup.wordpress.com/.

Riots on the streets of London [updated]

I’ve read a lot of cant about the “riots” in the UK [and Philadelphia and Washington DC and…]. So I had to post a comment of my own.

The most apposite comment I’ve seen however came from one of the rioters themselves, a young woman who said they’d all seen everyone getting their bail-outs from someone, so why shouldn’t they get out and take theirs.

It’s not about “poverty,” as the bank accounts of many of those arrested goes to show. Instead it’s a very simple equation: it’s the moral hazard of bankers’ bailouts times the entitlement-culture squared, which equals everyone taking from everyone else, forever.

It’s the fag-end of sixty-five years of welfare, in which everybody’s property is fair game.

The rioting, thieving and looting was carried out by a generation who has seen and endured and been “given” by government more than any other. Govt housing, govt welfare, govt projects, govt handouts, govt schools. Govt, govt, govt. The result, here and elsewhere, has been more dependence, less responsibility and  increasing illiteracy. And min the last few years, what they’ve watched and seen has been more govt bailouts for more and more failures—all of them“too big to fail.'”  Society’s biggest failures being rewarded for stuffing up big time, and taking us all down with them.

They’ve seen everyone getting something for nothing; they’ve seen government steal from one group to give to another; they’ve seen everyone say that’s okay … so why wouldn’t the governments’ biggest failures not want to “get theirs” in the same way when they see their opportunity? And break as many windows as they need to in the process.

It’s not like they’ve seen the moral lessons anywhere to tell them it’s wrong. Or the education to enable them to articulate their rage in any other way.

Just over thirty years ago teenagers saw the mess their parents had made of the world and, made just as inarticulate by public education to clearly voice their rage, called incoherently and in three chords for “anarchy,” “destruction” and chaos.

It’s not so very different now, is it. Only this time, instead of safety pins and bondage trousers the villains are all wearing brand-name hoodies.

Here’s The Clash:

White Riot by The Clash Lyrics: White riot - I wanna riot White riot - a riot of my own White riot - I wanna riot White riot - a riot of my own Black people gotta lot a problems But they don’t mind throwing a brick White people go to school Where they teach you how to be thick An everybody’s doing Just what they’re told to An nobody wants To go to jail! All the powers in the hands Of people rich enough to buy it While we walk the street Too chicken to even try it Everybody’s doing Just what they’re told to Nobody wants To go to jail! Are you taking over Or are you taking orders? Are you going backwards Or are you going forwards?

UPDATE: One commentator who’s been making sense on the riots is old friend Liberty- Scott, who points out the rioters are simply “engaging in socialism - without the middle man of the state.”

Read his recent posts here.

Image over reality

From a government that increasingly believes in style over substance comes two announcements making clear that image is more important, to them, than reality. At least in their minds.

We have the report from the Gnats’ weekend conference that—at a time when around 450,000 adult NZers are on welfare—the Tories plan only to get “tough” on around 1600 16- and 17 year-old beneficiaries too young to vote; on young folk who were first made unemployable by government schools, and then priced out of the market by this government having removed Youth Rates.

And we had the report yesterday that despite the inept Judith “Crusher” Collins’s grandstanding about getting “tough” on street racing by crushing cars, not one car has yet been crushed. (Asked to comment on this failure, the Non-Crusher points to a 15% drop in street racing, apparently oblivious to the fact that way more than 50% of the Christchurch streets where most racing was done are now impassable.)

What we have here is a reliance on image (getting “tough”) over the disastrous reality the Gnats refuse to either confront or acknowledge. Add to that their insistence on continuing to borrow $300 million per week rather than confront the reality of their over-spending, and you have a recipe for a government who prefers doing headlines to doing the hard stuff.

That they think they can get away with it is due only to a media and opposition who are as inept as each other in being able to hold them to account.

Economics in snow-time

Expat Canadian Eric Crampton—from a place where they get real snow—muses on supply and demand in a time of snow.  Where are all the rosy-cheeked youngsters when you need them to shovel the stuff?

Read “Snow pro tips for Kiwis” – O F F S E T T I N G   B E H A V I O U R

“Roll out the bunting. Tomorrow is the 40th anniversary of the modern global economy.” [updated]

“That's right: come Monday morning we will have managed to survive four decades of fiat money – though, given the chaos in markets in recent weeks, it is anyone's guess how much longer it will last…”

Read: “Abandoning the gold standard was a seminal moment, and one we're now all paying for.” 
            – T E L E G R A P H

UPDATE:  I give you the man who gave us our modern crises economy, Richard Nixon, the man who was forced to divorce the US dollar from gold back when it was tied at $40/ounce. Who forced him? It was those speculators, you know.

Bring on the Space Alien Stimulus, says Nobel Stimulunatic [updated]

As the world's economies slip into the Greater Recession from which they had “emerged” only by massaging their numbers, the man who called for a housing bubble to "fix" the American economy during its last Recession  in 2001 demonstrates that mainstream economics has learned nothing since--has not learned that it is not credit creation and mindless consumption that drives economic activity, but genuine savings and real production!

Speaking not on The Onion but on CNN,' Krugman calls for space aliens to attack earth requiring massive defence build-up to stimulate economy. Yes, really:
"If we discovered that, you know, space aliens were planning to attack and we needed a massive build-up to counter the space alien threat and really inflation and budget deficits took secondary place to that, this slump would be over in 18 months. And then if we discovered, oops, we made a mistake, there aren't any aliens, we'd be better –"
Is this the dead end for mainstream economic “fixes” for the crisis their failed theories have caused, exacerbated and extended?

[Hat tip Liberty Watch]

UPDATE: Any Keynesians reading this will snicker quietly to themselves and say things like “But didn’t World War II rescue America from the Great Depression? No, schmucks, it didn’t.

As Dr. Robert Higgs has more than ably shown, the Great Depression continued, and deepened, throughout the New Deal and throughout World War II. The World War II years were a time of shared privation, with virtually every item that we take for granted today either rationed: e.g., meat, gasoline, sugar, clothing; or not available at any cost: e.g., new cars, appliances, etc. The American standard of living throughout World War II remained at an excruciatingly low level that no 21st century American would accept. Meanwhile, unemployment disappeared simply because 16 million able-bodied people were sent to war, paid below-market rates and subject to danger, death, and maiming they may not have preferred to unemployment.
  As [Mary Theroux] earlier detailed in “One More Time: World War II Did Not Bring Us Out of the Depression,” the Great Depression ended in 1946, when 10 million individuals were returned to the ranks of the unemployed, and federal spending plunged 40% in the aftermath of FDR’s death and the abandonment of the New Deal.
If Dr. Krugman would quit reading Keynesian theory and start reading history, he could earn his Nobel and look for salvation not from aliens but from the creative engine fueled by free individuals unencumbered by regime uncertainty and widespread diversion of productive resources to government programs.

'Stopping By Woods On a Snowy Evening,' by Robert Frost

Whose woods these are I think I know.
His house is in the village though;
He will not see me stopping here
To watch his woods fill up with snow.

My little horse must think it queer
To stop without a farmhouse near
Between the woods and frozen lake
The darkest evening of the year.

He gives his harness bells a shake
To ask if there is some mistake.
The only other sound's the sweep Of easy wind and downy flake.

The woods are lovely, dark and deep.
But I have promises to keep,
And miles to go before I sleep,
And miles to go before I sleep.

- Robert Frost, New Hampshire, 1923

Watch a video of Robert Frost reciting his poem. - Posted by PC

Friday, 12 August 2011

Guest Post: The Credit Downgrade That Didn't Happen

Following is a post by Dr. Burt Folsom, author of New Deal or Raw Deal?* and professor of history at Hillsdale College. It is reprinted in its entirety from Prof. Folsom's blog by his kind permission.
The Credit Downgrade That Didn’t Happen

by Dr. Burt Folsom

Ninety years ago, in 1921, the U. S. was poised for a recession, high unemployment, and a possible credit downgrade.


Because World War I had ended, the troops had come home, but 11.7% unemployment darkened the country. Our veterans could not find work. To solve these problems, some leaders recommended, in effect, a stimulus package–give the veterans jobs to build roads, bridges, and some buildings.

But President Harding (who died in office) and President Coolidge said no. Instead, these two presidents recommended cutting federal spending and cutting tax rates.

The cutting of federal spending was critical because the U. S. national debt had increased from $1.2 billion to $24.3 billion from 1916 to 1920.

We complain today about 9.1% unemployment and a doubling of our national debt in the last eight years; from 1916 to 1920, however, we had a 20-fold increase in the national debt and 11.7% unemployment.

But in early 1920s, the U.S. never had a credit downgrade or a prolonged recession because the cutting of federal spending and of tax rates jump-started the economy and produced budget surpluses every year during the 1920s.

During that decade we slashed more than one-fourth of our entire national debt, and increased GDP by almost 25%. American entrepreneurs eagerly began producing radios, talking movies, and air conditioning–three inventions, among others, that changed our nation and the world.

What is encouraging here is that Americans can still chart their own future. We did that in 1921, and we can do so today. We are not pre-destined to be a declining nation–we have a choice in that and we will help make that choice as a nation when we vote next year for the leaders who will shape public policy.

If we select someone with Coolidge’s free-market philosophy, then the freedom that comes with that will allow Americans to invent and create more goods and services to provide the jobs and prosperity to get America moving again.

Woodrow Wilson, the president who Harding and Coolidge replaced, promoted the first income tax and under Wilson the top rates went from 7% to 15% to 65%, and finally to 73%.

Under those rates, we were making the decision to chase wealth out of the country and stagnate as a nation. Harding and Coolidge reversed that decision and sent tax rates tumbling to 25% on top incomes.

American entrepreneurs arose and dominated the world. Revenue actually increased and budget surpluses became the hallmark of the 1920s. What choices will we make ninety years later?

*Dr. Folsom is also the author of The Myth of the Robber Barons and has a new book on FDR during WWII coming out in October!

Posted by Jeff Perren

Monday, 8 August 2011

ECONOMICS FOR REAL PEOPLE: Reserve Bank, cause or cure … ?


Here’s the note from our friends at the UoA Economics Group for their talk tomorrow evening:

Hello Everyone
This week we have Rodney Dickens coming to speak to us further about the role the Central Bank plays in the Business Cycle.  Rodney Dickens is the former head of Research at ASB Bank and has been a member of the RBNZs Monetary Policy Committee.  He is now the Managing Director of Strategic Research Analysis and brings a unique perspective on how the market operates from his 25 years experience working as as an Economist. 
In a recent media release he showed how lowering the OCR during the early 2000's created the boom bust property cycle.  [Some reaction to his media release here.] While this created short-term employment for those in the building industry, it ultimately left many people out of pocket, as over 50 different finance companies collapsed and billions of dollars in investments were lost.  As markets around the world continue to struggle, come and hear an interesting perspective on how this story began.

    Date: Tuesday 9th August
    Time: 7pm
    Location: Case Room One, Level 0, UOA Business School

Please note the change of time for this week to 7pm.  Look forward to seeing you there

DOWN TO THE DOCTOR’S: Why Labour should support tax cuts for the rich

_richardmcgrathLibertarianz leader Dr Richard McGrath invites you down to his surgery for an inoculation against this week’s stories and headlines on issues affecting our freedom.
This week: Why Labour should support tax cuts for the rich

DOMPOST: “Inequality report ignores tax cuts for the rich: Goff” - John Key appears to think income inequality is a bad thing. Phil Goff slaps him with a wet bus ticket for not taking into account the cuts to income tax enacted by National since their election in 2008…

This is much ado about nothing, a phony war over a non-issue. Apparently the gap between top and bottom incomes hasn't widened recently. That's probably not a good sign, as it means industrialists and entrepreneurs possibly aren't making bigger profits, and therefore are less likely to employ more people.

It's no secret that Labour and Bill English like the idea of a capital gains tax. Labour also wants to reinstate the Cullen Envy Tax (i.e. raise the top tax rate back to 39%). But why would on earth would Goff want to decrease government revenue? Doesn't he realise that hiking income tax rates leads to less, not more, tax taken by govt?

Daniel Hannan, member of the European Parliament, points out in his blog that in order to make the rich pay more, governments should tax them less. He links to an interesting article by the Adam Smith Institute (whose publications I strongly recommend) that quotes example after example of how tax reductions for the wealthy encourages them to stick around, keep making profits and thus fall prey to tax collectors.

Even that darling of statists everywhere, John Maynard Keynes, stated: "[T]axation may be so high as to defeat its object, [and] a reduction of taxation will run a better chance than an increase of balancing the budget."

Don’t believe me? Here’s some examples:

  • UK, 1979: Chancellor Geoffrey Howe cuts marginal tax rate from 83% (!) to 60%. Before the cuts, the top 1% of taxpayers were paying 11% of total income tax received. Nine years later, despite the hefty cuts, they were paying 14% of total income tax.
  • UK, 1980s: Chancellor Nigel Lawson cuts marginal rate further, to 40%. By 1997, the top 1% of taxpayers are paying 21% of income tax received. Thus halving the marginal tax rate doubled the income tax receipts from the wealthiest 1%.
  • US, 1920s: Presidents Coolidge and Harding reduced the top tax rate from 73% to 25%. The share of tax paid by earners making over $100,000 nearly doubled between 1921 and 1925, from 28% to 51%.
  • US, 1961: The top tax rate under Eisenhower had crept up to a staggering 91%. The Democrats supported by Kennedy dropped this to 70%. He stated, a few months before a sniper removed the occipital lobes of his cerebral hemispheres: "[T]ax rates are too high today and tax revenues are too low, and the soundest way to riase revenues in the long run is to cut the tax rates..." As a result of the Kennedy tax cuts, those earning over $50,000 increased the amount of tax paid by 40%, and paid 15% of income tax received in 1966, as opposed to 12% in 1963. Total income tax received went up from $69b in 1964 to $96b in 1968.
  • US, 1981: Under President Reagan, Congress reduced the top tax rate from 70% to 50%. Between 1981 and 1988 the top 1% of tax earners increased their share of tax received from 18 to 28%, while the bottom 50% of taxpayers decreased their contribution to income tax received from 7.5% to 5.7% over this same period.
  • US, 1991: George H W Bush, elected on a platform of "no new taxes", supported the introduction of new taxes including raising the top tax rate from 21 to 31%. The net result was that the wealthiest Americans paid $6.5b less in 1991 than they had the previous year before the tax was introduced. Federal tax results as a proportion of GDP dropped too.  
  • US, 2003: George W Bush reduced the top tax rate from nearly 40% to 35%. Between 2004 and 2007 federal tax receipts increased by $785b, mainly from the wealthy.
  • In 2000, the top 60% of US taxpayers paid all the income tax. The bottom 40% paid no net tax.
  • Canada, 1990: Top federal tax rate cut from 45% to 29%; share of tax paid by top 10% of taxpayers increases from 29% to 45%.
  • France, 1996: Gradual decrease in top income tax rate from 48% to 40%; result: higher tax receipts.
  • Hong Kong: Low flat income tax rate of 16% (or choice of graduated rates up to 17% maximum). Result: purchasing power parity 7th highest in the world and closing in on the US.
  • India, 1985: Top tax rate reduced from 65% to 50%; tax revenue the following year rises by 20%.
  • India, 1997: Tax rates reduced across the board; result: no drop in revenues but increase in number of taxpayers over following year, with rise in tax revenue over following 6 years and 50% increase in compliance.
  • Russia, 2001: Flat tax of 13% introduced. Result: 25% increase in personal income tax receipts the following year.

So, Mr Goff:

There is ample evidence that decreasing the top tax rates increases government revenue. So why are you advocating a rise in the marginal tax rate?

Are you so consumed by hatred of the successful for being successful that you would incur a drop in government revenues in order to drive these people offshore, which, of course, is what the wealthy do when grasping parasites like you try to steal larger amounts of their income than they are willing to hand over for redistribution?

Pray tell, Mr Goff.

See y'all next week!
Doc McGrath

Garden of Eden

I don’t know about you, but we had a ball at Eden Park on Saturday night. It wasn’t the MCG—we sat on scaffolding five miles in the air whose shaking quelled the staunchest stamping—and instead of built-in facilities we had portaloos and hot-dog caravans down several miles of stairs—but once installed up in the nosebleed section the atmosphere was fantastic. 

And if you had parking close (as some of us were lucky enough to enjoy) transport there and back was easy, and partying afterwards painless.

And there was a lot to celebrate, wasn’t there. Unless you are Australian. Or Robbie Deans.


This was pretty much our possie (above), which you might think would feel a little out of the atmosphere. But it wasn’t. Despite being behind the scoreboard at this end, the one at the other end was huge—and “spidercam” showed us anything we’d missed. And there was no chance of feeling out of it: with a crowd of 52,000, it was easy to feel part of it. I’d happily sit there again.  And might, in coming weeks.

Q: So how was your Eden Park experience?

Reality strikes back [update 2]

Malinvestment is always the result of the inability of human beings to foresee
future conditions correctly. However, such human errors and the resulting
malinvestments are most frequently compounded by the illusions
created by undetected inflation or credit expansion.”
- Ludwig Von Mises, Human Action

The cause of the ‘bust’ is the same as the cause of the previous ‘boom’ – the
willy-nilly creation of credit out of thin air…  To understand the root cause of
this crisis you need to understand the root cause of ‘boom and bust.’”
– David McGregor, ‘The global financial/economic crisis: causes & solutions

For decades, economies have been built.on a formula of fractional reserve banking and counterfeit capital—money created by banks out of thin air—debt, organised into currency.

This was the "new economy" proclaimed the fakers, an economic model in which production of real things was replaced with production of bank-created credit. Credit created out of thin air propping up prosperity created by illusion.

That unstable gallimaufry collapsed in the malinvestments of 2007 and 2008. And ever since, the fakers have tried to prop up their collapsing model of bank-created credit with trillions of dollars of government paper.

Such fakery can only last so long. Reality will out. All that "stimulus" flooded into the markets served only to resuscitate bad positions that should have been extinguished, and to inflate a (paper-based) "recovery" which allowed the gullible to think that reality had been faked once again.

But it hasn't been.

It looks like this morning, with markets ready to open again, that reality will reassert itself again.

The economic chickens are coming home to roost. Watch out for the fallout therefrom.

UPDATES  from around the traps:

UPDATE 2:  More reaction":

  • Don’t worry about US Government debt says the man who blew up the US housing bubble. “This is not an issue of credit rating,” says Alan Greenspan, “the United States can pay any debt it has because we can always print money to do that. So, there is zero probability of default."
    Yes, folks, this man was Chairman of the US Government’s money-printing wing for nearly twenty years. And you wonder why we’re all now in the mess we’re in!
  • Meanwhile, there are alleged economists out there saying that even though the US Government’s debt situation was “abysmal,” even though they’re now struggling to pay for all the government paper they wasted,  they should have gone for way more than the multi-trillion-dollar stimulus they did.
    “What I want is more now," Christine Romer said about a bigger and better stimulus.
    Yes folks, this woman was Chairman of the Council of Economic Advisers under President Obama and chief architect of his stimulus bill. And you wonder, etc…

Sunday, 7 August 2011

Happy Birthday, E-Type

Since it’s Sunday, here’s Jeremy Clarkson with the closest thing to a religious experience you’re likely to see here: a tribute to the best car ever made, on the occasion of its fiftieth birthday!

Top Gear Jaguar E-Type Tribute from Eric Huntington on Vimeo.

Friday, 5 August 2011


My apologies for such a poor effort on the blogging front this week. Unfortunately (or fortunately, depending on your viewpoint) an old back injury flared up again, putting me out of action for most of it.

But fortunately (or unfortunately, depending on your viewpoint) a crash-hot physio has me almost back to normal--and just in time to head to the test match tomorrow night.

How's that for timing!

So hopefully you will enjoy your weekend as much as I will, and I will see both of you back here on Monday, if not before.


Location:Jervois Rd,Herne Bay,New Zealand

Monday, 1 August 2011

So the (over) spending can now continue…

It has just been announced that Republicans, Democrats and and President Obama have reached a deal to raise the US government's debt ceiling.


Because as Peter Schiff said last week, “The real crisis will occur not if we fail to raise the debt ceiling, but if we succeed.”  The door is now open to new borrowing, new spending, more stimulus of the kind that has already signally failed … and many more crises to come down the road—and in very short order.

And don’t think that raising the government’s debt ceiling will comfort America’s producers, or avert a downgrade of US Govt Debt.

As former Chairman and CEO of BB&T Corporation John Allison notes

    It is important to recognize that the down grade [will not be] fundamentally based on the debt ceiling issue.  The credit rating agencies are focused on the long term deficits faced by the U. S. government.  Raising the debt limit may (or may not) help in the short term.  However, if federal government spending and deficits are not reduced U. S. government debt will be downgraded and rightly so.  The government will ultimately default on some of its obligations unless spending is brought under control…
    Corporate America is fundamentally concerned about the financial instability of the U. S. government and the very destructive regulatory environment, which is why businesses are holding so much excess cash.  It is impossible for a business to be fully prepared for a downgrade, but CEO’s see the government deficit problem, and out of control spending  as far deeper than the debt limit fight.

That’s what virtually every party to this argument, and every report from the MSM, has wilfully ignored. The fight over the debt limit has been a fight over consequences—when the real battle should have been over causes.

Even now, they fail to recognise that.

What would 'Party X' do about the environment? - CONCLUSION: A Kyoto plan with a difference

IMAGINE A ‘PARTY X’ that was actually committed to opposing statism ,and to advocating for free enterprise. Imagine such a party had a cabinet committing to rolling back the state, and an environment minister brimming over with ideas to do that.
    Over the last week, I’ve been throwing out the sort of environmental policies such a party (and such a minister) could advocate. Seven simple policies using present-day political realities to roll back the state without introducing any new coercion along the way.

I conclude today with an idea and an invitation.  The idea: a Kyoto Plan that makes the whole thing plain. The invitation: you’ll find that at the end of the post.

7. The Kyoto Plan for Tax and Regulation

Here’s one last suggestion that sums up the aim of all seven environmental policy planks presented so far. A plan explicitly designed to clean up the human environment, using the language of those who seek to shackle humans in the name of trees, rocks and mud puddles.

If you recall, to save earth’s environment from man’s allegedly climate-changing pollution the Kyoto Protocol to which Simon Upton signed us up required carbon emissions to be cut to 1990 levels by 2010. Which was never going to happen.

Whether or not you accept either the science or the politics behind that notion, however, it certainly concentrated minds on the proposition and elicited great pressure to achieve the goal, or something like it.

So what I propose—what a Party X could proposes—is to do something similar, but in the name of human freedom instead of human bondage.

What I propose quite seriously is a similar protocol to limit a far more serious and provably destructive pollution: the legislative pollution emanating from parliament that punishes achievement, destroys freedom, and requires the productive to go cap in hand to the unproductive just to ask permission to produce.

And along the lines of the Kyoto Protocol, I’d make it one that restricts the levying of taxes and the emission of regulations to 1990 levels, by about the time of the next parliament.

That shouldn’t be a big step to take, but it would at least concentrate minds on the enormous stack of new rules and regulations pouring out of parliament every year. While the jury is still out on the possible destructive consequences of emissions of carbon dioxide, there is no doubt at all of the destructive consequences of the emission of new taxes and ever more intrusive regulations.

Time to put a stop to the explosive growth in these emissions. 2014 works for me. Now would be better.

* * * * *

That concludes the series as written.

But now you’ve seen how easy it is to devise reforms that advance freedom one step at a time without implementing any new coercion, why not have a go yourself? I invite you to post in the comments your own ideas on reform in any policy area. And I invite members of political parties who claim to stand for freedom and small government to give serious thought to making their’s a property Party X, instead of just lapdogs to power.

INTRO: 'What Would 'Party X' Do About the Environment?'
PART TWO: 'A Nuisance and a BOR.'
Making Life Easier for Small Consents
PART FOUR: “Iwi then Kiwi” - A Unique  Privatisation
PART FIVE: A Very Special Carbon Tax
PART SIX: A Fishy Story

THE SERIES IS BASED ON THE PRINCIPLE DEVELOPED HERE: 'Transitions to Freedom: Shall We Kill Them in Their Beds?'

DOWN TO THE DOCTOR'S: Dentists and dickheads

_richardmcgrathLibertarianz leader Dr Richard McGrath invites you down to his surgery for an inoculation against this week’s stories and headlines on issues affecting our freedom.
This week: Dentists and dickheads…

THE DOCTOR SAYS: No, dental fees are not out of control. They have settled according to the economic law of supply and demand. High demand + low supply + over-regulation by government = high prices. If you restrict the number of people graduating from the Otago University dental school (as they do), and then you block qualified dentists from setting up shop in New Zealand (as is done), then of course prices will be high.
        Look at some of the comments made online at the Herald website however:

        "These people who are responsible for our health should not be doing it for personal profit, which
    they do."

    Written by a person who has clearly abdicated responsibility for his own health. Well, I have news for him. Each person is responsible for their own health. Why should anyone else be responsible for my health? It's my body, and I make the decisions that affect my health. The profit motive is what incentivises people to work hard. What dentist is not going to try to make a profit after paying for five years of training and then sitting vulnerable throughout his working career to anyone who cares to make a complaint to the Health & Disability Commissioner? 
    There were lots of other bleeding hearts evident in the online comments, positing the argument that dental care should be paid for with other people's money, but one comment resonated with me: a woman who had dental work done in Thailand at a fraction of the cost in NZ and recommended that others do the same. From my own personal experience, I can recommend travelling to Bangkok where there are top-notch dentists who can even arrange discounted accommodation at four or five star hotels within walking distance of their office.
     I have been over twice and my experience was good.
    For any dental work costing more than $4k, I would think a trip to the dentist in Bangkok would be more economical in dollar terms. Needless to say, let the buyer beware: do your homework first!

3 NEWS: “Family mourn loss of 'big-hearted girl' in Norway” - A 14 year old New Zealand born girl was among those apparently killed in Norway….
THE DOCTOR SAYS: This mass murder was tragic, and the murderer should spend the rest of his life compensating the families of his victims in every way possible—if indeed there is any way possible.
    There were a couple of other interesting angles to this outrage, though.  First, this young lass joined the Labour Party a year ago, aged 13. Thirteen! Isn't it a little unusual to join up children into political parties at such a tender age and take them out on 'camps'? Plenty of potential for brainwashing/indoctrination/child abuse—not sure I'd go as far as Glenn Beck and compare the murdered teenagers to the Hitler Youth movement, but it all seems a little strange to me. 
     Not that it excuses the actions of her killer.
    Like many countries, Norway has strict gun laws. As is the case in many other jurisdictions, a Norwegian's desire to be capable of acting in self defence is not considered a valid reason for him to own an instrument by which he could defend himself. To own a firearm over there, one must be a certified hunter or sports shooter.   
    But if one—just one—of the people who had the misfortune to encounter the killer had had recourse to a firearm, how very different the outcome might have been. How ironic that the inspiration for many little socialists such as those killed eight days ago, Chairman Mao, once opined that political power grows out of the barrel of a gun.
    And it didn't take long before someone from the misanthropic greenie left, a soulmate of Ted Kaczynski, expressed the opinion that the killings in Norway were trivial compared to the slaughter of animals to provide protein for human nutrition.
    What a dickhead.

That’s all for me this week.
See you next Monday.
Doc McGrath

Sunday, 31 July 2011

“Evolution made us all”

Here’s a nice hymn for a Sunday:

by Ben Hillman

Here’s another: 

‘by Monty Python’s Flying Circus

[HT Linda K.]

Saturday, 30 July 2011

INVITATION: “Capitalism, the Cure for Racism”

A few of the more enthusiastic students from the Auckland Uni Econ Group and beyond have been hooking up on Sundays to work through George Reisman’s Program of Self-Education in the Economic Theory and Political Philosophy of Capitalism.

It offers, as the sub –heading of Prof Reisman’s book describes it, “a complete and integrated understanding of the nature and value of human economic life.”

This Sunday, tomorrow, we’ll be listening to Prof. Reisman’s classic lecture on “Capitalism: The Cure for Racism”—an extension of the Uniformity-of-Wages Principle, i.e.,

that the profit motive of employers [where it is free to operate] operates to eradicate all differences ni pay based not on differences in performance. Where such differences persist, they are [argues Reisman] the result of government intervention or private coercion that is sanctioned by the government.

This is an ideal time to come along and hear Prof Reisman’s mind at work on a subject no less topical today than when his lecture was first delivered. So why not come along and enjoy the discussion!

When: Sunday 31 July (tomorrow), 10:30am
Where: The Organon Architecture offices, Level 1, 236 Dominion Rd (next door to the Valley Rd supermarket carpark)

See you there!

Friday, 29 July 2011

Peter Schiff: “The real crisis will occur not if we *fail* to raise the debt ceiling, but if we **succeed**”

Peter Schiff on the U.S. debt ceiling. There’s a more important ceiling staring the U.S. govt in the face than the one they’re trying to fake right now, he reckons: a lending ceiling…

What would 'Party X' do about the environment? - PART 6: A fishy story

IMAGINE A ‘PARTY X’ that was actually committed to opposing statism ,and to advocating for free enterprise. Imagine such a party had a cabinet committing to rolling back the state, and an environment minister brimming over with ideas to do that.
    Here, in several parts, are the sort of environmental policies such a party (and such a minister) could advocate. Seven simple policies using present-day political realities to roll back the state without introducing any new coercion along the way.

Yesterday we started depoliticising the commons. Today, we finish the job: here’s how to de-politicise the fisheries

New Zealand’s fisheries are at present what’s known as a “managed commons,” a system in which the tragedy of the commons is limited only by bureaucratic management of the fisheries—which is effectively held in common by all those who own fisheries quotas, and managed by bureaucratic fiat.

While it’s been applauded by some who should know better as a system bringing property rights to the fisheries,  the Quota Management System is in fact nothing  more than system of rationing by bureaucrat, with no incentive for the bureaucrats who set the level of rationing to get it right, nor for quota holders to maintain the resource.

The result has been politicisation of the fisheries, short term thinking from fishermen (rational in the circumstances), and pressure for even more government control of local fisheries to fix the very real problems created by so-called “deregulation.”

I suggest we need a rethink.

The best way to protect fish stocks and to protect the legitimate interests of fishermen is not through rationing but through property rights. We know that when property is secure that property owners tend to look to their longer term interests: no reasonable property owner wants to destroy the goose that lays his golden eggs.

When property rights are insecure however (as they are with Individual Transferable Quotas, whose value can be wiped out at the stroke of a Minister’s pen) the situation is reversed: the greatest incentive with the short-term horizons created by insecure property rights is to grab what you can while the going is good. So it’s no surprise then to see increasing reports of bottom trawling and bucketfuls of bycatch, and scary reports of decreasing fish stocks and decimated fish stocks. Such is the inevitable result when incentives favour short-term thinking.

The answer is not more politicisation, but less.

THINK ABOUT IT FOR a moment. Native birds face extinction, and fish stocks are reported to be running down. Meanwhile, there is no immediate likelihood of dairy or beef cows becoming extinct. The difference? In the former cases, there is no long-term incentive for private individuals to harbour the resource; whereas in the latter case, where farmers’ property in their cattle is protected, they have an enormous incentive to protect the value of their property—in the case of breeding programmes, right down through several generations.

That’s the whole difference in a nutshell. Protect property rights properly, and you set up “mirrors” reflecting back owners’ behaviour—and incentives to nurture and protect rather than smash and grab.

Farmers have historically protected the property in their stock and crops with methods such as barbed wire, brands and enclosed paddocks—and their development created a revolution in food production that saw the world’s population explode.

Obviously, none of these methods of protecting farmer’s property in their stock works very well with fish. (Certainly, shellfish can be tied to a stake, for which water rights and seabed rights are necessary, but few fish show much concern about swimming past a few barbs on a strand of wire.) But the difference is only technological:  and giving fishermen an incentive to develop the necessary aquatic equivalents is key.

What a responsible Party X would do is not to say how and why a property right in fish would be recognised in law, but invite fishermen themselves to develop the technology to do that—and incentivise the development by promising firm protection in law for whatever method is proven to work.

In other words, give fishermen the opportunity to show reason WHY their ownership in a particular fishery should be recognised in law, and HOW the ownership may be recognised and protected.

A Party X offering this would be using the power of good law to promote the technological means by which good law could be brought to bear on the problem.

THINK ABOUT THE DEVELOPMENT OF property rights in cattle, and how technology helped: The use of cattle brands was the first simple method enabling cattlemen to define ownership of their stock, which it was the law’s job to protect, allowing them to plan and to grow their herds ‘sustainably’ in the full knowledge that their investment in the herd was protected. The better the legal protection, the longer term the investment and the planning that could be done—hence the reason that cattle rustling was treated so severely in the days before barbed wire.

The invention of barbed wire revolutionised farming, allowing farmers to protect and define both their stock and their land across huge areas, allowing them to plan ahead and to protect both their herd and their land ‘sustainably’ in the full knowledge that their investment in herd and land was protected.

Both inventions enabled the legal technology of property rights to be brought to bear to protect first the resource (by means of identifiable brands) and then the environment (by means of barbed wire). What’s needed now is the same thing to happen with the fisheries.

If every fishermen’s interests in his own fishery and fish stocks are safeguarded, then every incentive exists for them to take the long term view. Why would you bottom trawl or in any other way damage your own highly valuable property?

What’s needed with the fisheries is the maritime equivalent of brands and barbed wire so that fish stocks and fisheries are protected by those who have the most interest in protecting them: the fishermen themselves. What’s needed is technology. Political parties don’t invent technology. They can’t. But what they can do is offer the protection of property rights to those who do.

I suggest the best way to obtain what we want here is to invite the fishermen themselves over, say, a three year period to present methods either technological or otherwise by which their own interests in fish and fisheries may be objectively recognised and protected in law, and then commit to enact that protection. I predict an explosion in fish stocks, the depoliticisation of the fisheries … and a big export market in the technology produced.

[Tomorrow, Part 7: A Kyoto Plan with a difference]

* * * * *

INTRO: 'What Would 'Party X' Do About the Environment?'
PART TWO: 'A Nuisance and a BOR.'
Making Life Easier for Small Consents
PART FOUR: “Iwi then Kiwi” - A Unique  Privatisation
PART FIVE: A Very Special Carbon Tax
THE SERIES IS BASED ON THE PRINCIPLE DEVELOPED HERE: 'Transitions to Freedom: Shall We Kill Them in Their Beds?'

Thursday, 28 July 2011

What would 'Party X' do about the environment? - PART 5: A very special carbon tax

IMAGINE A ‘PARTY X’ that was actually committed to opposing statism ,and to advocating for free enterprise. Imagine such a party had a cabinet committing to rolling back the state, and an environment minister brimming over with ideas to do that.
    Here, in several parts, are the sort of environmental policies such a party (and such a minister) could advocate. Seven simple policies using present-day political realities to roll back the state without introducing any new coercion along the way.

Today, Today, what I like to ironically my 'Carbon Tax Plan':  A Carbon Tax—but not as you know it!

We've all heard the litany: We’re all gonna die. Runaway global warming is gonna get us.  Man-made global warming is killing the planet. We "need" a carbon tax, urgently …  Agree or disagree, like it or not, but those sentiments and those statements are political reality, both here and across the Tasman.

So I’m proposing something to bring honesty to warmist science and warmist politics. Yes campers, it is a carbon tax. But look closely, because it’s a very special carbon tax.

First off, it’s a carbon tax that is a substitute for other taxes (yes, a condition of Party X’s support for any new tax would would be the removal of another tax.)

And second of all, it’s a carbon tax that’s reality based, i.e., it’s a tax whose rate is linked to actual global temperatures instead of to the sound of hot air.

What I’m actually suggesting is not new. It was first put forward by Canadian Ross McKitrick, who was the co-debunker with Steve McIntyre of the IPCC’s infamous ‘Hockey Stick.  What he put forward was a carbon tax linked to actual global temperatures – specifically, to the temperature of the tropical troposphere, which is precisely where the IPCC's science says the primary CO2 "fingerprint" is to be found.

It is, if you like, a way to call warmists’ bluff. But it is a new tax, of sorts, albeit a tax with a number of very attractive advantages for everyone on both sides of the debate.

Because if you really believe that temperatures are going to rise precipitately, then how could you reasonably oppose such a tax -- from the warmist point of view, this is a one-way bet with cross-party support! And if you don’t believe, it’s the same.

So if warmists were to oppose the tax, it would call into question everything they say they hold to be true—and vice versa.

But there’s more:

  • The Special Carbon Tax offers a real fiscal bonus. If the globe warms we pony up, true, (but remember this is offset by the removal of another tax). But if the globe cools as many solar researchers expect?Then if the globe cools, we all get a real refund. “If models are right, then the tax would go up a lot,” [points out economistGeoffrey Plauche], “but on the other hand, if the tropical troposphere temperatures continue to decline as they have since 2002, then the tax would go negative and turn into a subsidy on carbon emissions. Of course, the alarmists are convinced this won't happen so it shouldn't be an obstacle to them endorsing the tax...” Like I say, a Party X could use this to call warmists’ bluff.
  • But that’s not all. With carbon taxes linked to global temperature, people would begin to really focus on the actual means by which global temperatures are measured – how the measurements are produced, what the actual surface temperatures are, and how closely (if at all) they correspond with predicted temperatures. They might notice too that the methods by which the surface temperatures are presently produced are seriously shonky but considered “good enough for government work.” And they might even notice that there has been no real warming since 1998.
  • There will be serious attention paid to this ongoing temperature figure, so much so that we might even see warmists forced to admit there has been no real warming since 1998. We might expect to see the measurement recorded at the Stock Exchange, and shown on the news each night right after the Dow Jones and the Nikkei and the US govt debt figures, and for the same reason those figures are reported and with the same pressures regarding accuracy and accountability (except of course for the US govt debt figures).
  • In a further wrinkle suggested by economist Arnold Kling and others, we would expect there to develop a futures market in the temperature indicator, with taxes, profits and predictions tied to the futures price in a way that rewards accurate forecasting instead of the sort of political horse-trading rewarded by the IPCC.
  • Furthermore, all those computer models that predict warming (and since 1998 that’s the only place we actually see any real warming) – all those models would be under much closer scrutiny. And as Climate Science Coalition convenor Owen McShane points out, we’d expect to see the rise of real, non-government, climate experts to make real non-government sponsored predictions about where troposphere temperature is going, Those whose "predetermination and bias" always encourages them to predict "warmer" would soon lose their clients and their track record would be there for all to see. No doubt too these experts would be listed in the same pages as the share market and similar "real" information. As Owen says, “The late Augie Auer would be thrilled.”
  • Finally, as I said before, this idea was originally proposed by Ross McKitrick (the chap who helped debunk the bogus IPCC hockey stick) so it already has serious credibility, and has received significant international attention. No harm at all in using that spotlight to help promote more freedom here.

So in short we have here a “tax” designed to call warmists’ bluff while keep industry free of their shackles, and doing it in the name of the warmists' name—a “tax” that promises to be a tax refund.

You can see why I call it a special carbon tax.

[Tomorrow, Part 6: A fishy story]

* * * * *

INTRO: 'What Would 'Party X' Do About the Environment?'
PART TWO: 'A Nuisance and a BOR.'
Making Life Easier for Small Consents
PART FOUR: “Iwi then Kiwi” - A Unique  Privatisation
THE SERIES IS BASED ON THE PRINCIPLE DEVELOPED HERE: 'Transitions to Freedom: Shall We Kill Them in Their Beds?'

Wednesday, 27 July 2011

Gratitude, by Daniel Anjou

Gratitude - Danielle Anjou

A passion for life and a spirit inspired by that full-blooded reality focus I talked about the other day...

Tax, tax, and more tax

You have to laugh.

I’ve been posting in recent days about an imaginary ‘Party X’ committed to more freedom and less government. Indeed, if you scour the National Party constitution, under all the dust you’d even find such a commitment written there.

Just as you’d find a firm commitment from that that same team before the last election for “an ongoing series of personal tax cuts” delivering “about $50 a week to workers on average wage”—a “tax cut programme [that] will not require any additional borrowing.” And no increases in GST, to boot.

They lied to you then like they always do.

Instead of more freedom and less government we’ve seen the opposite. And instead of delivering tax cuts of about $50 a week with no new borrowing, we’ve seen lots of the latter and very little of the former—much borrowing, derisory tax snips, and and a whole raft of tax increases and new taxes, from rises in Roger Douglas’s GST on everything, to increases on ACC levies, to increases in excise tax on everything enjoyable, to the introduction of Nick Smith’s ETS taxes on fuel and power.

And to top it off, we now have Steven Joyce wanting to whack motorists with a new tax to pay for his favourite form of stimulunacy: oodles more taxes to spend $36 billion building more roads.

Because the govt isn’t already taking enough out of your pocket to do the things he wants it to do.

Sod off Steven.

Q: What would 'Party X' do about the environment?– A: They’d use it to push privatisation.

IMAGINE A ‘PARTY X’ that was actually committed to opposing statism ,and to advocating for free enterprise. Imagine such a party had a cabinet committing to rolling back the state, and an environment minister brimming over with ideas to do that.
    Here, in several parts, are the sort of environmental policies such a party (and such a minister) could advocate. Seven simple policies using present-day political realities to roll back the state without introducing any new coercion along the way.

Today, “Iwi then Kiwi” - a unique kind of privatisation. A politically viable method of ending the tragedy of the commons by beginning to get rid of the commons.

The leitmotif of this series so far is using existing pressures in the political environment to advance the de-politicisation of the natural environment.

There is arguably no more virulent and on-going political pressure in the wild than those that formed the Maori and Mana Parties. And there’s no more important environmental repair than fixing the Tragedy of the Commons. The water needs it. The land needs it. Even “protected” species need it.(And while the reasons the Commons need fixing are as simple to understand as cocktail party etiquette, the methods by which the Tragedy is overcome are enough to earn people a Nobel Prize.)

Now, I’ve maintained in many posts here that property rights under a common law regime provides superior environmental protection to what we presently endure. Property rights are the key to genuine environmental protection. Property rights in defence of nature. But there’s a problem there too, isn’t there.  There’s no property rights without property…

To work effectively, property rights-based environmental protection needs an owner to stand up for it. And more than half of this beautiful country (and, despite the best efforts of Hone, Pita and Tariana, most of the seabed, foreshore and waterways) have no-one to stand up for them but a bureaucrat.  [Cue the joke told by Department of Conservation (DoC) bureaucrats: Q: What’s the best way to exterminate possums? A: Give them to DoC to protect. ]

No, most of this beautiful country still has no property rights attached. Most of it is essentially un-owned, i.e., nearly half of the country is still nominally Crown Land, with no owner in the least interested in standing up for their patch. (With about thirty percent of the country being so called “conservation estate,” i.e., “protected” by Kate Wilkinson and her Department of Conservation (DoC).) 

SO WHAT DO WE do? Using our ‘judo’ principle of using our opponents’ strengths to gain our goals, what do you think the easiest way would be to establish property rights in all that land that needs property rights protection. Anyone?

I’ll give you that clue again, shall I? What about giving the Maori and Mana Parties something to vote for? Think about that for a moment.

It makes a lot of sense. Who’s going to advocate loudest and longest for title in all Crown land, seabed, foreshore and waterways to be privatised?  Just imagine getting the full weight of brown roundtable behind privatisation. That’s a fair old weight!

So am I really advocating giving all this un-owned land away to a bunch of tribalists!? Well, yes I am.

What have they done to deserve it? Well, nothing. Nothing, that is, except develop rights in land and water over long historic use, and agitate loudly enough today so that they’re on point as the easiest way to effect this sort of privatisation.

If we can have titles created in land where there are presently no titles at all, if we can extract land and water from the hands of the state and turn it into private property with covenants and easements attached that protect all existing rights, then that’s as good a thing as any peaceful freedom fighter can hope to achieve—and it’s perfectly in line with our goal of more freedom, with no new coercion.

THERE”S JUST FOUR THINGS that should be done to ensure that both freedom and prosperity are secured.

  • The first thing is to ensure that only Crown Land is involved; that no existing private property will be in the mix.  Don’t put it past a bureaucrat to take the chance to effect another confiscation, even while all around are being privatised.
  • The second is that tribalism must taken out of the mix: title must be transferred NOT to tribal leaders so they can increase their control or create new tribal fiefdoms, but to individuals. The only opposition to this condition will come from tribal leaders themselves, of course, who realise they’re being made redundant, and not before time—and that opposition in itself will reveal that the interests of the tribal leaders and the people on whose behalf they claim to speak are not the same, and are actually at odds with each other.
  • The third thing is to ensure that all existing interests, such as logging rights, fishing rights, harvesting rights—all existing easements or covenants, whether presently registered or not—are registered and protected on all new titles.
  • And the fourth thing to do is to to ensure that all titles created are both fully individualised and transferable. As Ronald Coase points out, as long as titles are made transferable and transaction costs are kept low, then land titles so created will tend to end up in the hands of those who most value them. The first holders of these new titles can do anything they wish with them (and making land individually owned and transferable is between them a necessary condition to allow the holders of these titles to borrow against them to advance their wealth), but as we’re all aware the deadbeats and the astute will both quickly sell to those who value them more than they do, and the productive who wish to will keep theirs and use it to produce something more. The choice will be entirely up to these new first-time owners.

So there you have it. A simple and politically possible way to begin effecting property rights all over the country. In short, this is a privatisation even talkback callers can support.

And over time we would expect to see this land and water which was initially un-owned and unprotected (the main reason for problems like ‘dirty dairying’) used first to raise people out of poverty who are in urgent need of that boon and thence to reduce the importance of tribalism--and then once land and water end up in the hands of those who value the land and waterways the most, owners who have most to gain from its protection, we’ll have the sort of strong environmental protection across the country that common law was so successful at delivering.

[Tomorrow, a very special carbon tax plan ...]

* * * * *

INTRO: 'What Would 'Party X' Do About the Environment?'
PART TWO: 'A Nuisance and a BOR.'
Making Life Easier for Small Consents
THE SERIES IS BASED ON THE PRINCIPLE DEVELOPED HERE: 'Transitions to Freedom: Shall We Kill Them in Their Beds?'