Monday, 9 July 2012

ECONOMICS FOR REAL PEOPLE: “Ten-Minute Talks”

While students are still on their break, participants in the weekly Econ Group meetings have been invited this week to deliver “ten-minute talks” on an economic subject of their choice.

Feel free to come along and join in!

When: Tonight, Monday, 9 July
Time: 6pm
Where: Room 215, Level 2, Business School Building, Auckland University

All welcome.
Look forward to seeing you there.

GUEST POST: Cut-price sections for #EQNZ red-zone residents

"Cut-price" sections are being released in Christchurch for residents of red zones. Where in Christchurch? Rolleston. How many sections? Eighteen. What price is cut-price? $113,000 to $139,000. Still, let’s not be churlish.

Hugh Pavletich of Cantabrians Unite responds:

_hugh-pavletich-smlTHE TEAM INVOLVED WITH the Canterbury Cooperative Land Trust is to be applauded for bringing sections to market for Red-Zoners in Rolleston for between $113,000 to $139,000. This is is not as good as things could be, but it is an extremely helpful step in the right direction.

There is still massive scope to lower prices further, but only when the serious structural and infrastructure issues in Christchurch are effectively dealt with by the Authorities at both central and local level.

Back in early 2010, well before the earthquakes, I set out the whopping differences of new-home costs between an affordable North American housing market  such as Houston, where housing costs 2.9 times household incomes, and, Christchurch—where the multiple between housing and income is a "severely unaffordable" 6.3.

There’s a a huge difference in building costs. On the fringes of the affordable US housing markets, starter-housing stock has an ALL UP build price of around $US600 per square metre. Compare that to here in Christchurch, where we enjoy a staggering build-cost of $NZ2,500 per square metre  and beyond.

Our residential development / construction sector is a shambles.

In her lead article this week’s Listener, Rebecca Macfie illustrates just how woeful our residential development & construction costs are in comparison with those in Australia. Yet Australia is not even in the same ballpark for cost efficiency as the United States.

TO OFFER RED-ZONE RESIDENTS sections at the $113,000 to $139,000 quoted in The Press, the Canterbury Cooperative Land Trust has taken the approach of attempting to wipe out developer margins—while no doubt allowing within this pricing a risk/costs overrun contingency. No doubt there will be further "savings" to end purchasers if, in the final wash, costs are controlled and the contingency is not required.

The Trust is being somewhat generous in suggesting the savings are quite as much as 40%. After all, this is South Rolleston. Lets just call it novice developer enthusiasm! In having said that, all involved (for little if any personal financial reward in most cases) are playing a hugely important role: first, in bringing better priced sections to market; and second, in illustrating to the wider public just how this is possible.

This is, however, a “one-off” deal. The major impediments to allowing affordable sections at and below $50,000 are not addressed at all by the Trust’s initiative: first,  the urgent need to eliminate the artificial fringe scarcity values created by planners strangling land supply; and second, the need to finance new infrastructure appropriately. (These points were covered in more detail in my article "Christchurch: The way forward.")

IT’S NOT ROCKET SCIENCE. New housing construction internationally today is a very formulaic business, and has been ever since the creation of the modern production construction industry by Bill and Alfred Levitt following World War Two.  Professor Peter Bacon Hales of the Art History Department of the University of Illinois at Chicago outlines this remarkable history—the "democratization of prosperity" if you like.

The truly remarkable Levitts supplied new starter homes for $US8,000 to single-earner  young families (yes....single-earner) earning an average of just $US3,800 a year—that means starter homes selling at just 2.1 times annual household earnings, with a mortgage load of only 18% of the family’s annual gross income!

Our young people today deserve these same opportunities. Buying a house should be as easy as buying a car (although the former is of course more expensive and financed over a longer period).

The major reason this was allowed in Levittown—because even then in the States planners were out there arguing against what the Levitts were doing—was because the Authorities in the end were too frightened to deny affordable housing to soldiers returning from World War Two. They didn't want a repeat of the civil unrest that occurred with returning veterans following World War One, which in Europe helped usher in Mussolini and worse. Indeed, when politicians and planners got in the road, Levitt often called the Veterans Association in for support.

You would think there would be abundant political pressure around Christchurch to similarly focus attention!

ON THE FRONT PAGE of my archival website www.PerformanceUrbanPlanning.org I offer a clear definition of an Affordable Housing Market:

DEFINITION OF AN AFFORDABLE HOUSING MARKET
For metropolitan areas to rate as 'affordable' and ensure that housing bubbles are not triggered, housing prices should not exceed three times gross annual household earnings. To allow this to occur, new starter housing of an acceptable quality to the purchasers, with associated commercial and industrial development, must be allowed to be provided on the urban fringes at 2.5 times the gross annual median household income of that urban market (refer
Demographia Survey Schedules for guidance).
The critically important Development Ratios for this new fringe starter housing, should be 17 - 23% serviced lot section cost, with the balance being the actual housing construction cost.
Ideally, to ensure maximum stability and optimal medium and long term performance of the residential construction sector through a normal building cycle, the Median Multiple should move from a Floor Multiple of 2.3, through a Swing Multiple of 2.5 to a Ceiling Multiple of 2.7.

So even with the commendable numbers at which the Canterbury Cooperative Land Trust is offering these sections—and I do applaud them for what they are trying to do—we are still a million miles from where fringe sections should be priced.

Recovery Minister Hon Gerry Brownlee is well aware of all this too, as he chaired Parliament’s Commerce Committee Inquiry into Affordable Housing Inquiry back through 2007/08.

He knows it, but he’s not prepared to do anything about it.

Hugh Pavletich
Coordinator, Cantabrians Unite

QUOTE(S) OF THE DAY: Isabel Paterson

Taxes

There is no means by which "the rich" can be taxed without ultimately taxing "the poor" far more heavily. And one tax tends to increase all other taxes, instead of lessening them, because tax expenditure goes into things which require upkeep and yield no return (public buildings and political jobs).
            - Isabel Paterson, God of the Machine

Government Spending

When paper currency is depreciated, the difference has to come out somewhere; and the main cut is in wages. The fact is that heavy government expenditure must always be taken from the workingman's wages; there is no other possible source. But the depreciation in currency comes out of wages immediately; whatever anyone gets in his pay envelope will simply buy him that much less in goods.
            - Isabel Paterson, God of the Machine

Great Depression

What was the cause of the panic [that led to the Great Depression]? Enormous government loans abroad which were not repaid; and the existence of the Federal Reserve system, a political creation, which made an inordinate credit extension possible.

If a financial system is unsound, it can only be so by the possibility of overextension of credit, and paper currency. A true remedy could only consist of limiting such facilities. Government "guarantees" merely put the property of prudent men at the disposal of speculators in case of loss. There is no such thing as a "money panic"; a financial panic occurs from collapse of credit.
            - Isabel Paterson, God of the Machine

Humanitarianism

Most of the harm in the world is done by good people, and not by accident, lapse or omission. It is the result of their deliberate actions, long persevered in, which they hold to be motivated by high ideals toward virtuous ends. This is demonstrably true; nor could it occur otherwise. The percentage of positively malignant, vicious or depraved persons is necessarily small, for no species could survive if its members were habitually and consciously bent upon injuring one another. Destruction is so easy that even a minority of persistently evil intent could shortly exterminate the unsuspecting majority of well-disposed persons. Murder, theft, rapine and destruction are easily within the power of every individual at any time. If it is presumed that they are restrained only by fear or force, what is it they fear, or who would turn the force against them if all men were of like mind? Certainly, if the harm done by willful criminals were to be computed, the number of murders, the extent of damage and loss, would be found negligible in the sum total of death and devastation wrought upon human beings by their kind. Therefore, it is obvious that in periods when millions are slaughtered, when torture is practiced, starvation enforced, oppression made a policy, as at present over a large part of the world, and as it has often been in the past, it must be at the behest of very many good people and even by their direct action, for what they consider a worthy object. When they are not the immediate executants, they are on record as giving approval, elaborating justifications or else cloaking facts with silence, and discountenancing discussion....
    Then there must be a very grave error in the means by which they seek to attain their ends. There must even be an error in their primary axioms, to permit them to continue using such means. Something is terribly wrong in the procedure, somewhere. What is it?...
    The root of the matter is ethical, philosophical and religious, involving the relation of man to the universe, of man's creative faculty to his Creator. The fatal divergence occurs in failing to recognize the norm of human life.... No one person, though his income be $10 million dollars a year, can take care of every case of need in the world. But supposing he has no means of his own and still imagines that he can make "helping others" at once his primary purpose and the normal way of life, which is the central doctrine of the humanitarian creed, how is he to go about it? ...
    There is only one way, and that is by the use of the political power in its fullest extension. Hence, the humanitarian feels the utmost gratification when he visits or hears of a country in which everyone is restricted to ration cards. Where subsistence is doled out, the desideratum has been achieved, of general want and a superior power to "relieve" it. The humanitarian in theory is the terrorist in action. ...
    Why do kind-hearted persons call in the political power? They cannot deny that the means for relief must come from production. But they say there is enough and to spare. Then they must assume that the producers are not willing to give what is "right." Further, they assume that there is a collective right to impose taxes, for any purpose the collective shall determine. They localize that right in "the government," as if it were self-existent…
    But if taxes are to be imposed for relief, who is the judge of what is possible or beneficial? It must be either the producers, the needy or some third group. To say it shall be all three together is no answer; the verdict must swing upon majority or plurality drawn from one or other group. Are the needy to vote themselves whatever they want? Are the humanitarians, the third group, to vote themselves control of both the producers and the needy? (That is what they have done.) The government is thus supposed to be empowered to give "security" to the needy. It cannot. What it does is to seize the provision made by private persons for their own security, thus depriving everyone...
            - Isabel Paterson, God of the Machine

On what moves the world

“An abstraction will move a mountain: Nothing can withstand an idea.”
            - Isabel Paterson, God of the Machine

[Hat tip Jeffrey Tucker]

Sunday, 8 July 2012

Farewell, Wim Verhoeven

With the greatest sadness, I have to pass on the news to you that Wim Verhoeven has died, passing away in his sleep Sunday July 1st.

Many of you will know Wim. He was a regular contributor to the Libz party, both intellectually and financially, and actively participated in conferences, events and demonstrations right up until a couple of years ago when he no longer felt up to it.

Wim’s funeral will be held at 11am Wednesday 11th July at the Lychgate Funeral Home, corner Willis and Aro Street, Wellington City.

He was a good man. A very good man. Be sure, if you’re there, to give him the sort of send-off he deserves.

Friday, 6 July 2012

FRIDAY MORNING RAMBLE: July 4 edition

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The conjunction of last week’s US Supreme Court decision shredding their Constitution with this week’s July 4 celebrations commemorating the commitment at the birth of that country to the protection of individual rights has not been missed by intelligent commentators:
Thoughts For the Next American Revolution – MICHAEL HURD
What to Celebrate on Independence Day – Ari Armstrong, OBJECTIVE STANDARD
U.S. Declaration of Independence (and declaration against government dependence) – Richard Ebeling, MASTER RESOURCE
Our Constitution is too Good for Us - THRUTCH
My Fourth of July Reflections – Tibor Machan
The Eternal Meaning of Independence Day – Scott Johnson, POWERLINE
New at Reason: Nick Gillespie on What Frederick Douglass Teaches Us About American Exceptionalism – REASON

The Green Party claims Amy Adams’s planned amendments to Section 6 of the Resource Management Act are “a major assault on the Act and on sustainable management.” Sadly, they’re not. Not any more than National’s last tinkering, and this like that looks like it only giving even more power to planners—planners like the arsehole below.
Report is major assault on RMA - Greens – VOXY
Eco-Fascism in NZ—the Beginning of the End? – Lindsay Perigo, SOLO
Report of the Minister for the Environment’s RMA Principles Technical Advisory Group – M.F.E
Unsustainable management – NOT PC, 2005
What would 'Party X' do about the environment? - PART 3: Small Consents – NOT PC, 2007
Unaffordable housing? No wonder! – NOT PC, 2012
It's time to drive a stake through the heart of the RMA – Peter Cresswell, FREE RADICAL, 2005

Whose_Bloody_Land_is_it_Anyway

Speaking of “sustainable management” and the ethos behind it, here’s an excellent piece on the recent Colorado wildfires—several responses to which exposed the caustic, anti-man, soul of the environmentalist movement.
Incinerating America’s West – Robert Zubrin, PJ MEDIA

Beware of mere “good intentions” on environmental issues, and run from “deep ecology” like the plague.
Do You Want to Reduce Your Carbon Footprint to Zero? – Diana Hsieh, PHILOSOPHY IN ACTION

Meanwhile, well-meaning big-government environmentalists continue to pick winners losers. (Can someone please tell Russel Norman that in the real world a Green Economy is an oxymoron.)
Yet Another DOE Green Failure as Abound Solar Goes Bankrupt – NLPC

Ahem.
The Miracle that Is the iPhone (or How Capitalism Can Be Good for the Environment)CATO@LIBERTY

And it’s not even trying to become a nuclear threat or anything!
Over the top Aussies liken Christchurch to Iran – THE PRESS

Obviously short of a headline recently, Shane Jones has picked a good issue with which to find it, saying :“We in Maoridom must not buy uncritically into the hostile rhetoric from the Greenies. It’s about time they showed as much concern for the brown kiwis disappearing to Aussie as for the habitat of the brown spotted kiwi.”
Shane Jones on the Greens and mining – WHALE OIL

“There are two types of people in life: those who get on with the business of living, and those who try to get in their way. Politicians and bureaucrats are of course foremost in the latter category, but in this crony-capitalist society we have now it is not uncommon to find those who ought to be in the former category sidling up to those in the latter. Thus the obscene spectacle of NZX, the company that runs New Zealand's stock exchange, announcing a new Diversity Listing Rule, requiring companies listed on the stock exchange "to provide a breakdown of the gender composition of their directors and officers; and, if they have a formal diversity policy, to give an evaluation of their performance with respect to that policy."
NZX Dildoed by MWA – Lindsay Perigo, SOLO

Yes, I agree, we should end fossil fuel subsidies. But…
The Amazing Ignorance of #EndFossilFuelSubsidies – Tim Worstall, FORBES

The Greens' Metiria Turei calls the Accommodation Supplement a "landlord subsidy" and points to it as part of the general problem of housing affordability: it pushes up the price of housing. She’s right, you know.
Accommodation incidence – Eric Crampton, OFFSETTING BEHAVIOUR
Fiddling with Housing Benefit won't solve the cost explosion – Richard Wellings, IEA.ORG

“Primary and secondary school education is in a shambles. Universities are
increasingly in academic decline as they endeavour to make comfortable
environments for the educationally incompetent. Universities should refuse
admission to students who are unprepared to do real university work. That
would not only help reveal shoddy primary and secondary education but also
reduce the number of young people making unwise career choices. Sadly, that
won't happen. University administrators want warm bodies to bring in money.”
- Walter Williams, Too Much University

Let’s not get too excited about China’s continuing ability to keep our economic heads above water.
China’s Economic Policy of Denial – Greg Canavan, DAILY RECKONING
The Question China Has To Answer Fast to Save it’s Economy – Callum Newman, DAILY RECKONING

Don’t think Germany is immune either.
Germany’s economy is only king in the blind valley of the Eurozone – Detlev Schlicter, PAPER MONEY COLLAPSE

The crash is speeding up. Will the Europeans manage to spend the last of Germany's money? Will it make any difference?
The greatest financial collapse the world has ever seen – Egon von Greyerz, KING WORLD NEWS

This story illustrates yet another of the moral hazards of a government-controlled paper-money system.
Bank of England dragged into rate-rigging row – TELEGRAPH
RBS & Lloyds drawn into rates-rigging scandal – TELEGRAPH
LIBOR: When Bankers Try to Shift the Blame – Murray Dawes, MONEY MORNING AUSTRALIA

On Monday, July 2, BBC Radio 4 broadcast a program on the gold standard as part of their Analysis series. Detlev Schlicter was one of the interviewees.
BBC Radio 4 – Analysis: The Gold Standard – BBC AUDIO

It’s happening, just quietly.
Gold reentering the monetary system – COBDEN CENTRE
How the Gold Standard is Returning Through the Back DoorMONEY MORNING AUSTRALIA

Mind you, it’s not a proper gold coin standard they’re talking about—one that leaves gold coins in the hands of workers.
A cross of gold, part 5 of 5 – Edwin Viera, TO THE POINT

“One of the things that separates good thinkers from not-so-good thinkers is the attention they give to terminology.”
To Discredit The Anti-Capitalists, Pro-Capitalists Need To Learn How To Use Words 
- Harry Binswanger, FORBES

Our favourite motelier had a strangely unsatisfied guest last week.
Unsatisfied Motel Guest – MOTELLA

 

Is Washington’s libertarian CATO Institute undergoing an Objectivist takeover? And why the hate from The New Yorker?
Who Is John...Allison? A Randian, Libertarian Business Icon Takes Over the Cato Institute – FORBES
The Kochs vs. Cato: Winners & Losers – NEW YORKER
Cato, Koch Brothers Settle Suits Over Control Of Think Tank – BLOOMBERG

Are formerly active blog comments sections losing out to Twitter and Facebook? But how meaningful a debate can you really have with 140 characters?
Blogging and Facebook- ROBERTO SARRIONANDIA

Here’s a topical question answered:
How much were the original Olympics like the modern Games? – HISTORY NEWS NETWORK

Yes, it’s true.
Your E-Book Is Reading You – WSJ

And now for the important stuff…
Formula 1 design evolution visualised – ROBIN’S CAD BLOG

There are some facts you really need to know. This is one of them:
Random Facts #2: Merkins – EROSOPHIA

Artist Michael Newberry has created a new video section on his website. “Cool time-lapse of wip paintings, lectures, presentations, and a few friends chiming in about art related stuff. All of it,” he says, “shares my love of figurative art and the road ahead with knowledge and innovation.”
Videos – MICHAEL NEWBERRY, ARTIST

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And another artist friend, Auckland artist Jesper Sundwall, has just won a Highly Commended Award in the highly regarded Art Renewal Center 2012 Salon for the piece below, ‘Sven and I.’ Congratulations, Jesper.
International 2011-2012 A.R.C SALON – ART RENEWAL CENTER

You can catch up witH Jesper and his equally-talented artist wife Jasmine Kamante at their Newmarket exhibition next Friday, and public lecture Sunday week.
Exhibition "Florence to Auckland" – JESPER SUNDWALL
Artist's Talk on Sunday July 15th, bookings available now – JASMINE KAMANTE

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If you’re living anywhere near Auckland, Wellington or Christchurch, then you’re in luck! Because at the end of this month the NZSO with Simon O’Neill, Edith Haller, John Wegner, Margaret Medlyn and other stellar singer will be presenting Richard Wagner’s opera ‘The Valkyrie’ as an “Opera In Concert.” Don’t miss out!
Here’s New York’s Met Opera giving the famous Ride of the Valkyries earlier this year:

A brief history of rock music100 guitar riffs in 12 minutes!

It’s a bit of a spotty presentation, but it does tell the story of my favourite album by my favourite 20th-century composer:

[Hat tips to Hugh Pavletich, Thrutch, Don Watkins, Geek Press, Julian D.  And thanks for cartoons to Bosch Fawstin and Nick Kim]

Thanks for reading…

Thursday, 5 July 2012

And the biggest drinkers are…

No, men over fifty are not the nation’s biggest drinkers.

Whatever the sub-editors at the Royal NZ Herald say.

As two of the experts actually quoted in the Herald’s story said, men over 50 accounted for the largest chunk of the booze because there are a lot of men over 50, not because they are the heaviest drinkers.  A little simple arithmetic shows that, per person, men over 50 drank less than men 35-50, and less than men 25-34.

We men between 35-50 clearly need to pick up the pace.

QUOTE OF THE DAY: “…conceived to eradicate the illegal drug market, the war on drugs cannot be won”

“If there is one number that embodies the seemingly intractable challenge imposed by the illegal drug trade on the relationship between the United States and Mexico, it is $177.26. That is the retail price, according to Drug Enforcement Administration data, of one gram of pure cocaine from your typical local pusher. That is 74 percent cheaper than it was 30 years ago.
”This number contains pretty much all you need to evaluate the Mexican and American governments’ ‘war’ to eradicate illegal drugs from the streets of the United States. They would do well to heed its message. What it says is that the struggle on which they have spent billions of dollars and lost tens of thousands of lives over the last four decades has failed…
Conceived to eradicate the illegal drug market, the war on drugs cannot be won.”
      - New York Times, July 3, 2012

The Higgs-Boson Particle explained

The Higgs-Boson Particle explained by PhD Comics. [Hat tip Geek Press]

And now the particle has been spotted, here are the politicians’ reactions

Why Government Intervention Hinders Progress and Innovation

_Kris_SayceGuest post by Kris Sayce from Money Morning Australia

‘The success of Asian economies such as Korea didn’t happen through the ideological miracle of economic bushfires, where the conditions need to be just right for their creation naturally.
‘They were deliberately built through considered and targeted government policy – picking winners and planning for long-term growth.
‘The Samsung story itself is incredible.
‘Driven by government-sponsored credit and policy vision, Samsung now accounts for more than ten per cent of the country’s GDP.’
            -
Paul Howes, National Secretary, Australian Workers Union

In one breath, Mr. Howes denies the existence of entrepreneurialism and creative destruction.

In Mr. Howes’ (and other central planners’) world, it’s government that creates jobs.

They believe that a nation needs a group of wise overlords to guide and direct the economy.

In their view, nothing happens without government intervention.

As they see it, governments come up with the bright ideas and it’s then up to the market to fulfil those ideas. If the market doesn’t do it, it’s not because the idea is rubbish, it’s because the market has failed.

But while Samsung may be a wonderful example of a government picking winners, let’s not forget the other side of the coin — the hundreds or thousands of South Korean businesses that failed, the money lost and the lives ruined because the government backed Samsung while not giving the same favours to others.

Or let’s look at an example of another global brand that received government support — Nokia.

Until recently, Nokia was the world’s leading mobile phone company. And it was Finland’s biggest company.

Government Intervention and the Lesson of Nokia

But having favoured status didn’t protect the company from error. It made two crucial business mistakes that would cause it to miss out on the two biggest trends in the mobile phone industry during the past 10 years.

First, it missed the trend towards ‘flip’ mobile phones. It stayed with the ‘brick’ style that had won it millions of customers over the years. But at the time consumers wanted compact and sleek phones. The kind you could neatly hide away in a pocket or handbag.

But as you know, technology changes quickly. The trend for compact and sleek phones didn’t last long. Perhaps if Nokia caught the next trend wave it would be fine.

But no, it missed that too. That was where consumers wanted theopposite of sleek and compact. Mobile phones (smart phones) became fashion accessories.

Consumers wanted big screens. The bigger the better. No longer were mobile phones stashed in pockets or handbags, now they were laid out on the table or desk where everyone could marvel at the size of your screen and the smallness of your pixels.

Nokia missed out. But Apple and Samsung didn’t.

The result is that Nokia’s share price has fallen from USD$40 in 2008 to just USD$2.82 today.

Success and failure come and go quickly in business, especially in technology. So the idea that any business should account for 10% of a nation’s GDP (gross domestic product) isn’t a point of pride, it’s a point of concern.

Take an example close to home. BHP Billiton [ASX: BHP] and Rio Tinto [ASX: RIO] made combined revenues of $127 billion last year.

That’s about 10% of Australia’s GDP. Again, that may sound great, but not so much when those revenues are at the mercy of a slowing Chinese economy.

So South Korea, like Australia, isn’t a poster-child for positive government intervention. Rather they are poster-children for what happens when a government intervenes and manipulates to create a lop-sided and fragile economy.

Of course, the idea that government intervention creates prosperity is nonsense.

Government Intervention Hinders, Not Helps

Government’s don’t create opportunities…or plan for long-term growth. Governments hamper opportunities. And they only ever plan for short-term growth (even though they pretend they’re planning for the future).

That governments take the credit for progress, wealth and high standards of living is a falsity that must be corrected. Progress and wealth comes from freedom and opportunity, not from central planning and State intervention.

Tomorrow, we’ll explain how it hasn’t been the increase of government intervention powers that has created so much wealth and progress. Instead, it was the end of centuries of human oppression and the reduction in government involvement.

Kris Sayce
Editor, Money Morning Australia

Wednesday, 4 July 2012

“Peak oil” is past

It’s fascinating to see someone’s delusions falling off before your eyes. Environmentalists George Monbiot is moving bit-by-bit with baby steps away from his more lunatic ideas, and down the path trod before him by the likes of Bjorn Lomborg, David Bellamy, James Lovelock and Patrick Moore—sane folk who looked again at some of the enviro-lunacy they helped to promulgate and found it wanting.

He still has a long way to go before you’d call him sane.  But he did call out The Team on what was exposed in their ClimateGate emails.  And he has come out in today's Guardian admitting he was wrong on “peak oil.”  Rather than being at its peak, as he and his colleagues had claimed so noisily, even he now can’t avoid noticing oil is pouring out of the ground all around the world in increasing amounts even as available oil reserves are growing.

And why were he and his colleagues so wrong? In a word: Economics—the very laws of economics he’d never bothered to notice before, especially the principle observing that as prices for commodities go up, more production of those commodities (or substitutes for them) tends to comes on stream. For there is compelling evidence, writes Monbiot, that despite the best efforts of the likes of the Lucy Lawlesses and George Monbiots of the world to stop exploration and slow new production, a new boom in oil production has just begun.

The constraints on oil supply over the past 10 years appear to have had more to do with money than geology. The low prices before 2003 had discouraged investors from developing difficult fields. The high prices of the past few years have changed that.

Great news!

Unless, like George, you’re still a warmist and convinced fossil-fueled climate change is the new Armageddon.

Free trade is good in the real world too

Posting at NZ’s Anti Dismal blog, Paul Walker is great at finding snippets of interest around the net—like this one, a letter to the editor from Don Boudreaux to the Washington Post on free trade:

[Your correspondent] Steven Pearlstein correctly notes that the economic theory in support of free trade “is based on a number of assumptions” – but he mistakenly suggests that many of these assumptions often don’t hold in the real world.
    In fact, the critical assumptions on which the economic case for free trade rests are highly descriptive of reality:
(1) the ultimate justification for economic activity is to improve living standards for consumers;
(2) producers facing competition serve consumers better than do monopolists;
(3) each party to a voluntary trade is generally made better off by such trades; and – most importantly –
(4) the first three assumptions aren’t nullified merely by putting a national political border between consumers and producers.
    Other subsidiary assumptions, when they hold, explain particular trade patterns and the size of trade’s benefits.  But the proposition that trade between America and, say, India is beneficial for the people of both countries rests on assumptions no more unrealistic, tentative, or fragile than does the proposition that trade between Arizona and Indiana is beneficial for the people of both states.

So as Paul summarises,

if people in the South Island are made better off by trading with people in the North Island (and vice versa) then people in the South Island are made just as well off trading with people in Iceland (and vice versa).

And there are enough geographic barriers between us trading with the rest of the world to make us better off (and vice versa) without adding legal ones as well.

Earthquake

The 7.0 quake off Opunake was reported to have been felt all the way north up to Te Kuiti. I didn’t feel it myself—and to be fair, we’re not in a building that would stand too many earthquakes—but a friend felt it in his tall building in downtown Auckland.

Hope everyone’s okay.

Tuesday, 3 July 2012

DOWN TO THE DOCTOR’S: Live at the Witch Trials

This week, Doc McGrath has been filling out tax returns.Dick_Turpin_and_the_taxman

_McGrath001According to Wikipedia, tax avoidance and tax evasion are part of a greater sin covering all actions deemed "unfavourable to a state's tax system.” Tax avoidance refers to the legal arrangement of one's financial affairs in order to minimise what the state regards as taxable income. Evasion, on the other hand, is generally understood to encompass fraudulent activity designed to render one's finances invisible to the tax collectors in a dishonest fashion.

Peter Dunne, Minister of Revenue, is overseeing the IRD's selective persecution of tax avoiders—people  legally trying to minimise their tax liability. Yet he is treating them like criminals.

Note that in this situation the IRD are not chasing tax evaders, who are clearly breaching the law, only targeting people who file income tax returns and disclose to the IRD how they have managed their financial affairs.

Peter Dunne represents the United Future political party, whose tax policy clearly encourages tax avoidance. Dunne claims to believe that the tax system "should empower family and community self-sufficiency rather than creating dependency." What better way to create self-sufficiency than to make New Zealanders responsible for the costs of their own health care, pensions, income protection and other facets of their lives? What better way of avoiding dependency than to leave income in the hands of those who earn it, to dispose of as they choose, taking responsibility for their long term future?

But Dunne is nothing if not a purveyor of meaningless blather. To him, empowering families and offering communities self-sufficiency is blather. But chasing tax avoiders? That’s real work.

"This is not witch-hunt stuff," says Dunne. Well, only because there’s no actual stakes being erected at which folk are burned. Other than that it looks a hell of a lot similar. "People who are paying their taxes steadily and normally aren't a concern of ours in this regard,” reckons Dunne against the evidence, “it's the people who just wilfully avoid and ignore their responsibilities that we're after and we employ a full range of measures to get to them."

So, he is talking about tax evaders, isn’t he. Describing people as evaders who obey the law to the letter, and who use duly qualified and registered accountants and legal advisors to follow perfectly legal avenues with the aim of distributing wealth back to themselves and their families and communities. This is a witch-hunt targeting people who have broken no law, a witch-hunt with one aim: to maximise the amount of money they can remove from private citizens to fund state wealth-redistribution programmes.  

According to the Dominion Post "The expected returns [on this exercise] show why this was one area the Government was keen to spend more on."

Government may not be in surplus by 2015—it sure as hell won’t be spending any less—but by the efforts of its Revenue minister (motto “You Can Get Blood From a Stone”) they hope to at least be sucking in more from you and me.

Speed_Camera_CriminalsYes, folks: this is similar to those “rogue cops” who ignore the speeding non-registered gang car with dodgy lights because it’s so much easier to get your quota by harassing law-abiding drivers for going five kmh over the speed limit. It's all about the IRD taking money from whoever they can most easily coerce it, the easiest source being the law-abiding citizenry—those suckers who think that by being honest and open with the IRD, they will avoid persecution.

This is nothing short of disgusting. Peter Dunne has betrayed United Future party members and voters. He clearly believes a person's justly-earned income belongs to the government, not to themselves; that legal counter-measures taken to retain earnings are immoral, not perfectly sensible; that anyone "deliberately seeking to avoid paying tax" is fair game, not a prudent taxpayer.

By Peter's logic, any downward adjustment at all of taxable income by a New Zealander leaves that person liable for action by the IRD.

Presumably then, all of our MPs have a moral obligation to maximise their taxable income so that the state can receive the maximum possible cut for redistribution?

Any attempt by an MP to divert income into family trusts, companies or other entities, or even to claim expenses against self-employed income, must count as tax avoidance measures and should thus be liable to the full weight of IRD investigation and demands for money. Any MPs manipulating their financial affairs, and tax return in this manner, are hypocritical to say the least.

If Dunne is to unleash the IRD pit bulls on law-abiding New Zealanders, the very least we deserve is a statement that he and his MPs are maximising their taxable income, after which the tax returns of all public service employees should be examined by the IRD to make sure that the government is complying with its own arbitrary rules. First three people to supply affidavits they are paying the maximum possible tax should be Peter Dunne, Bill English and Michael Cullen—the man who prostitutes himself to every government that comes along; the man who set up his domestic affairs to make himself the country’s highest-paid welfare beneficiary; and the man who hiked the marginal income tax rates for rich pricks thus giving Dunne and English the fuel for their witch hunt.

Oh, and by the way, I wonder if Helen Clark submits a tax return in our local jurisdiction? Surely, she must believe her income should not be immune to the maximum possible taxation and would be taking steps to pay it for the greater good of her fellow New Zealanders. Ah, hang on. The income from her Very Important Job is tax-free. Of course: it's one rule for the elite—for our intellectual betters—and another for us proles.

Sorry, Aunty Helen, I forgot.   

See you next week!  
Richard McGrath

IRD_thieves

Ewen McDonald. Guilty? [updated]

All of the evidence supporting the charges against Ewen McDonald for the murder of Scott Guy has now been presented.

And I fully concede the press reports from the trial were sensational rather than factual. But I don’t recall any clear evidence being presented (or at least reported as being presented) that demonstrates beyond reasonable doubt that it was Ewen McDonald who killed Mr Guy.  Hell, forget reasonable doubt—I can’t recall any evidence presented at all even suggesting it was he who murdered him.

Sure, he didn’t like him. But evidence of dislike is not evidence of murder. Yes, he burned down a house being trucked in. But evidence of arson is not evidence of murder.  And I saw no credible evidence presented in court supporting the charge against him of murder.

Did you?

UPDATE:  Apparently the jury didn’t either.

Verdict is not guilty after yet another disgraceful prosecution by Crown Law—a prosecution so lacklustre it leaves McDonald neither convicted nor cleared.  With continuing incompetence like this, no wonder Crown Law has given up the ghost on the Kim DotCom case.

Emissions scheme delays has some problems

The National-led Government has “indefinitely postponed” further implementation of its Emissions Trading Scam (ETS), saying “the economic environment means consumers and businesses simply can't afford it.”

"We're not prepared to sacrifice jobs in a weak international environment when other countries are moving very slowly," said John Key.
    As signalled in the Government's response to a review of the ETS completed last year, Climate Change Issues Minister Tim Groser announced farmers will not have to buy carbon credits to offset livestock and pasture emissions until at least 2015…

There are a number of problems with this.

First, the date of 2015 is interesting, isn’t it. It’s the year this government fantasises it will finally emerge into surplus. A feat even the Reserve Bank can’t bring itself to believe. No doubt the fantasy of economic growth in the next three years sufficient to allow the government to get back into surplus is linked to the notion of economic growth sufficient to allow agriculture to be included with little economic cost.

Which means it’s unlikely to ever happen at all.

Second, for some years New Zealand Trade Ministers have stumped the globe arguing against agricultural subsidies. But what is this but an agricultural subsidy—as, no doubt, someone sitting across the table in trade negotiations with Tim Groser will soon tell him.

Finally, every argument used in favour of delaying further implementation of this Scam can be used with greater accuracy to support abandoning the stupid scheme altogether. It simply adds costs and costs jobs without any meaningful impact on the climate whatsoever. If extending it further is wrong because in this economic environment “consumers and businesses simply can't afford it,” then having it at all is wrong for the very same reason.

Which it is.

Monday, 2 July 2012

ECONOMICS FOR REAL PEOPLE: “It will be interesting”

I just received “a quick note” from our friends at the Auckland Uni Economics Group to say that, although they are now on holiday (when are students not on holidays?) there is still a meeting tonight.
Where: Room 215, Level 2, Business School Building
Date: Tonight - July 2, 2012
Time: 6pm
The topic, they say, is yet to be decided, “but it will be interesting.”
Look forward to seeing you there.

PS: Next week’s meeting is an evening of Ten-Minute Talks—an opportunity for students, non-students and regular, run-of-the-mill enthusiasts for economics and/or economic history to deliver and then host discussion on a ten-minute presentation on an area of their choice within economics and/or economic history.  (Contact Riko Stevens at rikostevens@hotmail.com if you’d like to present a Ten-Minute Talk yourself.)

The Grass Is Always Greener on the Other Side

Guest post by Jan Gindrup

Jan Gindrup spent 21 years serving as a police officer in Denmark. After retiring from the police force, Jan served as a security consultant to a large Danish energy company. He is currently in construction and real estate. 

While a small country overloaded with government, Danes pride themselves as being “the envy of the world.”   Just like New Zealand.  Yet most of

the world barely knows where they are. Just like New Zealand. 
It is a place in which it’s wrong to stand out from the crowd. Just like in New Zealand.

And Danes truly believe that no harm can ever come to or change Denmark. And just like in New Zealand, it’s not true. 

As you read Jan’s piece, you will think he is talking about us—another small, insular place cut off in many ways from the rest of the world, a place in which rigid conformity and ever-growing government is both all powerful and yet barely noticed.  There is much to learn from his story, including his account of the disastrous "land tax" which Danes now endure--the same sort of "land tax" morons from Bernard Hickey to Davids Farrar and Parker promote--the sort of tax that amounts to paying rent to the state for living in your own home.

Have you ever thought of life being better somewhere else?

It is often said that the grass is greener on the other side. Could it be that sometimes one's own grass just has grown so high that one can't judge the conditions over there?

…Most people, especially Americans, know that Denmark is home to the happiest people in the world and that it is a wonderful fairy-tale country with peace and the best social welfare system ever. The movie Hans Christian Andersen with Danny Kaye probably reinforced that impression. Never mind that no one knows where Denmark is.

Well, here's a chance to hear from the happiest people on earth and their wonderful little country.

First, let's look at parts of Danish history that we Danes gladly share with pride:

Denmark used to be a warrior nation. During the Viking Age (approx. 800-1200 AD), we beat the living daylights out of everybody and ruled from Moscow to America and from the North Pole to Constantinople. In the 16th century, after fighting mostly each other for a while, we built larger ships, acquired cannons and beat
everybody again.
We fought the Swedes, the Brits and the Germans. We colonized parts of India and Africa, and owned Iceland, Greenland and the Virgin Islands. We had plantations, freed the slaves, and made and sold a lot of rum.

Now some parts of Danish history that we are less proud of:

We caught and transported many slaves – slaves that served as the backbone of the plantations in the Caribbean. In 1801 and 1807, the British attacked Copenhagen, sank and stole our navy, and burned down
most of the city.
In 1864 we fought the Germans, were beaten yet again, lost a part of our territory, and since then we have been very tame and have developed a habit of being very faithful to authority and compliant to bullies. This was sadly the case with the German invasion during World War II, where the Danish government tacitly cooperated with the Nazis and condemned partisan freedom fighters, who were labeled "terrorists."
In 1917, we sold the Virgin Islands to the United States for $25 million; in the '70s, our government gave the oil-drilling rights to Maersk Shipping, a trade that made the firm and family very wealthy. Many left-wing politicians cooperated with the Warsaw Pact without consequence, and in 1972 the politicians got us into the European Union, which has bureaucratically evolved into the United States of Europe.

Back in the '50s and '60s, Denmark was still a sleepy little farm country. Mothers were housewives, and everybody was slim and fit. Frogs, lizards, storks and grasshoppers were abundant, and generally life was pastoral and idyllic. The king would wave from his balcony, everybody knew everybody, and the policeman even stopped the traffic for passing ducks.

The sun was always shining and all was good… or at least, that is what we remember.

As Danes, we have always believed in our hearts that we are better than the rest of the world. We know that there is no other country like Denmark. A funny Danish song says, "In all other countries, they live in caves and fight all day. Darn, we have never been like that!" We trust our politicians, believing that they are honest and represent the people. We have a democracy and a Constitution. We have many political parties; heck, even the communists are Danes.

We are all friends.

Danes truly believe that no harm can ever come to or change Denmark. We know that everybody in the whole wide world loves us and that that, among other things, is due to us helping the Jews escape from Denmark during WW II.

Many Danes don't want to go on vacation – even to Poland, a southern neighbour, or many other countries – because they know that the people there are of a lower social standing and will steal their money and cars.

Until the Berlin Wall came down, the Soviet Union was "the beast in the East," and we were scared to death of the threat of a nuclear war. Later, during travels to the Baltic countries, I learned that they had exactly the same fear of us coming to "take them."

Before my travels to Eastern Europe, many Danes told me that I would face former communist mafia everywhere and that I would be kidnapped and robbed. Stunningly, I managed to visit the Baltics without incident. I have never felt so safe as I did in the Baltic states. As an interesting aside, I also later learned that they have a far superior fleet of cars.

The United States is, in the mind of many Danes, also a dangerous place to go. America's ills range from rampant daily shootings in the streets to a superficial, consumer-driven culture devoid of any redeeming traits.

Danes skiing in Austria or France have chosen to fly home with injuries, operating under the belief that "down there," they don't have the knowledge or education to provide proper medical treatment. This is despite the fact that they are used to dealing with plenty of snow, big mountains and therefore thousands of ski injuries. Denmark, on the other hand, has neither mountains nor significant snowfall. Though it can get quite cold in the winter, we rarely see snow for long, and when we do, it is mostly brown, sloppy mush.

Many Danes wouldn't dream of emigrating, because they know that no country has an educational system like Denmark, and we don't want our kids growing up ignorant and brainwashed, like they do in other places. A professor at the Danish Polytechnic University was quoted as saying, "Well, maybe they educate one million engineers in India, but they are nowhere near our level!"

Whenever we hear of a successful endeavour from abroad, we are always ready to look knowingly at each other and say, "Yes, but it's not like the Danish (fill in the blank)!"

And that's the image we like to portray.

How Do You Keep People Happy?

How do you keep a population happy? You do it the same way that you keep a dog happy. You provide basic necessities, education, a justice system and entertainment to keep people from spending too much time thinking, in order to keep them from looking outside the fence for new masters. In time, people will start telling each other that they are happy. The North Koreans are probably told the same story.

I guess it all comes down to how you define happiness; if happiness means not starving and not wanting to worry about anything besides the weather, then Danes can be considered happy. But so could many cultures – at much lower costs, I suspect.

What we can readily do without shame is happily brag about being the most taxed and perhaps also most regulated country in the world.

It has jokingly been said that North Korea and Cuba envy Denmark for being the only place where socialism has been successfully implanted without anybody noticing. Let me correct that to mean implementing a form of "fascist, socialistic, bureaucratic capitalism," defined as a society controlled by technocrats where almost all wealth is collected and distributed by the state from the regulated "free" market. In all fairness, this is accomplished without the boots and guns. After all, you don't need guns when you have groomed a compliant population and implemented rules, laws and punishments for everything that is a conceivable part of daily life – all implemented "for your own good."

Compared to the Third World, Denmark seems rich, but no more than any other Western country. In my childhood in the '60s and '70s, it was a luxury for people to own a TV or a car – and by car I mean a small one, like a Ford Cortina or a VW Beetle. We got dishwashers in the '70s, and electric car windows were not common before the late '90s. Today it is still only luxury cars and cabs that have automatic transmission. In other words, not much progress there. Today I know that the USA was far ahead of Europe in all these matters, as some of these items were already on the market in the '40s.

Danes my age were taught, growing up, that they are the freest people on earth. Our school, health care, political, tax and social systems were second to none. All envied us, and therefore we viewed other nations as third-world countries, a prevailing belief to this very day. Some of these beliefs might have been fairly accurate in the past when our parents – the "grasshopper generation," so called because they took everything and left nothing – enjoyed full employment and ample tax deductions, making it a great time to expand consumption and lifestyle. Furthermore, the double-digit inflation made it an ideal time to buy houses as one's debt burden in real terms was shrinking every year.

We became accustomed to a plethora of state benefits ranging from Medicare to art. Social welfare has been a boon for a large segment of the population. In fact, a few years ago it was normal that after ten years on welfare, people were automatically transferred to a permanent disabled pension at a young age. We have experienced massive immigration by people from the Middle East during the last thirty years, something that has dramatically changed the fabric of our society.

Then there is the "Jante Law," the perfect tool to keep people in line. In Denmark we have been raised with a perverse Danish mentality, brilliantly captured by the writer Aksel Sandemose in his 1933 book A Fugitive Crosses His Tracks. In the book, the lead character is mistreated by the citizens of Jante, a fictional yet representative town in Denmark.

From this book came the 10 commandments, known as the Jante Law, which was meant to serve as a sarcastic constitution emblematic of the Danish culture:

The Jante Law says:

1. Don't think you are anything special.
2. Don't think you are as good as us.
3. Don't think you are smarter than us.
4. Don't convince yourself that you are better than us.
5. Don't think you know more than us.
6. Don't think you are more important than us.
7. Don't think you are good at anything.
8. Don't laugh at us.
9. Don't think anyone cares about you.
10. Don't think you can teach us anything.

The last law:

11. Don't think that there aren't a few things we know about you.

Hans Christian Andersen captured the same sentiment in his novel The Water Drop, in which small amoebas would tear the arms off anyone being different from the rest (a reflection of the Danish society).

The message is basically, "Don't stand out!"

A very famous and popular Danish song says, "Don't fly higher than your wings can carry, it serves you better to stay on the ground." So much for supporting and developing the individual spirit.

Sad to say, despite the sarcasm, it holds some truth. In Denmark, you get along easiest if you avoid making waves. Don't try to be smaller, bigger, smarter, prettier, richer, poorer, have a bigger car or house, discuss anything controversial, etc. If you do, you need to have very special social skills, meaning that you'd better be quiet and humble about it. Americans are not; and that's why we view them with scepticism and call them superficial.

Aksel Sandemose, the author of the Jante Laws, later "fled" to Norway, where he joined the Norwegian resistance.

By the way, I have no idea how researchers reached the conclusion that Danes are the "happiest people in the world" – neither I nor anyone I know was asked. But since it is published in a major scientific survey carried out by Leicester University in England, it must be true.

There Ain't No Such Thing as a Free Lunch

Yes, it true: all Danes enjoy six weeks of paid vacation and, for the time being, paid retirement pension. But these benefits are slowly vanishing.

Today we are paying the price, but like the frog in the boiling water, we haven't noticed, and we love to tell everybody else that it's just a nice warm bath.

I spoke with a young Danish welfare recipient who was very angry at the government because it hadn't given him a job. I felt a bit offended and went into a diatribe about personal responsibility, taking self-ownership, etc.

He listened and then stated, "The system we have in Denmark is a totally socialistic system. The state takes everything we earn and decides everything. So, as I see it, the state has also taken over the responsibility to find me a job!" Perversely, it was hard to disagree with his argument.

The Danish system is very expensive. It has turned into a juggernaut and taken on a life of its own. It has grown like a cancer. Every little office, school, education and sport facility, every public department, military, police department or agency fights to get its piece of the cake and to make its budget grow bigger every year.

To finance this overwhelming and still growing public sector, the Danish government keeps inventing new taxes with more and more creative names, like "amenity value tax." The creative Danish tax system – or "how to tax the same service more than once without people noticing" – is big business. It all started with Medicare.

While taxes have been raised time and again, wages have not changed much, except for management salaries. Politicians are very eager to work in Brussels (in the EU), partly because they know the member states are dying and the real power is in the EU, and partly because the salary is tax-free. Our schools and hospitals are old and worn down, our senior care is terrible and money is draining out of every hole in the state.

We have roughly 5.5 million inhabitants, including citizens and noncitizen residents. The Danish workforce consists of 3 million people, of which 1 million are public employees. That means that 2 million people in the private sector support 3.5 million other people with their taxes, plus their own use of the public sector.

We have been hammered with the "fact" that the only way forward is education, education, education; the higher, the better. It is a brilliant plan, keeping people in school where they can be told "the truth." Later, most of the graduates of higher education go to work in the public sector. Even a job as a police officer requires a bachelor's degree. It's not normal thinking to become an entrepreneur and start up your own business. If you do, a lot of the time is spent trying to find loopholes in the tax laws or fighting your way through both Danish and EU regulations. In typical Danish manner, the state is now fighting this by creating a full university degree in entrepreneurship! What a great way to start tunnel vision.

Around 1900, we had 200,000 small farms (76 % of Denmark's area), so everybody could, if they so wished, buy fresh eggs and potatoes from the farmers. Now we have around 10,000 left due to the EU, because the biggest farms get the most subsidies, which in turn buy out the smaller ones.

(I would encourage interested readers to follow Nigel Farage, a Euro-skeptic from the United Kingdom. His brave work in exposing the failures of the European Union, both monetary and otherwise, has made him the lone light in a very dark place.)

One example of how the state gets money is by raising taxes on real estate lots. I own an empty half-acre lot in the middle of nowhere, for which I used to pay $180 a year in "dirt tax" (tax for owning the land). I then had the lot subdivided into three lots, each about one-sixth of an acre – still empty land, no rights, utilities nor other improvements. For this, I am now paying $1,250 per lot, or $3,750 per year. This amounts to a tax hike of approximately 2,100 %! When I complained, I received a letter informing me that I could expect an answer in eighteen months. I am still waiting.

The state decides every year what your house and lot is worth. It's usually not far from the market value. First we pay "lot-due tax." In our case, it runs around $7,000 a year. On top of that, we pay something called "rental-value tax of your own property." The state thinks that as a homeowner, you are better off than a person who rents his home. Therefore, it decided that homeowners should pay rent to the state for living in their own home. This also goes if you own a home outside of Denmark. As the name was too obvious, it was changed to "real-estate value tax." It is 1% of the assessed value of the house below $542,850, plus 3% of what's above. Based on home prices in Denmark, this adds up to a significant sum in short order. Every year we get a valuation on our house, which the government uses to tax the owner.

Almost every rule implemented, almost all due to climate, safety or similar odds and ends, costs extra in some form.

Contrary to common belief worldwide, our hospitals are not impressive… In "the best country in the world," 5,000 people die and 100,000 are injured from medical malpractice every year. One out of four hospitalized in Denmark picks up a new disease during hospitalization.

We are the world's top user of "happy pills" and alcohol. Our youth are among the heaviest drinkers. We have 500,000 (10 % of the population) alcoholics, and we are seeing more kids developing ADHD and eating disorders.

Couples in old-age homes risk separation to different retirement homes after 50 years of marriage. It is considered normal to offer old people a bath every seven to ten days, and it is right now being discussed to take away their daily lemonade from them.

We hardly ever see a police car in the streets anymore, except for the many speed traps that bring more money to the state. This is hardly efficient use of our workforce, considering it takes four years of education to become a police officer. Police officers have become a de facto collection muscle for the IRS. I just received a $270 fine for talking on a cellphone while driving.

While we have virtually no corruption in the police force – something that we should be grateful for and proud of – we also have a force blindly loyal to any orders from the system.

We have both public and private parking attendants everywhere, writing tickets for US$125, which is a lot of money, considering that you pay 50% tax first. The town hall of Copenhagen alone writes $18 million worth of parking tickets every year.

We never see our paycheck, as it goes through a public account called "Easy-ID." This means that anything you owe the public is automatically withheld from your account before you get it.

If you pull out more than $1,780 from your own bank account, the teller may ask you why, and if not satisfied, the bank clerk will report you to the Danish IRS; the same goes for any "suspicious" activities in your account. Should you get the stupid notion of opening a bank account outside Denmark, don't use a credit card. If a person residing in Denmark takes out money from a foreign account, it is reported to the IRS.

In one way or another, more than 90% of our wages goes back to the state in some form, but it is never enough. As our politicians are keen to say, "Either lose your standard of living or pay more tax." As elsewhere, never is a word uttered on saving. Predictably, there seems to be no end to public extravagance. The latest news is that local municipalities over the last five years have built 54 cultural centers. Not one cost below $8.9 million, and one of them ended up running $125 million. These boondoggles end up running in the billions of dollars. These "prestige" projects invariably experience significant cost overruns and end up costing a fortune to maintain.

For over two hundred years a "cooperative association," similar to a credit union or a mutual insurance firm, issued loans to homeowners so that everybody could afford a home. About ten years ago, the association's board turned the association into a company and sold it to the largest bank in Denmark without asking the "shareholders," which are also the mortgage holders. The proceeds, which should have been issued as dividends to the owners, were placed in a trust, which is now run by "friends of friends in high places," distributing money to various cultural events and programs. It's called the biggest fraud in Denmark. Nobody knows or cares.

So while we may not have obvious corruption in the traditional sense in Denmark, job perks and benefits from "good old boy" network access are the standard.

Steaks cost up to US$70 per kilo, a bottle of liquor runs over $26, plus there's a 25% VAT on everything. There is a 180% tax on cars, which of course also is reflected in equally expensive insurance rates. We have a graduated registration tax scheme on cars. Normal vehicles have white plates and are subject to a 180% sales tax; yellow plates are two-seated, company-cargo cars, where the backseats are permanently removed and which are in turn subject to less tax; and yellow/white for cargo cars with VAT paid and thus allowed to be used privately. If you drive a white-plated company car, you are heavily taxed if using it privately. This does not apply for cars driven by chauffeurs, as they are tax-free. All ministers have chauffeurs.

Almost all transactions in Denmark have numerous hidden taxes. To give an example, let me try to analyze an electricity bill for you. We pay around $0.35 per kilowatt-hour (kWh), which is about $1,400 a year for a normal home. The basic price is roughly $0.078 per kWh, but after adding energy tax, appendix tax, distribution tax, energy saving (CO2) tax, public duties, transport of electricity, actual consumption and subscription, and 25% VAT, we end up with $0.35!

Gasoline is now at US$9.60 per gallon and still rising. By far the largest part of that price is tax.

And it's like that with almost everything in Denmark.

A Toyota Hilux pickup, which is similar to a Tacoma but has only four cylinders, is a two-seated car on yellow plates. You have the option not to pay VAT, but then you can't drive it privately. If you do and get caught, you have to pay full (white-plate) registration and a fine of the same amount. This Hilux, incidentally, costs $1,600 a year in road taxes.

A guy just got caught in a Ferrari on temporary plates. He was charged for private driving and got a combined ticket and registration tax for $1,070,000 PLUS six months in jail. It's considered tax evasion, and tax evasion is punished more severely here than violence. In normal law, the police have to prove you guilty. With the IRS, you have to prove your innocence. The IRS can conduct a search on your private property without a warrant.

A recent legislative proposal is that the buyer of a service from a craftsman can be held responsible if the craftsman fails to pay tax. That means that the buyer has to make sure that the service provider pays the tax!

For the sake of illustration, the latest survey of estimated prices for craftsmen in Denmark shows that companies charge the following hourly rates:

Plumbers
$125

Electricians
$107

Carpenters and bricklayers
$90

Floor Sander
$63

To compare, a policeman or nurse makes roughly $33 an hour – before taxes.

It will be illegal to pay a craftsman in cash on transactions exceeding US$1,780. Transactions exceeding that have to be done through bank transfer, so the Revenue Ministry can track in detail what you do with your money.

You are not allowed to carry more than $13,600 on you (included valuables) anywhere in Europe, unless you have declared them to the authorities.

By now you get the picture of what it takes to run a "paradise."

This paradise I have described isn't that peaceful, by the way. The Danish Hells Angels is the most violent chapter, punished for the most serious crimes. We have stabbings, robberies and shootings in the streets like all other cities. But like you, we don't notice it.

Danish people think they are free capitalists, but the truth is that we are a heavily regulated, bureaucratic, technocratic, fascist, socialist society. Sadly, the United States is rapidly joining us in the global group of nanny states.

But don't worry if you feel like your country is heading the same way, your personal freedom slipping away, your rights disappearing and your money being taken. You hardly notice it, and slowly, day by day, you will become accustomed to it.

Perhaps I am wrong, but since we never protest, we must like being kept.

Did I forget to mention laws regarding weapons in Denmark? You are not allowed to buy guns unless you are a registered hunter or member of a shooting club. No mace, spray, Tasers, etc. Only folding knives are permitted, and the blade can be no longer than three inches.

You want to defend yourself? Fill in a form and get in line at the nearest police station!

Jan Gindrup received his bachelor's degree in trade and shipping. He spent the next 21 years serving as a police officer in Denmark. After retiring from the police force, Jan served as a security consultant to a large Danish energy company. He is currently in construction and real estate.

This post first appeared at the Casey Daily Dispatch, and is reposted here by permission.

Friday, 29 June 2012

R.I.P. America—and It Serves You Right!

In case you weren’t already aware, with the decision overnight by the US Supreme Court to not strike down ObamaCare as unconstitutional—despite even its own own advocates being unable to show how it could be—it’s now clearly evident that, as a Constitutional Republic, the United States of America is now extinct.

Lindsay Perigo has more…

America, qua Land of the Free and Home of the Brave, just died. Qua travesty thereof, good riddance. Cowards and cretins—now a majority of Americans—don't deserve the liberty that has just been definitively removed from them. They don't deserve the freedom they won't miss.
    Even without the Supreme Court's thoroughly anti-American decision on Obamacare today, the Founding Fathers would scarcely recognize the semi-police state that their republic has become…

Read on here.

Thursday, 28 June 2012

Pictures of the Queen

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This is the first and probably only time a picture of the Queen will appear on this blog. It appears here because she’s shaking hands with a murderer.

Despite well-argued protestations to the contrary, it is symbolic—a symbol of the long-awaited and much-appreciated peace northern Ireland has enjoyed for a nearly a decade, and which everyone involved wants to continue.

A sign that the English Lion can lie down long term with today’s Irish Republican lamb.

Wonderful!

But let’s not get too carried away with it.

Is it as symbolic on its own scale as, say, the day Ulysses S. Grant shook hands with Robert E. Lee on the steps of Appomattox Courthouse after Lee had fought for five years in defence of black slavery? No, because the issue of right and wrong is much cloudier with McGuinness and Elizabeth.

Is it as symbolic on its own scale as the day ending the Second World War when the surrender of the Japanese was taken on board the battleship Missouri ?  Not really. The peacetime attack on Pearl Harbour was far more murderous than anything McGuinness’s boys ever attempted, fortunately, and the picture of peace breaking out after three years of slaughter was much more widely welcomed.

But it is symbolic. Irish Republicans have still never forgiven the British for Ireland’s brutal seven-hundred year occupation; for the Potato Famine; for partition and the oppression of the Catholic minority in the Six Counties; for the murder of civilians in Derry and elsewhere during the Troubles. These are  reasons enough to bear ill will. But the former commander of the IRA is shaking hands with the figurehead of everything British.

There are just as many well-rehearsed reasons for that figurehead to bear ill will towards McGuinness—the murder organised by McGuinness of her husband’s uncle Louis Mountbatten being just one of many of which you will all be aware. Yet she still shook hands—even if her husband couldn’t.

What the handshake symbolises then is that those things are in the past. There’s no likelihood of then happening again. That the peace begun when the IRA laid down their arms after the atrocity of 9/11—laid them down in part in the realisation they would never have the stomach for that scale of atrocity themselves—that peace has continued, its benefits are recognised, and the participants wish it to continue.

And being people of honour that desire for harmony is best symbolised with a handshake.

It’s true that one reason they can shake hands is because both the causes of Irish Republicanism and British Imperialism look somewhat quaint today. This is not the age of Parnell and Palmerston. The world has moved on, passing by what seemed issues of great moment generations ago. So in truth  it’s a rather moth-eaten English Lion preparing to lie down with an emasculated Irish lamb.

Still, whatever they think themselves these two can only shake hands because their constituents support it. Perhaps their supporters too have come to understand that it matters less what colour flag you have flying over your head than what that flag stands for—and these days both the Union and Irish flags stand for much the same brand of failing mixed-economy morass.

In the end I think it is a good picture.  It’s one of the better things the English Queen has done. I’d like to think it represents that same understanding that occurs at the end of wars like the two cited above; that animated the desire for peaceful coexistence in Chile after the fall of Pinochet rather than bloody retribution; that impelled Nelson Mandela’s Truth Commission after the ousting of South African apartheid; that we can only hope one day inspires those nursing grievances in Palestine –that as long as right is recognised and both sides can agree then in the long term peace is far better for everyone than war—and then even shaking hands with murderers might be worth it for the sake of the peace achieved.

It’s a shame the Queen’s husband couldn’t see his way clear to understanding that.