“Housing is one of the largest ways things are going wrong for young people. And people blame that on capitalism, because that's the status quo. But, in fact, housing is one of the sectors of our economy that is least exposed to the free market."
~ Emma Camp, from the pilot episode for Breaking Containment ‘Is Gen Z Okay?’
"[M]ost people hold, explicitly or implicitly, that without regulation, markets could, and sometimes would, spin off into disastrous excesses of one form or another.
"The operative image of economic regulation is that of a huge truck without steering or brakes. 'We have to have those instruments of control, or the truck will go careening off the side of a cliff.'
"The truth is that government regulation is precisely the cutting of the brake lines and the seizing up of the steering column.
"The actual alternative is: government regulation vs. market regulation---which means coercive rule by political appointees vs. freely negotiated prices.
"On a free market, when price relationships begin to diverge from economic reality, they are brought back in line because of greed. Speculators, arbitrageurs, and other "profiteers" swoop in to profit from any misalignment.
"Their activity acts to eliminate the very misalignment with reality that created the profit opportunity. ... Whenever prices, including interest rates, diverge from economic reality, there is money to be made in correcting the prices by the appropriate buying and selling.
"And here's the best part: those with the best judgment of economic reality are the ones who make the most money, which means they have the most influence on the market. It is the buying and selling of the Warren Buffets (and their more speculative counterparts) that keep the economy aligned with the facts. ...
"But ... [t]o the extent there is government intervention, the minds of the profit-seekers are thwarted and rewards go not to the Warren Buffets but, at first, to the ward heelers and power brokers, then as the system devolves, power over the economy goes increasingly to those who are better at conning the public. Then, they are replaced by those more willing to use compulsion. The ruthless displace the relatively timid punks, and destruction reigns.
"So, people have it backwards. 'Unregulated' means reason sets the terms and 'regulated' means reason is quashed by political power."
~ Harry Binswanger from his post 'One contradiction in the fear of laissez-faire'
People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.If I had taken a bingo card with me that included the words "government," "sustainability," "climate," and "social housing," I would have won not just a meat pack but the whole cow.
It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.
How many regulatory bodies have been closed down, or substantially hacked back, in the first 2.5 years of this government?
How many of the 267+ regulators had been abolished or substantially hacked back under the current govt, 2.5yrs in?
While too many pundits still labour under the misapprehension that the primary job of government is to continue subsidising Wellington's economy with make-work jobs, one insightful twitterer offers several good reasons why reducing the size of the public service is a good idea:
Ideally, it reduces that coercion. As Walter Williams noted:
Powerful government tends to draw into it people with bloated egos, people who think they know more than everyone else and have little hesitance in coercing their fellow man.
Fewer know-alls given power --> less coercion.
Ideally.
However ... Michael Reddell is exactly right: National's announcement looks more like last-minute electioneering that a genuine plan for improvement.
63657 core public service Full-Time Equivalent employees (FTEs) as at 31/12/25. Of those 24834 are in Corrections, MSD, & Ministry of Children. Seems unlikely there would be material cuts in any of those ... To cut 8000 FTEs off the rest by 2029 would mean a 21% cut.No doubt it could be done, but over its first 2.5 yrs the govt has done very little to cut public service numbers, so people would reasonably be quite sceptical that the same senior ministers will suddenly sharply change their approach. ...One might sympathise with the spirit of [Nicola Willis's announcement] (I do) but can't help noticing that there are no specifics (at all) beyond the baseline cuts for 26/27 for some agencies in the Budget. Beyond that is little more than handwaving.Talking up 20% real cuts (2+5+5 + 2% pa inflation) means almost nothing at this point (6 months from an election, with her party averaging say 28% or so in recent polls) without specifics. It has the feel of budget-accounting gimmickry: just enough to get Treasury to count the savings in the forward fiscal projections (& thus avoiding any more slippage in the date for getting back to surplus on the measure the govt likes (but Treasury doesn't).Had the speech been given in Dec 2023 it would have been one thing, but they've had 2.5 yrs to work out what they want to cut & still the answer seems to be "not much at all, but perhaps this latest rhetoric might get us beyond the election."As for track record, recall that in the 2025 Budget, core Crown expenses for 25/26 were to be 32.0% of GDP, UP slightly on the 31.8% for the last full year under Lab.
And simply saying "Cut!" without specifying on which portion of the bureaucratic anatomy the knives should be sharpened leaves the Government, as before in this term, hostage to the decisions of the capital's Sir Humphreys.
[So] simply telling us that you'll cut some spending quite a lot in future (really I will...) brings to mind both the old economist's joke (let's assume a can opener) and St Augustine on continence and chastity ... but not yet.
"These reforms dismantled the import quotas and regulatory walls that had kept Australian manufacturers comfortable and unchallenged for the better part of a century. Industry had to compete with the world. Not because a regulator told firms to behave, but because Japanese cars and European appliances were suddenly on showroom floors, at prices local manufacturers could not match.
"Yes, competition law played a part. But the real transformation came from opening the economy.
"Take household appliances. During the reform period, the number of local manufacturers shrank and the industry became more concentrated. By the logic of competition law, this should have been a disaster. Fewer producers means less competition. Consumers should have suffered.
"They did not. Prices fell and choice exploded. Tariffs on refrigerators dropped from 47.5 per cent to 5 per cent. In 1999, the Productivity Commission studied what had happened. It attributed the gains to trade reforms that reduced “barriers to market entry,” not to competition law. Anyone in the world could now sell a fridge in Sydney.
"The economist Israel Kirzner, now 96 and long overdue for a Nobel Prize, spent his career at New York University making exactly this point. His work shaped my own doctoral research in the law and economics of competition.
"Kirzner’s central argument is that competition is not a snapshot of how many firms happen to sit in a market at any given moment. It is a process, driven by entrepreneurs spotting opportunities and entering markets to challenge incumbents. A market with two players can be fiercely competitive if both know a third could arrive tomorrow. A market with twenty can be sleepy if regulation keeps the twenty-first from showing up.
"Hawke and Keating grasped this, perhaps instinctively. The way to make an economy competitive is to open it up, let foreign goods in, let new businesses form and remove the barriers that protect incumbents from challenge. Competition law can help keep the game honest once the field is open.
"But it is the opening that matters most."~ Oliver Hartwich from his post 'Dismantling the competition myth'
"My hobby, for many years, was sitting down with the rulers of basket-case countries—preferably military dictatorships—to give them a plan that I promised would make them loved by the people, internationally famous, and legitimately a multibillionaire without stealing.
"Basically, I proposed taking 100% of all State assets (land, parastatals, the works) and putting them in a corporation. 70% of the shares would then be distributed pro-rata to every citizen, 10% put in trust for the next generation, 10% taken public internationally, and 10% reserved for those who could make it happen.
"There’s much, much more to say. But it would get the government out of the economy, and liberate dead capital. By giving the people what they theoretically own, it would be very hard to steal the shares back. I had some wonderful adventures pitching the deal in a dozen countries.
"How does that relate to Argentina? It’s the only way to solve the problem of what to do with the Vaca Muerta oil deposits and Aerolineas. Barring a distribution of shares to the citizens, the assets will just be stolen when the next leftwing government is elected [anyway]. And used as a piggybank for the political caste."~ Doug Casey from his post 'Doug Casey on How Milei is Flirting with Failure in Argentina'
Yesterday I was looking at the announcements. Today I'm looking more at the two replacement Bills themselves, mostly the Planning Bill. [ONLINE HERE.] (Although I can't help noting, of those announcements, that anybody who can seriously assess these sort of changes to produce 46% fewer consent applications, not 45% or 47% but 46%, has a problem only assuaged by a large consultancy cheque).
Still, if the needle were shifted to that extent it would be a start. Would the replacements do that? We have a nation who hopes so, and a Minister who seems to intend so. But then they all told us back then that the RMA was permissive ....
So, thoughts upon reflection:
** Iignore the major hype. Property rights are still not explicitly mentioned, except as a reference to matrimonial disputes.
** Contrast all this with a common-law system – something commentators still don't understand. (Here's one ignoramus who thinks the RMA's subjectivism is an example of common law, FFS!). Common Law protections have the unique beauty that they protect both property rights AND the environment—the stronger the property-rights protection, the more the law sets up "mirrors" reflecting back to us our own actions, especially long-term ones. (As Aristotle already knew, when people need to heed their own stuff, they are more careful than when they deal with commonly-owned resources.) Here’s how it could be done.
FIRST, ENACT A CODIFICATION of basic common law principles such as the Coming to the Nuisance Doctrine (the ideal antidote to zoning) and rights to light and air and the like.
“Second, register on all land titles (as voluntary restrictive covenants) the basic 'no bullshit' provisions of existing District Plans (stuff like height-to-boundary rules, density requirements and the like).
“Next, and this will take a little more time, insist that councils set up ‘Small Consents Tribunals'…”
** Anyway, I put that paragraph there to show the distance from that idea. So what do we have here? Much of the format, plans, rules, standards and zones of the RMA are still with us. Councils will still write Plans. The Plans will still have Zones. Zones will have Rules and Standards. A council planner will assess your Consent application. And then you, your planner, their planner, your lawyer and theirs will work hard at it until your bank says "That's enough." Much of that will still be with us, even if terms are changed.
There will be fewer zones, and fewer plans, but so what? It doesn't matter whether you have 17 rules saying "no" or one-hundred and 17 ... if the rules are still telling you "no." (So ignore the headlines about that announcement as well.) It does mean that much of the law built up in courtrooms over the last thirty years is still applicable. But when much of that law should be shovelled out, that's not altogether a bonus.
** If there is a "balance" required from the law here, it's simply between the rights of land-owners to build and the effect of that choice to build on others' land, and on themselves. Note that each owner has equal rights: the right to peaceful enjoyment of their property—the boundary between land and actions being defined by that right (my rights to do whatever the hell I like, including enjoying my spread peacefully, ending where your equal right begins). That's what good law should (and common law did) recognise. it should recognise it, not restrict it.
** The RMA had a Purposes heading, Part 2 (sections 5 to 8), around which all parts revolved. What it contained was mostly mush, the residue of the nineties non-sequitur of so-called "sustainable management." It was this wherein judges had to adjudicate on what "sustainable management" might mean for your carport extension, or whether that boundary retaining wall might avoid, remedy, or mitigate any adverse effects of activities on the environment. Or not. (This, for Henry Cooke's benefit, is the source of much of that 'judge-made law' he talks about, not the common law with which he has it confused.)
Instead, the replacement Planning Bill replaces Purposes with Goals. You can see that terms like "well-functioning" and "incompatible" will get lawyers' invoices juiced, but for the most part an effort has been made to keep things moderately objective. Except for section (i), which allows for virtually everything here to be outsourced....
** Compensation: Early opponents and the Property Council have both signalled that compensation from taxpayers for regulatory takings is a big part of both replacement Bills—which is not by any means the same thing as protecting property rights, despite what some people still think.
In the replacement Planning Bill at least, they take this form...
** Standing: I'd understood that to object to an Application one needed to have standing, e.g.., to be a neighbour on whom the effects of an application might have objective and measurable harm. Naturally, section 11(1)(i) above vitiates that, but we'd been told that, for instance, someone from Bluff couldn't object to a project in Kaikohe.
That doesn't appear to be the case (but happy to be corrected).
** As a halfway house between a council decision and the Environment Court—a sort of limbo-land it might take months/years and several hundred thousand dollars to cross—the Planning Tribunal looks to be useful. Not game-changing, but useful.
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| "Oops." Luxon-led policy-making takes a tumble |
It's a rule in politics. The devils is not always in the details. It's often that the details reveal the real devilry.
If the large print ever giveth, then the small print will surely taketh away.
Let's look at a few examples in an area I know something about: Building.
*** Building Minister Chris Penk seems a jovial character but unfortunately he knows little about his subject area. His first move was to promise faster building consents. Exciting. Encouraging. Mighty work.
Here's hist first step: "requiring councils to submit data for building consent and code compliance certificates every quarter." There are no other steps.He adds "hope" to the idea of anything being faster. Council inspectors "must" issue building consents in a timely fashion, he insisted. And yet every council inspector ever employed knows how to legally delay a consent application. In fact, if you fine a council for being legally overtime, they'll just legally delay applications for even longer to give themselves some head room. Which is what they've done.
Score One for the Grey Ones.
*** Another move by Building Minister Penk was "remove barriers to overseas building products." At least, that's what it said in the headline. His idea, sensible enogh on its face, is that if enough similar jurisdictions to ours have passed a product (places like Canada, US, UK, Europe, Australia etc.) then that product would be deemed to pass here too.
Yay? No, not so fast.
First move by the Ministry who oversees these things was to rent several new floors in Wellington. Because their idea of this (and it is they who are running it) is to set up a committee who will consider, one at a time, every morsel of regulation passed anywhere at any time to decide of we might be so lucky to have it here.
So far, in the three months since introduction, they'e okayed some taps from Sydney. Next year, they might look at concrete codes in the US. Done properly, with due consideration, this will take most committee members through to retirement.
Score One More for the Grey Ones.
** And then the Minister for Regulatory Reform (sic) stepped up to announce a new measure to "liberate" builders and designers. For years, some of us have suggested that instead of applying to councils for permission to build (which asks for more knowledge than council employees really have, and puts ratepayers on the hook for the risk should they fail) we instead use insurance companies to take the risk.
You know, like if you build a hot rod or street racer instead of a bog standard car, then you ask the insurance company to take the risk, and they use their acumen to discern the risk, and charge you accordingly.
This allows for good design, with risk properly underwritten.
But you see that word above: instead.
Rather than placing the risk and the onus on designers and builders and insurers instead of on councils and ratepayers, the Minister for Regulatory Reform is doing this as well as. So it's no more "liberation day" than were Trump's tariffs: we end up getting the worst of both worlds: councils assessing risk, and insurers granted a monopoly charging like wounded bulls. And the ratepayers? Still on the hook.
So it's Several More there for the Grey Ones.
** It's like education, where a "regulatory review" by the same Minister for Regulatory Reform intends to "clarify" and "simplify" Childhood Education's overwhelmed sector. One imagines a quick fix might be going back to say, 1996, when things were working tolerably well, and just before regulations began piling on and classrooms and centres became over-regulated, under-performing, and wholly unaffordable for parents.
Instead, the "reform" begins by (and I quote) "establishing a new statutory role, the Director of Regulation, with responsibilities for performing key regulatory functions in the Early Childhood Education system." Which means another red carpet rolled out in yet another floor of a new office building in Wellington.
Back of the Net with another great effort by the Grey Ones.
*** It's a bit like the "cap" on rate rises.
Let's stop rate rises!! Yay!! Well, not so fast.
We know that the "cap" will be supplemented for weepy boomers with top-ups for water use, for mayors who plead public transport debts, and councillors who claim infrastructure shortfalls. We also know that the minister "responsible" ( I use the world loosely) is happy with "soaring" council debt, just as long as the effects and the headlines are only felt after he's gone.
Not to mention that the "cap" includes a minimum rate rise as well!
Yes, a minimum. By law, councils must increase rates by at least 2% every year.
It a sop, not a cap.
Grey Ones score again.
** And not to mention that the new-fangled means by which councils can "fix" their bloody awful traffic problems—traffic jams being a clash of capitalism (in the form of car production) confronting socialism (in the form of too few roads). The "new" solution is a tax. A new tax to be called "congestion charging," which will of course not replace any other tax but just be added to all those under which we are already burdened.
And if history is any guide, may help finish off Auckland's CBD altogether.
I'm pretty sure that's a total victory for Grey.With this government, as with every other in recent times, it's always one step forwards, and three steps back. Too many ministers with too little nous giving too much help to the unproductive to whom too many of us must seek permission before we can do anything.
I look forward to this afternoon with trepidation.
"How did we get to the point where having an old-fashioned see-saw on the playground is something almost no park ... would consider? ...
"[I]t all began in the ‘60s. Not with the hippies – with the experts.
“'The idea we had back then was that we could prescribe the correctness of public choices with detailed rules,' say [Philip] Howard, author ... of Saving Can-Do: How to Revive the Spirit of America. 'But actually, that’s not correct. Practically every situation involves human judgment in the circumstances.'
"The post-war optimism about technocrats led America to start substituting regulations for what some of us call common sense. ... This combination, which was supposed to make our world safer and more fair, had the unintended consequence of making it stagnant and scary. Lots of rules meant lots of opportunities for punishment. ...
"The result is not just boring playgrounds. It’s bored kids, with fewer chances to learn to solve problems. “You no longer have the brain learning these social skills, because you have an adult overseeing them,” says Howard.
"Perhaps Howard’s biggest bugaboo is the burgeoning books of standards that schools and other institutions, like day care centres and nursing homes, are required to follow. ...
"And when we are busy trying to make sure that we have done things exactly as outlined on page 78, sub-paragraph 5-H, we’re not getting smarter. 'The regulatory state is literally mind-numbing,” Howard says. Load it up with rules and it can’t see the slide as anything other than a piece of equipment that is noncompliant, should it angle more than 43 degrees in a vertical direction'."~ Lenore Skenazy from her post 'One Reason Childhood Is So Boring Now'
"In 1966 there was a watershed event. A National government, under Prime Minister Keith Holyoake, tried to stifle nascent private radio [by barring broadcasting by then pirate-radio Radio Hauraki]. It failed: the government monopoly was broken.
"The present National government can atone for its 1966 sin against freedom by joining its coalition partners to overcome the attempt by the Broadcasting Standards Authority to impose censorship on [Sean Plunket's] The Platform, an online media outlet. ...
"Today, a new type of freedom, the freedom to exchange information online without government censorship, is under challenge from a government agency. ... [T]his could be another watershed moment. National should join with ACT and New Zealand First, to abolish the Broadcasting Standards Authority. It is a creature from the past which should not exist in a free and democratic society.
"The Broadcasting Standards Authority’s actions have called public attention to the insidious role of the administrative state, the significant power of government agencies to write, interpret, and enforce their own regulations. Creative interpretation is little different to writing the regulations.
"Perhaps the Broadcasting Standards Authority has performed a service by demonstrating not only that it should be abolished, but also why other government agencies with similar powers should either be abolished or have their powers severely curtailed to restore democratic accountability."~ Gary Judd from his post 'Are we experiencing another watershed event?'
1. Minister : “Am I required by law to do this ?”
2a. Civil servant : “No, Minister”The government can then produce a monthly Repeals Potpourri Bill.
3a. Minister : “OK then, don’t do it.”
2b. Civil servant “Yes, Minister.”
3b. Minister : “Have a draft law on my desk tomorrow morning which repeals whatever law obliges me to to do this. Let’s return to this in the morning.”
"You can't address a fundamental problem by making marginal changes."Its remarkable timidity is its underlying flaw. It either makes fundamental change, so is worth passing, or it doesn't — which is now how Seymour is left to defend it. If it doesn't, then one is left to wonder: what's the point?
"Absent a fundamental shift in which our politicians are guided by restoring government to its proper purpose, i.e., the protection of individual rights, there will only be this nibbling at the margins. Meanwhile the leviathan will grow out of control until the unsustainable mess mercilessly self-corrects."
"There are already too many reasons for international supermarket chains to decide our small set of islands far from everywhere are not worth bothering about.
"If an international grocer wanted to set up shop here, land use planning would be a substantial barrier. ... [I]t has taken Woolworths four years to get planning permission for a supermarket in Halswell. Could a new entrant navigate across dozens of councils’ systems when even experienced incumbents have a rough time? ...
"My column ...made the case for a fast-track system for new supermarket entry. ... The government ought to be keen on making sure that kind of entry is possible. ...
"And government definitely should not be doing things that would make New Zealand seem risky, unpredictable, and generally hostile to retailers. ... [The] Grocery Commissioner van Heerden [says] that international food price comparisons that adjust for GST are ‘a bit sort of sneaky.’ ... The Grocery Commissioner’s draft review of the grocery supply code is more worrying. ...
"I still hope the government sets fast-track planning approval for new supermarket entry. But unpredictable regulations give potential entrants one more reason to give New Zealand a miss."~ Eric Crampton from his column 'The obstacles in place for any new supermarket player'
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| Picture of New Zealand's richest man. Guaranteed a reaction against his success by a certain sort of commentator ... |
EVERY SO OFTEN A PIECE of dross comes over my monitor that just cries out to be fisked. Like this rant against the latest NBR Rich List by someone called Dr Neal Curtis. His piece argues that "as society groans under the weight of wealth inequality" (can you hear the groans, readers?) there should be a "different slogan to ‘tax the rich'." The one he favours: "reclaim the wealth'."
Yes, he's an ultra-redistributionist. Aka, a thief. Walter Williams knows the type:
Dr Curtis's piece is of course a reaction to publication of the NBR Rich List, which without fail gets a certain sort of person to hyperventilate.
Dr Curtis is that sort of person.
And this screed vomiting forth at Newsroom is the result.
Dr Curtis, by the way, is said by his bio to be "a comics scholar and critical theorist with wide-ranging interests." Lead item on his Areas of Expertise is: Comics. So let's just call him Mr Curtis.
MR CURTIS BGINS: THIS Government, he says, is "gutting government departments and cutting public services."
I wish this were true instead of comical. (Spending is now higher under Nicola Willis than under Grant Robertson. Full-time employees under the Luxon Government was 64,222 when elected, and is now 63,238. There have been cuts, it's true, but none anywhere near as big as I would hope.)
But his beginning is only a drive-by to pass off his credentials. Three paragraphs in we get to the meat. So it's here that I'll begin my fisking.
MR CURTIS: [There are] three central assumptions of current economic dogma that those who question are branded as ‘radical leftists.’ These assumptions are underpinned by the beliefs that wealth trickles down; deregulation is good for business; and the state should stay out of the market and everything should be privatised.
Should I cry "strawman" this early in the piece? Each of these pieces of alleged dogma is both fly-blown and overblown. No-one outside a piss-poor public-choice lecture would anyone say everything should be privatised. (Courts? Police? Army?) And no-one anywhere advocates so-called "trickle-down." His point here is not to make sense, however, it's simply to damn the rich so he can later advocate their being eaten.
So he ploughs on regardless, challenging each of the assertions he's just straw-manned. Like his logic, let's looks at each of them in reverse.
MR CURTIS: ...the state has always been an economic entrepreneur funding all kinds of technological innovation, such as the internet, but this often goes unreported in the dominant economic journalism.
"Always" is doing a lot of work here. There's a reason so much government entrepreneurialism goes unreported in any economic journalism: it's because it's so rare. Sure, the government defence project ARPANET linking dozens of people was transformed into something that now links five billion. But that wasn't a Ministry of Doing Shit that did that. It was private entrepreneurs who turned the great idea into a GREAT IDEA.
MR CURTIS: ... seen from a purely corporate perspective deregulation is no doubt a path to profit. However, it is also socially disastrous as costs of deregulation are outsourced via public bailouts following financial crises, for example, that are directly caused by the rolling back of legislation designed to safeguard the wider economy.
Without going too much further than this one paragraph (though we can if you wish), let us agree that there is more than one kind of deregulation. There is the kind that mandates safety and (may) safeguard the wider economy. There is regulation that protects intellectual and real property, and that allows for the enforcement of contracts. And then there is regulation about how curved a banana should be, or how far apart hairdressing salon seats should be. You'll notice how carefully Mr Curtis conflates these. And why.
Now, it's Mr Curtis who insists this to be economic dogma, i.e., that wealth "trickles down." Yet the author of Basic Economics, Thomas Sowell, insists that there is no-one anywhere outside a lunatic asylum or a comics convention who holds it to be true, let alone as dogma.MR CURTIS: ... wealth, especially when given away in tax cuts, does not trickle down. It stays at the top. Ever-increasing wealth inequality as measured by the Gini coefficient or any study of income trends show this.
Years ago [writes Sowell, I] challenged anybody to quote any economist outside of an insane asylum who had ever advocated this “trickle-down” theory. Some readers said that somebody said that somebody else had advocated a “trickle-down” policy. They could never name that somebody else and quote them, though.
[Mr Curtis] is by no means the first [person] to denounce this nonexistent theory. Back in 2008, presidential candidate Barack Obama attacked what he called “an economic philosophy” that “says we should give more and more to those with the most and hope that prosperity trickles down to everyone else.”
Let’s do something completely unexpected: Let’s stop and think. Why would anyone advocate that we “give” something to A in hopes that it would trickle down to B? Why in the world would any sane person not give it to B and cut out the middleman? All this is moot, however, because there was no trickle-down theory about giving something to anybody in the first place.
Sowell wrote a whole book exposing the nonsense of those who believe this trickle-down fantasy. [It's free, you can DOWNLOAD IT HERE.] And as I've pointed out myself on occasion, if there is a trickle-down system in operation it's the one whereby large gobs of your own money are taken from you by government, and trickled back down to you in the form of favours, and subsidies and social welfare for working families and the like.
There is an argument however for having capitalists keep their own capital, however— an economic argument, as well as the strictly-speaking moral argument that it's their goddamn money. Mr Curtis et al would like to think that if the "one percent's" capital were not stripped from them it would perhaps be baked into pies or used to light cigars—or would be emptied into money bins so that, like Scrooge McDuck, the owner of capital can spend his time rolling around in it.
This is truly a comic-book version of reality that only one ignorant of the division of labour could hold.
Because, as George Reisman explains, the vast majority of the wealth owned by the so-called “one-percent” is not held in the form of chocolate bars or champagne bottles or pies, but in the form of the capital goods and equipment that produce the consumer goods on which we (and Mr Curtis) all depend—capital goods that only come to represent wealth to the extent they are used to produce the goods and services people, in their capacity as consumers, really want. Per-Olof Samuelsson observes:"The productive rich (think Rockefeller, Carnegie, Ford, Bill Gates, Steve Jobs, etcetera, etcetera) actually flood the rest of us with wealth (and themselves become wealthy in the process). Taxing or expropriating them simply means to dam this flood. And this may make it appear 'trickle-down'— because governments and politicians will only allow a small portion of this wealth to trickle down to us; the rest of it lands in their own pockets."
[Mr Curtis and his readers] have no awareness of this, because they see the world through an intellectual lens that is inappropriate to life under capitalism and its market economy. They see a world, still present in some places, and present everywhere a few centuries ago, of self-sufficient farm families, each producing for its own consumption and having no essential connection to markets.But in the modern world (at least, to the extent that the so-called “one-percent” are not simply milking government subsidies and bailouts, which is how so many seem to think business should work), all of us benefit from the private ownership of their means of production whoever owns them—just as long as the owners are left free to produce and innovate. We all get the benefit of their production, both as buyers of the products of those means of production, but also as sellers of labour employed to work with those means of production.
In such a world, if one sees a farmer’s field, or his barn, or plough, or draft animals, and asks who do these means of production serve, the answer is the farmer and his family, and no one else. In such a world, apart from the receipt of occasional charity from the owners, those who are not owners of means of production cannot benefit from means of production unless and until they themselves somehow become owners of means of production. They cannot benefit from other people’s means of production except by inheriting them or by seizing them.
The wealth of the capitalists, in other words, is the source both of the supply of products that non-owners of the means of production buy and of the demand for the labour that non-owners of the means of production sell. It follows that the larger the number and greater the wealth of the capitalists, the greater is both the supply of products and the demand for labor, and thus the lower are prices and the higher are wages, i.e., the higher is the standard of living of everyone. Nothing is more to the self-interest of the average person than to live in a society that is filled with multi-billionaire capitalists and their corporations, all busy using their vast wealth to produce the products he buys and to compete for the labour he sells.
Nevertheless, the world [Mr Curtis and his readers] yearn for is a world from which the billionaire capitalists and their corporations have been banished, replaced by small, poor producers, who would not be significantly richer than they themselves are, which is to say, impoverished. They expect that in a world of such producers, producers who lack the capital required to produce very much of anything, let alone carry on the mass production of the technologically advanced products of modern capitalism, they will somehow be economically better off than they are now. Obviously, [they] could not be more deluded.
AND IT'S NOW, WITH HIS three dogmas exposed, that we can see Mr Curtis's error more plainly. Like many who are branded as "radical leftists," not only is there an inherent wish to damn the rich, all of them, there is also a paucity of understanding of how the deserving rich got that way.
Yes, there is more than one way to get rich. One may pull favours and subsidies from government, as cronies all try to, or one may be the government and sell Shitcoins (as one particularly egregious entity is currently doing). Or one may sit tight and rely on central banks inflating monetary assets (what is often called the Cantillon Effect, after the eighteenth-century ex-banker who called attention to this phenomenon of long-term capital consumption). But neither of those examples is any more than short-term, and no amount of short-term skimming is going to get you to the top of even a New Zealand rich list.
Even in this small pond, it does take an entrepreneur risking his or her own capital to really roll in the big returns.
Mr Curtis would like you to conflate all three, as he proceeds to draw his conclusion.
But first, his corollary: that it is government spending that makes us all rich. Mr Curtis phrases it this way.
MR CURTIS: All this [leaving capital in the hands of its owners] results in top-heavy, financially starved economies as governments continually try to make the wealth giveaways fit into a budget by stripping support for public services or selling off public assets at knockdown prices. ...
The fact that the global economic outlook as well as specific national economies remain so fragile and unstable ... is surely enough evidence that the principle of continually moving wealth upwards doesn’t work...
He really does think that money in the hands of government grows economies, whereas money in the hands of those who made it simply squanders it.
It's deluded.
And sure enough, having made his three points of alleged dogma, and delivered his corollary, he gets to start eating his meat.
MR CURTIS: Just as there is no economic justification for structuring an economy in which only the very wealthy are the true beneficiaries, there is also no moral justification.... As our society is placed under increased stresses and strains beneath the extreme weight of amassed, socially useless wealth that sits with a very small class of people, there have been increased calls to tax the rich.
MR CURTIS: Instead of a call to ‘tax the rich’, the call should be to ‘reclaim the wealth’. I believe this phrase more adequately represents the request to return a greater share of what was commonly created. It is also a call to give back even just a small amount of what was taken through the design of an economy knowingly and carefully organised to purposefully benefit the few.
You can see his own dogma peering out from under his comical version of how an economic system works:
"Commonly created."
"Give back."
"Reclaim."
One question should be enough to puncture the deceit, and with it we return to Walter Williams at the top of this post. The question is: Who created this wealth?
Nick Mowbray is an almost perfect example here.
The wealth represented by Mr Mowbray's Zuru Toys quite literally did not exist before Mr Mowbray created Zuru's toys. Pre-Mowbray, there was a pile of stuff. Post-Mowbray and his identification of the value to human beings to be delivered by his toys, there's enough value in them to make him this county's richest man.
I know that can be hard to get your head around, but there it is. Value, in the economic sense, is in the eye of the consumer. Consumers' "vote" every day, with their own hard-earned money on their devices, for Zuru's toys creates a socially-objective price for Mr Mowbray's offerings, and allows him to grow his capital. Which he can then use to create more toys, which creates more capital, which .....
All going well, especially if you like children's toys, that's a life-enhancing spiral that costs no-one else anything.
LET'S NOT BOTHER TOO MUCH to investigate further into the mind of someone who would despise that.
Let's ask instead only what they're trying to achieve. For. Mr Curtis, here's his payoff here, he hopes (now with an added noteto identify his errors:
MR CURTIS: As our society is placed under increased stresses and strains beneath the extreme weight of amassed, socially useless wealth [sic] that sits with a very small class of people, there have been increased calls to tax the rich.
I love the use of the passive verb: "there have been calls..." instead of "I and my colleagues have been demanding..."
MR CURTIS: In keeping with the dogma [sic], conservative supporters have made tax a dirty word [I wish! -Ed.]. Rather than tax being an individual or corporate contribution to the maintenance of a functioning society, the corporatist right has over the past four decades tried to make it a synonym for theft [I wish - Ed.]. The idea that taxing the rich is really a form of theft also makes it easy for the dogmatists [sic] to present the call as a form of envy; a petty resentment of the successful.And isn't it envy? Envy, for example, that one person making toys that delight people will earn more in his lifetime than someone with pretensions to intelligence making his living from analysing comic books and posting snide articles on a web page. The envy fair oozes out this piece, and other similar rants by the usual suspects.
MR CURTIS: Instead of a call to ‘tax the rich’, the call should be to ‘reclaim the wealth.
Ah. Here we go: an all-but explicit claim from the mire that "you didn't build that." Which in the next sentence is made explicit:
MR CURTIS: I believe this phrase more adequately represents the request to return a greater share of what was commonly created.
So, in what will no doubt be a surprise to Messrs Mowbray, Hart et al, everybody created the toys for which the world is clamouring, the companies made more efficient, the plastics that store food better, the films that folk queue up for ... We all did it, he claims.
In the end, after all the verbage, that's his major claim. That we made it—an absurdity—so therefore we should keep it. A nonsense.
It is also a call to give back [sic] even just a small amount of what was taken [sic] through the design of an economy knowingly and carefully organised to purposefully benefit the few.The irony is that, if Mr Curtis lifted his head from his comic books and looked properly at the world around him and at the division-of-labour system that allows even sad sacks like himself to survive and even flourish, he'd understand that (even imperfectly) it already is benefitting all of us.
If there's one benefit of watching a US president tearing down everything that made his own country prosperous, it's that his many political enemies are slowly discovering this truth.
Many are discovering anew that it is actually poverty that is mankind’s natural state, that it is past wealth production (not redistribution) that has been rescuing people from poverty worldwide in ever-expanding numbers—the great (but almost unheard) story of our era that allows today's worker more easily-available health, wealth, and luxuries than even a king enjoyed in all previous centuries—and that efforts to simply legislate higher wages by law amounts to little more than a “loot and plunder” approach to economics.
The fundamental policy tools of statist politicians [explains George Reisman] are clubs, guns, and prisons... What allows statist politicians to conceal the fact that they’re thugs is the belief that they have a special account with Santa Claus. As though Santa Claus, rather than extortion, were the source of the funds extorted by the politicians.Some have realised and reconsidered. I invite Mr Curtis to consider it too.
The statist politicians and the leftist “intellectuals” dismiss the teachings of sound economics by calling it “trickle down.” They do not allow themselves to see that their theory of economics is the loot and plunder theory.
Frankly speaking, my dear Karl, I do not like this modern word, which all weaklings use to cloak their feelings when they quarrel with the world because they do not possess, without labour or trouble, well-furnished palaces with vast sums of money and elegant carriages. This embitterment disgusts me and you are the last person from whom I would expect it. What grounds can you have for it? Has not everything smiled on you ever since your cradle? Has not nature endowed you with magnificent talents? Have not your parents lavished affection on you? Have you ever up to now been unable to satisfy your reasonable wishes? And have you not carried away in the most incomprehensible fashion the heart of a girl whom thousands envy you? Yet the first untoward event, the first disappointed wish, evokes embitterment! Is that strength? Is that a manly character?
Is it?
