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On this site you'll find posts and pages from recent years. The site began as part of my public law practice after leaving Parliament in 2005. Accordingly it records my opinions, not necessarily those of Franks & Ogilvie of which I am a principal, or any client, or the National Party for which I contested the Wellington Central electorate in November 2008.

From the Wellington Writers’ Walk:

“It’s true you can’t live here by chance, you have to do and be, not simply watch or even describe. This is the city of action,the world headquarters of the verb”

– Lauris Edmond, from The Active Voice

Why no libertarian party rules (or thrives) anywhere

  • October 5th, 2017

This article is a fragmentary popularisation of conclusions in scores of papers and studies. Excerpts:

“Throughout history, there have been significant costs associated with appearing not to be altruistic. According to [a] paper in the Annual Review of Psychology, “Across cultures, people punish others who have violated moral norms, even when the violation leads to people being better off rather than worse off…In populations in which certain behaviours are punished, people are better off if they resist engaging in these behaviours, even if doing so is in their short-term interests.”

 The personal costs of altruistic behaviour are outweighed by the benefits: Reciprocation from our tribe. Additionally, we may be wired to protect our genially similar tribesmen, not just ourselves. This is in contrast to the view that we’re all just selfish creatures out for own best interests. Since acting selfishly is not always in our genes’ best interest, we may not be hardwired to do so.

However, the research conversely indicates that acting selflessly is not always in our best interest as the primary carriers of those genes. While it may have been beneficial for our ancestors to favor the interests of others over the personal and, as a result, we may have evolved to do the same, society is very different today than it was for our ancestors.

“Society was not invented by reasoning men. It evolved as part of our nature”, Ridley says. While our genes may want us to behave in a given way, we need not be slaves to our genes when the personal cost could potentially prove to be disastrous.

A Newsroom article this week has quoted me and Richard Prebble on the future for ACT and why it did so poorly. I got into my thinking on this with the journalist, but evidently he did not have the space for that part of our conversation (or my musing was too dense).

I believe ACT will not flourish until it is perceived as being comprised and lead by people who understand and share most people’s need and respect for altruism, nationalism and other expressions of the social and collectivist part of our nature. I, and most of the fellow citizens I trust, want to be lead by people who show genuine commitment to institutions that reinforce mutual obligation and support.

Too few people to matter electorally will ever trust a party, and people, who do not understand and reflect our collective impulses.

Most of the people who’ve lead in ACT knew that, intuitively. They were extraordinarily unselfish. They lived the values of effective collective obligations.  Sir Roger Douglas’s health, welfare and education policies were directed to creating very strong institutions, best compared to those in Singapore. He wanted reform to ensure long term political support for the social safety net. He was an original supporter of what is now called UBI, with a reverse income tax scheme. He wanted to reinforce the values of social duty and responsibility, but working with how people actually respond, rather than the current NZ model which rewards free-riders on the generosity of hard working neighbours.

But people were deaf to him. ACT branded him to them, but he reinforced that branding by being sometimes tone deaf to fears. Public musing, for example, on auctioning passports, sent a message that closed ears to the logic of that position, let alone his other mechanisms to strengthen the values of collaboration and mutual support.

Sensitivity to our collectivist side does not need repudiation of market capitalism, for example. But it does need obvious commitment to  enforcing honesty and upholding the rules that reassure people they will not be left to the mercies of robber barons. Sensitivity to the collectivist side does not demand renouncing individual economic and social and criminal responsibility, or anything else of the classical liberal canon. But I believe they will only be accepted (tolerated) within a framework of obviously shared adhesion to collective loyalties. If people retain a sneaking suspicion that their elites could prefer the company, and the values, and the money, of “the other”, they will shrewdly deny them support, no matter how well reasoned, and attractive is their marketing.

The journalist was testing the line that ACT’s brand is toxic, and that it needs to become clearly classically liberal. I accepted both as possibilities, but said I thought ‘classical liberal’ was now scarcely understood by the voting population. It would be confused with libertarian, yet condemned when it failed to embrace liberal/progressive causes (eg feeble on crime, keen on minority ‘rights’ that are in fact privileges dependent on coercing others) that are anything but classically liberal.

Nevertheless I see that the predominant view of commentators on WhaleOil and Kiwiblog about the very low party vote for ACT appears to be that it needs to become more “liberal”. The remind me of the Green activists who are convinced that the missing million and the Labour apostates will come to them when their party is more adamantly Corbynist.

Both sets of zealots ignore and deplore what drives normal humans. Sadly for ACT, however, the Corbynist vision can be made to appear closer to how people want to think of themselves and their leaders.

I did not want to give the journo hostile lines, so refrained from directly disagreeing with him in any concise way. But those who dream of wide enthusiasm for ‘ liberalism’ are to me more ideologically blind than the Corbynistas. The libertarian vision of the perfectible human may be even further from human nature than theirs.

I suspect that David Seymour is more in touch with his electorate’s nature than our current holders of the Green brand.

And it may not be ACT’s internal struggles that capture our attention over this next Parliamentary term.

From contact with young voters, I think TOP  could provide a reassuring home for the environmental Green supporters. TOP could expropriate the real Green brand and leave the NZ Corbynistas with Marama Davidson in a rump “Green” party. Without any anti-waka jumping law now, they could even support Parliamentary defection, for example by James Shaw and Julie Anne Genter.

I suspect that the TOP party will remain too beholden to Gareth Morgan to adhere to the discipline that would need. He would have to leave many of his social justice hobby horses unridden, to highlight his reliability as a true environmental Green.  Assuming that he could not avoid being drawn into social justice warfare, TOP and the rump Greens would end up fighting over the same dirigiste/inequality/Treaty worship voters – the types that just will not tolerate the compromises demanded by MMP (and democracy). That would continue to obscure and confound the fantastic Green/environmental brand. They’ll damage each other too much to gain the NZ First type power to determine who governs.



Why just Kingmaker? Why not King?

  • September 28th, 2017

The following is a guest post from my law colleague, Rob Ogilvie. Rob specializes in negotiation advice and strategy. At a Harvard course in negotiation many years ago, Trump cases were used to explore and illustrate successful negotiation approaches.  So to our astonishment early in Trump’s campaign Rob warned against dismissing his chances. Rob later won wagers taken when it still seemed inconceivable that Trump could become President.

Like many I lazily assumed National had it in the bag until their recent press conferences.  Then the faces showed they have had their “Oh Sh-t” moment.  To woo the elusive Mr Peters Mr English has already told David Seymour to scram, and both Ms Bennett (National) and Mr Davis (Labour) have offered to step aside from deputy leadership. Mr Joyce has said he really can be best friends, honest.  Both parties have made it clear that cherished policies are up for grabs.  Have whatever cabinet seats you like.  And that is just their opening positions.  The negotiations apparently haven’t even started.

The art and science of negotiation means Winston could be our next PM, or at least a newly constructed position more influential than Deputy PM.  If he really wants the job.

He has been working towards these two weeks all his life.  He is the longest serving MP and party leader, and has replayed these sort of negotiations many times.  He is in a position where he can trade two feasible potential governments off against each other.  Why wouldn’t he back himself for the top job?

To do so, he just needs to satisfy three simple negotiating conditions:

  • Be alive;
  • Hold the balance of power in MPs in Parliament;
  • Be credible dealing with Labour.

The reason this may translate into PM, despite NZ First only having 7% of the total MPs is simple:  BATNA.

Lots of factors will influence the negotiations over the next couple of weeks between NZ First, National and Labour – the numbers, policy preferences, personalities, perceived moral authority, misunderstandings, error.  We can only make assumptions.  But above all, what will drive the participants is what they think will happen to them if they don’t reach a deal: their Best Alternatives to a Negotiated Agreement, or BATNAs.  Analysing BATNAs is fundamental to understanding all negotiations.

BATNAs are a better guide than just listing what you want and arguing as to why the other side is morally bound to agree with your just cause.   Everyone with a place at the table thinks they are in the right.  And persuasive ability, experience and tactics can help to get the deal you want.  All the players in this political drama have that, especially Winston.  But these factors aren’t enough.

What the science of negotiation teaches is, paradoxically, that what matters most is what the other side perceives as their next best alternative.   In a negotiation your key job is to enhance your own real BATNA and diminish your opponent’s perception of their own BATNA.  And then, encourage your opponent to an agreement just slightly better than their own, diminished, BATNA.

For example, a simplified outline of each participant’s BATNA might start like this:

  • Labour:  at least another 3 years of the same boring opposition stuff. But room to complete a renewal.
  • National:  Lose all the baubles of office, likely for at least 6 years.  Abrupt reversal of many policy gains.  But preserve their integrity and avoid responsibility for the next market crash.  A bit like the Greens.
  • NZ First:  OK going with either.  Policy pluses and minuses largely balance out, likewise electoral outrage at a deal. Both will deliver the cabinet posts necessary to ensure the party could endure. If with Labour, Mr Peters may get the PM’s job but in a flakey weak Government.  If with National, only get deputy PM but in a more stable, effective Government.  But if fail to form a government at all, severe backlash from voters, and Mr Peters loses his last chance.

A BATNA analysis says that any deal better than this could be worth doing. There are many reasons that may not happen, and in particular both Labour and National have long term interests to consider which make some otherwise sensible deals unrealistic.  They may also have different perceptions of the longevity of a coalition deal with Winston.

On international comparisons there are really only thin policy differences between National and Labour (as evidenced by the fact Winston could credibly deal with either).  If NZ had a different political tradition, there could even be room for a “grand coalition” excluding NZ First.  But Labour and National can’t ignore their tribal differences. They define them and increasingly voters and supporters may be using and exaggerating those differences to define themselves. The way religion once did.

It makes all the difference that NZ First can credibly deal with Labour, especially if specials change a couple of seats to make that coalition more secure.  Without that, National’s BATNA would have been going back to the polls now and the likelihood of voters favouring stability and punishing NZ First.  So they could confidently drive a very hard bargain.  But now their BATNA is the wilderness and hoping for a weak Lab/NZ First coalition lasting only one term or less. And, for those in the negotiating team, the likely end of their political careers.

It makes a big difference that the Greens have such a poor handle on negotiation 101.  They could easily be in NZ First’s position had they just warmed up their base for a deal with National over the last several years.  Then the BATNAs of all participants would have been very different, and NZ First would have had a snowball’s chance at the top job.  But the current Greens’ self respect (as virtuous in a world of sinful humans) has depended on demonizing National and dismissing existing levels of NZ sacrifice to environmental visions. So the Green party treats democracy’s unavoidable negotiation and compromise as moral deficiency. By therefore minimising their leverage, they have ensured their voters can be taken for granted. Their best hope now is as a very junior partner in a three way coalition.

Bill English’s strong finishing performance makes it unlikely, but not impossible, that Mr Peters could get the top job (or a constructed close substitute such as “First Minister”) in a National/NZ First coalition.  Of course it is unthinkable this week.  But next?

So far, all Mr Peters has done is muddy the waters with a long list of negotiable “bottom lines” and making it clear he has all the time in the world.  He cares, but not T-H-A-T much.  (Master negotiator Herb Cohen 2003).  On the other hand, both Labour and National have already offered the deputy PM slot, cabinet positions, policy workarounds and NZ First’s choice of sacrificial lambs.  National has even started sacrificing their lambs already.  And that’s just their opener, before negotiations have started. We’ll see how far they’ll go when the grim reality of the BATNAs sink in.

We can already see National laying out the fine trails of silk, feigning confidence that they will ensnare Winston in the process.  Perhaps they will.  He needs a deal.  But Labour have nothing to lose, and can more easily offer the biggest prize.  And of all the participants, Winston has played this game many times before.  He knows what works and what doesn’t.  Maybe he doesn’t want the top job.  Maybe he will settle for good cabinet posts and some legacy policies.  But given that is each of Labour’s and National’s opening offer, why wouldn’t he play one off against the other to go for more?  It’s not as if he’s constrained by policy – he’s announced enough bottom lines to give everyone lots of options.

One reason is that this is a representative negotiation.  There are major agency risks for all participants.  Put bluntly, what really matters to the negotiators personally may not matter to their party and vice versa.  So for example, 3 years out of Government might well suit Jacinda, but might not suit the stern leaders of the Labour party.  Likewise NZ First might be better off trading PM for more solid cabinet spots in a stable government, and a deal on a safe seat for the next election, but Winston might not be. And some National backbenchers might prefer the opportunities that defeat and renewal could bring, but they won’t be in the room to decide on the deal.

The suggestion this morning by ex NZ First MP Tuariki Delamere that Ms Ardern offer Mr Peters a shared PM position now is premature.  A good negotiator never opens with their best offer – because that leaves no room for the major concessions the other side will expect to win off you before agreeing the deal.

Rob Ogilvie is a principal in Wellington boutique public and commercial law firm Franks Ogilvie and a specialist in commercial negotiation.

Counting our blessings – NZ still fending off the political tribalists

  • September 28th, 2017

This  must-read is from Andrew Sullivan, a thoughtful leftist. It acknowledges and explains the blight settling over all the Anglo democracies, though thankfully not yet heavily in our lucky land.

It is consistent with Helen Clark’s gracious warning to New Zealanders (her supporters) to respect the outcome of the election, reported in yesterday’s Stuff.

The democratic blight has been fended off since 2008 by the ‘teflon’ decency of John Key and then Bill English. While those two have lead from the centre the nastier left has been unable to persuade enough New Zealanders to share their hatreds. Ordinary people could see that decency through the media/entertainment elite’s hostile screen. And so most of the country did not catch Jacindamania.

I’m allowing myself to hope that Labour got enough sensible new blood this election to regenerate something positive in its caucus. When their leading elements line up in 2020 they may have a few who have actually experienced the lonely responsibility of building and leading an organization. There will still be almost none who have ever experienced the demands of business and putting their own money at risk. But even if the doctrinaire nasties remain the majority, many of them are genuinely stupid. A critical mass of incomers like Greg O’Connor could be the nucleus for rebuilding.



Q.E.D. on spies, from the Minister responsible for our security intelligence sevices

  • September 21st, 2017

Rarely, if ever in politics, does one get explicit, irrefutable proof of a risky and unpopular hypothesis within a week of venturing it.

But Attorney General Hon Christopher Francis Finlayson provided such proof last night.

Last week, after discussing on Radio NZ the Newsroom suspicions that NZ MP Jian Yang may be a spy for mainland China I blogged my explanation that time did not permit with Jim Mora. I predicted that the Communist government could expect their spies who have penetrated New Zealand leading circles to be sheltered by our  elite’s PC terror of being accused of racism.

Last night at an election candidate’s meeting Finlayson showed just how the accusing is done. The other  candidates then showed how effective it is in cowing them.

Here is Michael Reddell’s account of what happened yesterday.  Michael has recently retired from many years as an economist with the Reserve Bank of New Zealand. He is among our most highly respected analysts of matters economic. The bolding for emphasis, and the links are added.

I’m furious.
Local democracy came to Island Bay this evening, and I – an undecided voter – joined the crowd at the local candidates’ meeting, in the Rongotai electorate. Candidates congratulated themselves on a well-fought campaign – as the National Party’s candidate put it, not a cross word had been spoken between any of them through all the various meetings they’ve attended together. Most of tonight’s meeting was like that. Most.
Over the years, I’ve heard nothing to suggest that the National Party’s candidate was other than an honourable and decent man. The Hon. Chris Finlayson is the 8th ranked Cabinet minister, minister responsible for the intelligence services, and Attorney-General. He appoints our judges. And as he described himself tonight, he is “the first law officer in the land”. You’d imagine he’d be at the forefront of defending the integrity of our democratic system and its institutions. But not based on his performance tonight.
The format of the meeting allowed questions from the floor. Each question had to be addressed to one particular candidate, but each other candidate also had a chance to answer. On almost all the questions, almost all the candidates took the opportunity to answer. But not on one question.
I got up and asked a question of Chris Finlayson, explicitly noting that I was not asking him as a minister responsible for the intelligence services (where I would have expected a fob-off) but as a senior National Party figure. My question ran roughly as follows:
“Mr Finlayson, last week one of the world’s leading newspapers, the Financial Times gave considerable prominence to a story about a New Zealand MP. That MP had been a member of the Chinese communist party, and part of the Chinese intelligence services. He never disclosed that past to the public when he stood for Parliament, and has never taken the opportunity to denounce the evils of the Chinese regime. Can you comment on why it is appropriate for such a person to be in our Parliament? And could you also comment on the new paper by Professor Anne-Marie Brady raising concerns about the extent of China’s attempts to exert political influence in New Zealand, and about the close ties of various senior National Party figures with Chinese interests?”
The question was greeted not with embarrassed silence, but with pretty vigorous applause from the floor.
Finlayson – our Attorney-General, first law officer of the land, senior National Party minister – got up, briefly. His answer ran roughly as follows:
“That was a Newsroom article, timed to damage the man politically. I’m not going to respond to any of the allegations that have been made about/against him. I think it is disgraceful that a whole class of people have been singled out for racial abuse. As for Professor Brady, I don’t think she likes any foreigners at all.”
And as I shouted back “the claim was about one man”, our Attorney-General sat down. He’d simply refused to answer, or even address, the question, at any level other than suggesting that anyone raising these quite serious issues was a racist or a xenophobe. Starting, presumably, with the Asia editor of the Financial Times, Jamil Anderlini a Kuwaiti-born Italian-American New Zealander who has spent more than a decade reporting from Beijing (and now is based in Hong Kong) through to Professor Brady, with all the other serious media outlets and China-focused commentators overseas who have reported the concerns in-between? It was preposterous. Plus, one couldn’t help thinking that he knew he was weak ground. After all, if there was a clear, simple, authoritative and compelling explanation, presumably he’d have given it.
I hold the Attorney-General – first law officer of the land – to a considerably higher standard than other local candidates. And the specific question was actually about a National Party MP, National Party selection choices, and the ties of National Party figures to Chinese business and political interests.
And, as I said, on every other question this evening, all the other candidates rushed to the microphone to have their say, on everything from apprentices to housing to guidance counsellors. But not one of the others said a word on the Chinese government politicial influence seeking in New Zealand, or specifically on Jian Yang’s position. Not the Labour candidate – deputy mayor of Wellington, and sure to become a member of Parliament on Saturday. Not the quite highly ranked, and apparently very able, Greens candidate. Not the TOP candidate, or the Conservative candidate. Strangely, not even the New Zealand First candidate, who was presumably unaware that his party had taken a stand, both on Yang, and on the more general issues Professor Brady has raised about the activities in New Zealand of the Chinese government. Not a word, from a single one of them.

As it happens, there was someone in the room who knew Professor Brady; in fact, this woman had done her masters thesis under Brady’s guidance. Noting that Finlayson had tried to claim that Professor Brady didn’t like any foreigners, she proceeded to point out that not only was Brady fluent in Mandarin, but that her husband was Chinese. Cue to guffaws and applause, and a rather grudging apology by the Attorney-General for his specific claims about one of our leading experts on China and its international activities.

The Attorney General makes stuff up.

It was a shameful performance all round. The candidates can congratulate themselves all they like on the bonhomie of the campaign, but when not one of them will even address a serious question, raising concerns themselves raised by serious international publications and respected experts – and Brady’s paper has been linked to and report quite widely, it rather gives the game away. As Professor Brady put it in her paper, the fear of giving any offence to the government of the People’s Republic of China – a brutal and aggressive dictatorship – seems to have been raised to a defining feature of New Zealand politics, and not just by National.

We saw it on display tonight, nowhere more so than in the despicable performance by our Attorney-General and first law officer. How safe is our democracy, our values and freedoms, our laws, in such hands?

I’m reminded of his recent unfounded claim that Labour’s water tax proposals were a Crown claim to own water and would therefore hand water rights to Maori.  The Minister in charge of the SIS seems to have a thing against clear law and property rights. He replaced the Foreshore and Seabed Act with a deliberately murky Marine and Coastal Areas Act. It repudiates Crown ownership. It states explicitly that no one owns the nation’s marine areas. But somewhat duplicitously that Act then claims for the Crown many of the powers that an honest lawyer recognises immediately as owner rights.

I think it would be absurd, but some day some conspiracy theorist might think there is a connection between Finlayson’s disdain for property rights and his defence of Communist penetration. A future historian may find that less unbelievable than our elite’s disloyalty, even hatred of those who warn of the kind of threat that is the  fabric of history.

China can count on NZ elite’s fear of ‘racist’ slur

  • September 14th, 2017

Newsroom’s carefully written stories of possible spying at the heart of our government appear to expose National Party naivete. The Financial Times report adds weight to the criticism. James Anderlini concludes with a call for liberal democracies to gain the “courage” to face up to the threats.

I can vouch that an important ally is reading the Newsroom report in New Zealand,  wondering if we are capable of waking up to our longstanding credulity and loss of sovereign integrity.

In the current election campaign the story may be played on a partisan basis –  blaming National’s desperation to access a torrent of cash flooding in from Chinese grateful that NZ, almost alone among target countries, seems happy allow local home buyers to lose in competition with them. Others might link it to NZ business’s anxiety to ingratiate themselves with China without regard to its human rights record, the unrefuted horror stories of organ harvesting from political dissidents, and its militarism.

But MMP has steered all parties into identity politics – selecting a shop window of ethnic, gender and age “diversity”.  Parliamentary votes are preordained by party bosses. Too many MPs bring nothing to debate or select committee except their obedient party vote. Even constituencies which return independent minded genuine local leaders know they’ll no longer be expected to contribute compelling persuasion in a national debating chamber. Some MPs could not buy a coffee – the barista would not understand them, or notice them.

Still, MMP does not explain or excuse party and journalist venom toward any who’ve criticised immigration policy from a  security risk and cultural corruption perspective.

I know many of those responsible. Venal party fundraising may explain some of it. But there is a simple, more deplorable, reason for the twitter put-downs of Newsroom for reporting the spying concerns. The give-away is that only NZ First has picked up the story. Winston Peters has never been afraid of the reflex slur of “racist’. He expresses ordinary citizen concerns about immigration.  Being Maori gives him a partial free pass. But he has not relied on it. He gives as good as he gets. So he can’t be silenced by the cowards who run a mile from any debate that could seriously test that gagging slur.

It is not a left/right issue. Phil Twyford is supposed to be silent in shame since his ‘Chinese-names’ expression of the knowledge of every land agent in Auckland, about the false government under-reporting of foreign house buying in Auckland.

A suffocating elite consensus that nothing could be worse than to be accused of racism has young left wingers sneering with young right wingers about any determined interest in matters military and geopolitical. For them, foreign policy does not go far past a joint chorus of detestation for Trump. Concern about foreign threats has become risible.

Foreigners star in the elite public ‘narrative’ as victims of our earlier sins and aggressions. Sometimes they are the benign and respectful visitors who will rescue us from 60 years of spending more than we earn, borrowing the difference from them.

Unless of course the foreigners have private capital, in which case  suspicion is permitted.

Once the racism debate-stopper has been deployed, those who persist are impossibly  passe. Being passe is of course death in public life. Persisting with reasoned argument after that is conclusive evidence of not being with the programme (reactionary, ignorant,  and embarrassing). Such persons must necessarily be discreetly excluded from national ‘discourse’.

The fear of being branded racist is all pervading.

We could cite the  documented destructions of complacent societies at the hands of more ‘barbaric’ competitors, aided by elite elements of those betrayed. We could find recent stories of spies sent by currently non-threatening neighbours, until ruthlessness stops biding its time. We could recount how vital some sleeper commercial agents have been to the creation of the empire of which we were a part.  We could remind people of the standard pattern of societies and peoples being undone by the treachery of their own decadent elites, willing to sell their inferiors for temporary exemption from a foreigner’s exactions, or just for money or privilege, or to secure positions within the incoming regime.

But even if it got a hearing, it would not change smug minds. This little corner of the world has not heard the news – history was not abolished.

After this was posted I was contacted by a person I respect to pass on a view from one who knew the MP of the Newsroom story while he was at Auckland University. He was reportedly an admirable person, helpful to students. The commentator was upset for him, but acknowledged that did not dispose of the spy suspicion. The commentator pointed out that NZ language schools have been polishing the English of China’s spies for decades. After NZ pioneered warmer relations it became for them a favoured easy entry experience of the West. And we are so gullible it was inconceivable that we would not be well penetrated.

Bank regulation – respect for CER/mutual recognition?

  • July 16th, 2017

For some time APRA has shown limited respect for the NZ Reserve Bank’s regime for bank supervision. It has begun applying Aussie rules to the NZ subsidiaries that NZ says must have standalone capacity, as if parallel NZ requirements did not exist.

The consequence for our big four is overlap and expensive double reporting.  It is not entirely surprising – a price for allowing ourselves to depend on another country’s banks. And understandable that APRA would not want to leave regulatory gaps as compliance loopholes. But I hear they’ve chosen to make little pretence at respectful collaboration.

It should be deeply embarrassing for the RBNZ (and the NZ government). The RBNZ under Dr Brash after the 80’s and 90’s reforms had a reputation as the world’s best central bank.

Now APRA has another casual slap on the way for NZ and the senior people at our big four. Submissions are due by 3 August on a plan for Bank Executive Accountability Rules that ignore and overlap with our regulation of investment advisors. Among other things they will stipulate for delayed payouts under senior banker incentive pay schemes.

Many may welcome interference in bankers’ bonuses. They might be less enthusiastic if the effect is to inflate bonuses in compensation for unwanted stipulations.

Theoretically, restrictions on the Aussie big four should give our domestic minnows more scope for inventive competition. Kiwi, Coop, Heartland and SBS might be more attractive employers in comparison. Rabo and HSBC and other offshore players will of course also be unconstrained.

This reminds me of how limited the competetition now is. In the two previous business cycles I’ve experienced, at a time when demand for business and developer finance is high, and the NZ interest premium is also high, with low interest rates on consumer deposits, we should be seeing rapid growth of finance companies. Some would eventually mature into bank competitors, some would be bought by banks and some would justify the high interest they pay by eventually collapsing

Unfortunately the current RBNZ leadership’s low intelligence regulation of non-bank deposit takers has strangled that process. By unlawfully ignoring the restriction of their powers to systemic level risks they extended bank prudential supervision to institutions that offered no systemic risk.

The RBNZ has underpinned Aussie Bank profitability by preventing what should have been emergence of competing challengers to bank intermediation.

How many naggers could we measure and dump?

  • May 31st, 2017

The Times of London reports on correlations between teen pregnancy rates and cuts on spending for teen pregnancy advising and free contraception.

The wonderful news –

“Teenage pregnancy rates have been reduced because of government cuts to spending on sex education and birth control for young women, according to a study that challenges conventional wisdom.

The state’s efforts to teach adolescents about sex and make access to contraceptives easier may have encouraged risky behaviour rather than curbed it, the research suggests.”

Of course people warned that the cuts would lead to runaway teen pregnancy. The study is sure to be attacked by those still employed in handing out contraceptives and advice.

Perhaps this apparent effect is just coincidence. Teen pregnancy rates have been falling anyway, and not just in the UK. The study reportedly took that into account.

“The number of pregnancies, however, has fallen at a significantly faster rate since the grants were scrapped in 2010, in spite of critics’ dire prophecies … the decline was steepest in areas where councils slashed their teenage pregnancy budgets most aggressively.

The report quotes one of the researchers –

“Mr Wright said that the effect was fairly small but had remained robust after all of the pair’s adjustments to the data. “It’s quite a surprising result, so we’ve tried to do a lot of different tests to see whether we could explain it away effectively,” he said“.

The report mentions other authoritative evidence to similar effect –

“A study in 2009 looking at a typical Teenage Pregnancy Unit campaign, which included SRE [Sex and Relationship Education]and access to family planning in schools, found that it resulted in significantly higher pregnancy rates. Meanwhile a gold-standard Cochrane review of SRE published last year found that the measure had “no apparent effect on the number of young women who were pregnant”.

New Zealand employs thousands of worthies exploiting politicians’ fears of being called uncaring, Many of them will be well-meaning, and genuinely believe they help. Some will be invaluable. Others are simply our generation’s burden of useless priests, battening onto modern  superstitions and fears.

There is a whole industry of counsellors whose effectiveness has never been established. We have EECA nannies telling us to save electricity. All over the country local councils are ordering us to recycle our rubbish and to save water, when for most New Zealanders at most times both activities just waste resources. The energy used and the alternatives people turn to,  may harm the planet more than the recycling can ever save.

And beyond that we have a vast new cadre of people peddling new pieties – including health and safety compliance officers,  professional identity measurers and consultation full-timers, diversity zealots and governance advisers.

All should routinely be put under a sceptical secular microscope. It is bad enough to be wasting resources on them. But terrible if they add to the misery or wickedness they claim to be protecting us from.

It would not be surprising if a rigorous study found that Dame Susan Devoy’s sermons on racism have the same effect on most of us as telling toddlers not to stick beans up their noses – result, more beans up noses.

Has Air New Zealand been shopping us for some time?

  • April 26th, 2017

Should you book with Air New Zealand on a different device from the device you use to check availability and fares?

I’ve been suspicious for some time that Air New Zealand’s “dynamic” pricing pushes up fare quotes when the enquirer’s device has previously checked for space and fares on  particular flights. When they know you really want a particular flight, its cheap seats seem to disappear.

Patrick Watson’s newsletter reminded me of this suspicion with a comment headed “Shopping the Shoppers”

“On the surface, online shopping seems to favor shoppers. It’s easy to compare prices, shipping cost and time, sales tax, and other factors to get the best deal. Retailers have to offer lower prices to make you buy, right?

Well, maybe. Last week, I read a fascinating Atlantic Monthly article by Jerry Useem: How Online Shopping Makes Suckers of Us All.  It’s about the sophisticated ways online merchants adjust and even personalize prices to maximize revenue.

For several years I’ve been taking precautions just in case.

Watson goes on:
 “A quick excerpt:
“I don’t think anyone could have predicted how sophisticated these algorithms have become” says Robert Dolan, a marketing professor at Harvard. “I certainly didn’t.” The price of a can of soda in a vending machine can now vary with the temperature outside. The price of the headphones Google recommends may depend on how budget-conscious your web history shows you to be, one study found. For shoppers, that means price is ”not the one offered to you right now, but the one offered to you 20 minutes from now, or the one offered to me, or to your neighbor” [. It]may become an increasingly unknowable thing. “Many moons ago, there used to be one price for something” Dolan notes. Now the simplest of questions ”what’s the true price of pumpkin-pie spice?”is subject to a Heisenberg level of uncertainty.
Which raises a bigger question: Could the internet, whose transparency was supposed to empower consumers, be doing the opposite?

In other words, online retailers are now comparison shopping us. Amazon and others are learning how to dynamically adjust prices based on where you came from, what you bought in the past, where you live, what time of day it is, and even the current weather in your zip code.

Doubling down for Nick Smith

  • April 4th, 2017

I was obliged to spend all yesterday on unplanned responding to calls about Dr Nick Smith’s Resource Legislation Amendment Bill. It could be passed by Parliament this week.

Yet New Zealand is just waking up to what desperately bad legislation it is. Some beneficial provisions are badly overdue, but it tries to fix other weeping RMA sores by forcing Councils  to plaster them with Ministerial acne cream. It is so prescriptive it could be a Green bill, rejecting property rights as a cure for Planners Paralysis, and instead subjecting local authorities to detailed Ministerial decrees.

So it mostly wastes time instead of cauterising the RMA bleeding.

But the more critical problem in the Bill is its transformation of local government democracy into racial power sharing. The Bill gives every local authority exercising RMA powers 18 months to reach a power sharing agreement with any iwi or hapu that asks for one. If they can’t agree the agreement will be dictated by forced mediation, with “guidance” from the Minister.

Once reached the agreements are permanent, unless iwi/hapu agree to amendments. There is nothing in the legislation to protect citizens from permanent subjection to the religious/cultural/venal demands of unelected iwi leaders with their hands on some of the most critical levers of local government. The RMA delegates to Councils powers which are legislative, semi-judicial, coercive and punitive. They have been justified on the basis that the voters’ right to eject councilors is a backstop protection. Bitter experience of abuses of power have also evolved the prescribed procedures and criteria for exercising the power, in the Local Government Act, and supervisory jurisdictions including Auditor General inspection.

So far as I can tell from the Bill there is virtually nothing to prevent power sharing agreements with iwi/hapu from by-passing democracy and diving below the current legal safe-guards against dishonesty and self-dealing.

When I heard that the National caucus were being whipped into backing this Bill, to show solidarity with Nick Smith, I was reminded of the latter days of Sir Robert Muldoon.

Not because there is any likeness between Muldoon and PM Bill English. There isn’t. Bill English does not rule by fear. He has not tried to humiliate journalists and the public service. He is not presiding over a government clinging to power with increasingly desperate expedients to block economic steam vents.

But I thought of Muldoon because taking a virtue to a foolish extreme can end both great and lesser political careers. Muldoon allowed blind loyalty to a friend named Colin McLachlan to show that he placed a friendship ahead of good government and his MPs interests. Muldoon had an incompetent (probably ill) Minister of Transport. The Minister became a target for media ridicule. It reached a crescendo with a ridiculous excuse for what appeared to be public drunkenness. But instead of distancing himself and his government Muldoon tried to force his caucus to back the doomed Minister.

It was only one among several reasons why caucus loyalty unravelled. But it told many backbenchers that Muldoon’s political instinct was no longer reliable. It told them he no longer put first the good of the country, and stable and respected government.

I’m reminded of that telling saga by the inexplicable determination to push ahead with Dr Smith’s Bill, especially just before an election. It can’t possibly get one extra house built before the election. It should be superseded early by the major reform recommended by the Productivity Commission. So its only function now is to try to salvage Dr Smith’s reputation as a ‘can do’ Minister.

It can’t do that on any objective assessment. Winston Peters will use it to mince up what is left of National credibility on RMA issues.

So to those whose calls I did not return yesterday, I apologise. I can’t explain why the government is doing something so radical and so dangerously silly (constitutionally and politically) other than to say that it would not be the first time that friend loyalty has trumped duty and common sense.

To the journalist who apologized with “Sorry to have to admit it, but I’ve only just heard about this. I couldn’t believe what I heard, but now I’ve looked into it, why haven’t we heard all about it for months. Why on earth is the government handing this gift to Winston?”


Is Greg O’Connor pretending to be liberal for Ohariu

  • March 14th, 2017

I feel for Greg O’Connor as the full destructive weight of low quality political journalism starts to focus on him.

When I became my party’s Justice Spokesperson I got the Parliamentary Library to feed me catch up criminology. I’d spent 20 years in commercial law. I badly needed to understand what had happened to turn the courts into awkward apologies for authority, from the oases of calm judicial and establishment confidence they were in my early practice.
But when I began to apply and discuss the findings of research, instead of the idealist fantasies that pass for policy analysis in public debate on law n order, I was immediately accused of ‘far right nasty populism’, and ‘playing the crime card’. The kindest comments would pretend to sympathise, asserting that as an intelligent man it must be hard for me to have to pretend to support criminal justice policies that just ‘pander to the worst in human nature’.

I was stunned by the complete media disinterest in the truth about crime rates. Literally no journalist ever reported on the thorough research behind our policy positions. None had the slightest interest in the astounding US success in cutting by nearly 90% the rampant vicious crime that the ‘compassionate’ elite from their leafy suburbs and gated apartments had decided was just a cost the poor must bear as a price of being in a diverse and caring society.

Few ever failed to add “far right” to any reference to me, in all the coverage of my criminal justice contributions. The fact that most of my policies were developed from hugely successful reforms of Bill Clinton in 1996, and explained in terms compellingly expressed by Tony Blair, made not a jot of difference to the ignorant media. They wanted only to report on the Punch n Judy show characters they’d invented to suit their dated class defined world view.

Greg O’Connor may never escape the stupid badging he is getting now, as some kind of policy Neanderthal, forced to tone down and live down his experience-derived understanding of policing. I know, for example, that his fresh thinking on marijuana is genuine, not something forced from him by dopey liberal Labour colleagues. He has been pondering the costs and benefits of the long prohibition for a long time. We discussed the pros and cons long before he challenged Peter Dunne in Ohariu.

Whether, of course, Labour wishes to be branded as the “soft on marijuana party” for this election is a matter that should legitimately be decided by the Party, not Greg. But the continual smug assertions that Greg is somehow learning in that area to dissemble, to pretend to views he does not hold are just normal media moral snobbery.

And even if that were not the case I’d be surprised if Greg was silly enough to think that dope policy will help him in Ohariu. Dopers may think that Peter Dunne is an icon of flopping expediency, but he too has been among the most consistent of liberal members on drug matters. It is ironic that he was forced to appear to dither over medical marijuana.

If Greg O’Connor and Peter Dunne were to debate drug policy outside an election period I’d be surprised if anyone but experts could predict the difference. But Mr Dunne is far more experienced at saying what he thinks his audience wants to hear, however non-sensical.

Whether that will save him will be one of the most interesting questions for this election

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