Posts by BenWilson
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Hard News: Unwarranted risk, in reply to Stephen Doyle,
Whatever happened to good old fashioned nationalization. Is it now such a dirty word that no "left wing" party will utter it?
I wonder if it's because of the first 9 letters in the word ;-)
Welcome to PAS, blood.
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One (privatised) energy CEO isn't confident about that under current settings.
They've found a way to make something that converts rainfall into money turn a loss. Easy, just borrow heaps, and give high dividends to shareholders. Then you're converting rainfall into debt repayment and shareholder recompense. If the stock falls, it leaves the shareholders with nothing and the lenders with bad debts, at which point a sensible government could do the opposite of what has happened for 30 years - they could privatize risk and socialize profits, by snapping up a bargain. Will they? Nah! Government can't make good investments - this government is determined to prove that true with everything they do.
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Hard News: Unwarranted risk, in reply to insider,
It seems a huge selective morality is at play around the sale of a business to foreigners.
Agreed. I'm not personally against selling those farms to Chinese owners. But when the government is selling things I think it should certainly be done in an open bidding process that gives local people a chance to buy too.
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Hard News: Unwarranted risk, in reply to Gareth Ward,
Of course, you now have NZ ownership over the big chunk of cash that was given to you for your business.
Yes, and it is possible to reinvest that cash, either building a new NZ business, or overseas, thus bringing back the lost profits from the business sold. Or you could just spend all your money, flowing it through other NZ hands.
I'm not inherently against any of this, whatever insider seems to think, with the exception of government assets, which are a much, much more complicated matter - they set the backdrop and infrastructure for our whole society, they have huge impacts on the entire nature of our economy. They can and should undertake the huge infrastructure projects which project the nation in whole new directions, or invigorate languishing sectors.
Most of these projects are natural monopolies which should not end up in private hands. If they do, all we have is trickle down, which is an apt term for being pissed on from on high. If those private hands are not even in the country, then we don't even get the trickle down. A great many of these will make losses in perpetuity, because the purpose of them is not direct profit at all - hospitals and education are good examples - the whole of society is improved by them. I think basic utilities are the same, society functions best if these natural monopolies are supplied by the government at cost, or cost + reinvestment sufficient to sustain growth in supply at a rate roughly equal to general economic growth.
If any business can compete with this, then they should be welcome to try. But I do not rate their chances unless they come with enormous capital and something genuinely new to supply, or they are prepared to take huge risks. All of these things are what capitalist business is meant to be about - not being handed an already existing natural monopoly with proven earnings and massive capital assets. The proof that our government telco is less efficient than private enterprise should be only by a private enterprise setting up a business that outcompetes the government one. Same goes for power companies. If someone out there is prepared to actually set one up that outcompetes our state owned ones, then have at it.
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Hard News: Unwarranted risk, in reply to insider,
Ben seems to think it's some form of collective that has dibs on my property and is devalued by me selling it, because that's giving it away, whatever 'it' is.
Nope, I don't think that. I only said that by selling it you lose ownership of it, which is actually true by definition of the word "selling", but it makes it slightly plainer what that means. If you are a NZer, and you do that, and the person or entity you sell to is not in NZ, then NZ is losing that property, because you are a part of NZ.
Well the set of people living in New Zealand have no rights to my business.
That is beside the point. If you are in NZ, you will spend some of the profits from your business in NZ. This means that NZ profits from your business, under James' definition of NZ.
So it's all a bit more complex than the slogans being chucked around IMO.
We were actually talking about things that belong to the NZ Government before you tried to muddy the waters by talking about your own business. But I'm happy to also answer your questions about the effect of you selling your business to foreign interests - depending what you then do with the money, you've expatriated a little bit of the control of this country. The employees of your business are now answering to people in another country, and the profits are leaving the country. This isn't always bad - you could be a horrible manager and they could be wonderful.
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If the returns were that spectacular you;d see every man and his dog lining up to build power stations, but you don't.
Your concept of returns is entirely tied to profit. This is not how I see it. The return from the nation generating a lot more cheap power is a massive growth in the nation's industry. This is stifled by the insistence in returning a profit from one kind of asset - it chokes out other industry. This is so obvious in the realm of finance that the world economy has been stalled by it.
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Hard News: Unwarranted risk, in reply to insider,
If I own it but move permanently to Australia have I given it away to Australia?
Pretty much. You'll be paying tax in Australia, and spending your money there. You've stopped doing anything for the NZ economy with the profits from that business. You will still be employing people in NZ, possibly (depending what your business is). Which is precisely what the situation is with a foreign owned company.
If it's my property, 'NZ' has no ownership of it - I do irrespective of my passport or where I live.
I think you're trying to say that there's no such thing as foreign ownership? That's ridiculous. In fact it's so ridiculous, that I can see why you're struggling to understand - it's because you don't even believe in the idea of a nation or a nationality at all. To you there are only people. So far as you're concerned there is no such thing as NZ, or the NZ economy.
Your position is not nonsensical, except in so far as most people would think it was utter nonsense. But it is possible to take a normative approach like yours. I just don't. To me, the idea of a foreigner is not meaningless, it's just complex, and doesn't really need your normative simplifications added on to twist it into something unrecognizable.
As for holding up investment, Genesis announced this week the deferral of a major wind farm because demand was not there.
Which, if you understood me at all, is synonymous with Genesis saying they deferred development because the profits are not there. Which is not the same thing at all as saying no one would find the extra power generated useful, or that no-one would use it if it was heaps cheaper.
The exact same reasoning has been what's choked broadband in this country. It's not that no-one would use the capacity, it's just that they're not prepared to choke on the prices they would be charged to line Telecom shareholder pockets.
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Hard News: Unwarranted risk, in reply to insider,
You need to go to the MED data file 2011 for both, but the respective numbers are 32.6GWh and 39GWh if you want to check my maths.
I expect we have a very different idea of what demand actually means. Yours is based on a free market model, in which price is set by demand - you maximize how much you can get by how much people are prepared to pay for it. I have a very different concept of it - if power was cheaper, more of it would be purchased, and used for industry, or things like heating people's homes. It's a cop out to say that people do not demand power because they can't afford to pay for it. It's buying into the language that normalizes that power generating organization should squeeze as much as it can out in profits. I simply disagree with this altogether.
I do not deny that these SOEs have managed to squeeze huge profits out of their power supply monopolies, to the point where obviously inefficient ideas like people generating their own power are almost viable. But that does not make it right. That makes it wrong.
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Hard News: Unwarranted risk, in reply to Russell Brown,
But building new generation capacity almost always has an environmental impact, and funding it has an opportunity cost. It cannot be done trivially.
It can't, but the returns in this case have been fantastic, so opportunity cost is very low. This is hardly surprising, considering how incredibly useful electricity is, and how power from fossil fuels has to continually rise as the stuff runs out, driving up the value of electrical power constantly.
That's why National has such a horn to sell this asset. Because it really is a golden egg laying goose for whomever gets control over it.
Environmental impact is perhaps a concern, but is that really what's been holding up reinvestment? That just draws out the time it takes, but shouldn't impact on how highly prioritized reinvestment should be.
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Hard News: Unwarranted risk, in reply to Russell Brown,
If only a past government had established a compulsory superannuation scheme in, say, the 1970s ...
It's never too late. The Ozzie scheme didn't start until the early 90s. The payback was super fast, and nowadays they're only voting to up the contribution rate. It's such an obviously good policy.
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