51 thoughts on “General debate, January 9, 2013

  1. “They have an operation to isolate higher brain function from real world input when they graduate.”

    Actually that is a myth. It is actually a form of long term hypnosis which is performed during lectures on economics.

    I bet you thought it was unintentional that such lectures tended to send the students off to sleep!

    Trevor.

  2. “Deaf or dumb or blind”

    No – an economist. They have an operation to isolate higher brain function from real world input when they graduate.

  3. Gold for physical delivery is subject to some delays… and now this.

    http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/1/17_James_Turk_-_Germanys_Gold_Is_Being_Held_Hostage_1.html

    Don’t know that it is “true” but if it is they have to cover it up or the wheels come off. The “back story” is a supposed lease and transfer program to suppress the price of the metal while the QE is full-on.

    Watch however, who is buying Gold and has stated their Gold Reserve targets (Russia 10%, China 2%), Bundesbank asking for their Gold back is part of that. Brazil

    http://www.reuters.com/article/2012/11/21/imf-gold-idUSL5E8ML68E20121121

    The World Bank proposal

    http://www.reuters.com/article/2010/11/08/us-gold-zoellick-idUSTRE6A70D720101108

    Just thought it might be of interest to some folks here. Don’t know which way this will go. (They couldn’t be THAT dishonest :: Yeah Right!)

  4. The internet is our greatest hope in keeping government (and pretty much everything, for that matter) transparent. As they say sunlight is the best disinfectant.
    I always struggled to read those Playboy articles, I kept getting distracted….
    ;-P

  5. I think this guy has a good handle on the problem…

    http://www.winnipegfreepress.com/opinion/westview/american-culture-murderous-without-guns-183899071.html

    “Democracy came too early”.

    For the rest, DBuckley has it pretty well pegged. The delusional nutjobs believe the NRA mythology, the Sam Colt mythology…

    http://www.guncite.com/gun_control_bellesiles_plby.html

    They reckon that their guns keep them free… yet have absolutely no understanding that if someone else controls their information, or they fail to honestly and diligently seek the truth, they cannot ever maintain that freedom, even if they possess nuclear weapons and control death-rays. They are survivalists with a focus. Not all gun owners are like this, but the gun nuts are all of a piece.

    Their mistrust of government is religious.

    Their blind spot with respect to corporates is immense.

    Their fantasy is to restore the USA to a libertarian socio-economic Darwinism that it never suffered.

    … the key word here is Darwinism, even though most of them do not appear to be familiar with evolution.

    So the kids proved, by dying, that their parents were incompetent to protect them, that the school and the parents did not have enough guns to ensure that someone would shoot back. The gun lobby regards them as evidence that the USA needs MORE guns.

    Each of them sees in themselves, a hero ready and willing to be completely alert to danger, to assess risks and make life and death decisions a split second than any possible assailant with the ability to get at their weapon and hit a potential felon in the 10 ring faster than that assailant can pull the trigger.

  6. Do piles of dead kids give these good ‘ol boy NRA types ANY pause for thought?

    I very much doubt it.

    Stereotyping, these people believe in the one true way, and dead bodies aren’t a factor in their thoughts.

    Mouthpiece of the Police union Greg O’Connor is cut from the same cloth; he’s quite willing to see Kiwis dead.

  7. So is that an argument FOR keeping Queenie as head of state? To keep ultimate power out of the hands of anyone who might actually WANT that power, as opposed to the fuddy-duddies born to it wheter they like it or not?
    D-Buck, love your last paragraph. Do piles of dead kids give these good ‘ol boy NRA types ANY pause for thought? They always give such an unequivocal (read Heston) message, but surely even within NRA there must be some folk squirming uncomfortably in their seats?

  8. Samiam asks “why THOSE arms?”

    Because those arms are the sort of weapons you might want if you are going up against someone pointing them at you. They are the sort of tool used by agents of the state.

    Why is this important? It goes back to the bit you don’t want to talk about, the right to bear arms.

    Us Kiwis are Subjects of Her Maj, we are allowed to do what Her Maj allows us to do, though in practice her predecessors long since passed that job onto other folks, though technically, she’s the boss, and her government work on her behalf to rule us. For us to revolt against Her Maj is treasonous.

    Americans, on the other hand, have a government that is “of the people”. American citizens have a duty to keep their government in check. If the government get out of line (tyrannical) then it is the job of the people to depose that government, using force if necessary. So, musket up against musket.

    And that is why Americans think they need THOSE arms; one has to think you’ve got a fighting chance against the federal army.

    Of course, the second amendment was never kept up to date, so there is no constitutional right to have an Apache gunship, or a nuke, or even a swarm of explosive quadracopters.

    And, of course, the army aren’t going to waste their time shooting you, they’ll aim the non-lethal(ish) RF weapons at citizens from a couple of miles away, and apply energy until the pain makes the citizens deposit their assault rifle on the tarmac and run away screaming.

    Thus THOSE weapons aren’t actually necessary as they wont do the job anyway, but the NRA hasn’t figured that out yet.

  9. I reckon, Sam, they know all hell’s going to break loose and they want to be on the delivering, not receiving side of that.

  10. BJ, you’re our pet Yank, and I just KNOW you’ll have a complete understanding of these ‘decent folk’. :)
    Why are the NRA etc so prepared to die in a ditch over automatic weapons? Lets leave aside the right to bear arms for a moment… why THOSE arms?
    What are they really scared of? Would the removal of automatic weapons really be the end to the American dream?

  11. @ bjchip

    “The guy who owns the house next to mine and rents it out, gets to deduct it all from his income tax. I don’t. He can deduct a bunch of other things as well. I pay a HIGHER rate of tax on my income to support his exclusions.”

    Presumably the tenant receives the service, not the landlord. As a homeowner you also are receiving the service, not your next door neighbour’s landlord.

  12. @ bjchip

    “I think perhaps the question should be, why does the Landlord get to deduct this “expense”, rather more than why do I NOT get to deduct it. The inequity of the system as a whole is quite clear.”

    I think if you got to deduct the expense rather than the landlord then the latter would probably have to increase your rent to compensate for the reduction in his net income.

  13. I think perhaps the question should be, why does the Landlord get to deduct this “expense”, rather more than why do I NOT get to deduct it. The inequity of the system as a whole is quite clear.

    Accepting that I suffer the attentions of more than one government, the reasoning behind the deduction of one payment for service from the tax that is the other payment for service, is at fault. That of course, would also apply to the mortgage deduction the landlord is “entitled” to.

    Make the landlord pay both, then reduce GST rates. Put a reasonable top rate above the current one, for folks who are > 5x the median income.

    It is far simpler to construe that I have one government with varying levels. I’d accept the “paying for different things” argument, but the fairness of the arrangement is notable by its COMPLETE absence.

  14. A supermarket bill is clearly a “cost for service” but one could not reasonably call it a tax.

    No… because you have a choice about how much, and you have the option of growing your own, and if you want to go hungry and/or lose weight you can avoid paying the supermarket in a wide variety of ways, and there is a competition (sometimes) among supermarkets to serve you and you have a choice of who to pay.

    The tax on your property is not an avoidable thing, there is no choice who to pay, nor is it deductible unless you are a business. A landlord gets to deduct this expense, but not the homeowner who lives in the house. The renter of course, does not pay it at all.

    ((The overall arrangement of the country seems to favor us all renting houses to each other, with nobody owning the home they actually live in… and no dogs. Not very nice for the kids.))

    It is not of course, as clearly income related as a straight income tax levied by the local government, but the effect is the same. It is, the thirteenth mortgage payment in a 12 month year. The fact that it is paid to local rather than the national government is irrelevant. It remains a tax, and the tax on that money paid is double taxation… in favor of the landlord. Waipa council, Waikato Regional and then Income tax on top of that. To the home OWNER Government is like a tropical paradise, it has many palms :-) All demanding to be crossed with silver.

    The guy who owns the house next to mine and rents it out, gets to deduct it all from his income tax. I don’t. He can deduct a bunch of other things as well. I pay a HIGHER rate of tax on my income to support his exclusions.

    I checked the numbers… I could afford a much nicer house… and better neighbours.. as long as I didn’t care to live in it and didn’t own a dog. The Capital Gains would pay for it completely over time. The law in this country is horseshit. The skew in favor of the landlord here is so pronounced and bizarre that my Real Estate agent back in the US (where I had my first house), wondered how the agents here had managed to get into position to make the laws this way.
    ___________________________________

    A land tax is… a useful notion. I would regard it more in the form of “rent”. We cannot realistically call what we do with land “owning”, we rent it. Reasoning being that it was there before we were born and will be there long after we are forgotten… we get to use it, abuse it and become part of it in due course. The idea that we own it seems a bit arrogant on our part :-)

    No argument… I am happy to add to the toolbox.

  15. @ bjchip

    I would add to your list of nine factors of inequality the absence of a land tax. Land in areas where the wealthy live would generally be more expensive than land in poverty stricken areas, so the former would pay a lot more tax if a land tax were in place. Proceeds from a land tax could offset by reductions in income tax, which would also benefit low end taxpayers more than high end taxpayers.

  16. A supermarket bill is clearly a “cost for service” but one could not reasonably call it a tax.

    Errr, it’s a cost for goods with a service component.

    Also, you can grow your own food so it’s not compulsary. You also have a choice of supermarkets.

    Lastly, you can tax deduct some of your supermarket bill if you can attribute the purchase as an input to another business good or service.

  17. @ nzmr2guy

    “I dont see how my 3 bedroom house worth $480K puts more demand on services than the 3 bedroom house 2 blocks up the road worth $280K.”

    Provision of services by local bodies helps support property values. I would imagine support for a 480K property would be more valuable than support for a 280K one.

  18. @ nzmr2guy

    The issue is not whether rates is, or is not, a tax, but whether it should be deductible in order to avoid double taxation, as bjchip was implying. Double taxation occurs when the same thing is being taxed twice as in the case of the taxation of company dividends. Rates and taxes are not double taxation because they are paid in respect of two different lots of services.

  19. @ bjchip

    “Rates are a property tax. Pure and simple. Calling it a “cost for service” begs the question of how that differs from any other part of government.”

    A supermarket bill is clearly a “cost for service” but one could not reasonably call it a tax. So if rates were to be made tax deductible why not the former. Supermarket bills could be regarded a compulsory in the sense that we all must eat.

  20. Agree bjchip, here in Hamilton they rate your property on value plus landsize formula, but have a set price for EW rates, realistically if it was fair and based on cost of service (water, rubbush, parks etc) the formula would be

    total costs of services / total properties = ONE PRICE for all.

    I dont see how my 3 bedroom house worth $480K puts more demand on services than the 3 bedroom house 2 blocks up the road worth $280K.

  21. @mikesh

    Rates are a property tax. Pure and simple. Calling it a “cost for service” begs the question of how that differs from any other part of government.

    The distinction is without a difference and is purely used as an excuse by those who impose those TAXES on money that is already paid in tax.

    It is, frankly, an outrage. I wonder at the sanity of New Zealanders that they can accept the fiction and the abuse that this practice entails.

  22. @ mikesh

    CGT will not work if homes are exempted.

    All asset classes – including the family home – should be subjected to a comprehensive CGT but a sensible policy of marginal rebate can be applied factoring in inflation and cost of capital over the time of occupation.

    In that way a home that is occupied for 10 years might pay no CGT where a home occupied for 1 year would pay some.

    I like the idea of a Rates offset and while it is most definitely a cost for service, the difference between it an and say, a supermarket bill, is that there is no freedom of choice associated – you cannot choose not to pay rates and you cannot shop around for a better deal.

    As such, Rates can only be considered a non-discretionary levy as opposed to a service.

  23. bjchip @ 12.46

    I agree with most of the nine points, but 1 and 5 seem problematic.

    Capital gains taxes don’t seem politically feasible unless residential properties are exempted. However this would mean that the home of a wealthy person, sold for a million dollar gain (say) would attract no tax, while a poorer person’s investment property, gaining fifty thousand when sold, becomes liable for CGT. This to me doesn’t seem quite fair. What is needed I think is a general tax on all capital, and on land in particular.

    In the hands of businesses rates are tax deductible so there is no double taxation in this case. Perhaps households should be allowed to deduct rates from other income for tax purposes. However most would argue that rates are simply a payment for services provided by local councils, and therefore paying rates is no different from spending money at the local supermarket.

  24. “If it is predictable it can’t be democratic”

    Maybe one of the things we ought to do is add some randomization of the parliament. Add some number of citizens randomly selected out of the population to parliament, with no consideration of party affiliation. IIRC the ancient Greeks USED to do something like this?

    Yes… I LIKE changing things. :-)

  25. Intresting article on why printing a $1 trillion coin would be the right thing to do.

    http://www.businessinsider.com/why-the-mint-the-coin-debate-could-be-the-most-important-fiscal-policy-debate-youll-ever-see-in-your-life-2013-1

    It is easy to see that this would not be inflationary in the current climate. I’m less sure what would happen when (if) the economy returns to “normal”. A link from the main article says:

    Because this trillion dollar coin isn’t being used as “helicopter money” (money dropped directly into the economy) you don’t get the inflationary effects you’re used to seeing when you hear about governments creating money in large denominations. (http://www.businessinsider.com/3-huge-myths-about-the-plan-to-save-the-economy-with-a-trillion-dollar-platinum-coin-2013-1)

    The other argument I’ve heard is that the govt can recall the coin later, but I’m not sure how practical that would be. Of course, the US is already in this situation with all the QE it has done, so we may find out at some point whether the coin is minted or not.

    Interested to hear other’s views.

  26. I may not agree with what you say BJ, but there’s no denying your careful and constructive thinking on matters economic.

    Personally, I hope the caucus ignore you :)

    @12.46

  27. Gerrit – I would be surprised if your advice isn’t read with interest by members of our Caucus, but those 9 points only have to do with inequality in our society. Inequality is not my principle objective as a human being OR my reason for joining the party.

    Policy zero is to avert climate catastrophe through action within NZ and coercion and negotiation internationally… every means available, no holds barred. That’s MY priority… and yet I come to the economics side as a result, because the society changes the environment through its economy, and if the economy is distorted (and ours is VERY distorted except in comparison with everyone else’s) both the society and the environment are damaged.

    The philosophies and attitude around the activities of the “free market” and the nation most responsible for promoting that attitude (one that National aspires to emulate in so many ways)… give us this…

    http://www.reuters.com/subjects/income-inequality/washington

    The monetary system we’ve adopted along with everyone else on the planet, gives us this…

    http://www.businessinsider.com/the-path-to-20000-gold-2013-1

    … and those distortions that give us rising inequality also leave us in the grip of a need to “grow” even though we are doing this to our planet….

    http://www.esrl.noaa.gov/gmd/ccgg/trends/history.html

    I am not a Green because of “inequality”. I’m a Green because with what I know, I can make no other choice and be able to look my kids in the eye and tell them I am doing all I can for them.

  28. BJ,

    I can agree with all of the causes and dont mind the solutions you propose.

    It is time for a radical overhaul and those point are a great starter.

    What chance the Green party campaigning just on those nine points, leave everything else for a rainy day in the future when fiscally more buoyant?

    Here is a starter for cheaper housing. Build it yourself with a little expert advice.

    http://www.c-style.co.nz/

  29. Nice post BJ. I don’t, of course, agree with all you say, but you make a damned fine case, identify the shortcomings, and recognise that fixing “all of the above” is pretty much an impossible task.

  30. Is it that there aren’t young men (or women) prepared to do hard physical work or is it something to do with the terms and conditions of employment?

    Perhaps its because folks have figured out that they might put up with a shit job, or shit wages, but not a shit job with shit wages…?

  31. Gerrit

    To re-establish the “muddle class” means offering a couple of things up and taking a couple of things down. The goal is to get the GINI decreasing, which is basically to decrease inequality in this country.

    The causes of inequality here have to be identified and addressed. We identify some of them… low wages and limited employment opportunities for skilled workers here… there’s a fair few minimum wage jobs, there are the owning class, and there is little skilled labour opportunity. Before we go further lets ask ourselves if we HAVE correctly identified the causes of inequality.

    1. No taxation on Capital Gains – we created a class of income that the government DOES NOT tax, and this government has a religious aversion to taxing it.

    2. Less progressive taxation.

    3. Debt based money

    4. Negative Gearing for landlords but not homeowners.

    5. Double taxation of property taxes/rates.

    6. Lack of policy compensating for our distance and small market, that encourages NZ manufactor/production of goods, relegating all manufacture of consumer goods to offshore sources.

    7. High dollar with little restriction on foreign finance.

    8. Dependence on foreign owned and operated banks rather than our own Treasury.

    9. COST of housing (related to other factors above, and perhaps best addressed by addressing them more directly but one of our most significant symptoms).

    That’s what I come up with when I look at this, and I can honestly say that apart from number 5, I think Green’s have identified all of them. YMMV, but there is a better awareness of how we are being ripped off in this party than any other I know of… except maybe Mana.

    So many causes… a POLICY statement is “to reduce inequality to healthy levels in a fair and equitable manner”. How do we implement that policy when addressing such a dog’s breakfast?

    See, I think you are asking for implementation details… not policy. Policy is almost always MUCH simpler, a statement of goals and limits on what you will actually do.

    Lots of things you can do that eliminate inequality, but ways that are really “fair”, and levels of inequality that are healthy, are much harder. It is a limit that makes the point that we recognize that there IS a limit to what we can and should do. We might add that we believe that a “healthy level” corresponds with a target GINI of between 0.26 and 0.31

    What we can’t do is describe HOW we are going to do it all. You want to know ahead whether your particular Ox gets gored. I don’t think we should tell you we know something we don’t. The policy is to be fair, to you as well as to everyone else, not to make everyone the same, but to make a measure of inequality match the observed inequality of healthy societies.

    It isn’t something we can “manage” the way a corporation manages. I have my preferred solution on most of those nine problems… but I don’t think I could get more than 5 of them past the party rank-and-file, even though they would agree about the PROBLEM. You are asking for predictable future actions of a democracy… and I don’t think that there are any actual democracies that are that predictable. :-) If it is predictable it can’t be democratic :-)

  32. BJ,

    The problem with that article, and so many like them, is that they make a great fist of outlining the problems and perceived causes but each author always fall back on (like George Friedman)

    People who are smarter and luckier than I am will have to craft the solution. I am simply pointing out the potential consequences of the problem and the inadequacy of all the ideas I have seen so far.

    Sort of a follow up on the previous GD tread.

    Paint a picture on how the Greens will re-eastablish the middle classes, what policies will be enacted, etc. etc.

    The cure to “send them home” is no cure. Who will you replace the “thems” with, and how will they work within the current political social democracy of the New Zealand representative system?

Comments are closed.