Sunday, 11 March 2012

SUNDAY MORNING MYTHS: Prometheus brings fire to man!

If religion represents the beginnings of philosophical thought, then mythology is the means by which this early, primitive form of philosophical thought is portrayed.

But not all mythology is equal. As the great mythologist Joseph Campbell once observed, the difference between the pagan Greeks and their Hebrew contemporaries  for example is that the Greeks are on man’s side, both in sympathy and in loyalty; whereas the Hebrews are on the side of their god.

So rather than recite here every Sunday the nastiness emanating from so much of the Hebrew mythology (like Jehovah’s genocide I recounted last Sunday), I intend instead to intersperse it with better stories from other mythology, especially the Greek..

Today, a story of the gods’ power beginning to break down: Prometheus stealing fire from the gods.


Prometheus theft of fire is the beginning of the end for the gods. It reveals Zeus as a cruel and vicious  tyrant who has withheld from men “the means of life" for fear his power is beginning to wane; and Prometheus as the benefactor of humanity bringing them the gift that will transform their industry and their lives, with which (as Hesiod describes it in the 8th century BC) "you would easily do work enough in a day to supply you for a full year even without working; soon would you put away your rudder over the smoke, and the fields worked by ox and sturdy mule would run to waste."

Thinking about stealing fire was easy, but it finally proved a bit more complicated. Prometheus, known for his wit and intelligence, had an immediate plan – to trick the goddesses throwing them a golden pear into the courtyard with a message: "For the most beautiful goddess of all."
    It worked as he planned – the goddesses started a fight over the fruit while gods were completely enjoying the scene. All of them were distracted and Prometheus didn’t have a hard time steeling the fire from Hephaestus’s workshop. Hephaestus was, among other stuff, the Greek god of fire. Prometheus happily left the Gods’ playground and took the fire with him either in a hollowed pumpkin or hollowed reed and brought it to Earth and gave it to humans.
    Oh, how Zeus was mad.

imageSo mad he sent to men “a sweet, lovely maiden-shape, like to the immortal goddesses in face,” with “a shameless mind and a deceitful nature.” So like a woman.  Her name was Pandora, and she bore a box

A box, of course, she was told not on any account to open. With such an invitation however, it was a box she simply could not resist peeking into (so like a woman!), unleashing evil into the world for the first time. One item however remained inside:

Only Hope was left within her unbreakable house…,

Thanks the gods for that.

Zeus was also mad enough to punish Prometheus.

He made Hephaestus himself to chain Prometheus on Mount Caucasus where the eagle would eat his liver forever.
    But, time passed and Zeus offered at one occasion to free Prometheus in exchange for a revelation of the prophecy that predicted the dethroning of Zeus. Prometheus refused.

He refused to take favour from a god he despised, saying (in Aeschylus’s classic play Prometheus Bound):

In one round sentence, every god I hate,
That injures me who never injured him.

imageHis resistance is eventually rewarded:

 Zeus’s son Hercules, on his journey to fulfill the Twelve Labors, passed by the Mount Caucasus, saw Prometheus and decided to kill the eagle and free the chained Titan. Zeus was very angry initially but eventually agreed to grant Prometheus his freedom in return for the tale of how his rule would end.
    But Zeus wanted Prometheus to carry a reminder of his punishment forever – he ordered Prometheus to make a steel ring from the chains he was in, and wear that ring from then on. Since then, the mankind started creating rings in order to celebrate Prometheus and commemorate his help.

The story of Prometheus has inspired poets, sculptors, artists and writers from Aeschylus to Waterhouse to Scott Eaton (above) to Pat Foley (below) to the poet Shelley, who wrote his Prometheus Unbound in revolt against the stories “reconciling the Champion with the Oppressor of mankind.”

 The moral interest of the fable, which is so powerfully sustained by the sufferings and endurance of Prometheus, would be annihilated if we could conceive of him as unsaying his high language and quailing before his successful and perfidious adversary.

The story and Shelley’s attitude was inspiration to Ayn Rand, who once described the figure of John Galt as

Prometheus who changed his mind. After centuries of being torn by vultures in payment for having brought to men the fire of of the gods, he broke his chains and he withdrew his fire--until the day when men withdrew their vultures.

 Atlas Shrugged = Prometheus Unbound, Vol II?


Friday, 9 March 2012

Good advice from Nico Nazis

It seems the Nico Nazis understand the problems endemic in the government’s factory schools, offering this advice to impressionable youngsters:


Story here. [Hat tip K Mack]


_McGrath001This week, Libertarianz leader Dr Richard McGrath has been sniffing minerals and evading checkpoints. Unsuccessfully.

"Sir, could you just say your name and address into this little machine, and then promise not to exploit the minerals?"

Sometimes you can almost sympathise with people who lose the plot at the ubiquitous random police checkpoints that spring up in the most annoying places at the most awkward times. The last two times I was stopped personally were at 10 a.m. on a week day on my way to visit a sick rest home patient, and at 5.45 p.m. dropping my son off in in Naenae before heading into Wellington to meet up with Lindsay Mitchell and James Bartholomew.

Not only did the Naenae checkpoint cause a massive traffic jam backing up onto the railway overbridge (and was therefore a road hazard), but it made me late for my meeting. I would have had a breath alcohol reading of zero but a rage quotient going into the red; the screening sniffer device did not detect any alcohol.   The officer holding it may have detected the anger.

Random stoppages at roadblocks should not happen in a free country. Why oh why do we tolerate them?

A woman, who admittedly over-reacted when questioned by a police officer, was described by Granny Herald as '[trying to] evade police'. Evading implies breaking the law. Avoiding a police checkpoint is however a perfectly legitimate action.

The police could vastly improve their public image by paying five dollars on the spot to all drivers who pass their stupid sniffer test.  And ten dollars to everyone testing positive on their sniffer but negative on an evidential breath test—compensated for their time and inconvenience. It might at least maintain in them the police the realisation the people whose time they are wasting are their employers, not their subjects.

Currently, the gross intrusion of privacy and wasted time inherent in checkpoint stoppages are totally ignored by the police, as though their time is precious but ours is not. As if we don't have busy lives; as though our time has no value. Is it any wonder innocent motorists get angry and resentful at police officers? A little monetary compensation would go a long way toward mending bridges between law-abiding citizens and the police who are charged to protect them, not to harass them.

imageThe next news item I want to share with you is quite telling. The Green Party are up in arms because the government wants to make it easier for greedy capitalists to rape the countryside in order to 'exploit' minerals. To translate into common sense, that means  dig stuff out the ground so it can be used to improve the standard of living for human beings. 

Not happy with protecting all manner of living organisms (many of whom frankly are unable to adapt to current conditions and would not be missed if, like the Green Party themselves, they underwent the perfectly natural process of extinction), the Greens now want to protect minerals from human exploitation as well. Which exposes their real agenda: which is to suppress human advancement, to increase human suffering, to stifle progress that might lift millions out of poverty, until the right virus comes along

Let us avoid their checkpoints. Wowsers and misanthropes all.

No minerals were harmed in the writing of this op-ed.

Thursday, 8 March 2012

Alas, poor Howard


Wondering what it’s like to work in a “world-leading” architecture practice? Then new social media website Archleaks is for you, doing for architecture principals what RateMyTeacher does for pedagogues.

image"Reveals the hidden beneath the Architectural Studios" is Archleak’s slogan, offering  workers in well-known plan factories the chance to post their views on work conditions and their bosses—and to reveal (or at least to bleat) that Will Alsop for example “smells” and is “always drunk”'; that Zaha Hadid is “hardly ever there” and when she is imparts orders mostly by tannoy; and that Norman Foster overworks and underpays his staff, but does get them well drunk at Christmas.

But I was amused most by the posts of those working for legendary architect Howard Roark:



That’s not “austerity,” dickhead. *This* is austerity, and it works.

New York Times columnist Paul Krugman, from whom Bernard Hickey* and Gareth Morgan seem to learn their alleged economics, reckons the British government’s “austerity” programme has hindered Britain’s recovery—that if it had followed instead the profligate deficit spending model it did in the 1930s, that it might have enjoyed seeing recovery in the four years it did then.  Says the dickhead:

_Quote5It turns out that by one important measure — changes in real GDP since the recession began — Britain is doing worse this time than it did during the Great Depression. Four years into the Depression, British GDP had regained its previous peak; four years after the Great Recession began, Britain is nowhere close to regaining its lost ground.… Yes, there are some caveats and complications. But this nonetheless represents a stunning failure of policy. And it's a failure, in particular, of the austerity doctrine that has dominated elite policy discussion both in Europe and, to a large extent, in the United States for the past two years.

The difficulty for this analysis is that it’s both wrong in fact and wrong in theory.  In short, it’s a fiction. A complete pack of lies. Let me explain.

The first point to note is that on the two occasions he cites, Britain has followed precisely the opposite  approach to the one he describes.

Despite some very modest spending cuts [records Sean Rosenthal at the Mises Daily], it is now taxing more and spending more than it ever did. Although British spending as a percent of GDP fell mildly from 51.1 percent in 2009 to 49.8 percent in 2011, this level still signifies a massive increase in spending from 2007 levels of 43.9 percent of GDP. Similarly, although the British deficit as a percent of GDP fell from 11 percent in 2009 to 9.4 percent in 2011, this deficit still amounts to a huge surge compared to the 2007 level of only 2.8 percent and, with the exception of this recession, exceeds all other deficits in Britain since World War II.

This is not austerity. And in the 1930s it reduced spending, balanced its budget and lowered its debt. To be precise:

After leaving the gold standard in 1931, the British government balanced its budget and reduced spending as a percent of GNP every year until 1935, reducing government spending from a high of 28.8 percent in 1931 to 24.4 percent in 1935.[1] Although not ideal — because part of the reduction included tax increases — this policy succeeded in creating small budget surpluses every year from 1929 through 1936…

This is not deficit spending.

To grasp this first point then: the historical record is precisely the opposite to the one this lying sack of shit Nobel-Prize-winning laureate describes.

imageThere is one point however that the lying sack of shit Nobel-Prize-winning laureate does get right however: Four years into the Depression, the British economy had indeed regained its previous peaks (even while the deficit-spending US was about to go into another trough).

But this recovery--in Britain as in Canada, Australia and NZ—and in the US in the now-forgotten 1920/21 Depression—was not begun by the prescription of profligate deficit spending proffered by this Keynesian crank. It was due to the very austerity he writes to decry.**

* * * * *

* Bernard Hickey maintains NZ’s newly minted Reserve imageBank began money printing in 1936 to build houses, and this not only put a roof over every head and a steak on every plate it was the singular cause of NZ’s economic recovery.
The trouble for this  lying sack of shit second-rate business columnist is the same as it is for Mr Krugman: the facts simply don’t bear his story out.
The fact is, as the table above and graph below suggest, that the Commonwealth countries were already heading out of the Depression when the First Labour Government and Reserve Bank began their experiment (real GDP in 1933, before the Reserve Bank had been invented, had already exceeded the figure for 1929), and the local recovery continued despite (not because of) the Reserve Bank’s irresponsible paper printing producing an inflation rate of around fourteen percent!
Here as elsewhere, the reason for the recovery was not profligacy, but austerity.

* * Thus, in a different world, we might say with more authority than the lying sack of shit Nobel-Prize-winning laureate, that had the prescription of austerity actually been followed today here and elsewhere we might have seen recovery in February 2009!

* * * Just for the record, or perhaps for the enlightenment of Messrs Hickey, Morgan, Tom Cobley and all, here below are seven methods by which to delay recovery. All of which have already been followed! 

When markets need to correct, when real savings are being consumed on malinvestments that urgently need to be closed off, then here's what you can do to make sure the necessary correction won't happen:

  1. Prevent or delay liquidation by propping up shaky businesses and shaky credit positions.
  2. Further inflate the money supply, creating more malinvestments and delaying the necessary correction.
  3. Keep wage rates up --or keep money wages constant when prices start falling (which amounts to the same thing) -- which in the face of falling business demand is a sure recipe for unemployment.
  4. Keep prices up (by means of the likes of green-plated building regulations) or add new costs to struggling businesses (such as the dopey Emissions Tax Scam), delaying the necessary corrections that will make businesses profitable again.
  5. "Stimulate" demand by spending on "infrastructure" projects just to make it look like the government is doing something -- when what that something actually does is to take money from profitable businesses in order to bid resources away from struggling businesses.
  6. Discourage saving and investment by increasing government spending (all of which is consumption spending) and maintaining high tax rates.
  7. Subsidise unemployment with make-work schemes paid out of money from profitable businesses that bid resources away from struggling businesses, delaying the shift of workers to fields where genuine jobs would otherwise be available.

As Murray Rothbard points out in America's Great Depression (from which I draw the above seven points) when you list logically the various ways that government could hamper market adjustments and hobble the adjustment process, you find that you have precisely listed the favourite "anti-depression" arsenal of government policy—and of lying sacks of shit.

But then, stimulus is really motivated by economics, but politics.


Wednesday, 7 March 2012

Owen McShane (1941-2012)

_MCSHANE3I was shocked to hear of the sudden death of Owen McShane yesterday.

In the last couple of years I know he had been suffering from an inherited heart condition, but while he still suffered bad health I didn't realise his end was nigh.

We had much to say to each other over the two decades I knew him, but we didn't always see eye to eye. Over the years we had many agreements, and many, many disagreements. Mostly about the Resource Management Act (RMA), for which he was a consultant and an early champion, and which to the end he argued had simply been "misinterpreted"; about town planners, on which he argued my plans for their enforced unemployment were too harsh; and about gin martinis--which everyone knows should be based on vodka!

I eventually agreed he could certainly make a very drinkable gin martini (but it took a few goes); and he reluctantly agreed that if the RMA could be as abused by power-lusters as it has been then maybe it wasn't such a good piece of law in the first place, and maybe there was something to be learned from common law after all.

On town planners we never really agreed at all. Perhaps because he once was one. In the far off days of the early seventies Owen was a planner at the (smaller) Auckland City Council, and had much to do with freeing up land around Freemans Bay (for which many a townhouse-dwelling Ponsonby-ite might now give thanks) and with promoting the "infill" sections that have allowed Auckland to play host to more people on the same-sized isthmus.

Owen's main public work in the last two decades was on the RMA. He wrote many reports on the RMA both for the Reserve Bank, proving beyond doubt the RMA's role in skyrocketing urban land prices; and for Environment Ministers, bravely pointing out the abuses occurring under the RMA before shamefully suggesting that tinkering with it would help.

For these latter reports he fell out with Lindsay Perigo among others, who claimed McShane was simply providing a convenient smokescreen for the Minister to tinker rather than toss out, for which sin (as many of you will recall) Perigo proceeded thereafter to refer to McShane as "McScam." 

That Owen was so clearly mistaken about the tinkering fixing anything hardly needs pointing out. But despite his sadness at being so labelled, and despite his own blind spot, in his latter days Owen remained a tireless battler at defending the rights of property owners under this execrable piece of legislation.

And despite our own disagreements, I think I can say he was a friend.

The RMA wasn't the only thing that got Owen excited.

He could be a very incisive commentator. His column ‘If the Stone Age had run out of rocks...’ on the fraud of so called “Peak Oil” contains the classic line that “the Oil Age will certainly end before we run out of oil. Just as the Stone Age ended long before we ran out of rocks.”It deserves (re)reading now. 

He was active with Augie Auer and others in setting up the skeptics' NZ Climate Science Coalition, which has set a serious cat amongst local warmist pigeons (and will soon be facing them in court!). That we now must talk about both the late Augie Auer and the late Owen McShane is very sad indeed for non-warmists.

And he had a very fine sense of good, liveable architecture.

In fact, I first met him 1995 or so ago when investigating a site for sale overlooking Piha. He was doing the same for himself, and discussing its potential it turned out my ideas for my client were similar to what he was thinking for himself. Rare enough.

I remember too one afternoon a couple of years ago walking around a subdivision on the Kaipara which he had developed, and on which he had built a few houses to set the tone. It was a quite magnificent achievement.  None of your kerb and channeling or picket fences--indeed, no fences at all. Privacy was maintained by careful planting and thought about sightlines, and there was much shared public space in the form of gardens, nooks, a jetty and a vineyard. None of your grandomania either--the houses, and the whole estate, were hard-working, humble and just very, very liveable.  Living with nature in a very sensible by low-impact fashion. It was architecture in the best sense of the word, i.e., as Frank Lloyd Wright had said, “making human life more natural and nature more humane,” and barred therefore from ever appearing in any glossy “starchitecture” magazines.

We had a few discussions over the years about what makes a good house, and I always recall in particular his thoughts on siting a house in the landscape, pointing out especially that a house should first be designed to look OUT, not to be looked AT.  On a post of mine about the magnificent ways in which traditional Japanese houses so managed so skilfully to practice this principle he wrote:

Notice how these houses all "look into" the garden and the view.
Sadly our fixation with cinerama views means that many people "look over" their garden to focus on the view.
I like to look for a section shaped like a cupped hand with the fingers pointing up. Drive down the thumb build the house in the palm look over the edge of your hand to the view but look into the curled fingers at your garden.
Simple model – but effective. Views are often static while your garden is changing every day. Garden to the north on an upwards slope and view to the west - for the sundowner.

For these and other observations, he will be greatly missed.

My thoughts go out to his wife Jenny and his family and friends.  And I will be making myself one of his gin martinis tonight in his honour.

PS:  National Business Review farewells its former columnist:

NB: Owen worked almost until the day he died.  Since he put so much into it, here is his last weekly missive, sent out last Friday on his networks:

Background: Why so much Dissent – at this time?

Recent ST Digests have drawn attention to the wave of dissent spreading throughout the Western World in response to the failed experiment in central planning at the local and regional level of Government. For some reason we have suffered decades of top-down local planning in spite of the total failure of central planning in economies as diverse as the Soviet Empire, Maoist China, and North Korea.

This wave has now become a flood and is attracting attention in all quarters.

During the property boom, triggered by the planners’ excessive regulation of land markets, and powered by the speculative bubble and lending, the rapid inflation in land prices allowed the planners to fund their excessive interventions and compliance costs, and of course their own salaries and fees, because the “speculators” and developers could absorb the costs.

But now the bubble has burst the real costs are being revealed. Worse, the drop in revenues means that Council budgets are now hopelessly out of kilter and the anticipated development contributions (fines) do not even fund the interest on the borrowings.

Remarkably, the typical response of Council administrators and their consultants has been too increase fees and charges to try and maintain the lifestyle to which they have become adjusted.

Of course, it doesn’t work any more than a retail store can increase revenues by increasing its prices. So the obvious solution was to raise the rates.

Suddenly, the ratepayers began to ask the hard questions and demanded to know why they should be expected to pay for other people’s profligacy.

A good question, and a hard one to answer. Especially when asked by all those pensioners on fixed incomes.

1. The Generic Problem – Amalgamation Compounded by the Powers of General Competence.

The current crisis in Local Government has two basic causes.

The first is the belief that bigger is always best. Whenever some local government creates a mess the immediate response is to propose amalgamation. But the end result is no more than a local authority considerably larger than the one whose problems have just proved too big for councils to deal with.

Dr Smith, the Minister for Local Government and the Environment, has recognized that Local Government is dysfunctional, drawing attention to the escalating rates and debt levels that are causing waves of discontent all around the country. These symptoms of widespread failure of are largely the result of the last round of amalgamations in 1989.

Councillors suddenly found themselves in charge of multi-million dollar organizations that demanded skills and experience well beyond their levels of competence. Since then, the Chief Executives (previously known as Town Clerks) have been able to exercise largely unbridled power.

Those problems were then compounded by the 2002 amendments to the Local Government Act that gave Councils the power of general competence.

This expansion of powers enabled already over-extended authorities to expand into new policies and activities totally outside their competence.

Their general incompetence has been demonstrated all around the country – as exemplified by the losses on V8 races, entertainment events, swimming pools, sewage schemes, arenas, and exploding levels of debt and rates. Project cost overruns became the norm as a councillors lost control of their staff, consultants and advisors.

The end result has been that most of our councils have been colonized by major corporations who are now busy exploiting the local “environment industry”. These consultancies regard our districts and cities as little more than well-funded ATM machines.

It’s time to take back control of our Councils and their Plans. Hopefully, Dr Smith’s proposed caps on borrowing and rates will restrain these excesses.

2. The Myth that Bigger is Better.

The routine response to any problem in local government is to propose amalgamation. The end result is a local authority considerably larger than the one whose problems have proved too big to deal with.

Dr Smith, the Minister for Local Government and the Environment, has recognized that Local Government is dysfunctional, drawing attention to the escalating rates and debt levels that are causing waves of discontent all around the country. These symptoms of widespread failure of are largely the result of the last round of amalgamations in 1989.

But sadly he is also launching a further round of amalgamation. For example, he is promoting the amalgamation of the Unitary Councils of Tasman and Nelson into a single Unitary Council. Kaipara District Council is in financial meltdown and so he has proposed similar amalgamations for Northland.

He says his general aim is to get rid of Regional Councils. However, his current proposals will actually get rid of Local Councils, leaving behind a few truly massive “Super-Regional Councils”. It will take 4.5 hours to drive from one end of the Tasman/Nelson Council to the other. The merged Kaipara-West and Far North Council would stretch from Kaipara Harbour’s North Head to Cape Reinga – another 4.5 hour drive.

This bias is understandable; Dr Smith is an engineer, and he instinctively focuses on the efficiency of regional services which do enjoy the benefits of scale.

But democracy enjoys no benefits of scale. Small local councils can be effectively governed by local citizens and managed by local staff and consultants who actually know their people and territory.

Many councils are in the midst of RMA plan reviews and any amalgamation means the millions of dollars invested in those plans must be written-off and the whole planning process, including Long Term and Annual Plans, begun again. Proposed reforms to the RMA will generate another round of plan reviews. This endless plan writing halts all development because of the consequent DURT (Delays, Uncertainties, Regulations, and Taxes).

This is the time to implement a comprehensive reform of the legislative framework for the whole of local government in New Zealand.

3. Small really is Beautiful.

The people of Switzerland place great emphasis on both efficiency and democracy. The average Swiss Commune (district council) has two thousand people. The average Canton (region) has 135,000 people. Switzerland is one of the most successful economies in the world.

Maybe small really is beautiful – and we “Power to the People” folk of the sixties had it right all along.

4. It’s Time to take our Councils Back.

Just prior to the last Local Body elections I wrote a pamphlet, widely distributed to the Residents and Ratepayers of Kaipara District called It’s Time to Take our Councils Back. Muriel Newman’s New Zealand Centre for Political Research here, has given me the opportunity to say “I told you so” on her Guest Forum here.

The company is excellent. Muriel’s own essay “The Need for Local Government Reform” and her husband Frank’s recommendations on “Regulatory Controls for Local Bodies” complement my commentary on how we got here, with some forthright recommendations for the future. Frank puts the blame squarely where it belongs. While KDC has its own sorry tale to tell, Frank makes a generic point about Central Government’s actions and intertia across the country when he writes:

The proper place for Kaipara to confess their errors and plead poverty is at the doors of central government. It is they and their agencies that have sat on their hands and watched Kaipara go deeper down the drain. Indeed the failings of central government to adequately oversee local government goes back as far as 2002 when it assumed councils were competent to handle the greater powers given to them with the reform of the Local Government Act in 2002.

Muriel reminds Government that no matter what is strives to achieve it will be defeated so long as Local Government is allowed to continue its spendthrift ways. She writes:

There are widespread problems with local government. At a time when central government is tightening its belt, striving to reduce debt and lower its costs, local government appears to be moving in the opposite direction. In contrast to households and farms, which have been reducing debt since the onset of the global recession in 2008, council debt has been on the rise with borrowings growing from $500 million in 2007, to $800 million in 2008, $1,100 million in 2009, and to $1,800 million in 2010....

5. Kaipara District Council – A case study.

Kaipara’s own Legal Eagle, (a retired Barrister and Solicitor) has been on the Kaipara Case for some time now, focusing on the illegal setting of rates and related charges. He has now been vindicated by an independent report by Simpson and Grierson. His latest report is here:

It’s hard to do justice to this collection of “concerns.” All I can do is strongly recommend readers set aside some time to read the whole sorry story.

In particular the total failure of the Government’s watchdogs to take any action in spite of all the evidence is thoroughly documented here:

6 When Councillors Dissent.

So far I have concentrated on the general conditions that have changed Council behaviour. There is much more to discuss in future Digests.

The general argument in this Digest has been that amalgamation and the extension of powers has meant that the tasks and responsibilities of Councils are now beyond the competence of their own councillors.

This is generally true but there are the exceptions that prove the rule. Bruce Logan and Bill Guest, both former Councillors of Kaipara District, had the necessary skills and moral fortitude to ask most of the hard questions and demand the necessary answers. Their efforts were not appreciated. Current Councillor Jonathan Larsen began raising the same issues during the election campaign and has continued to press for the necessary financial information, and legal opinions, to be presented to Council so as to allow them to properly make their decisions. His efforts have not been appreciated and indeed, he has effectively been prohibited from making any sensible contributions to Council’s decision making. (A future Digest will deal with this general failure of proper process – especially as it relates to the notification of the Proposed District Plan.)

At this stage it is best to let the “Workboot Councillor” tell his own story at his web page here.

In particular, the menu item Workboot Motions documents Cr. Larsen’s multitude of attempts to table notices of motions only to have the great majority of them “censored” or lost, or failed for want of a seconder.

This web page demonstrates that the web allows councilors elsewhere, who find themselves similarly silenced, or stripped of their portfolios and committee memberships, to speak directly to their electorate.

One can also only hope that those Kaipara Councillors who recorded their determination to remain uninformed are now having second thoughts.

We have to ask why the standards now applied to the Lombard Directors do not seem to apply to Councillors, who seem happy to work on the principle that “ignorance is bliss.”

7. Will We Ever Learn?

The planning theory of Smart Growth has proven to be one of the great failed experiments of all time. And yet many people continue to be seduced by the foolish concepts of “Dense Thinking” and “Compacted Cities”. (It does take some flexibility of thought to believe that serious congestion will be reduced by further intensification.)

Anyhow, for those who continue to be persuaded:

In his essay from "The New Blackwell Companion to the City", UK urbanist Richard Sennett argues that to create more habitable, vibrant cities, urban planners need to focus more on revitalisting life at the borders between communities: "The planning of the last century was hopeless at creating or promoting borderlands". Planners need to focus on the "living edge" of communities and on making the city a more open and flexible system"

From TLS February 10th 2012.

8. Indoctrinating our School Kids to make sure we Don’t

Bay of Plenty community leaders got down on the floor this morning to build their dream city using blocks and a giant floor map.

They were getting a hands-on look at a new teaching resource launched for high school students that looks at managing growth in the western Bay of Plenty.

'Managing Growth - SmartGrowth' has been jointly developed by the western Bay of Plenty's growth planning organisation SmartGrowth, Tauranga City Council and Bay of Plenty Regional Council with educational curriculum development company Indigo Pacific.

The free resource uses SmartGrowth and the western Bay of Plenty sub-region as a case study for managing growth, exploring global growth-related concepts and national growth-related trends.

Launching the resource, SmartGrowth independent Chairman Bill Wasley said the resource is free for all education providers to use to develop the knowledge of future generations about issues of population growth and how communities can manage these issues over a long period of time.

"It investigates the nature of population growth, in particular in the western Bay of Plenty sub-region, urban settlements and patterns, planning and decision-making, and population growth and sustainability-related issues relevant to our region," he said.

Read the whole story here – and weep.

9. Census 2011: Urban Dispersion In Canada

This essay on growth in Canadian cities shows where population grows in the real world as opposed to the fantasy world of the Dense Thinkers. (Who are always wrong but never in doubt.)

10. Time To Rethink This Experiment? Delusion Down Under.

Ross Elliot writes on “newgeopgraphy”

The famous physicist, Albert Einstein, was noted for his powers of observation and rigorous observance of the scientific method. It was insanity, he once wrote, to repeat the same experiment over and over again, and to expect a different outcome. With that in mind, I wonder what Einstein would make of the last decade and a bit of experimentation in Queensland’s urban planning and development assessment?

A sample of Ross Elliot’s pungent commentary follows:

So the triple whammy of ‘reform’ in just over a decade was that regulations and complexity exploded, supply became artificially constrained to meet some deterministic view of how and where us mere citizens might be permitted to live, and costs and charges levied on new housing (and new development generally) exploded.

At no point during this period, and this has to be emphasised, can anyone honestly claim that this has achieved anything positive. It has made housing prohibitively expensive, and less responsive to market signals. Simply put, it takes longer, costs more, and is vastly more complicated than it was before, for no measureable gain.

He concludes:

All up, it’s a pretty damming assessment of what’s been achieved in just over a decade. Of course the proponents of the current approach might warn that – without all this complexity, cost and frustration – Queensland would be subject to ‘runaway growth’ and a ‘return to the policies of sprawl.’ The answer to that, surely, is that everything prior to the late 1990s was delivered – successfully – without all this baggage. Life was affordable, the economy strong, growth was a positive and things were getting done. Queensland, and south east Queensland in particular, was regarded as a place with a strong future and a magnet for talent and capital. Now, that’s been lost.

Einstein would tell us to stop this experiment and try something else if we aren’t happy with the results. To persist with the current frameworks and philosophies can only mean the advocates of the status quo consider these outcomes to be acceptable.  Is anyone prepared to put up their hand and say that they are?

No doubt, unless we come to our senses someone will cut and past this story to summarise the failure of the great Auckland experiment in Central Planning by the ardent promoters of Dense Thinking.

Read Elliot’s whole essay here.

11. Assistance.

If you need assistance in challenging your Council’s land use policies, or proposals for amalgamation feel free to contact the Centre for Straight Thinking to discuss how we might be able to help.

Or help us finance our own research and submissions by making a donation using the form attached below.

Tuesday, 6 March 2012

Rebuilding Christchurch’s Cathedral?


Whatever your view of religion, the Christchurch Cathedral was at the heart of the city in the same way London’s St Paul’s is of that city.


We remember the refusal of St Paul’s Cathedral to die during the Blitz, and how this became a symbol of British resistance. So too, but in reverse, can we perhaps understand how the planned demolition of the remains of Christchurch’s Cathedral will rend the heart of many a Cantabrian, especially for those who hoped for its rebuild as a symbol of Christchurch’s own hoped for regeneration.

The survival of the Christchurch Cathedral after the first quake lifted spirits; its wounding on February 22nd, wounds which engineers now say were fatal, will have helped dashed them again.

So you can understand why talk has turned to protesting the demolition, despite the advice of engineers that a rebuild is just not an idea that is going to run. And neither demolition nor rebuild would properly acknowledge one of the most painful periods in the city’s life. It would efface the memory of the tragedy.

So allow me to reprise an idea I posted some months ago  that surely both sides could subscribe too. 

Why not take a leaf from what Berliners did to their destroyed cathedral after the war--its landmark Kaiser-Wilhelm-Ged√§chtniskirche.  Damaged, but not beyond repair, yet instead of rebuilding as before the otherwise uninspiring church was left damaged as a memorial, and a new contemporary tower constructed alongside. The damaged tower that remained was itself “a symbol of Berlin's resolve to rebuild the city after the war and a constant reminder of the destruction of war.”

A great idea, one that could surely be done a lot better than Berlin managed.


Assuming it could be made safe using donations and insurance, and not by the government sticking its hand in everyone’s pocket, something similar in Christchurch should surely be contemplated.

It wouldn’t repair or rebuild the Cathedral itself (but how many used it for the dedicated pursuit of religion anyway?), but it might help do both for the spirits of Cantabrians.

Hone rewrites the Treaty

I must say, it was fascinating to hear Hone Harawira rewriting the Treaty of Waitangi this morning [audio].

Yes, it’s been rewritten before and by better men than him—one of whom, Pita Sharples, was on air immediately afterwards rewriting it again. But this time it was on the spur of the moment, and just to make a political point.

Mana Party leader Hone Harawira says the Maori Party should resign over the sale of state assets, that “Section Nine of the existing SOE Act requires the Crown do nothing that breaches the principles of the Treaty of Waitangi,” in short “it is a sell-out of the Treaty of Waitangi because the treaty should be applied to all shareholders, not just the Crown.” [Emphasis mine.]

_HoneAnd then he just starting rewriting history. Right out of the side of his mouth.

The Treaty of Waitangi, he said, didn’t just protect Maori; it “provided protection to all New Zealanders in respect of assets held by the Government on behalf of all citizens of Aotearoa.”

This is a a quite astonishing claim.

In whatever language you want to read it, the Treaty document promises the protection of private property rights (or rangatiratanga in the looser Maori translation) in their property “for as long as they wished to retain them.” It says nothing at all “in respect of assets held by the Government on behalf of all citizens of Aotearoa”--a very different thing indeed.

(In fact, the Treaty goes on to provide that “asset sales” may only be effected through the Crown, nonsensically patronising even at the time, but more relevant to the situation today than Hone’s self-evident fiction.)

Another fascinating exchange occurred next. In discussing Hone’s response, Sharples was invited to respond to the charge that the “principles of the Treaty of Waitangi” have been left deliberately vague, allowing them to defined and redefined as protagonists wish—to mean everything to everybody.

_SharplesSharples denied they were deliberately vague, or even vague at at all, before heading down the now well-worn route of insisting they mean “partnership” and “consultation” and a pony for everyone—fictions all, apart from the pony—then declaring the Treaty binds only the Crown and Maori—a rewriting of the all-pervasive insistence nowadays that the principles apply everywhere from your workplace to the pub.

Yet even in denying the vagueness, Sharples himself was relying on it to assert the fictional Crown duties of “partnership” and “consultation. Fictional  duties keeping Sharples in a job based on the same vagueness Hone himself relies on in his own power-play.

It was once observed by Ayn Rand that

In any conflict between two men (or two groups) who hold the same basic principles, it is the more consistent one who wins.

Both Hone and Pita live of the vagueness of so-called Treaty Principles that allows the principles to be endlessly rewritten. But the “moderate” Pita holds to the rewriting as it is today, whereas the more strident Harawira holds to the rewriting he wants to put in place tomorrow.

Whom do you think will win?

Monday, 5 March 2012

Equations for everything: Holiday edition


Eric Crampton comments on the absurdity of the “Holiday Equation” above produced by some underemployed academics.

A mathematical equation for holiday happiness, or banal tautology?

Or just nonsense.

Not, sure if the academics have been to Bali. But the tragically under-known Redgum have.

Maybe they could put their lyrics in an equation.

Lunchtime activism in Wellington tomorrow

There’s activism tomorrow in Wellington to highlight the desirability of legislation to legalise cannabis, and the iniquity of the incarceration of cannabis activist and former Daktory organiser Dakta Green—in prison for a victimless crime.

What? NORML “White Flag” Meeting

Where? NZ Parliament Buildings, Molesworth Street

When? Tuesday 6th March, 1pm at the Richard Seddon statue. (Assemble in front of the Cenotaph at 12:45pm.)

Why … ?
1. To demand the immediate release of Dakta Green from Mt Eden prison.
2. To highlight the Law Commission Report on the review of the Misuse of Drugs Act 1975.
3. To request compassion, and common sense cannabis law reform – and an Armistice to end the War on Drugs.

Carry the international symbol for peaceful dialogue, the White Flag. Start walking at 1pm from the Cenotaph to the Richard Seddon statue. Once there, pause for One Minute’s Silence for the victims of the global War on Drugs,
following which a few words will spoken regarding the protest and intentions for future events..

All those keen for sensible, rational law reform are invited.

QUOTE OF THE DAY: The demerits of devaluation

Since Bernard Hickey et al persisting in promoting a healthy tonic of inflationism to “fix” every problem from the high NZ dollar to excessive lint in your laundry, here’s some common sense as a response:

What difference does it make to the importer of our goods that
the [NZ] dollar is now 5 percent cheaper, if domestic  inflation
has made the price the importer pays in dollars 5 percent
higher? The effect is nil.

                     - David Howden, ‘The Blessings of a Strong Currency


Council debt tsunami now unstoppable

When the Great Recession first began hitting the country, everyone had two choices: either hunker down and beginning cut your cut according to your shrunken cloth, or keep spending like a drunken tailor and borrow to cover your rapidly increasing debts.

You can guess the approach every council in the country took. 

When Sandra Lee’s Local Government Act 2002 gave councils the power to do whatever the hell they wanted to (laughably called “the power of general competence”), to a man and woman virtually every councillor in the country began voting for grandomania.  Then as the Recession hit and revenues shrunk (even with their hugely inflated rates bills and development levies) they borrowed to keep their overspending going—sailing blithely along to disaster.

The result now is predictable as the Greek decision to do much the same. Total council debt has quadrupled from $2 billion in the Year of Sandra Lee to over $8 billion today.

And the rate of still growing: $500 million more in 2007, $800 million more in 2008, $1,100 million more in 2009, and $1,800 million more in 2010.

Most councils in the country now have an uncontrollable debt, no debt repayment programme, and no plans to rein in their spending.

Dunedin and Kaipara are merely the most high-profile froth on this torrent of irresponsibility.

Listen to whistle-blower

One of the few to pay this any notice, Larry Mitchell, who has spent the last 15 years analysing council’s books, reckons

the financial tsunami currently hitting the beach of some New Zealand territorial local authorities is unprecedented. You don’t have to be a rocket scientist to go through the figures and see that it has come time to activate the warning systems.

Listen to him talking this morning on Radio NZ [audio], after which Sir Humphrey steps up.

Sunday, 4 March 2012


One of the most bloodthirsty myths in the Bible is also one of the most celebrated:

I’m talking about the “Passover.” The culmination of Ten Plagues inflicted on the Egyptians by Jehovah to prove he was the bigger god. The day when Jehovah killed every first-born in the kingdom (every one, from king to slave to cattle) passing over (geddit) only those households with the foresight to have smeared lamb’s blood on their front door…



This slaughter gave the Ancient Israelites the impetus, somehow, to escape Egyptian bondage and head into the desert in search of a promised land. (Stopping along the way only to plunder and drown their former captors.)

Nice story. No wonder that (according to a later fairy story), Jesus and his disciples celebrated the slaughter. (That’s what they were doing at the Last Supper, remember, and why they were in Jerusalem.) And no wonder that to this day the Ten Plagues are still so celebrated, by both Christians and Jews! (There’s even Passover for Kids. Nice, huh.)

But the celebration is about a slaughter. A killing of every first-born in the country. Wholesale slaughter by a supposed “god of love.” Heck, you might even call if a heaven-sent holocaust! 

Fortunately, however, like so much in the Bible, and the Torah, the whole story is a fiction:

  • there is no record of large numbers of Hebrew slaves living among Egyptians, and none of 40,000 walking out. (Egyptian records confirm payments of salt to royal guards; you don’t think they’d mention the loss of of 40,000 slaves?)
  • there is no record of the Ten Plagues.

Sure, there are suggestions the Ten Plagues happened as the result of the massive eruption of the Santorini volcano, which snuffed out the glory of Minoan Crete (for which we do have records) turned the sky dark (the Ninth Plague) and the water red with ash (The First Plague), etc.

But Santorini erupted around 1600BC, at least eight centuries after Moses and the Red Sea Pedestrians are supposed to have begun their journey. And even at a stretch (a big stretch) there is no coherent explanation of how the explosion might have effected only Egypt’s first born (nor, as we’ve said before, and record of this occurring). And if the “miracles” of the slaughter were natural and not heaven-sent, then what made Yahweh even greater than the gods he was supposedly trying to supplant?

It’s all just so much incoherent balderdash.

Especially the idea that a god this bloodthirsty would be worth worshipping.

Or one with whom you’d want to make any sort of “covenant.”

Or that “god is love.”

Or that anyone subscribing to this sort of genocidal nastiness should be anywhere near any levers of political power.

[Pictures from the Brick Testament stories of Exodus.]

Saturday, 3 March 2012

GUEST POST: Houses are homes, not investments

Guest post by Vedran Vuk of Casey Research 

Recently, my parents were considering purchasing some real estate. As the financial professional in the family, they asked me, "What do you think? Will it go up in value? You know... not now, but eventually?" I've heard the same thing over and over again. In response, I shared my opinion: "Would you pay the current market price to live there even if its value never increased?" If the answer is yes, buy the property." Essentially, is the house worth it as a home, not as an investment?

In the past few decades, the concept of home ownership has been completely turned on its head. Previously, homes were considered a very long-term consumption good. Do you think anyone in the 18th, 19th, and prior centuries ever considered tripling the value of their homes by retirement time and selling them to move beachside? In the vast majority of cases, such ideas never crossed their minds.

Yet, somehow along the way, this became a reasonable investment expectation. Even today, home buyers still make their purchases with the hopes of escalating prices. But are homes really wise investments?

Consider the difference between your house and an investment such as Apple (NASDAQ: AAPL) stock. At a major company, the opportunities can be truly limitless. Apple can produce cashflows from computers, iPods, iPads, and future innovations that are just dreams and concepts today. If the local market is oversaturated, Apple has the option of spreading out all across the world. As a result, Apple's stock price has gone from $17 in 2005 to $540 today. Can your house do the same? Unless there's a hyperinflation ahead or your house is located in the New York City or London of the 21st century, the answer is no. Why? Because your house is ultimately a product--and products have an upper bound to their prices.

To understand this difference, there's no need to drag out the Case-Shiller Index or analyze complex statistics. Suppose one bought a single-family house over a decade ago for $200K. At the peak of the housing bubble, the price reached $500K; to his joy, the owner sold it and moved thereafter to retire in the Bay of Plenty. Can the house's price go higher from here? With Apple, the stock price can just keep climbing with greater profits and innovations. But is that true with real estate?

For the sake of argument, let's say that prices do keep rising. Eventually, the second owner sells to another buyer for $1 million a decade later. Guy number two also peacefully retires in bounty. Well, where does that leave the third guy? Unless real salaries make an incredible jump in the same time period, no one will be able to afford the home next. The median worker earning $51K won't be selling such a house for retirement; instead, it will take him until retirement to afford it. In many ways, this "investment" more closely resembles a Ponzi scheme. (Yes, Ponzi schemes work: for those who get in early and get out - as the recent real-estate bubble demonstrated.) Ultimately, there's an upper bound to housing prices - they can't continue rising perpetually with no end.

The same is true of any product. At $300 for the newest iPod Touch, Apple might be doing well, but at $10,000 per unit, there likely would be very few buyers. As a homeowner, you're not holding a company that can innovate, cut costs, and enter new markets. You're ultimately holding a product which must be either sold to the next user or leased to the next renter. Houses are a good created for a specific use - to put a roof over one's head. They are not magical money machines. Previous generations understood this very simple concept. One built a home as a place to live and escape the elements - and worse yet, the squalor of tenement housing. Homes were not retirement tools, but rather long-term goods.

Unfortunately, policy makers still view homes as investments and are always worried about low prices. But is it really healthy to play another round of the same Ponzi scheme? Suppose the Reserve Bank manages to inflate housing prices again. There will be another boom in which some folks will make a tremendous amount of money. Eventually, housing prices will hit an unrealistic upper bound. Again, home prices will violently drop, resulting in homeowners deeper underwater than now. Of course, the banks will again take a hit as the mortgage holders. As long as real incomes trail the rise in housing prices, there will ultimately be a correction of some sort.

So, do I think the current real estate market is just fine? No, of course not; but I don't think shocking houses prices back into a bubbly stratosphere is the solution. Ideally, I'd like to see increasing housing prices, but only at the pace of real growth in society's wealth. Over the last few decades, houses grew in value for good reasons and bad. On the good side, the economy had been expanding. On the bad side, central banks’ low-interest-rate bubble artificially inflated housing prices beyond what made sense for economies to sustain.

If US companies such as Apple are creating greater abundance in society, it makes sense for US housing prices to grow with greater wealth. But, bringing house prices higher on a wave of printed cash does not make anyone wise investors, but rather willing participants in a Ponzi scheme where someone else will be left holding the bag. Though that might be an attractive solution for those underwater on their mortgages, it's no solution for the economy as a whole--nor for the next buyer, or the next but one.

Vedran Vuk is a senior research analyst with Casey Research

Friday, 2 March 2012

Myth-busting, or ‘Things you know that ain’t so.’ #366: Chinese wages

There’s another myth that’s done the round for years.  That globalisation is a “race to the bottom.” In the way it’s usually couched, we hear that cheap Chinese goods produced by cheap Chinese labour will lower labour costs (i.e., wages) all round the world.

This obviously ignores the enormous benefits to everyone who can buy these cheaper goods for less money, leaving everyone free to spend their remaining income on things they couldn’t afford before (making everyone’s real wages higher, even if their nominal wages stay the same).

It ignores the historical evidence from the likes of Hong Kong, South Korea, Taiwan and Japan, which in only the last half-century have leapfrogged from being low-cost low-wage economies producing objects of some scorn to places producing high-cost, high quality goods and services at wage levels higher than those of their western customers.

Not to mention that it ignores what is happening to Chinese wages themselves. And the fact to grasp hear is that as China itself grows wealthier, the gap between Chinese wages and American wages (which as we all know are higher than our own)will plummet:

US manufacturing wages were 22 times that of China's in 2005. Today, that wage gap is under 10 times and likely will be under five by 2015.

And if China continues on this path (which, for all sorts of reasons, is not guaranteed) then by 2025 …

the wage gap is shrinking

Meanwhile, if we continue to set up barriers to this new wealth (as so many local idiots continue to call for) our wages will be going the other way.

Somebody tell some of the local idiots.

[Hat tip TVHE who asks“Why fear labour market globalisation?”]

Myth-busting: Things you know that ain’t so. #365: “the numbers of people on welfare plummeted under Labour”

There are more myths afoot in the political arena than anywhere else. No wonder, when it’s full of people who lie for a living.

Here’s one doing the rounds in Wellington at the moment: that “less than ten years ago” beneficiary numbers were reduced to “historical lows.”

Fortunately, Welfare Myth-Buster Lindsay Mitchell is all over this one:


And this is without counting all the hundreds of thousands of middle class families turned into beneficiaries by Labour’s Welfare for Working Families election bribe.

“Historical lows”? Really?

Send the truth to Duncan Garner and Gordon Campbell.

Good news about good drinking

Since drinking is in the news again, courtesy of Jesse Ryder drinking enough to attract the Herald’s sub-editors, perhaps (I thought) I could help redress the balance a little bit from the usual headlines suggesting “drinking is bad” “drinking is dangerous” “drinking should be banned.”

So here’s two recent pieces of research on this important topic that never made the Herald, indicating drinking can be good. I offer them to you as a public service.First, alcohol encourages creativity; or, as Science News reports, “a boozy glow may trigger problem-solving sights”:

A moderate alcoholic high loosens a person’s focus of attention, making it easier to find connections among remotely related ideas, [psychology graduate student Andrew Jarosz of the University of Illinois at Chicago and his colleagues] propose online January 28 in Consciousness and Cognition

The reason suggested is simple enough: drinking alcohol “lowers the ability to control one’s thoughts,” allowing the drinker to jump outside his canalised ways of thinking about a problem and finding instead new and more inventive ways to think about it.  Sounds like a more fun way to solve a problem than sitting in a room “brainstorming” about it.

    Jarosz and University of Illinois psychologist Jennifer Wiley, a study coauthor, suspect their finding applies to musical and artistic inspiration. “A composer or artist fixated on previous work may indeed find creative benefits from intoxication,” they say.

Composers, artists and writers through the ages from Aristophanes to Mozart to Hemingway would undoubtedly agree with them—as would anyone who’s ever jotted down a great idea produced while wetting their throat in the pub.

One word of warning about this, however. People don't think as clearly when their bladders are full.

Second, in further news that will astonish those who write the Herald’s headlines, "People who consume alcohol earn significantly more at their jobs than non-drinkers..."

The study published in the Journal of Labor Research concluded drinkers earn 10 to 14 percent more than teetotalers, and that men who drink socially bring home an additional seven percent in pay.
    "Social drinking builds social capital," said Edward Stringham, an economics professor at San Jose State University and co-author of the study with fellow researcher Bethany Peters.
    "Social drinkers are out networking, building relationships, and adding contacts to their BlackBerries that result in bigger paychecks" …
    The researchers found some differences in the economic effects of drinking among men and women. They concluded that men who drink earn 10 percent more than abstainers and women drinkers earn 14 percent more than non-drinkers.

Good news all round really.

But it must be countered with another word of warning: apparently drinking could also make you carry a Blackberry. Perhaps because you’ve been blinded by endorphins.

So it’s not all good.

[Hat tip Geek Press]

Wednesday, 29 February 2012

Gould, Morgan et al: Hopeless

imageIf you’ve ever wonder why Gareth ‘Bloody’ Morgan’s alleged investment company is the worst performing of all the Kiwisaver providers, perhaps the answer is that their economic analysis is as risible as the analysis in the books churned out by their principal.

Consider for example the Pollyanna like pronouncements by their “senior economist” John Carran recently that everything is about to become all rosy in the garden again—that official Chinese GDP figures (measuring the construction of empty cities, empty shopping malls and the like) are to be believed; that European banks have been inoculated from Greece’s by oodles of printed paper; that all the printing by all the world’s central banks will (sometime soon) bring about a second Land of Cockaigne; and that the US is one of these place in which Milk and Honey will soon be flowing. 

Or the equally insipid “analysis” by their “senior equity analyst” Nathan Field, who also pins his hope on a fabled US recovery while appearing not to realise that the US stock market has been rising recently for no other reason than all the phony paper money pumped into markets by The Fed, and that there is and had been no credible signs of a US recovery (about which more below).

_BryanGouldThe level of reasoning on display is so dim it almost makes the analysis in the Herald this morning by failed British Labour Party MP Bryan Gould look good. Basing his “analysis” on facts both historical and from out of yesterday’s papers, Mr Gould reckons that  a recipe of spend, spend, spend is the answer to today’s economic woes. And he’s wrong on virtually everything he says, both factually and analytically.

_Quote_IdiotIn the 1930s [for example, says Gould], there were those, like Herbert Hoover, who insisted that austerity - cutting government spending - was the way to beat recession.

In fact Hoover did nothing of the sort, as he himself boasted in his 1932 presidential campaign.  Instead of doing nothing, he crowed, “we met the situation with proposals to private business and to Congress of the most gigantic program of economic defense and counterattack ever evolved in the history of the Republic.”  “Gigantic” then meant raising spending by nearly one half, and adding a deficit where before there was none:


Spot any fiscal or monetary austerity there? (Note: these are not “gee-whiz graphs.” There is a zero baseline.)

The result of this non-austerity was to make the situation worse, not better---with even worse to follow when his successor, Franklin Roosevelt, followed the same medicine.

The myth of Hoover’s do-nothingness is just one of many myths from the Great Depression [PDF[ that are still peddled by the know-nothings of today to justify their own nostrums. It should be known to Mr Gould (who has the same pretensions to historical acumen as Mr Morgan and his colleagues at his lacklustre firm have to economic acumen) since the spending, debt, and deficit numbers are all given in tables published every year with the president's proposed federal budget [PDF]. So he really has no excuse. Because as often as this myth is repeated, the truth is the reverse: that Herbert Hoover was a big-government man who did not trust the free market whose meddling turned an ordinary depression into a Great one.

Not that accuracy is any part of Mr Gould’s intentions (even as a failed politician, lying was one of his professional talents) since he then goes on to suggest, quite erroneously, that the reason for the failure of Portugal, Ireland, Spain and the UK to get off the floor is not the enormous debts with which they’ve saddled themselves, which all have increased in the last four years, but some alleged “austerity” which all have inflicted on themselves.

If only they had.

It is not an austerity programme when you debt keeps rising—as it has in all these jurisdictions. It is not an austerity programme when you raise taxes—as all have done. The UK for example

raised capital gains taxes from 18% to 28%, which is the taxes that hit business formation the most.  Raising capital gains decreases the return on investing in new economic activities and investors can easily decide not to invest their capital so this tax reduces economic activity more quickly than other taxes.  If the UK had not raised taxes, they would most likely now be experiencing an economic boom.

It is not an austerity programme when governments spend beyond their means, and it is not a real rescue when the the real causes of the financial crisis [PDF] not only have not gone away but have been given more legs.

So what’s the argument Mr Gould gives for the success of his plan to spend more money?  It’s the wonderful success story of the United States of America in the last four years, wherein “President Obama's stimulus programme - bitterly opposed and relatively timid as it was - is pulling the US economy around.”


Mr Gould seems to be reading the same poorly performing tea leaves as Mr Morgan’s poorly performing staff. Because far from recovering, as they both suggest, the latest data doesn't indicate a recovering US economy at all but precisely the reverse: a place wherein all that the Fed's phony paper money is sloshing around the highly inflated stock markets while  every real measure of recovery is on the floor or falling.

The evidence of an improved labor market, higher corporate earnings and the return of the housing market are all based upon misleading data [observes Charles Biderman in Forbes magazine]…

  • The only increase in cash since the March 2009 has been the Federal Reserve giving newly created money away as payment for government expenses… The combined $4 trillion deficit, when added to the $1.4 trillion given away to banks to buy their worthless mortgages equals the $5 trillion increase is US debt.
  • Corporate after-tax income is growing at just under 3% year-over-year, not keeping up with inflation… The reality is that if income tax collections are not growing very fast than neither are the number of new jobs. That calls into question the recent BLS press release that said jobs are growing fast.
  • Without seasonal adjustments unemployment claims are currently down the same 10% year-over-year as the past six months. In other words, by counting year-over-year numbers there is no improvement…
  • Real-time data, ignoring seasonal adjustments and counting year-over-year numbers, indicate both prices and sales of new and existing home sales are pretty much unchanged from year end 2011…
  • Yes the stock market has been going up, but that does not have to mean the U.S. economy is improving. While U.S. and European stocks have been going up, gold keeps rising faster. That means it is not gold that is a chimera, or a phantom, it is the U.S. currency that is a phantom.

This is not anything like the US of Mr Gould’s dreams then. This is the real US data from just yesterday--real data that doesn't corroborate an improving U.S. economy

Real data indicating Messrs Gould, Morgan, Carran, Field—and Pollyanna—have all been talking through their hats.

So perhaps instead of talking about some non-existent “austerity” of today, or talking up the failed super-Keynesian stimulus of the 1930s, they might instead look at the last time a serous economic depression was seriously allowed to play itself out by adopting the real hands-off approach Mr Gould erroneously attributes to Mr Hoover.

It was the Great Depression of 192o.  The Great Depression you’ve never heard of.

And the reason you’ve never heard of it before?  Because the hands-off real austerity turned around a bigger crash than 1929’s plunge in less than eight months.

And oddly enough, it was similar policies that eventually allowed most of the non-US western world to recover from the Great Depression , while Franklin Roosevelt (following Mr Gould’s recipe, which includes every ingredient necessary to stop a recovery in its tracks) was busy making it impossible for America to recover.

But don’t expect to hear that from a failed politician. Or Gareth Morgan’s “experts.”