OnPoint by Keith Ng

Yes, you can sell your house to pay off the mortgage, then you'll be mortgage-free. But you'll also be minus a house.

In New Zealand's case, we can sell our SOEs to pay off debt, which means we'd pay less interest to overseas creditors. But if we sold the SOEs to foreigners, then we'd just end up paying dividends to foreign investors instead. This may actually be worse than paying interest on debt. Bernard Hickey looked at the SOEs being singled out and found they had an average dividend yield of 7.6% - considerably more than than the 5.5% interest the government is paying on new debt.

And if we sold it to New Zealand investors? Well, where would they get the money to buy it?

• By investing less in other NZ companies (who'd buy up those companies then?).
• By investing less in overseas companies (which would have brought dividends back to NZ).
• By taking up debt (from overseas creditors).

The point is that you can't look at debt in isolation. Debt and assets all amount to money. Pushing stuff from one column to the other doesn't solve the underlying problem. I'm keeping an open mind about asset sales though, as there are a lot of indirect issues like efficiency gains and debt exposure that might come into play. But the onus is absolutely on the Government to prove why it makes sense to sell off a profitable asset.*

And while it might be the wrong solution, it's definitely the wrong problem. The concerns of the Standard & Poor's negative outlook had little to do with asset sales. It was about a) we're constantly sending money overseas because we (private individuals) borrow too much, and b) the government is on an unsustainable path. (And we're on an unsustainable path because instead of preparing for the aging population during the good times, we got stuck in a pissy (and in hindsight, delusional) debate about whether we should have more spending or less taxes (and we took both the money *and* the bag, even after things turned to shit).)

Asset sales does not address either of these problems. It's association with the S&P report, with our private debt problem, with our long-term fiscal problem is simply the product of a spin-doctor putting all these things in the same speech. This is a rhetorical trick. They are, at most, tenuously connected.

This rhetoric created the "changing our asset mix" euphemism. The idea is that we can't take on any more net debt, therefore we can't take on any more public debt, therefore if we want new assets we'll have to sell old ones. This logic tells us to sell assets to avoid debt, even when it's unprofitable. Come on, right-wingers. This is a slap in the face of capitalism itself. It is the very foundation of capitalism that we borrow money in order to do productive things and profit from it. To ignore the cost of borrowing or the potential gains, and to just assume that any activity that involves borrowing is bad... that's just bad capitalism.

(I am not accusing Key of being anti-capitalist, of course. He is just using anti-capitalist rhetoric to cover his ideological purist motives about the efficiency gains, etc.)

I still carry a substantial chip on my shoulder about the 2005-08 election cycle. Back then, everyone seemed to think that government surpluses were inherently bad. Debt was low, therefore the government MUST get rid of that money. Nobody was concerned with whether there were things *worth* spending money on, or what the long-term impact would be, they just wanted spending (or tax cuts) to take place. Now, the mob has turned on debt, and the new normal is that debt is inherently bad, and nobody seems concerned with whether the cost of reducing debt is worth it - or even what that cost is (hint: It could well be even *more* debt in the long-term).

Let's not do that again.

* On the other hand, if you're an editorial writer for the Herald, you might consider John Key's case for asset sales to be "powerful". Despite the fact that he HASN'T MADE A CASE YET. Key is saying that the Govt is considering it, and Treasury will be looking at whether it's viable. And the Herald considers that to be a powerful case. Seriously. WTF is wrong with you people?

If you'd called the Cable leaks "an irritant" a week ago, before we knew what it contained, you'd have been merely rash. But if you wrote an editorial in the Herald calling it "an irritant" and basically an IT security issue this Saturday, then you have seriously not been paying attention.

It's hard to see it as anything but a catastrophe for US diplomacy. Secrets have been disclosed, allies humiliated, enemies antagonised, relationships compromised, diplomats are getting recalled... for better or worse, it's undeniably a clusterfuck.

What they say about world leaders is both horrifying - the world is governed by fools, thieves and maniacs - and comforting - we seem to do okay despite being governed by fools, thieves and maniacs. But these are sideshows in what is, essentially, a newsletter written for the people who run the world.

We saw that Afghanistan is fucked. Whereas we use to the think of it as run-of-the-mill corrupt, with a fairly bleak outlook once the Americans left, it turned out that the reality is far worse. The Vice-President was caught walking out of the country with $52m in unexplained cash. The corruption is systemic, massively massive, and utterly unsustainable. Afghanistan, as an enterprise, is hopelessly fucked.

Less solid, but still credible is the *incredible* accusation that Russia is a Mafia state, with Putin pocketing billions, criminals working for the state and the law enforcement agencies working towards criminal ends. And not even war crimes, or human rights kind of crimes, but just plain old crime. If this is true, the a former superpower *is* a criminal organisation now.

Far from being hypothetical, cyberwarfare is already a hot war, with mounting evidence that China is particularly active.

More than just new information, this is a new world view. It's a new set of "Hey, this is what your world looks like". Perhaps it doesn't actually change the way we interact with the world. But the very fact that the world runs on so much that we don't know about should make us get up and pay attention.

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With the greatest of ironies, I'm writing this post from mainland China, on the wrong side of the Firewall that Dare Not Type Its Name in Plain Text. Having completely failed to do my homework, I didn't realise that China started blocking Tor - the silver bullet I was counting on - about a month ago. Mucking around with bridges and other tools, but it's much harder to learn about and get the tools you need when you're on THIS side of the wall (and I haven't gotten it working in Ubuntu yet).

I feel like a Second Amendment gun-nut, watching the Federalmonetaristislamocommunazis smash through my door and realising that I have the wrong kind of ammo.

To be honest, I've always had a great deal of sympathy for the spirit (if not the practice) of those gun-nuts - that as citizens and as individuals, we have a responsibilty to be the ultimate check on government. It doesn't mean we have to exercise it, but the point of a check is to simply have the capacity to check. Nor does that ultimate check necessarily have to be violence.

One of the most practical things we can do is to learn about free tools like Tor, Freenet and Freegate (I can't link to any of this. Please, can some kind soul chuck some links in the comments?). I admit I was pretty complacent about this stuff when the Iranians were protesting. I didn't get too worked up when they started putting in internet filters. But the combination of the attacks against Wikileaks, the Australians' use of the filter against Wikileaks (back in 2009), and being in China and experiencing the Firewall in its full glory has made me realise that a) this is getting less hypothetical by the day, and that b) by the time you *need* to learn how to defend your freedom, you no longer have the freedom to do so.

Dear Bill English. Let's make a deal. I won't do something stupid, like blame National for the recession, if you don't do something stupid, like try to claim that all the side-effects of the recession are actually good things that National can take credit for.

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Bullshit #1: "The lowest annual inflation rate in more than six years confirms that cost of living increases have generally been low... price increases [are] significantly lower across the board under National" - English

I can't believe that National is trying to claim credit for low inflation.

1) It's the Reserve Bank's job to control inflation. If anyone should be taking credit, it's Alan Bollard, not Bill English.

2) But the current low inflation is not because of anything English has done, it's not even because of anything that Bollard has done. Prices have not increased much because people haven't been buying. This is what happens in a recession.

3) If English really wants to stake his government's reputation on keeping down prices, he'll need to resign in exactly three months, when the impact of GST flows through to the inflation statistics and they go through the roof.

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Bullshit #2: "Real after tax average earnings in New Zealand have increased 8.7 per cent since September 2008 - a significant improvement on the 3 per cent total growth over the previous nine years." - English, in August

"[English] released figures which he claimed showed real after-tax wages had risen under National (from minus 1 per cent from December 2006 to September 2008, to 9 per cent in September 2008 to June 2010)." - English, in October

Let's think about this for a sec. He's telling us that wages grew faster during a global recession than economic golden weather. In fact, in August, he claimed that wages grew 13 times faster (on a per year basis) during a recession than during the boom.

Come on. A little more common sense and a little less LSD please.

Why do the numbers look like this? Because English used the average wage for employed workers. During the Clark years, policies like WFF brought more people into the lower end of the workforce. This bought the average down. The people who were already in the workforce didn't get any poorer - the only thing that actually went down was the average.

When the recession hit, people got laid off, or got bumped down to part-time. Because the low earners tend to get laid off first, when they got taken off the books, this perversely made the average go *up*.

This shows the number of full-time equivalent employees (e.g. Two half-time employees count as one). The last two years saw the biggest dip in employment since Ruth Richardson.

(Source: FTE Employees by Sector, Quarterly Employment Survey, from StatsNZ InfoShare)

A lot of people became unemployed, or less employed. The only thing this bumped up was the average - it didn't actually make the people who were still employed any richer. This is what happens in a recession. This is what Bill English is taking credit for.

The real statistics on income comes from (duh!) the New Zealand Income Survey. This shows the median weekly pre-tax income. No prizes for spotting the trend here - these have been the worse two years for income since the survey started. This is what happens in a recession.

(Source: Household income by source of household income and household type, NZ Income Survey, from StatsNZ TableBuilder)

So far, I've only looked at pre-tax figures. English's numbers are after tax. How can that be, when National's tax cuts just started this month? Oh. Turns out English was measuring the effect of Labour's 2008 tax cuts and National's April 2009 tax cuts, but doesn't include the one that has just come into force. 70% of the tax difference came from Labour's tax cut, and 30% from National's. So, English is trying to take credit for *that* as well.

This stuff isn't National's fault. There was a global recession. People lose their jobs, income takes a hit, consumption slows down. It's what happens. But all this stuff about how we've suddenly become better off because it's a National government is just a lie. Nothing magically happened when John Key took office.

Please stop making shit up.

**WARNING: Strong speech freedom follows. Reader discretion is advised.**

I may not agree with what Paul Henry said, but I will defend to the death my right to say that he's a cunt for saying it.

And, I suppose, if pushed, I will write strongly-worded letters to the editor to defend his right to say it. VERY strongly-worded.

But seriously, let's not throw around ideas like freedom of speech without carefully considering what they actually mean.

Freedom of speech is being free to say what you want without interference; not from the police, not from lynch mobs, not from your neighbours. They don't get to arrest you, strip you of any of your other legal rights, beat you or gag you.

Calling someone a cunt for what they said does not interfere with their freedom of speech. It is, in fact, the opposite. It is active participation in the marketplace of ideas. Granted, neither what Paul Henry said nor "Paul Henry is a cunt" are particularly good or useful ideas. But hey, even the marketplace of ideas has a $2 Shop.

Nonetheless, this is precisely why democracies have freedom of speech - so that people can say whatever they want, and other people can say "No, you're a dick. Fuck off." This is the free and frank competition of ideas, regardless of how crap those ideas are.

Let's consider what freedom of speech is not.

It is not protection from consequences of speech. The state cannot and does not protect someone who says cunty things from being thought of as a cunt, nor from being called out as a cunt. Why? Because it would impinge on other people's freedom of thought and of expression.

It is not a guarantee of employment - especially when the substance of the employment *is* speech. Paul Henry is not a drycleaner. He gets paid to say things. To suggest that what he says should not affect his employment is nonsensical.

Jokes aside, I do believe in the right to free speech. I believe that the marketplace of ideas leads to a healthy democracy. I will defend the right to free speech. I will defend the right of individuals to say and write and sing and think whatever dumbass bullshit they want, free from violence or coercion from the state or from individuals.

Defending Paul Henry's opinions, reputation or employment, however, is not upholding any constitutional right, any democratic principle, any moral imperative, any sound reasoning or any practical purpose.

But hey, if you like the guy, sure, why not? It's a free country. You cunt.

Is the mic still on?