Monday, December 30, 2013

New Year 2014–Raison d’etre

As the last parts of many beneficial reforms I was involved in over the years fall out of the bland shredder which is timidity and MMP I struggled to find motivation for another year – especially an election year.

I should have looked, as always, to my betters. Steven Landsburg pointed out Milton Friedman’s wisdom:

“Only a crisis – actual or perceived – produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes the politically inevitable.”

And so none escape another year or more of my efforts.

Thursday, December 26, 2013

The fruits of…. ???

Three numbers worth considering as you approach the New Year:

    1. annual share price performance Synlait                 +44%
    2. annual share price performance A2 Corporation   +42%
    3. annual share price performance Fonterra Fund     -18%

Monday, December 23, 2013

Romantic nonsense about family silver is costly to the poor

Excluding both the profits and the assets of Meridian, Mighty River Power and Air NZ, the NZ Govt portfolio of $45bn in assets produced a net profit of $20m in the year to June 30 2013.

A return of 0.04% on assets. That's zero point zero four percent.

The strongest returns came from:

  1. Transpower – a statutory monopoly which the High Court has just ruled operates under an indefensible regulatory regime costing consumers millions a year – around $150m in fact.
  2. Airways Corporation – another statutory monopoly and the only company empowered to sell air traffic control services. Justified of course but guarantees the company a profit,
  3. Asure Quality – which until September 2012 (i.e. after balance date) held the statutory monopoly for meat inspection in NZ.

So all of the strong performers were strongly assisted by being legalised monopolies. Grand.

The worst performers were:

  1. KiwiRail – $174.6m loss (we paid over $600m for the pleasure)
  2. Solid Energy – $335.4m loss
  3. Learning Media – $9.0m loss

Those losses mean:

  • less to spend on everything else… surgery, drugs, hip operations, young peoples’ education, Maori health, pensions – you name it… and the biggest losers are the poor – the people desperately in need of these funds, and,
  • the Govt bears risk. Risk which drives up the cost of funds for all of us.

All of us pay for some of us to indulge romantic dreams about trains or to feed fanciful beliefs that the government owns these “assets which are valuable”

This stuff is not silver its rust… the best performers can’t perform without laws which force revenue into their pockets, the worst performers are a receivers dream.

Genuine concern for the poor would not see government owning commercial assets.

Saturday, December 21, 2013

How not to allocate scarce resource?

Last night, the 20th of December, the Ministry of Transport breath tested 2,584 drivers in pursuit of drink driving offenders. Result? Zero – no cases found at all.

Yes – part of the reason a zero result turned up is likely to have been the incentives created by the fact that drivers “might” be screened. However it is equally likely – and road toll trends support the hypothesis – that the message has and is sinking in.

The cost of such a mission can only be guessed at. Given scarce resources a reasonable question becomes “is large scale breath testing an optimal use of the time, energy and funds.”

Wednesday, December 18, 2013

Personal Liability… Len

It is clear from the shambles that “is” Len Brown, that the sanctions and remedies around Mayors – perhaps especially Executive Mayors - are a pointless sham to the extent that they exist at all.

They fail both in respect of any given event – such as non disclosure even as a breach of contract – and they fail to prevent repetitions… see Manukau and credit cards re-visited.

A simple remedy would be to attach liability, personal liability equivalent to that every director of a company in NZ from the tiniest to the largest faces, to the role.

Why on earth not? Why on earth do shareholders who vote for their directors get this protection while the voting community of the 1.5 million or so in Auckland do not?

Minimal to fix this and surely a no brainer.

Tuesday, December 3, 2013

Cliff Asness on Data Mining

Opposition politicians digging around in others’ budgets should remember that:

“It is generally churlish to be to be horribly disappointed when your monkey who typed Hamlet produces only Coriolanus next time.”

(FAJ 70(1) 2014 Ahead of print)