I think you have hit the nail on the head with a pneumatic hammer Bryce. “The various critiques also paint a picture of New Zealand becoming an oligopoly economy, where a handful of corporate players dominate essential markets (electricity, supermarkets, banking, and more) and governments – beholden to lobbyists and free-market ideology – consistently shy away from truly breaking their power.” I would debate the word ‘becoming’ and argue New Zealand has already arrived at the land of ‘opolies’. I think the unprecedented kiwi citizen departures and rapidly growing inequality are testament to the rich getting richer and the poor getting poorer, a phenomenon ‘opolies’ amplify. This ‘mojo’ draining and depressing dynamic is now rapidly seeping into the New Zealand psyche.
Frankly, Christopher Luxon should be sent back in exchange for a full refund. Not only has he failed to deliver what he advertised, promoted, and promised, pre-election, he has in stark contrast, delivered bitter failure, which has been wrapped in cruelty, financial and economic myopia, and egotistically fuelled, ideological arrogance. It is remarkable that Luxon and/or his coalition are still in contention to remain in power for a second term. That should be a five-alarm fire right there for anyone who values a humanistic society.
Not only is New Zealand becoming an ‘opoly’ paradise, it’s becoming a right-wing ‘opoly’ paradise, and that doesn’t bode well for breaking their power. If anything, that will encourage them to come completely out of the closet to reveal their authentic selves. They will no doubt bring their kissing cousin, ‘privatisation’ with them. A golden age of lobbying beckons. I would also argue that Luxon and his government have been completely and very effectively captured by immovable and inflexible ideological dogma, by donors and vested interests, by political and personal expediency, and most dangerously of all, by an absence of ideas. The needs of the nation keep on knockin’, but there’s no one home. Queue Little Richard.
"the immediate, focused, and well-funded backlash from a powerful oligopoly is a far greater political risk than the diffuse, disorganised, and longer-term anger of the general public" which can only lead to one conclusion: the Realm of New Zealand is not a democracy. Not really.
But look deeper and one will see that while domestic power bills are generating the anger, the real damage being done by the failure of New Zealand's energy policy is de-industrialization. When that process is complete, people will be looking for scapegoats, and, inevitably, some will suggest that National and ACT deliberately destroyed New Zealand industry in the interests of foreign powers. Whether de-industrialization is intentional, negligent, or the result of gross incompetence, it will give rise to an unprecendented level of distrust and conflict between the former industrial working class and those who can continue to enjoy a comfortable life as the New Zealand farm manager for the affluent classes of Asia and North America.
Energy is the economic lifeblood of any nation, so this is a very big deal. In principle I'm with Shane Jones' call for renationalisation. We are operating a fake market, a big boys game of Monopoly. Why oh why when there was no prescedent for successful operation of such a jerrymandered setup in a tiny country like NZ. With the strange idea that a fake competition would see greater efficiencies with reduced prices, particularly when what was already operating was already the envy of most nations. Apart from obvious focus on shareholder profits, a competitive market, even a nominal one, seriously diminishes the ability to strategically plan NZ's power generation and distribution assets to best meet the nation's needs rather than those of individual power companies. Two significant concerns though about renationalisation. 1. The obvious risk of scaring off investment into other sectors partcularly telecoms from fear of renationalisation. 2. Does NZ even still possess the ability to successfully operate such a significant engineering enterprise, particularly with the advent of treaty led, DEI culture that is rife in pretty much every public endevour these days.
Am I being nostalgic when I reflect on the Ministry of Works building large power systems which worked for the benefit of all, in the total absence of "markets"?
Possibly nostalgic in the sense that the "old school" engineers that built that system were highly skilled, knowledgable, innovative, and couldn't give a toss about the woke stuff that gets in the way of almost everything these days.
Shane Jones would no doubt have got on well with those guys.
Justin Yifu Lin in "The logic of China’s rise" writes of the economic reform undertaken in China from 1978 onwards "Moreover, certain industries could not be permitted to fail—most notably the power grid and telecommunications networks—which required massive capital outlays. Although in the 1980s and 1990s these sectors did not align with China’s comparative advantage, they constituted indispensable national infrastructure. Consequently, telecommunications and electricity received strong protection during that period".
New Zealand, a decade later, took a very different approach. Who was right?
The men who ruled China wanted to create a economy commensurate with the size of China's population, and on the basis of a world leading economy they wanted China to progress to be an independent power of the first rank. They have now pretty well achieved those aims.
The people who governed New Zealand from 1984 onward had no such aspirations. Their ambitions were largely personal. They were comfortable with the thought that New Zealand could regress to the situation of 15 November 1840, which is to say that New Zealand could revert to being a second order colony, or even disappear entirely from the register of nation states, and many times over the succeeding decades they have canvassed the idea of the dissolution of the New Zealand state into the Commonwealth of Australia.
Because they did not see New Zealand as a permanent fixture in the world order they had no need to establish the deep and broad economy necessary to provide a solid basis for an independent nation state. Their policies have created the situation where a merger with Australia, always an acceptable outcome from their perspective, appears to be the only sensible way out of the current economic dilemma.
The differences between China and New Zealand are not ideological. They are political. The Chinese rulers wanted to assert an independent presence in the world. Those who ruled over New Zealand did not. The contrasting economic policies of the two states flowed from their differing political goals.
All this handwringing is misdirected. What the electricity market needs is settings friendly to new investment in generation. Current settings are not friendly: there’s too much sovereign risk. Majority public ownership of most existing capacity brings the threat of politically-driven shifts in pricing behaviour. Tiwai Point is unsustainable in the medium term and its closure - when politicians pluck up the courage to allow this - will release substantial generation capacity (subject to some transmission investment). In short, less government intervention would allow the market to work better, not more.
On the up side…Ministers and their cabinet backers for Energy, Finance et al will never be without a plum directorship within the sectors they have been so responsive to, once they are thrown out of office. Knowing that their ‘difficult and deeply unpopular decisions’ will one day be recognised ( and rewarded) must offer a small piece of comfort to these poorly paid “public servants” currently subject to outrage and vilification from…the rest of us.
A further angle would be to explore the implications for legitimacy. An article in Sunday's SST on the self-rationalisations of shoplifters is quite interesting, basically some of them see themselves as urban guerillas sticking to the man, as they used to say in the 1970s. At the moment all this is at the level of what the German sociologist Hans-Magnus Enzensberger called "molecular civil war," but we can expect that it will become more organised and less molecular in the future.
I think you have hit the nail on the head with a pneumatic hammer Bryce. “The various critiques also paint a picture of New Zealand becoming an oligopoly economy, where a handful of corporate players dominate essential markets (electricity, supermarkets, banking, and more) and governments – beholden to lobbyists and free-market ideology – consistently shy away from truly breaking their power.” I would debate the word ‘becoming’ and argue New Zealand has already arrived at the land of ‘opolies’. I think the unprecedented kiwi citizen departures and rapidly growing inequality are testament to the rich getting richer and the poor getting poorer, a phenomenon ‘opolies’ amplify. This ‘mojo’ draining and depressing dynamic is now rapidly seeping into the New Zealand psyche.
Frankly, Christopher Luxon should be sent back in exchange for a full refund. Not only has he failed to deliver what he advertised, promoted, and promised, pre-election, he has in stark contrast, delivered bitter failure, which has been wrapped in cruelty, financial and economic myopia, and egotistically fuelled, ideological arrogance. It is remarkable that Luxon and/or his coalition are still in contention to remain in power for a second term. That should be a five-alarm fire right there for anyone who values a humanistic society.
Not only is New Zealand becoming an ‘opoly’ paradise, it’s becoming a right-wing ‘opoly’ paradise, and that doesn’t bode well for breaking their power. If anything, that will encourage them to come completely out of the closet to reveal their authentic selves. They will no doubt bring their kissing cousin, ‘privatisation’ with them. A golden age of lobbying beckons. I would also argue that Luxon and his government have been completely and very effectively captured by immovable and inflexible ideological dogma, by donors and vested interests, by political and personal expediency, and most dangerously of all, by an absence of ideas. The needs of the nation keep on knockin’, but there’s no one home. Queue Little Richard.
James. well written! Your comment is on the dot.
"the immediate, focused, and well-funded backlash from a powerful oligopoly is a far greater political risk than the diffuse, disorganised, and longer-term anger of the general public" which can only lead to one conclusion: the Realm of New Zealand is not a democracy. Not really.
But look deeper and one will see that while domestic power bills are generating the anger, the real damage being done by the failure of New Zealand's energy policy is de-industrialization. When that process is complete, people will be looking for scapegoats, and, inevitably, some will suggest that National and ACT deliberately destroyed New Zealand industry in the interests of foreign powers. Whether de-industrialization is intentional, negligent, or the result of gross incompetence, it will give rise to an unprecendented level of distrust and conflict between the former industrial working class and those who can continue to enjoy a comfortable life as the New Zealand farm manager for the affluent classes of Asia and North America.
Energy is the economic lifeblood of any nation, so this is a very big deal. In principle I'm with Shane Jones' call for renationalisation. We are operating a fake market, a big boys game of Monopoly. Why oh why when there was no prescedent for successful operation of such a jerrymandered setup in a tiny country like NZ. With the strange idea that a fake competition would see greater efficiencies with reduced prices, particularly when what was already operating was already the envy of most nations. Apart from obvious focus on shareholder profits, a competitive market, even a nominal one, seriously diminishes the ability to strategically plan NZ's power generation and distribution assets to best meet the nation's needs rather than those of individual power companies. Two significant concerns though about renationalisation. 1. The obvious risk of scaring off investment into other sectors partcularly telecoms from fear of renationalisation. 2. Does NZ even still possess the ability to successfully operate such a significant engineering enterprise, particularly with the advent of treaty led, DEI culture that is rife in pretty much every public endevour these days.
Am I being nostalgic when I reflect on the Ministry of Works building large power systems which worked for the benefit of all, in the total absence of "markets"?
Possibly nostalgic in the sense that the "old school" engineers that built that system were highly skilled, knowledgable, innovative, and couldn't give a toss about the woke stuff that gets in the way of almost everything these days.
Shane Jones would no doubt have got on well with those guys.
Justin Yifu Lin in "The logic of China’s rise" writes of the economic reform undertaken in China from 1978 onwards "Moreover, certain industries could not be permitted to fail—most notably the power grid and telecommunications networks—which required massive capital outlays. Although in the 1980s and 1990s these sectors did not align with China’s comparative advantage, they constituted indispensable national infrastructure. Consequently, telecommunications and electricity received strong protection during that period".
New Zealand, a decade later, took a very different approach. Who was right?
https://www.pekingnology.com/p/justin-yifu-lin-the-logic-of-chinas/
In answer to my own question, both were right.
The men who ruled China wanted to create a economy commensurate with the size of China's population, and on the basis of a world leading economy they wanted China to progress to be an independent power of the first rank. They have now pretty well achieved those aims.
The people who governed New Zealand from 1984 onward had no such aspirations. Their ambitions were largely personal. They were comfortable with the thought that New Zealand could regress to the situation of 15 November 1840, which is to say that New Zealand could revert to being a second order colony, or even disappear entirely from the register of nation states, and many times over the succeeding decades they have canvassed the idea of the dissolution of the New Zealand state into the Commonwealth of Australia.
Because they did not see New Zealand as a permanent fixture in the world order they had no need to establish the deep and broad economy necessary to provide a solid basis for an independent nation state. Their policies have created the situation where a merger with Australia, always an acceptable outcome from their perspective, appears to be the only sensible way out of the current economic dilemma.
The differences between China and New Zealand are not ideological. They are political. The Chinese rulers wanted to assert an independent presence in the world. Those who ruled over New Zealand did not. The contrasting economic policies of the two states flowed from their differing political goals.
All this handwringing is misdirected. What the electricity market needs is settings friendly to new investment in generation. Current settings are not friendly: there’s too much sovereign risk. Majority public ownership of most existing capacity brings the threat of politically-driven shifts in pricing behaviour. Tiwai Point is unsustainable in the medium term and its closure - when politicians pluck up the courage to allow this - will release substantial generation capacity (subject to some transmission investment). In short, less government intervention would allow the market to work better, not more.
On the up side…Ministers and their cabinet backers for Energy, Finance et al will never be without a plum directorship within the sectors they have been so responsive to, once they are thrown out of office. Knowing that their ‘difficult and deeply unpopular decisions’ will one day be recognised ( and rewarded) must offer a small piece of comfort to these poorly paid “public servants” currently subject to outrage and vilification from…the rest of us.
A further angle would be to explore the implications for legitimacy. An article in Sunday's SST on the self-rationalisations of shoplifters is quite interesting, basically some of them see themselves as urban guerillas sticking to the man, as they used to say in the 1970s. At the moment all this is at the level of what the German sociologist Hans-Magnus Enzensberger called "molecular civil war," but we can expect that it will become more organised and less molecular in the future.