Posts Tagged ‘asset sales’

The left’s lose-lose SOE strategy

datePosted on 11:50, March 10th, 2013 by Lew

If it wasn’t already over on the night of 26 November 2011, the argument about the popular legitimacy of the government’s plan to partially privatise selected state-owned enterprises was finally put to bed when the pre-registration website for the Mighty River Power float fell over shortly after it went live. Whether this was a result of intentional underprovisioning to generate buzz or genuine organic demand doesn’t matter: within 24 hours 100,000 people had pre-registered interest in buying shares. That’s about one-third of the signatures opponents of the scheme took seven months to collect to force a citizens initiated referendum. The battle over whether these assets will be sold has been well and truly lost, and expending more political firepower on it is futile. The left needs to start organisaing around how they will be run.

This episode highlights two separate failures of strategy; one from the 2011 election, and one for 2014 and beyond.

Salience
Labour mistook asset sales for a high-salience issue and tried to run a campaign on it, when in reality too few cared enough for it to work. I have no reason to disbelieve the assertion that most people don’t want the assets sold. But the evidence of the election, the sluggish uptake of petition signatures, and the general lack of traction gained by the Labour party, for whom this has been the only coherent policy frame since the election, show that it is not an issue about which people are strongly exercised.

This strategy worked quite well for NZ First, and to a lesser extent the Greens, both of whom have the luxury of being able to appeal to a smaller base who care more strongly about a narrower range of issues. But it didn’t work for Labour, and the recognition that what works for parties of a relatively activist mindset doesn’t work for a broad-based, moderate mainstream party is long overdue. It failed. Time to move on.

Mandate
The notion that the government, having spent the entire year 2011 campaigning on it, lacks a mandate to proceed with asset sales is utter nonsense, as I wrote when the campaign kicked off. Labour and the Greens have decided the mood of low-level dissatisfaction with the plan that failed to win them the election will be sufficient to derail the policy now that it is on the move. They have decided that a citizen-initiated referendum, which worked so well for the opponents of the Section 59 repeal, is their best tool. Andrew Geddis wrote brilliantly about the problems with this in June last year, and here I essentially restate one of his arguments — that the Greens and Labour should be careful what they wish for. Both Labour and the Greens rely on the maxim that what’s right is not always popular. By insisting that policy be popular to be passed they risk painting themselves into a corner when next in government.

Plenty of bad policies are popular — three strikes, scaremongering about immigration, and most of the government’s welfare reforms are good examples. Despite what Josie Pagani might say, all are inimical to Labour and Green politics. How can they oppose these policies, if they’re so popular? Conversely, how can they insist on passing unpopular policies? Many of these are more central to the Greens than to Labour — the Greens are not a popular party; they poll just above 10%, so why are they embracing populism? Their policy agenda relies on making the electorate eat its greens, so to speak. Emissions control legislation, for example, will be deeply unpopular if it’s remotely effective. Likewise public transport and urban development policies, whose upfront costs are large and immediate but whose benefits are long-term and gradual, will be incredibly hard to pass if they insist on gaining the support of car-reliant suburban villa-owners.

Whether they “win” the referendum or not, at best Labour and the Greens will be vulnerable to legitimate accusations of hypocrisy whenever they propose policy that is merely somewhat popular, as opposed to being very popular. The will have demonstrated that consistency doesn’t really matter, and that could do deep harm to their long-term credibility. Worse yet, they could stand rigidly by their new-found populism and only propose policy that a clear majority of the electorate wants. Both strategies do more for NZ First than they do for Labour and the Greens.

The discussion has changed
The left has lost the argument about asset sales. Barring some sort of deus ex machina it’ll go ahead and will probably be a net vote winner for the government. But the apparent mismanagement of Solid Energy has given Labour and the Greens an opportunity to reframe the state-owned enterprise discussion, away from who owns these businesses to how they are run.

Both parties must be reluctant to do this, given that many of the bad decisions were made under the previous Labour government, and much of the lost money was poured into “green” tech like biofuels. But it is a necessary shift if the left is to own some of this debate. Regardless of what occurred before 2008, that things got so much worse under the current government, and that this was apparently a surprise to the shareholding minister is a serious failure of governance, and the public deserves answers about it. It’s a good opportunity for the left to highlight the point that there are good government managers and bad government managers, and that they will be the former, not the latter. The Greens have begun to do this by arguing that the government’s policies and directives to Solid Energy — including the lignite strategy, and changes to the Emissions Trading Scheme — effectively kneecapped the company.

Labour and the Greens should take the initiative and reframe this SOE debate now. If they persist with beating the dead horse of ownership, the risk is that the government will strengthen its case that the state simply isn’t fit to own businesses, paving the way for the rest of the SOEs to be sold as soon as they can secure a mandate to do so. The only alternative I can see for the opposition is a pledge to re-nationalise the sold assets. If they’re going to do that they need to get on with it — if they reveal this policy after the Mighty River Power float goes ahead the risk isn’t the argument that the state shouldn’t own businesses; it’s that Labour and the Greens are parties of big-government kleptocracy, trying to turn Aotearoa into the Venezuela of the South Pacific.

L

Market-oriented social engineering.

datePosted on 13:13, July 24th, 2012 by Pablo

The political Right regularly accuses the Left of engaging in social engineering. Be it pushing such unnatural constructs as union and civil rights, health awareness and environmental concerns, the Right claims that the Left is out to control how people behave and even think. For freedom-loving individualists, this is anathema.

Consider my surprise, then, when I saw the Prime Minister saying that one of the reasons for the $2000 dollar “kiwi-first” purchase option with loyalty premium for Mighty River Power shares was to “change the investment psychology” of New Zealanders. It seems Kiwis put money into real estate and bonds, but not the stock market. Mr. Key thinks that his countrymen and women should diversify their portfolios into stocks, and the asset sales option is one way of promoting that. After all, it is not really prudent to have too many eggs in one basket.

I can see his logic. As a money trader and speculator, stock manipulation comes natural to Mr. Key. Sell short, hold, think long…he has the field covered. And truth be told, in a market environment such as NZ’s, it may not be unreasonable to urge people to spread their savings around. Higher rates of savings are traditionally linked to higher standards of living and growth, so by market logic such a move is both collectively and individually optimal.

What I find notable is the PM’s admission that the Mighty River Power stock purchase proposal is a deliberate attempt to alter the way Kiwis think about investment. In other words, it is a social engineering project that proposes to transform the psychological disposition of Kiwis when looking at their investment options.

But if that is the intention, how is that different from campaigns to get people to stop smoking, not drink and drive, use public transport, practice safe sex, license and desex their pets or stop littering? Are these not all examples of what the Right claims is undue interference by government on the rights of individuals to freely choose how to live their lives? Even if one admits that the share purchase option is not compulsory and still a matter of free choice (as are some of the examples just mentioned), is not the intention of the National government and Mr. Key to engage in exactly the type of social engineering–to include psychological indoctrination–that the Right accuses the Left of championing for its nefarious totalitarian purposes? Mr. Key has admitted that there is a social engineering intent to the proposal, so how is that good when other social engineering experiments are considered by the political Right to be bad? Or are some types of social engineering more acceptable to freedom-loving market individualists than others?

If the latter is true, than even the Right has to admit that social engineering projects embarked upon by governments are not always contrary to the small-governance/more market/individual choice principles that ideologically underpin Right thought. And if that is the case, then how can social engineering experiments be totalitarian, collectivist and fundamentally anti-democratic at their core?

Pardon me if I see a little contradiction here…