Give me profit over rent-seeking any day

It is New Zealand culture and politics that keeps us poor.

HIDESIGHT

It is New Zealand culture and politics that keeps us poor.

We despise profit seeking as selfish and destructive.

We admire rent seeking as noble and just.

We run down what prospers us. We whoop up what keeps us poor.

We have it back to front. That’s why we don’t prosper.

What could possibly be nobler than profit seeking? It means applying what we have to the best use possible to satisfy what other people want and are prepared to pay for. In everyday life it doesn’t get better than that.

Profit seeking is done without force. No one is compelled to buy. It’s your choice what to buy, or not buy, or whether to buy at all.

It’s your buying decisions that determine what business is up; and what business is down. It doesn’t get more democratic (“rule by the ‘simple” people”) than the free market.

Profit seeking enriches us all. The constant search for better and better ways to use resources increases productivity and boosts wages. It’s that increased productivity that boosts wages across the board, not unions nor labour laws.

Successful profit seekers make money by the truckload. But the money they make is but a sad fraction of the wealth they create.

Bill Gates’ billions pale in comparison to the wealth generated by his Microsoft software: software that’s in nearly every business, home and workplace in the prosperous world.

Or Google. Our eyes water at Larry Page and Sergey Brin’s mega billions but again their wealth is a very small fraction of the total wealth they created for us all. Just think how many times we use Google each day at work, at home, on the smart phone, and try to imagine your life without it.

Wealth doesn’t trickle down from profit seeking; it pours down in buckets.

To prosper, we need a culture and a politics that both admire and respect profit seeking, whether it be in property, farming, finance, retail or whatever.

Rent seeking is the opposite of profit seeking. It’s the seeking of favours, not from the “simple” people, but from government.

Rent seeking doesn’t create wealth, it just shuffles it around. One person’s gain is always another’s loss. Any gain that government handouts must first be taken from someone else.

Worse, resources get chewed up rent seeking. People spend time and money lobbying both to seek rent – and to defend it. Rent seeking doesn’t just redistribute wealth; it destroys it.
It’s rational to rent seek wherever government has valuable resources up for grabs.

The Maori Council water claim at the Waitangi Tribunal is classic rent seeking. This is politics, not law. The claim would have no chance at common law. It relies on the Treaty of Waitangi Act passed in 1975 and the many amendments since. It’s entirely political.

So a great deal of energy, time and resources will be soaked up in a fight about who owns water. Some political deal will be hatched. And then the claims will flare up all over again over another valuable resource, and on and on it goes.

It’s entirely negative sum: no wealth is created but much is consumed in the process. What’s astonishing is that we allow such rent seeking to get dressed up as a noble fight for historical justice. Bollocks. It’s a greedy political fight for money without having to produce anything for it.

That’s the behaviour that keeps us all poor. It comes from government failing in its job of ensuring secure property rights. Property rights that had been secure for years are tossed up for grabs through legislation like the Treaty of Waitangi Act and the Resource Management Act.

To prosper our culture must respect profit seeking as the engine of prosperity and our politics must secure property rights, not forever toss them up in the air for political grabs.

Pictured top of article: Maori Party co-leader Pita Sharples with National leader John Key at the signing of the parties' confidence and supply accord.
 

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43 Comments & Questions

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Forget about the fight over water, Rodney - it is nothing but a lot of media hype with you trying to capture past glory by jumping on the bandwagon. A few hundred millions will sort the Maoris out.

Tell us instead about the cost savings and big benefits to come from the Super City,your brain child turned monster, Rodney. Where are the billions to be saved?

Especially with the ACC now paying $104m to buy over ASB tower to house its already bloated bureacrazy (crazy) to allow for room to grow?

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Big City: Thanks for asking. Here's the top lime results. 2,000 less managers from day one. That's a hundred million a year in wages alone.

That's over a billion over the councils ten year plan. On top of that the new council has taken out another 1.7 billion in the first two years -- $80 million a year first year then another 40. That's cumulative.

The average rate increase across Auckland for the last eight years was 5.7 percent. The previous eight councils were planning to hike rates by a weighted average of 6 percent for 2011/2012. Mayor Len Brown paid for the transition costs, had the Rugby World Cup, and cut that rate hike to 3.9 per cent. That’s a big saving. In his second year the rate hike is 3.6 .

The previous eight councils and their subsidiaries were investing a billion dollars a year on capital in Auckland. It wasn’t near enough. Auckland Council is now investing $2 billion a year. Auckland now has a lower rate track than before -- but those lower rates are supporting a 200 percent increase in investment in much-needed infrastructure.

Savings as I have always said weren't the point. The point was to get decent governance for Auckland. That has been achieved.

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why are my rates on the rise again then?

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Gee, where does one start to counter al that PR-induced hogwash?

Start with 2,000 less managers. What Rodney does not state is that they were all replaced with contractors, consultants and part-timers! And boy, do they know how to charge for their time and services - for what are essentially monopolistic council and local government regulated services.

Try doing a residential development these days, Rodney and you will know what I mean. Charges are through the roof and developers are held to ransom by the building inspectors etc.

As for decent governance, let's review what happened with the non-elected Maori Council's budget being approved in indecent haste and behind closed doors?

You sure you want to debate this further?

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Well done, Big City. You have left Mr Hide with no comeback as he knows he is dealing with someone who knows what's really happening!

Absolute disgrace the way the Council is allowing the contractors to fleece ratepayers worth excessive charges and slow response time.

Corruption is on the way, if it is not already happening.

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Well answered Big City -- also what additional staff numbers are required to read each water meter and despatch accounts on a monthly basis -- what an administrative shambles this will become as people wont pay within the required time frame-- think about all the extra account reconciliation required-- plus the additional costs of postage and motor vehicle running expenses .

Talk about the non elected Maori Council-- why was it necessary for rate payers to fund three attendees at the recent Local Body Forum in Queenstown -- what is wrong with one attendee ??

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Come on Rodney, face it - the auckland council is a failure driven by poorly thought out public policy codled by an un-educated style of 'economics'. The savings you talk about are 'soft savings' akin to my wife recently buying a christian dior dress in melbourne and telling me that she saved $$ because the price was discounted!! At least have the integrity to be honest Rodney! What exactly do you mean by decent governance?? The laetst debacle over the V8 decision! haha.

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Morning Rodney.

Couldn't agree more.

... and the comments above just show the mindset of the whinging, negative NZer.

Heaven help us.

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Heaven help us indeed from any more of Rodney's attempts to hoodwink the public that he actually stands for something.

Sort out the mess which is the ACC, Rodney, and you may yet get your day again in the political sun.

Until then, you will be haunted by the hypocrisy you showed. Remember the perks you took for your girlfriend? That's forgivable as love makes a man do silly things.

But the big city debacle? No Way!

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Another great column, Rodney
Ignore the naysayers and keep them coming.
liberte

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PS love mum.

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Nice one Rodney. I completely agree. I enjoy your thinking and writing. Finally, someone sane. Cheers!

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Back to the asylum with you Mr Manson.

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Excellent analysis. Ignore the rent seekers above trying to pick a fight and move this debate away from the principles you outlined above.

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Another good column, but while I am determined to defend you against 'Big City' the second post did have a valid point. A month or so back I sat an entire day at a council hearing and noticed a particular very highly paid consultant in attendance who was watching his essay in play. The fact that this individual has milked the system and been paid by rates and lost countless battles including the environment court and now is being paid to proclaim the complete reverse technical opinion than that given years back in court evidence beggars belief. What was worse during the break he swanned off to the council employee private area, far too cosy. I think the amalgamation was necessary but a job far from finished and the clever sods manipulated more ways to scheme and coin their way through the new system. I guarantee more meetings occur on how to procrastinate and create delay while avoiding real work and accountability than anything beneficial to the ratepayers. Keep up the good work Rodney, I love your columns, but dont take it too hard when your job in politics was only half done.

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I think the ACt membeship (the five or six left) have joined in posting comments!

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There is no point commenting on Rodney's story, he is just winding us up to get a media profile so he can transition his earning after sucking on the the big tit of the state for the past few decades, I don't recall him ever being against him doing that.

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Thanks everyone. I appreciate the comments. Naysayers don't bother me. My experience is that they are sad useless people.

But I thought others would be interested in the audited results.

The real problem for councils is the regulatory burden from central govt. the Reg Responsibility Bill would reverse that problem.

The anon comments read a little like Andrew Williams. Poor bugger. Winston quite rightly won't let him say anything.

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Not naysayers.

Maybe you are right, that we are people who may be useless and sad but hi, we sleep with a clear conscience that we are not hypocrites.

Just people who have more integrity than you would ever have in 5 lifetimes.

Just people who don't say one thing, and do another.

Am glad you have a public profile - all the better to keep reminding the public of how corrosive politics is, and how no politicians are to be trusted to keep their words and to deliver on their promises. Just a lot of PR induced hogwash.

Do something useful - Rodney. What political capital you have left, clear your conscience. You will be a happier man for it. Trust me.

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Yes, and just people whose don't have the balls to put ther names to their arguments and just people who attack the messenger rather than debate principles.

And if you truly believe that no politicians are to be trusted then why argue for any system that promotes politicians or gives them authority over you? So, LOL, time to walk the talk and become an anarchist.

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Not to trust them does not mean not to deal with them, Dear John.

I may not trust the Australians as far as I can kick them but I am prepared to deal with them.

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Sure, but I never understood why we would encourage people we don't trust to force us to act in a manner that we dont want or like and is unhelpful to our long term survival. So, M Smyth, you would be quite happy for these Australians you dont trust to be running your life? Of course not. And shame on you if you did. Now, why do you vote for politicians you dont trust?

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Pardon?

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Well Mr Hide at least Andrew Williams isnt a sell proclaimed perks buster who took a shiela away on an overseas trip on allegedly partly funded tax payer money.
No wonder the Epsom electorate gave you the dont come Monday

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The AC ain't perfect, but it's more perfecter than the eight councils it replaced!

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why does the govt keep sucking up to leeches and parasites?

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I vote that Rodney's column be put behind the pay wall, well out of the way.

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Rodney you should perhaps do a article on the diliqunt political mind set of newzealanders. It is as though they await your articles just to vent there verminous revenge. I fail to see what Auckland council has to do with your well written master piece. Keep it coming Rodney

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Good article Rodney, 'cept "rent seeking" treats the problem too lightly.
By "rent seekers" I presume you are meaning those individuals, corporations, Governments (central and local) who add unearned increment to the production cost of goods and services?
If you are, then a more correct term would be legal thieves!
Cheers

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Good to see the classic New Zealand Tall Poppy Syndrome, personnal attacks, unconstructive, shallow small minded brainless negative comments made by uninformed individuals who chose to open their mouths without knowing the facts, is still alive and well and leads to exactly what Rodney is writing about. A failure for this country and it's prosperity.
The message is very clear and concise and is something that has been going on for too long in this country. The hammer should have been brought down on the Treaty of Waitangi along time ago. The constant stream of claims that is endless, leads from wanting and succeeding, to more wanting, and the government (and public for that matter) is too soft or politically correct to say enough is enough.
This is a minority group that is after something that we as all New Zealanders own and belong to, it like foreshore and seabed should never be up for grabs or made to be available or negotiable.
Good government should be focussing on more important issues such as the national debt, creating jobs, and giving small business incentives, to bring profit seeking and a growing economy back to New Zealand rather than so called renting as above.
Good on you Rodney and Bravo to John Bander above, LOL has already admitted his intellect by the first sentence in his blog.
Anyway let's talk about something else, how about that Sue Bradford!

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Profit over rent I agree with.

This is contrary to what this and other right wing governments are practising. How is it better for the so called free market to own monopoly industries, who lobby to keep charging what they like?

If free market existed, I would go along with previous and anticipated state assets sales, but it doesnt!!

Accordingly, the government should retain monopoly type assets and gather profits for all, rather than renting them back at charges manipulated by the backhand bridgade who are the selective few!!

Sounds like ideology to me, rather than reality.

Big is not necessarily better. While recognising thande economics

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Just like your rent seeking in parliament in regard to your oversaes travel and other perks?

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Absolutely nothing wrong with the treaty of Waitangi claims and the settlements made to date.

This water claim is good and will sort out in the open the stealth way that water rights has been quietly ceded to Maoris so far.

Accept the point that the Maoris are now stretching the boundaries but who can blame them? You will too if you could.

If successive NZ governments had not been so stingy and stubborn about earlier claims, all this would have been settled a while ago for a fraction of what it is now going to cost.

Meanwhile, think of the tens of billions of dollars wasted and misspent by the likes of Muldoon (Think Big), Lange (Privatizations), Clark (Student Loans) and Cullen (South Canterbury Finance, anyone?). What's a few billion dollars to do the right thing?

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<i>If successive NZ governments had not been so stingy and stubborn about earlier claims, all this would have been settled a while ago for a fraction of what it is now going to cost.</i>

You are dreaming. So long as the well gives water you will keep going back to it.

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This article should be framed and put up in the National party cabinet room as the slogan for New Zealand

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Been raining buckets today. It came from the heavens. Water does not belong to any one person unless its in your cistern or matinee. Water does not belong to a group of people unless you've stored it on your land. Water belongs to everyone.

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Maori want water rights? Throw the dogs into the drink.

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I agree with Rodney's comment .Unfortunately if he had not been a politician some of the comments could have been different. I am not a Kiwi (yet) but I can tell you the place I am from , as a society they too don't like profit seeking . They are also not that innovative (in common parlance its called being smart) or desire to have a better life by themselves. They are termed as 3rd world. I was fortunate to have traveled around the world and have been spending considerable time now in NZ but do feel that NZ is not a first world (or going to stay 1.5 world) due to some of policies stopping meaningful progress.

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What could possibly be nobler than profit seeking?
Answer - People.

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The general tenor of the responses to Rodney Hide (by people who don't have the guts to use their own names when posting) makes me wish I was young enought to leave NZ again. These people have obviously never lived in a country like Greece (which has finally got its come uppance, just as NZ did in the early 1980s, under Muldoon - who lead NZ so close to bankrutcy it would be funny if it had not been such a travesty). Don't any of you think the eight previous councils in Auckland hired hundreds of consultants??? Don't any of you think they wasted milions of ratepayers dollars suing each other in the Environment Court over RMA political differences????

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Please leave the country, Lindsay.

Don Brash and his RBNZ board sent NZ into a double dip recession during the Asian Financial Crisis by keeping interest rates high when all the other Central banks were cutting rates.

Remember well that you were on the board and still in denial.

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Good article Rodney, keep them coming.

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Agree, good article Rodney. Shame you're not around still. After seeing a "sunk costs auction" play out in Eric Cramptons Econ class (he auctioned a $20 note for $35) I became disillusioned with the treaty process also.

If you look at:

http://www.stuff.co.nz/the-press/opinion/columnists/tahu-potiki/7313563/...

you'll see he says post setlement Ngai Tahu has spent $80m on bureaucracy, political manoeuvring, governance and public relations. It just shows that the rent seeking doesn't stop once the tribe gets the settlement; the tribe members enage in it too. The only people who get paid in the end are the lawyers.

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