trading – Page 3

Should We Sell New Zealand to China on A 99-Year Lease?

Many Kiwis are concerned about the amount of New Zealand land being sold into overseas hands. This concern has been heightened by last week’s sale of Westland Milk to China for $588 milllion. This essay asks an extremely controversial and unpalatable question: should we sell the country to the Chinese on a 99-year lease?

Thomas Porter of the Colonial Defence Force was a famously close ally of Ngati Porou war chief Ropata Wahawaha. When a captain, he served with the Ngati Porou contingent under Wahawaha that hunted down mass murderer Te Kooti in the Uruwera ranges. From the 1870s onwards, he was involved with work as a land purchase officer, a job made easier by his fluent command of Maori and his marriage to the daughter of a chief who had once paid for Wahawaha’s release from slavery.

Porter knew that the settler thirst for land was insatiable. The British Empire was possibly the most rapacious enterprise ever created by humans, and it had its eyes set on New Zealand. The Maoris would have to give up most of their land or be annihilated, as the Aborigines had been in Australia and the Native Americans before that on the other side of the Pacific.

However, Porter had a trick up his sleeve.

He was aware of the Highland Clearances, where the relentless desire for maximum profit had led to the evictions of tens of thousands of people from communal land in Northern Scotland from the middle of the 18th century. Some of the original landholders had survived the clearances by giving up their land on 99-year leases rather than selling it. By the time 99 years were up, the original pressure to sell had gone.

A great friend of the Ngati Porou, Porter did them a great favour. Instead of arranging for the land to be sold outright, he arranged for much of it to be sold on 99-year leases. This meant that the land was returned to Ngati Porou control in the years after World War II. Hindsight would prove this to be a stroke of genius.

A 99-year lease, Porter reasoned, would give the leaseholder all the security they wanted, as well as all the freedom they needed to use the land for whatever purpose. Consequently, there would no longer be any pressure on the Ngati Porou to sell it forever. So at the end of the 99 years, much of the original Ngati Porou holdings were still in their hands – and worth a packet.

This decision is part of the reason why the Ngati Porou are doing so well today compared to many other Maori tribes. Rather than accept a windfall that was inevitably squandered, the land was effectively put into a 99-year investment account. When that account matured, the whole tribe shared in the profits.

The Chinese demand for food products to feed their population of 1,400,000,000 is as difficult to meet as the Western demand for land once was. The Chinese population might not be growing any more, as birthrates have declined sharply since 1980, but Chinese wealth has been growing strongly since then, and their demand for food products has increased commensurately. The pressure to sell our land in the coming few decades will be immense.

This was a similar situation to what the Ngati Porou faced in 1870, and the factors that apply to us were considered by Captain Porter in his decision to arrange 99-year leases. We ought to ask ourselves if we should do the same. Would it not be better, instead of selling it for good bit-by-bit, to lease the whole country to the Chinese on a 99-year contract?

We wouldn’t be the first to have the idea. The Northern Territory Government has leased Darwin Port to the Chinese on a 99-year lease. This move has been criticised severely on account of its strategic implications, but the fact remains that Australia will get the port back after 99 years, the same way that the Chinese got Hong Kong back. So there is precedent, among other places faced with Chinese expansionism, to consider this option.

Some might not like the idea of selling the country into Chinese leaseholdership. They might reason that China is a human rights abuser, a corrupt, totalitarian dictatorship that strangles honest aspirations and which is incompatible with the Western desire for personal freedom.

However, these sentiments have to be balanced with the fact that the whole country is being sold into Chinese ownership anyway. Chinese nationals purchased $1,500,000,000 of New Zealand residential real estate in 2017 alone. Eight-figure sums are not uncommon for land purchases made by Chinese interests, many of which are owned in part by the Chinese Government.

Moreover, the old Western traditions of freedom are gone. Zimbabwe has legal medicinal cannabis, and Malaysia has announced that it will decriminalise it. New Zealanders are, therefore, less free than citizens of either Zimbabwe or Malaysia in important ways. Uruguay, South Africa, Chile, Mexico and even North Korea are further examples of countries with greater cannabis freedom than New Zealand. Our time as a human rights leader is long over.

Perhaps worst of all, New Zealanders are now going to prison for years for sharing videos, or getting harassed by the Police because they might like Donald Trump. There is ample evidence that we are no longer a free people, so there’s nothing to lose on that front.

Maybe it’s time to concede that it’s better to lease the whole country to China on a 99-year term today, get them to build some proper houses and infrastructure, and then to get it back in 2118, than to have it sold piece-by-piece into Chinese hands permanently. We would probably not suffer more under Chinese leadership than we already do under our own.

If you enjoyed reading this essay, you can get a compilation of the Best VJMP Essays and Articles of 2018 from Amazon for Kindle or Amazon for CreateSpace (for international readers), or TradeMe (for Kiwis). A compilation of the Best VJMP Essays and Articles of 2017 is also available.

The Best Way to Raise Wages Is to Strengthen The Negotiating Position of The Working Class

Low wages are blamed by many for the various social ills befalling the nations of the West. If only wages were higher, a lot of problems with housing, education and healthcare would be solved. Although this is true on the face of it, little thought goes into what actually leads to high wages. This essay explains.

A popular belief, particularly among young leftists, is that the wage being paid reflects the employer’s goodwill. This is true to a minor extent (it reflects the degree of solidarity that the employer has with their employees), but in practice the size of a wage reflects little else than the respective negotiating strengths of the employer and the employee.

These people don’t understand that a person’s wage is the result of a negotiation process, and that this process is determined by economic principles. In particular, the wage reflects what the employer and employee each have for a Best Alternative to a Negotiated Agreement (BATNA) – the alternative that would arise if negotiations failed and both parties walked away from the table.

If the employer’s BATNA is to lose production and fail to fill orders because they are short-staffed, that employer’s negotiating position is weak. Likewise, if the employee’s BATNA is to get a well-paid job somewhere else, that employee’s negotiation position is strong.

Conversely, if the employer’s BATNA is to get the Immigration Minister to import cheap labour from the Third World and to hire them instead of a local, then that employer’s negotiating position is strong. Likewise, if the employee’s BATNA is that his family back in the Third World starves, that employee’s negotiating position is weak.

So it can be seen that a person’s wage is chiefly a function of the demand for that person’s labour and the supply of competing labour. All other factors being equal, the greater the demand for that person’s labour, the higher the wage, and the greater the supply of competing labour, the lower the wage.

If one wishes to raise wages, then, the only thing that will reliably work is to restrict the supply of the labour competing for those wages.

The capital owners of the West have always striven to minimise their labour expenses. The most effective way to do this is through slavery, because then the capital owners get labour (effectively) for free. The American cotton and sugar plantations of the 18th and 19th centuries were profitable because slavery minimised their labour expenses, and the closer a modern company can get to free labour, the better.

In the 21st century, the way to keep wages low is to import cheap labour from overseas. This has the massive benefit of allowing the capital owner to undercut the native working class, and to pay a fraction of their wage to the new imports instead. If the cheap labour is from a poor country, they will often be happy to live 20 to a house so that they can send some of their wages home in remittances.

Many modern enterprises in the West are only profitable because of importing cheap labour, but allowing this is a form of corruption that harms the working class. In a natural capitalist system, companies that can’t pay a living wage to their employees go out of business because they can’t find staff. Under the system we have, those companies import cheap labour and their previous staff go on the dole.

Despairingly, many leftists now think it is “racist” to oppose open borders, on the grounds that it’s mean to tell non-white people they can’t live in the West. These leftists are indifferent to the argument that opening the borders to cheap labour is against the class interests of the working poor. In fact, they often verbally abuse those working-class people for agitating for their own class interests, while the capital owners laugh all the way to the bank.

There is only one reliable way to increase the wages of labour. This way is to improve the negotiating position of the working classes. The negotiating position of the working classes can only be increased in two ways: by increasing the demand for labour, and by decreasing the supply of labour.

Only if the best alternative to a negotiated high wage is another high wage will the employer pay one. If the worker asks for a living wage and cheap labour is available, the employer will go with the cheap labour in almost every case. The employer doesn’t give a shit if this leaves the original worker unemployed – the cheaper the labour, the more profits for them.

The sad truth is that the international capitalist interests who have created this arrangement also own the mainstream media. As a result, this media has convinced us that this state of affairs is natural and that anyone who complains about their wage must be a racist. They don’t care if they’re hated – they still own everything and hate doesn’t stop them. What they do care about is a weakening of their negotiating position.

The New Zealand Labour Party – like neoliberal parties everywhere – has completely betrayed the New Zealand working class by keeping the floodgates of cheap labour wide open. It is by doing this that the Labour Party have kept wages low and contributed to the current social problems. As this magazine has argued previously, this betrayal risks that the New Zealand working class turns to fascism. The only way out is to strengthen the negotiating position of the workers.

The Case For Cannabis: Legalisation Will Not Lead to A Black Market

One of the fears of those who are against cannabis law reform is that a legal system would lead to the growth of the black market in cannabis production. Therefore, it would be better to keep cannabis illegal. As this article will examine, this reasoning is based on at least two major errors.

The logic goes like this: it costs X amount of dollars to buy an ounce of cannabis – let’s say 300. Cannabis is likely to be taxed in a manner similar to alcohol, and alcohol taxes are reasonably hefty, so let’s assume at least a 20% sin tax on cannabis, plus 15% GST – this is already over $400 an ounce.

This could mean that legal cannabis will cause so much tax to be added to the cost of an ounce that black market operators will be able to undercut it. Since cannabis growing will not be cracked down on because of its new legal status, large numbers of people will be able to grow and to enter the black market at no risk.

This reasoning is false in two major ways.

The first is that is doesn’t account for economies of scale. On the black market – which is currently where all cannabis is sold – producing cannabis isn’t cheap. As mentioned elsewhere, home cannabis grows suck up as much as 1% of the electricity production of nations such as America and New Zealand. These are incredibly inefficient compared to warehouse grows.

Moreover, cannabis sold in a legal market, from dispensaries, would not carry the risk premium associated with a product sold on the black market. The risk premium is very high in the case of cannabis, because a lot of product gets intercepted by Police action before it ever gets sold, and the losses from this have to be balanced against finalised sales.

Taking both of these things into account, we can see that the production cost of legal cannabis, manufactured by the ton and distributed to pharmacies without interruption, is going to be a fraction of what it is currently. This means that it will be possible to put GST on it and a sin tax on top of that, and still sell cannabis for $200 an ounce, or less.

No black market producer could compete with this and still make enough of a profit for it to be worthwhile. So, if anything, legal cannabis would sooner wipe the black market out completely by undercutting it. This was a principle understood in Uruguay when they made cannabis legal in 2013 – they set the price of cannabis at $1 a gram.

The second major reason why we need not be concerned about a black market is because we have the capacity ourselves to more-or-less set the final cannabis price through taxation.

There are really two kinds of prohibition: hard prohibition and soft prohibition. What we have right now is hard prohibition, where the Police will physically smash anyone in possession of cannabis, or cultivating it. This is hard because it uses the full power of the state, and will go as far as killing you to enforce it, or putting you in a cage for several years. We are simply not allowed it and no correspondence will be entered into.

But making something legal, and then taxing it to the point where it’s almost impossible to afford, is a kind of prohibition. The New Zealand Government is currently employing soft prohibition of tobacco, in that it has been raising the tobacco taxes every year, with the stated intent of forcing tobacco cessation through making it unaffordable. This it believes is in the greater good.

Soft prohibition shares many of the drawbacks of hard prohibition. In the case of cannabis in New Zealand, we can see that black market tobacco has made a comeback, to the point where trade in it is believed to cost the New Zealand Government tens of millions is lost taxes every year. So we can see that high taxes on legal cannabis is a bad idea, if the black market is to be discouraged.

If cannabis legalisation was done intelligently – which is to say that it was done with an entirely different mindset to how prohibition has been done so far – we would set the level of taxation such that the transition to a legal cannabis market was a soft transition. In other words, we could calculate what the expected average production cost of an ounce of cannabis should be, account for profits, account for GST, and tax that total at a rate that would still allow it to beat the black market. This would achieve all major objectives at once.

Not only would cannabis law reform not lead to more cannabis being sold on the black market, but it would be the best thing to fight the black market. Cannabis law reform would allow legal sellers to undercut the black market through economies of scale and the removal of the risk premium, driving criminal gangs out of business.

This article is an excerpt from The Case For Cannabis Law Reform, compiled by Vince McLeod and due for release by VJM Publishing in the summer of 2018/19.

VJMP Reads: Edward Bernays’s Propaganda V

This reading carries on from here.

The fifth chapter of Edward Bernays’s Propaganda is called ‘Business and the Public’.

Businesses have realised that their interactions with the public are not limited to selling their product. They also have to keep on side with that public, otherwise the latter will pass laws restricting the operational freedom of that business. This need to stay onside with the moral fashions of the public has created the public relations industry.

Incredibly for 1928, Bernays is already talking about the fact that it is no longer demand that causes goods to be supplied to the market. He is aware even then that demand is something that is created, and that this is economically necessary in an age of mass production owing to the size of the capital investment necessary to get started. This is entirely different to even a century beforehand.

It has meant that psychology is now necessary in order to conduct business. The minds of the market, both as individuals and as collectives, must be understood. The vast reach of mass media only makes this more important. “Business must express itself and its entire corporate existence so that the public will understand and accept it.”

A company must think hard about the impression that it creates on other people. This means that businesses have to think about things like the dress of their staff. Much of this sounds routine for 2019, so it must be remembered this book was written in 1928.

The propagandist’s work can be divided into two major groups: “continuous interpretation” and “dramatisation by highspotting”. The former is a kind of micromanagement of the public mind in all minor matters, whereas the latter attempts to create a striking and lasting impression. The appropriate method to use can only be determined after a thorough study of the needs of the client.

Bernays writes of his conviction that “as big business becomes bigger the need for expert manipulation of its innumerable contacts with the public will become greater.” Critical to this is finding common interests between the good or service to be sold and the public interest. This search can have an almost infinite number of dimensions. He emphasises against that the goodwill of the public is necessary for any success, in particular stock floats.

Competition is now so intense that almost every decision made by the consumer is someone’s interest. Even the choice of what to eat for breakfast impacts a large number of corporate interests, all of who want to sell their product. Bernays jokes that this might lead to people becoming fat out of a fear that manufacturers will go bankrupt if people don’t eat enough – bizarrely ironic considering our obesity struggles 90 years later.

Bernays finishes this chapter writing about the amusement industry, which has its roots in carnivals and “medicine shows”. They were the ones who taught business and industry about propaganda. Ultimately, propaganda is a dynamic industry that responds to changing trends, and therefore “Modern business must have its finger continuously on the public pulse”.