Tuesday 30 April 2013

Power and the passion

Electricity politics in New Zealand has never been more interesting in years.

The shock announcement - pun fully intended - of the proposed NZ Power monopsony by the NZ Labour leader David Shearer and NZ Greens co-leader Russel Norman has turned the electricity debate on its head. The proposal, which would create a single buyer for NZ electricity along the lines of Pharmac, is intended to give electricity consumers a better deal than what's been given them following nearly 3 decades of major reforms which, like many other industries in NZ, have effectively led to a cartelised orthodoxy.

To make things even more interesting, the NZ Power announcement has coincided with the impending partial float of Mighty River Power on the sharemarket. And NZ Power has had support from some surprising quarters in manufacturers and even one of the power companies.

Not surprisingly, the usual suspects in the Key Government and Big Finance have hit the panic button, with the sharemarket reacting accordingly, the PM accusing the Opposition of sabotage, Prostetnic Vogon Joyce describing the proposal as straight out of North Korea, and Simon Bridges invoking the hoary old chestnut of the Soviet Union. If Reductio ad Stalinum/Kimum is the best argument that opponents of NZ Power can come up with, there doesn't seem to be much of a contest. Got any dancing cossacks to come to the rescue of the Shock Doctrine too, while they're at it?

There's something iffy, if not cronyistic, about the local sharemarket if it has to be propped up by the transfer of wealth from state monopolies to private ones, instead of garage inventors making good. Adam Smith - read but not always understood by his various fan clubs - forewarned in The Wealth of Nations of this kind of cartelisation happening:
"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary."

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