December 2013 newsletter December 2013 newsletter January 2014 newsletter February  2014 newsletter February  2014 newsletter


At a certain age (mine), we are inclined to rant on about things that, that, that just don't seem to be going in the right direction. It's a condition which is especially prevalent around New Year's eve.

And I've not come down with a trivial dose this time; it's the BIG one- how we govern ourselves.
And I have a serious concern.
So there's nothing about kites in the following- except in the sense that kites are a subset of wider society- so if your way of coping with the world is to avoid the big difficult questions while cuddling up with non-controversial kite sort of stuff- best you tune out and turn off right now (misquoting Timothy O'Leary who in the '60's, thought that whatever the question, LSD was the answer**).

Disregarding kleptocracy's (most African countries), theocracies (Pakistan, Afghanistan, the middle east and bits of the USA), failed remnants of collectivism (Cuba), South America, oh, and North Korea, there are just two systems currently competing for best practice in country governance.

Winston Churchill Portrait

"Indeed, it has been said that democracy is the worst form of government except all those other forms that have been tried from time to time."
~ Winston Churchill  
The current champion is democracy (of many different stripes), first tried at scale by the city state of Athens 2500 years ago and increasingly ascendant since the failures of fascism and collectivism in the 20th century. But democracy is not perfect; as Winston Churchill said; "Democracy is the worst form of government, except for all others", and as George Bernard Shaw said "Democracy ensures we shall be governed no better than we deserve"- whatever that means.

The rising rival is to have an unelected elite governing class that has immunity to the common people's law- in return for providing quality public policy and rising prosperity. This elite has two motivations; holding on to privilege, and fear. In the words of Aung San Suu Kyi, it's "the fear of losing power", but more viscerally, of being put up against a wall and shot. If entry to this governing class is open and competitive, then it seems to me to be a fair enough bargain:- anyone can be a lord if they want, but when they fail to provide an ever better life for those they govern, their future contributions to the gene pool may be terminated.
This is the current Chinese system- which is producing impressive results so far (albeit from a low base)- but it's useful here to reflect on the hopes held out for both fascism (Nazi Germany) and collectivism (USSR +) until both these systems failed catastrophically.

Probably too soon to write off democracy therefore; but I have a worry:

In recent years we are seeing countries that have previously prospered from having democratic government, sliding towards apparently irreconcilable internal division.

The USA is the obvious example with it's growing maker/taker (earner/spender) stand-off; each side ever more sure of it's moral right and of the other's selfishness- with the consequence of an increasingly dysfunctional and paralysed government.

The immediate cause is growing inequality, but what is causing this inequality?

The left believes it's because "the rich pricks aren't paying their share of tax", and for the USA there has been some truth in this: By some measures, Wall Street trousered the entire US surplus of income over expenditure for a decade- leaving everyone else with no gains to share around- hence the 20 year plateau in real wages.
But it's also true that the lower 20% or so of working age US citizens now pay no tax at all when various hand-outs and transfer payments are factored in.
For NZ, this figure is closer to 40%, and we can't blame Wall Street. Our local businesses lack scale and struggle to just survive, so don't have many opportunities for greed.
Especially here therefore, when they're already paying all of the tax, it's not going to be easy to convince the "rich pricks" that they should pay even more. NZ income tax is now so disproportionate (6% pay 36%) that, like in France, any further tax grabs just exacerbate the already dangerous social divide- and give the remaining earners even more reason to hide their wealth in trusts, leave the country, or get their noses into the public trough like everyone else.

Ben Franklin

More than 250 years ago Ben took time out from flying his kite to express the view that while public charity (social welfare) is well intentioned, it tends to become a lifestyle choice.
The right's view (in the US and here) is that the "takers are just lazy bludgers". And there's some truth in this too: As Benjamin Franklin noted 250 years ago, 'public charity' (social welfare in modern parlance) is well intentioned, but tends to become a lifestyle choice. Even if the standard of living is distinctly marginal, being able to get by on public hand-outs without working at all is a pretty attractive option for many people here. And after a while those living this way acquire a sense of entitlement that's not going to fade away any generation soon.

My view is that both the left and the right are blinkered; widening inequality in not caused by the other side behaving badly, but is an inevitable consequence of the ever-increasing social safety net- which almost everyone (myself included) supports the need for.
Some people are more able than others, and because ability is to some extent heritable, those people are also likely to have wealthier parents, so get a flying start as well. And when children from less advantaged origins first cross paths with smarter, richer, better educated kids, they rationally see the competition as too strong and opt out- a choice available to them because there is a social welfare safety net. Here in NZ, the boys become angry and alienated, easy prey for gangs, crime and drugs. The girls get up the duff, serially, so that the state will support them- which no doubt seems like a better alternative than a McJob at that moment. Even if the proportion of each cohort taking this path is only 10%, the long term consequences for New Zealand will be difficult to survive.

Are there any ways out of this trap for a democracy?
We can't "make the rich pricks pay", as the left wants to, because if they don't agree- and they don't- what do we do?- lock them up? Sure, that'll work! And besides, there aren't enough of them to make much difference even at 100% taxation.
Nor can we "stop the low-life's having hoards of feral kids and make them get a job", or not while retaining an open society- which New Zealanders are rather attached to, as they should be.
But it could be that NZ is about to take another path anyway:
There are now so many welfare recipients here, that later this year their party may become the government. Has this ever happened anywhere ever before? A democratically elected representative government of specifically those people who are not net tax payers? The world's first "kleptocracy of the majority" maybe.

Paraphrasing Abraham Lincoln; "can a nation so governed long endure?

Its a worry!

But have a great new year anyway.


* My Grandfather in his house of logs said ; "the country's going to the dogs".
His grandfather in the Flemish bogs said; "the country's going to the dogs".
And his grandfather in his old skin togs said; "the country's going to the dogs".
There's one thing I can state; "the dogs have had a good long wait".
Which is pretty much true seeing as during this time span the human condition has improved by every measure- so hopefully I'm wrong in the above.

**He was wrong by the way, the answer is red wine, obviously.

Peter Lynn Kites Ltd
105 Alford Forest Rd
Ashburton 8300
Ph: +64 (0) 3 308 4538
Fax: + 64 (0)3 308 1905

To un-subscribe from "Peter Lynn Himself Newsletters" please click [HERE],
Please do not reply to this email. If you wish to contact Peter Lynn, click the button below here.

Copyright Peter Lynn - all rights reserved.