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Insights 32: 30 August 2024
The Post: Dr James Kierstead on the troubling state of academic freedom in NZ
 
Podcast: Germany's political shift and its global impact, Dr Michael Johnston & Dr Oliver Hartwich
 
NZ Herald: Nick Clark on the balancing act for Kiwi councils

Lessons in market signals as electricity crisis recedes (for now)
Roger Partridge | Senior Fellow | roger.partridge@nzinitiative.org.nz
Misguided good intentions paved the way for this winter’s energy crisis.

Fortunately, the country has avoided blackouts. But we came perilously close. Transpower’s decision last week to allow greater use of hydro reserves eased immediate concerns. Meridian Energy is now “very confident” we will avoid an energy-saving campaign. But while this year’s crisis has passed, our energy security remains fragile.

The Government’s decision this week to reverse the offshore exploration ban and ease regulatory barriers to LNG imports offers some longer-term hope. But it provides no quick fix for avoiding another crisis next year.

An exceptionally dry winter pushed our power system to the brink. But the roots of the crisis lie in past policy mistakes.
 
The Ardern-Government’s ban on offshore gas exploration scared off further investment. In effect, it capped our offshore gas reserves. Yet, the exploration ban did nothing to reduce our climate footprint. The Emissions Trading Scheme already caps New Zealand’s net emissions. The ban merely shifted emissions between sectors.

The result? This winter’s sharply higher energy prices and a less resilient energy sector. The fall-out is painfully clear. Winstone Pulp International’s closure, with 230 job losses, is just one casualty. It is a stark reminder of the human cost of poor policy decisions.

Despite these lessons, some politicians seem eager to repeat past mistakes. The recent electricity price spike triggered calls for government action. Associate Energy Minister Shane Jones said he would not rule out price controls.

But regulating wholesale prices would be another bad mistake. Price signals play a crucial role in solving shortages. They direct scarce resources to those who value them most. They encourage new supply. And they highlight areas needing investment.

When prices are kept artificially low, demand outstrips supply. This leads to rationing. But no central planner can know all the factors affecting supply and demand. This ‘knowledge problem’ means top-down rationing risks harming our economy more than temporary high prices would.

In our complex electricity system, hasty, virtue-signalling interventions risk long-lasting, harmful effects. Prices must be able to signal scarcity and guide investment and consumption decisions.

The illusion that price controls will bring cheaper energy might soothe short-term public anger. But that comes at the cost of long-term energy security and economic stability.

Politicians must learn from past mistakes. Otherwise, their noble aspirations will keep steering us toward energy insecurity.

The country needs sound policies, not just good intentions, to ensure a reliable and sustainable energy future.

Defending democracy
Dr Michael Johnston | Senior Fellow | michael.johnston@nzinitiative.org.nz
New Zealand often reminds me of The Shire, the peaceful abode of the hobbits in J.R.R. Tolkien’s books.  

Like hobbits, we Kiwis tend to see geopolitical turmoil as remote and beyond our influence. But, like Tolkien’s fictional ‘War of the Ring’, events like those in Ukraine and the South China Sea have global implications. We can ignore those events with hobbit-like complacency, but we cannot avoid their ramifications. 

Russian president Vladimir Putin’s war on Ukraine is now in its third year. Meanwhile, China’s Xi Jinping casts his gaze towards Taiwan, sizing up the willingness of the US and its allies to defend the island he regards as a rightful part of his empire.  

Putin and Xi rule their respective countries with despots’ tools – fear, repression and political violence. The comparative freedom and prosperity of the world’s democracies stand as living refutations of their authoritarianism. So, they do all they can to seed instability in democratic nations. 

We can all contribute to thwarting their shared project to undermine democracy – and unlike Tolkien’s diminutive heroes, we need not undertake dangerous quests to do so. 

A first step might be to better inform ourselves. In our domestic world news this morning I saw nothing on the imminent transit of the Taiwan Strait by German warships. There is one short article on Ukraine’s incursion into Kursk, with equal column space devoted to Kamala Harris’ fashion choices. I recommend New Zealand veteran Ben Morgan’s Substack for excellent analyses of the Ukraine war and Pacific security matters, including China’s influence.
 
We can also all play a personal part in shoring up democracy. Across the English-speaking world, democracy is threatened by polarisation. The divisions in our political culture are partly driven by bad actors online—and some of those actors, whether human or AI bots, are in service of Putin and Xi. Cultivating more respectful ways to disagree would go a long way towards defeating their aims. 

In Peter Jackson’s film version of Tolkien’s tale, the hobbit Pippin, disheartened by the perils they are facing, worries that they are just too small to make a difference. His friend Merry’s reply makes clear their responsibility to do what they can: 
 
"The fires of Isengard will spread. The woods of Tuckborough and Buckland will burn. And all that was once green and good in this world will be gone." 

Complacency is not an option. 

The stupid outrage industry
Dr Eric Crampton | Chief Economist | eric.crampton@nzinitiative.org.nz
Classic-era Simpsons episodes may not have had the solutions to all of life’s problems, but they did get a few things right.

Be sceptical of monorail salesmen. The lesson also applies to hucksters for other grand council projects.

Both candidates for US President in 1996 were, in reality, aliens wearing human skin-suits, conspiring to enslave everyone no matter which party won. Don’t blame me, I voted for Kodos!

And there’s another serious lesson that’s too-often overlooked.

Ignore those who feed on attention.

American grifter Candace Owens plans to visit New Zealand. I wonder whether her intended visit is due to the success of the previous visit by other Canadian grifters a few years ago. Remember that success needn’t mean people paying for tickets. They aren't the intended audience.

There’s a kind of perverse ideological entrepreneur that feeds on controversy, and only on controversy. Their underlying messages range from racist tropes to conspiracy theories. None of it is worth any serious person’s attention.

But it’s trivially easy to help the outrage-merchants generate lots of small-donor donations from supporters.

Start by protesting the visit and demanding the government blocks their entry. If they’re allowed in, try to get the venue to cancel the booking. If cancelling fails, protest the event.

No matter the outcome of that game, the outrage-merchants win. They can show their supporters they’re important enough for the New Zealand government to care about. What they say must be important if people are trying to suppress it.

Whether or not their appearances ultimately proceed only changes the text in the donor appeal letter. Do they send Letter A, thanking their supporters for helping them overcome incredible odds to be allowed to speak and asking their support to take the message to the next place? Or Letter B, protesting the injustice and asking for support for the legal fights? Either way, their supporters’ outrage drives donations.

The Simpsons had the answer.

In a classic Halloween special, giant advertising billboard characters came to life and rampaged, Godzilla-like, through Springfield. Nothing could stop them. That is, until Lisa Simpson and Paul Anka came up with a catchy jingle telling people that if they were tired of monsters, “Just don’t look!”.

When people stopped looking, the monsters collapsed. It was only attention that kept them alive.

Just Don’t Look.

 
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