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Insights 38: 11 October 2019
Dr Bryce Wilkinson discusses on NBR how Government policies are weakening farmer's confidence.
How to improve access to data without compromising privacy says Dr Eric Crampton on Newsroom.
Report - In fairness to our schools: Better measures for better outcomes.

Rediscovering the West
Dr Oliver Hartwich | Executive Director |
When future historians look back at our world today, they will regard it as the end of an era. Over the space of just a few years, the fundamentals of our political and economic order have all changed.

In some cases, change reverses decades of development. In others, centuries. In one extreme case, millennia.

In combination, we are witnessing the greatest shift in the fortunes of humankind in centuries. But we may be too ignorant of history to even recognise it.

To start with the most extreme change, the world has never seen interest rates as low as today. A staggering US$17 trillion of bonds are now trading at negative yields.

This has never happened before. From ancient Mesopotamia circa 3000 BC until just a few years ago, interest rates had always been positive. They were 10 percent in ancient Greece, 20 percent in 15th century Venice and 10 percent in 18th century England.

Whatever the reasons behind the global shift towards negative interest rates, it is unprecedented. We have no map to navigate this economic world. There is no sign pointing out the exit, either.

We are simultaneously moving away from another order that lasted about half a millennium – the global dominance of Europe and America or “The West”: militarily, politically, scientifically and economically.

At its peak in the 1950s, the US and Western Europe accounted for well over half the world’s economic output. With the recent rise of Asia, that share has fallen to under 40 percent and it will continue to fall. That is a good news story for hundreds of millions of Asians, and a significant shift in the global architecture.

Another significant change is the decline of the liberal-democratic order. After the Cold War, there was hope for a new liberal world order. However, over the past two decades, entire countries have turned towards authoritarianism.

Meanwhile, support for classical liberal values is falling in the West – and being replaced with rising populism on the right and identity politics on the left.

Each development would be historically significant on its own. Together, and combined with rapid technological change, we are moving into an entirely new world. And sadly, it is not one guided by Enlightenment values.

This could be a reason for despair. It need not be.

But it must be a call to action: To re-engage with those foundations on which Western civilisation was once built and on which it thrived for centuries.

Keep your (bit)coins, I want change
Dr Patrick Carvalho | Research Fellow |
From cowry shells to metal coins, promissory notes, paper money and plastic, humans have adapted to different currency types over the millennia.

Then the first Bitcoin was issued on 3 January 2009.

After a decade, a trove of cryptocurrencies globally is finding it hard to earn cache with the spending public.

Perhaps auspiciously for early adopters of digital coins, New Zealand has just joined the select group of countries such as the US, UK and Australia to issue tax guidelines approving salary payment agreements in cryptocurrencies.

But while the new IRD ruling accepts digital currency remuneration for tax income purposes, it does not provide them with any legal tender.

In other words, you may earn your salary in digital kind, but you may likely not be able to buy a bottle of milk with it. (You definitely cannot pay your income tax in the cryptocurrency the IRD just approved).

Another hurdle for digital coins becoming a mainstream method of payment regards their inherent price volatility – which leads some to call them “crypto-assets” instead of cryptocurrencies.

For example, the dollar value of a Bitcoin was less than $1,000 in 2016 rising to almost $20,000 at its peak in 2018, before crashing to around $3,500 at year end. Currently, it is hovering at $8,000.

Such large price variations make it hard not only to determine how many Bitcoins you need to buy a loaf of bread, but also to be a safe place to park your savings like the dollar and pound do.

Addressing the issue, “stablecoins” such as Tether and NuBits were designed to reduce price uncertainty. Even so, these digital coins are still struggling to act as a true means of payment.

The fundamental feature of money as a medium of exchange lies in its liquidity (i.e. how easily it can be transported and be readily accepted everywhere). So far, all cryptocurrencies have failed the liquidity test.

Recognising the problem, Facebook has proposed a new stablecoin called Libra. The hope is to capitalise on its 2.4 billion monthly active users to make Libra a household form of payment.

But first, the social media giant needs to prove it can handle the responsibility of administering a global currency. Not an easy task, given Libra’s cold reception from authorities on both sides of the Atlantic.

So for now, take your employer’s offer to pay you in digital coins at your own peril.

Extinction Rebellion: New Zealandís newest religion
Briar Lipson | Research Fellow |
This week, the church of climate change was consecrated in New Zealand. Through widespread face-painting, chanting and dressing-up our newest saviour was born.

As the writer G.K. Chesterton once said, “When men choose not to believe in God, they do not thereafter believe in nothing, they then become capable of believing in anything.”

Sure enough, as traditional religious observance dwindles in the West, people are increasingly turning to political campaigns for their sins, saints and salvation. Ever since socialism’s utopian planned economies collapsed in the 1980s, small sections of the political left have been searching for something meaningful to worship. They have found their saviour in apocalyptic climate change.

Nowadays, the church of climate change offers redemption for everyone, from feminists to animal rights activists and any of us concerned with inequity. According to a banner hoisted outside Parliament on Monday, the church of climate change can even rid us of the effects of colonisation.

As well as offering exorcisms and salvation from all mainstream concerns, the church of climate change even offers transcendence, arrest and the associated ecstasy.

Through acts of collective protest, which included halting traffic (including the buses), stopping civil servants from doing their indispensable work, mass glue-ins, lie-ins and die-ins, followers of the new campaign group Extinction Rebellion have achieved widespread atonement for owning iPhones, and using electricity.

More dramatically still, a select few protesters have even been chosen, like Jesus before Pilate’s crowd, to be ticked-off by a police person around the back of a transit van. It is heady stuff at a time when the vast majority of New Zealanders are lucky to be alive.

But then, Extinction Rebellion is not really about addressing climate change. If it were, its activists would have glued themselves permanently to our pre-existing Emissions Trading Scheme (ETS), rather than the windows of the ANZ bank for half an hour.

Instead, the 429 words of vision, mission, purpose, principles and values on Extinction Rebellion’s New Zealand website contain not one mention of climate change.

Rather, the group’s stated purpose is to address “New Zealand’s deeply rooted problems….to transform our society into one that is compassionate, inclusive, sustainable, equitable and connected” to create a “new constitution” and a “genuine democracy”.

Extinction Rebellion use religious strategies and the threat of climate change as a front for motherhood and apple-pie reconstruction of our economy and democracy. We do well to treat them with caution and avoid climate change-idolatry.
On The Record
All Things Considered
  • Graph of the week:The $86 trillion world economy – in one chart.
  • “IRD Binding Ruling Pub 19/01: Income tax – salary and wages paid in crypto-assets.
  • Government abandons electric vehicle target for public service fleet.
  • Global Competitiveness Report 2019.
  • The Death Of Europe, interview with Douglas Murray.
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