Cunliffe: Neither good nor effective

 

The theme building around David Cunliffe’s departure is that he was a disaster as a leader, unpopular with caucus and colleagues, a fake and a phony – all true – but despite that, say the eulogists, he was still a brilliant man who did wonders for telecommunications*.

Bullshit.

His knowledge of history, economics and much else was bunk. (See here, here, here, and here for instances.) And it was always his set-piece speeches that bore the least connection to either reality or humility. (Here, here and here.)

And what he did to telecommunications and property rights was disastrous. (Q: How do you get a nice small business?  A: Take a large one, and make Obergruppenfuhrer Cunliffe the minister in charge.). What he did was neither brilliant nor remarkable; it was simply dismemberment of NZ’s largest company. And after distributing its parts and services to vultures like Annette Presley, rather than the dismemberment encouraging the investment in high-speed telecommunications he’d promised, instead we saw a slow-speed govt takeover. Because as I said over and over and over again at the time, "No one but an idiot or a cabinet minister would expect to see businessmen or women making a long-term investment in infrastructure when theft of such an investment is imminent, or the breakup of that investment is on the cards." And so they didn’t.

He did not “do wonders” at all. He created disasters. He was the sort of fellow who when fact checking his sentences you’d begin to doubt even the words “and” and “the” – and who after shaking his hand you’d check to make sure all your fingers were still there.

The fact the only people he ever managed to sell himself to were geeks who hated Telecom and the trade unionists who elected him to leader tells you everything about how gullible they both are. Good and effective? Only at flushing out wankers who rate him.

---

* Rob Hosking at NBR for example: “One of Helen Clark’s more effective ministers during the last Labour government and his role in regulatory reform of telecommunications should not be forgotten. He did a good job there.” Vernon Small at Stuff: “But he could also be a highly effective minister, and never so much as when he was busting Telecom’s local network monopoly or taking a hard line with DHBs.” And National’s pollster David Farrar, who understands how much Silent T did to make National’s last victory possible: “He was also a very good Comms and ICT Minister in the Clark Government… Always enjoyed working with him when he was a Minister…”

These men and others like them all need to look in the mirror and examine what they find there.

.

Do you, can you, watch your sport online? [update]

EVERYONE’S BEEN A-TWITTER over the last few days about the breaking of the Sky “monopoly,” and the need for English soccer fans to get themselves a fast enough connection to watch their favourite sport online—either via their computer, tablet, smartphone, or through an internet-savvy TV or set-top box—or through any TV they can hook up to their computer, tablet, or smartphone.

Much gnashing of teeth about the problems. But you’d think that would give folk enough choice in how they watch their sport.

And also help to demonstrate that as long as regulatory barriers to entry remain in abeyance, technology has a way of helping demonstrate that one man’s “natural monopoly” is another man’s opportunity to provide service in pursuit of profit.

Still, soccer fans who are regular customers of Sky are a little septic that Sky’s dominance in the sporting marketplace is being broken, and fearful how it will work watching 380 games a year of their sport online.

Well, let me reassure them.  I’ve been watching AFL online for nearly three years now, and after a few early teething troubles when the AFL’s international service was being set up, it’s just fine.  This year, you can watch all 170 games (plus pre-season, press conferences and highlights) through either an iPad app, an Android app, or through their AFL TV website.  Mostly, I use my computer to watch my main game (like those involving the Geelong Cats) on the big screen with the office data projector, a few mates, and a well-stocked fridge.  And then for the lesser games (like those involving the Collingwood scum), I watch it at home by wiring up either phone, iPad or computer to the telly.

It works fine. So panic not.

NOW, OBVIOUSLY IT DEPENDS on the speed and quality of your internet connection.  And already folk are leaping up and down using this as yet another stick with which to beat the government for moving at such a glacial pace in “rolling out” super-fast broadband across the country. “The country needs it,” say the spruikers of super-fast broadband.

But in fact “the country,” in the form of you and I and the folk down the road and everyone else who constitutes what economists call real demand are saying quite the opposite. Far from being desperate to bridge the digital divide, consumers are responding to the ultra-fast broadband already “rolled out” by government not by eagerly joining up to it, but with the sound of a loud and reverberant raspberry. Turns out

nearly two years after its rollout, the government's $1.35 billion ultra-fast broadband initiative (UFB) has the dubious honour of rapidly becoming both a white elephant and a lame duck. Just 5,133 out of a possible 171,886 users have signed up to connect.

So maybe, just maybe, we’ve seen demonstrated in that distinct lack of enthusiasm for the billion-dollar broadband boondoggle that NZers are already, by their own estimation, being served as well as they’re satisfied with by the present speed provided by  their ISPs—and that the supposedly “unfulfilled need” for this ultra-fast broadband was not an example of “market failure” at all, but just another example of a political football being turned into a rent-seeking boondoogle.

UPDATE: The good folk at Sommet Sports remind me that you can get every AFL game live on your box on the Sommet Sports Channel (accessible free at Channel 114 on your telly).

And if  for some unknown godforsaken reason you want soccer, then you’ve got soccer live and free right there on your box. You can watch Bundesliga, N Power Championship League, Football League, Argentinean League, Europa League, Capital Cup, England Home Internationals, Community Shield, Chelsea TV (Sommet will buy the rights to another Premier League TV which will enable them to broadcast 2 delayed EPL games per week), Scottish FA Cup,  German FA Cup, and Chinese FA Cup.

Isn’t that more than enough?

High fibre

Yet another flagship National government project is going down the toilet, and you are going to made to pick up the slack.

There is huge demand for high-speed fibre broadband, said the government in its election platform, such demand that only a government fibre network can satisfy it.

Yet when the government price-fixer in chief, the Communist Commission, declares it intends to cut the price that Telecom Chorus can charge customers on its existing copper network by one dollar a month, a panicky Prime Minister declareS he’s ready to legislate to make sure that wouldn’t happen!

Prime Minister John Key says the decision could … prove problematic for the ultra-fast broadband network because consumers could be discouraged from switching from copper to fibre.

If one dollar a month is enough to prove so “problematic” for his pet project, so problematic the PM wants to price-fix the price fixers, this might suggest to you just how sound an “investment” he thinks his pet project really is.

[Hat tip Gavin B.]

Stephen Fry, Steven Joyce and Government broadband

He loves gadgets and he’s tweeted from many places around the world, but Stephen Fry was less than satisfied with government broadband here in EnZed. And he reckons we EnZedders should rise up and take on those responsible.

“You wouldn't put up with potholes in your roads,” he says, though we do, don’t we, “so you shouldn't have to put up with Third World broadband standards as well.”

But we do, don’t we.  We not only put up with it, you vote for it.

So who’s responsible for the potholes in local broadband? Well, it’s fashionable to blame the private telcos, of course.  But consider that around six years ago, right when those private telcos were considering plans to roll out the next generation of broadband across the country, Labour’s David Cunliffe began dismembering Telecom—to the loud applause of  Labour hacks, National stalwarts and Telecom’s competitors—and announcing plans to “roll out” government fibre.

Would-be private investors in next-generation broadband began quietly reconsidering their own investment plans. Why put your own head in the noose when you could reap the benefit of a taxpayer “investment.”

Then around four years ago in a throwback to its Think-Big Muldoonist past the incoming National government began announcing that it would be they who would be “rolling out” the next generation of high-speed, bells-and-whistles broadband, the “roll out” of which would be a flagship policy of their first term.

Potential users and rival telcos alike waited with bated breath while nothing continued to happen. And now that the former promoter of National’s next generation of high-speed, bells-and-whistles broadband Steven Joyce has moved on to bigger, better and brassier things, the non-roll out has been left to first-time minister Amy Adams—who instead of being photographed in front of new high-tech equipment sits in her new office writing press releases boasting :

The Government has set aside $1.5 billion for ultra-fast broadband, and aims to have the service reaching 75 percent of New Zealand in the next 3 5 7 10 years… contracts had been locked in, the rollout was under way, and competitive wholesale prices had been secured, but it was up to the industry to ensure New Zealanders got the quality and performance they expected at prices they could afford…

Or in other words, “we’ve spent lots of your money already with only paper promises and electioneering hype to show for it. But stop whining, because you’ll get it when you get it.”

At least she recognises, if only partially, that government itself delivers nothing. That in the end it is still “up to the industry.” But perhaps she and other EnZedders might reflect that the industry might have done better and much earlier—that big private investment might have been directed into this area much sooner—if big government hadn’t been flexing its muscles for the last six years in the hope of  a political windfall.

After all, it looks like up to $33 billion could be the real return to NZ from the investment, if it ever comes to pass, some of which would have rubbed off on private investors. But when any private investment would have been drowned out by government and (no doubt) damned by luddite nationalists in every party, and when NZ’s largest telecommunications company is being dismembered and partially nationalised as a reward for owning and having rolled out the last national network, it’s no wonder no private investor wanted to take the risk.

As a blogger who’s now left the building once said:

If telecommunications companies think someone is going to steal their networks,they won't build any more of them! It's really simple. Now we are stuck with waiting for the government to waste my tax money building something that every private interest is now too scared to.

Former Telstra Australia head Sol Trujillo said much the same when similar threats were directed his way from the Australian government. He:

derided Kevin Rudd's election-promised "partnership" to build an across-Australian broadband network, calling it a "kumbaya, holding hands" theory. It might have been an election promise, but looks like no- one stopped to ask the company supposedly being partnered. Said Trujillo: "We are only going to participate in the things that we own and control."
    Mr Trujillo, firmly backed by chairman Donald McGauchie, said Telstra was happy to invest $4 billion or more of its own money rather than the taxpayers' - but only on its terms and pricing…
Australia needs a fast, modern telecoms infrastructure [says Trujillo]. And the quickest way to get there is to allow unfettered competition. Mr Trujillo says that America and Europe learned long ago that “to foster competition the government cannot control the levers, it must let the market work. Virtually every other country has moved towards less regulation in telecoms” …
    Worried that giving rivals a free ride would undermine his profits, Mr Trujillo is threatening not to lay the fibre: “My duty is to our shareholders—including 1.6m ordinary Australians. I will only invest where I can earn an economic return.”

So when private investors aren’t able to earn a return? Or they are (falsely) led to believe they can be given an unearned free ride on someone else’s network? Then you end up where you are today. As our late friend Anna Woolf said back in 2008: Remove the Red Tape, the Fibre Optics will follow. Or don’t, and it won’t.

So when you’re complaining about your broadband service today, it’s government broadband you’re complaining about.

Potholes and all.

Making shit up for fun and profit

Yet more numbers emerges from the Making-Shit-Up file, this time from a report on “fast broadband” written by BERL at the instruction of the Auckland and Bay of Plenty Councils. 

The report purports to show that “early roll-out, adoption and uptake” of “fast broadband” will make us all rich. But as Eric Crampton points out, this is based on some heroic, not to say nonsensical, assumptions about the sort of productivity increased by filing reports at 10 mbps rather than 500 kpbs.

Read A number I don't believe  - O F F S E T T I N G   B E H A V I O U R

High-speed broadband clusterf**k coming right up

While Australians are starting to realise they’re going to pay dearly for their government-run national broadband network, some New Zealanders are starting to question whether or not we even need ultra-fast broadband—particularly if it comes with a government label—and especially since New Zealanders are already world leaders in stealing films over their existing connections.  Something some of us have pointed out before.

These are the sort of people who were (and still are) cheering Obergruppenfuhrer Cunliffe’s break-up of Telecom in the hope it might make it easier to steal more movies and TV shows more quickly—cheering the vandalism of Telecom’s private property here while Telstra’s former CEO Sol Trujillo over there gave the spineless Therese Gattung a lesson in how to tell a thieving government to go to hell.

Trujillo was one chap who knew long ago that the government’s interest in high-speed broadband would only impede private investment in it; and having the government involved at all would only be a clusterfuck. As it has been both there and over here. The question, really, boils down to a simple value judgement:

“”The question is not whether there are, or might one day be, cool things that you can only do with 100mbps broadband.
    “The question is whether enough of us are prepared to pay what it would cost to make that available down every suburban street.”

And if we’re not prepared to pay that cost upfront to a private company--and clearly most New Zealanders aren’t, or they would have—then why pretend to ourselves we won’t be paying through the nose when (having delayed private investment in those places where it might be economic) the government starts doing it themselves.  Or trying to.

Like they’re been trying to, and failing to, in Australia.

Internet access a “fundamental right”? [updated]

Labour’s Clare Curran quotes a BBC World Service poll saying “Almost four in five people around the world believe that access to the internet is a fundamental right.”

Which doesn’t make it a right.  Especially not a fundamental right.

Even Tapu Misa gets that much about rights, or at least is prepared to quote it in her Herald column: “As the philosopher and writer Ayn Rand observed, ‘Individual rights are not subject to a public vote’.”  And thank goodness for that.

To paraphrase Tapu Misa’s new favourite author just a little,

    “the source of man’s rights is not divine law or parliamentary law—or popularity contest--but the law of identity.
    “A is A—and Man is Man. Rights are conditions of existence required by man’s nature for his proper survival.”

And the idea that access to the internet is a fundamental right?  Well, even if “four in five people around the world” would go that far, Clare Curran wouldn’t. Not quite. Not yet. “I am not saying categorically that access to the internet is a human right,” she says.

And thank goodness for that, because it isn’t.  It can’t be.  Because the test of a genuine right is not whether or not you can get four out of five people to agree with you about it, but whether or not it would, as a right, impose positive obligations on others. Even the Herald’s editorial writers understands this much:

    “Human rights are typically rights that everyone can enjoy equally at no cost to others. Society can recognise and uphold certain rights and freedoms because they can be applied equally to everyone; they do not require some people to be awarded rights at the expense of others. ‘Social’ rights are quite the opposite. They can be awarded only at the expense of others.”

“Social” rights? I’d call them bogus rights. Bogus rights are non-rights, since they can be awarded only at the expense of those required to service them—which means they serve to destroy real rights.  Fundamental rights. For example:

Create a “right” to a job, and you take away the rights of employers.

Create a “right” to a house, and you take away the rights of house-builders.

Create a “right” to health care, and you take away the rights of doctors and nurses.

Create a “right” to internet access, and you take away the rights of internet providers—as the assault by Clare Curran’s colleagues on Telecom’s shareholders demonstrates.

These are all good-things-to-have, to be sure, but being a-good-thing-to-have does not make it a right to have it. Free pizza and a big-screen TV are good things to have, about which we can be very sure, but to manufacture a “right” to those things would play havoc with the rights of Hell’s Pizza and the shareholders of Noel Leeming.

Rights are not to be multiplied beyond necessity, not even if our out of five people think they can be.

And not even when a Labour MP floats the idea on her blog as a trial balloon.

UPDATE: Good for Richard McGrath and Falufulu Fisi, whose straightforward common sense in the comments of Clare Curran’s post (here and here respectively) the Labour Party’s commenters are now doing their best to ignore.  They say it way better than I did:

Falufulu Fisi:

    “Clare, the argument that internet isn’t a right, it’s a privilege is right on the dot there.
    “Think about it as a property rights issue. This means that the provider of the internet services has no obligation to be forced (by law) to allow a person that it had banned for example from its services on the ground/s that this person had violated its rules. This banned person can’t run to court and complain that his access rights to the internet are being violated. The online services are properties that belong to the owner/s and not the citizens whom may have mistaken to believe that access to the internet is their rights by birth, but actually not. They (citizens) have a right to setup their own services (i.e., their own properties which they have rights to their use), but they can’t claim that getting access to the internet is being violated because no entrepreneur has setup such services in his village/town/country, etc…”

Richard:

    “Falafulu Fisi is correct. Fundamental rights are timeless. Such as: the right to freedom of speech and expression; the right to possess and carry adequate means of self-defence; the right to be secure in one’s possessions from search and seizure. The sort of things that governments everywhere try to limit.
    There is no fundamental right to broadband access, just as there is no fundamental right to spaceship travel to the moon. These are things to be paid for if you have the money. Otherwise something has to be forced to pay for them and to provide or create them.
    The essential aspect of rights and freedoms is that no-one has to be forced to pay for or supply them. They impose no burden on anyone else.”

And a blogger waits

While the Key Government promises a nearly country-wide, $1.5 billion broadband experiment of fibre to the home, a blogger waits.

A grown adult, a married man, a blogger who just wants to run his business and do what people do online. I give you Blair Mulholland, who -- while Steven Joyce promises the earth and a whole new bureaucracy this morning (unless you live on the West Coast) -- is reduced to blogging from his Mother's computer, and from the free ones at the Whangaparaoa Library because, because . . . well, let Blair tell you:

If telecommunications companies think someone is going to steal their networks,
they won't build any more of them! It's really simple. Now we are stuck with
waiting for the government to waste my tax money building something that every
private interest is now too scared to.

Remember when the government effectively nationalised Telecom's network and you all cheered? You're paying for that now with reduced property rights protection and decreased service, just as you'll be paying for National's promises with money that could have been spent on tax cuts.

Happy?

Guest post: Breaking the political broadband barrier

Reader Ann makes a perfect point about National's broadband boondoogle:

    One of National's promises was the faster broadband network. Way up north in Whangarei of all places, they're soon going to have (supposedly) the fastest broadband in the country. [Story here.] This is due to Telstra Clear and a company called Northpower, who are installing that super-cool, ultra-fast fibre whatsit network to help make their company more effective, and had the brains to make it much larger than their requirements, leasing the excess back to an ISP, and from there, to consumers in the CBD. 
    A great example of a private company getting off its arse and doing something rather than sitting back for the government to come along and fix things with a magic wand - usually a fucked up inefficient magic wand that takes years to get going, and gets tied up with red tape and regulation anyway.

Not to mention the courage it takes to invest in broadband when the whole area is a already a combination of political football and electoral bribe.  Good job, and good post.

Dial-up hell

I'd forgotten just how bad it is to have no broadband. Note the past tense. I had forgotten. For various sad and bureaucratic reasons involving Vodaphone, iHug and the other users of my network, I'm now being reminded -- and for another two weeks will continue to be reminded.

That's one reason posts here have been short in recent days; it's hard to point you to great stories and articles on the internet when I can't read them myself.

Making us poorer

Does anyone else find it ironic that in the same month that John Key has pledged to borrow $1.5 billion to install broadband in their homes (that's a cost of about $2000 per home, the cost to be borne by the taxpayers who live in those homes), the government has told Canadian investors who wanted to voluntarily give shareholders a similar amount that they won't be allowed to?

In other words, Key wants to take $1.5 billion out of capital markets to build a network that in the current regulatory environment is going to lose money (and if it weren't going to lose money, private investors would already be doing it), while shareholders and those capital markets from which those funds will be taken have just been denuded by a similar amount because of government regulation.

In other words -- and given that greater productivity comes about from ever greater application of capital to the job of producing wealth -- government regulation is making us poorer twice over.

UPDATE: Just to restate the point: 

The more capital invested, the better equipped are our places of work;  the better equipped a plant is, the more the individual worker can produce within a unit of time; and the more the individual worker can produce within a unit of time, the higher is what the economists call the marginal productivity of his labor and, thereby, the higher real wages he gets. [ref Mises: 'Wage Earners & Employers']

Or to restate the point in even simpler terms: The more capital a country invests productively, the higher are the real wages in that country. If you want higher real wages, then you need more and more capital invested productively, not consumed destructively.

And since these two measures between them take around $3 billion directly out of NZ's capital markets, and indirectly suggest to offshore investors that their money is unwelcome here and their investments are insecure, I'll leave it as an exercise for the reader to suggest what effect this has on real wages.

Broadband, by order!

New Zealanders need broadband, you say?  Okay, then if they need it as desperately as you say, why don't they seem prepared (as things stand presently) to pay voluntarily for the investment necessary?  Why does one of the two major parties think we need to be forced to pay for nationalised broadband, withdrawing more than $1.5 billion of investment capital from those New Zealanders who voluntarily choose their own investments based on reasonable return, and transferring it to a project that in the present environment is only apparently a goer as long as government force lies behind it.

Do you think perhaps there's a good reason, or several reasons, that New Zealanders haven't paid voluntarily for the sort of broadband that's now being talked about?

The fact is that the alleged need New Zealanders have for broadband -- a need that National says is worth spending taxpayers money at the rate of $2000 per household -- is only a problem from the standpoint of central planning, which necessarily views human beings as a collective incapable of direction, and which finds it simply unfathomable that individuals are capable of understanding and acting in their own best interests.

But this is quite wrong.  In actual fact, if government meddling and government restrictions were removed, then individuals are quite capable themselves of voluntarily redirecting their efforts and their investment capital to filling this alleged need, or any real need.  The fact is that if $1.5 billion of spending were to truly attract a benefit of $4.5 billion (and this figure that's been bandied around isn't just guesswork), then this is $4.5 billion of benefit to specific individuals.  Why wouldn't they be prepared to stump up voluntarily if their risk was minimised by the removal of the various restrictions on doing so?  Or as Annie Fox puts it in itemising the particular restrictions that need to go, "Remove the Red Tape, the Fibre Optics will follow."

Restricting investment and then using government force and taxpayer dollars to pick 'winners' was the leitmotif of an earlier National Government under Muldoon.  Liberty Scott recalls some of the 'winners' that the Muldoon Government picked in its 'Think Big' programme (some of which we're still paying for), muses on the resurrection of this flagship Muldoonist failure, and has eight relevant questions that any supporter of John Boy Thinking Big must be able to answer.

John Key's National Party?  They sure as hell aren't the answer.

UPDATE:  Says Matt Burgess at Anti Dismal:

    This is Think Big 21st century style.
    The objection is not that better broadband is a bad thing. In the 1980s, more electricity was a good thing but Clyde Dam was a disaster. The problem with National's plan is that it's likely to give New Zealanders less broadband at higher cost and lower quality than might otherwise have been achieved, much as Clyde Dam did for electricity.
There are several reasons for this pessimism...

Vultures circling over "fibre future"

State worshipper David Skilling of the NZ Institute proposes the government establish and partially fund a coercive monopoly called FibreCo to "roll out" national broadband and deliver dividends to rent-seeking crony capitalists who participate. "For now, this country's fibre future remained reliant on investment decisions taken by Telecom," says the Institute, which faces "weak incentives" to invest significantly in a fibre access network. The whole panegyric to rent-seeking cronyism is here.

Those "weak incentives" by the way include the continued support for local loop nationalisation from the likes of Skilling and David Farrar and of course Obergruppenfuehrer Cunliffe himself -- not to mention all those competitors of Telecom who wish to take advantage of its networks without any investment themselves -- and of course the dismemberment of Telecom forced upon it by Cunliffe in an effort to boost his ministerial ranking. 

In other words, the faces of those "weak incentives" are themselves and others like them who support the ministerial jackboot being applied to Telecom's private property, and the sort of coercive resnt-seeking proposed by Skilling.

People like Russell Brown, who while continuing to celebrate the ongoing nationalisation of Telecom's existing networks,  regularly celebrates how the faster broadband he's now getting in Pt Chev is already allowing him to steal even more films and TV from the internet.

Good to know why he's so keen on faster broadband, anyway.

Perhaps these luminaries could read and reflect on the comments of Telstra's Sol Trujillo last year when a similar public-private partnership was proposed by Kevin Rudd -- Trujillo called this a "kumbaya, holding hands" theory he wanted no part of;  said Trujillo: "We are only going to participate in the things that we own and control."  And how else could you justify the sizeable investment involved? What incentives are there?

Perhaps too they could reflect on Morgan Tsvangirai's argument for the importance of reinstituting property rights in Zimbabwe and think about the importance of drawing up such a programme for New Zealand, instead of continuing to bang the drum for their destruction.

UPDATE: Paul Walker comments at his blog: "Its not clear to me how a state guaranteed monopoly would speed up anything... Competition gives the best incentives, especially in rapidly changing, innovative markets."  Perfectly correct.  Doesn't stop Rod Drury and, lamentably, Bernard Hickey (who should know better) joining the chorus in praise of the corporatising/nationalising state. "It goes against the grain for me to recommend that a government effectively nationalise a private asset," says Hickey, who doesn't let the splinters slow his slide into the nationalisation chorus.