Correction: Britain’s gas crisis means Europe’s gas crisis

Remember the 1970s?  We were going to run out of oil and everything revolved around energy prices.

America got into wars because of it and built an enormous strategic stockpile; NZ had carless days and the hydrocarbon developments of Think Big, the last of the great state-directed development projects (well … until the renewables project, national fibre broadband and the distortions of the Resource Management Act that is).

Europe’s natural gas crisis has the potential to head in a similarly dominating direction.

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With MMP the politicians have to decide what Germany has decided

Voters in the German federal election on Sunday had the opportunity to sweep away the detritus of 16 years of compromises from retiring Chancellor Angela Merkel.  

The Green party led in the opinion polls by a good margin earlier in the year.  Only a few days ago, the Guardian dared to dream of a red-blooded left-wing coalition between Social Democrats, Greens and the former communist Left Party united by desire for higher taxes, more pernickety controls and a slug of anti-Americanism.

In the end, the German voters did what they have done for much of the post-war era, giving victory to the parties of the right (acknowledging that these labels seem to be less meaningful these days).

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China’s problems in property are a difficulty for everyone

As China’s most indebted property developer Evergrande hovers on the brink, the question is where the government will draw the line on support for the firm – and for the financial system.

Markets are nervous but the consensus seems to be that while an example may be made of Evergrande, the damage should be contained there.

But the Financial Times’s Gillian Tett (an insightful chronicler of the 2008 global financial crisis) sees the issue as more fundamental:

“… what is the pillar of faith on which asset values rest? Is it government support? Or is it the independent scrutiny of accounts by investors? Does either pillar work?”

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New Zealand’s absence from AUKUS is very much part of the debate

The immediate reaction in the UK to the AUKUS announcement was focused less on the UK’s new commitment and more on the lamentations of French politicians at the loss of a $90 billion Australian submarine deal.  It was left to former PM Theresa May to probe unsuccessfully the extent of Britain’s obligation to defend Taiwan.

Chuckles aside, you might think that anything which outrages France and China has something going for it.  

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Energy chaos – coming to a market near you

If the great Russian novelist, Leo Tolstoy, had been an economist he might have written: “All happy market outcomes are alike, but each policy error is disastrous in its own way”.

Certainly the implosion of the UK’s energy market manages to combine many familiar bad policy interventions, while nonetheless contriving its own unique set of outcomes.

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Who gives a tweet about MIQ misery

The government’s choice of a randomised electronic queue for the distribution of 3,000 MIQ rooms yesterday had one surprising benefit.  It showed just how many New Zealanders were desperate enough to stand in e-line – more than 26,000 according to Stuff.

It also reminds us that while ministers and their officials can sometimes do one thing well – occasionally even two or three – the system is not designed to meet your personal needs. The fatal conceit, as Friedrich Hayek pointed out, is that the bureaucracy thinks it knows what they are.

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Boris keeps on gambling

Boris Johnson has done a great service for politicians everywhere by testing the political waters for tax increases.  He and his Chancellor of the Exchequer, Rishi Sunak, are ratcheting up Britain’s taxes to pay for care homes.  And Covid of course.  Pretty much everything it seems.

The new tax is not really that new: a levy on labour incomes (i.e., salaries, wages and self-employment) of 2.5 percentage points, with an increase in dividend taxes of half that. Boris – with flagrant disregard for Econ 101 – claims that business will share this burden. Sorry Boris and Rishi – labour taxes fall on labour.

Meanwhile, the Financial Times gloomily opines that the move will raise the UK’s tax burden to the highest level since 1950 – about the time when Boris’s hero, Winston Churchill, was heading for a second term as PM.

Boris has a reputation for being better on the strategic than the tactical decisions.  So, will the tax increase work?

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Many Alexanders but only one Boris

The flaws of Boris Johnson, Britain’s jokey PM, have been highlighted through the Brexit saga, and he has many haters.  Fine material you might think for Tom Bower, the UK’s pre-eminent investigative muckraker, notorious for coruscating biographies of Richard Branson, Robert Maxwell and Jeremy Corbyn.

But funnily enough he hasn’t made that much of a splash with Boris Johnson The Gambler published in the midst of the UK’s Covid epidemic at the end of last year.

It’s not that Bower shuns the negative.  He scrupulously documents the driving ambition, rhetorical evasion, monumental self-centeredness, serial infidelity and inability to buy a round.

But these traits are not entirely absent from many leading politicians.  And Johnson managed to emerge through the pages as a ferociously intelligent and curiously likeable character, who pulls off these stunts more colourfully and successfully than most.

Indeed, Boris’s enemies tend to suffer in the comparison.  Former PM, Theresa May is portrayed as an over-promoted machiavel; while the head of the Foreign Office, Simon Macdonald, comes across as unctuous and incompetent. The next-door neighbours who snitched to the press on Boris’s domestic rows appear as uptight ideologues, determined to expose “the ugly edifice of capitalist heteropatriachy’”.

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A NZ-UK trade agreement will be another – albeit small – step in the re-ordering of global trade

There is increasing chatter in London that the NZ-UK trade deal will be announced in days, with invitations to briefings being diaried for Tuesday.

But it’s worth noting that the UK commentators seem to be excising the prefix ‘free’ from the ‘trade agreement’, perhaps reflecting better understanding that these days there is no free trade without a substantial regulatory component.

While NZ’s producers will no doubt be grateful if they get an Australian-style phased reduction of tariffs and quotas as has been briefed, the non-tariff/quota regulatory barriers will be just as important in the long run.

That at least would seem to be the view of the eminent organ, the Irish Farmers Journal, in its assessment of the currently-fraught implementation of free trade arrangements between the EU, Ireland, Northern Ireland and Great Britain (ie, the UK minus Northern Ireland).

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NZ does better than Australia at Covid messaging but signals a different approach

Jacinda Ardern’s government got better press than Scott Morrison’s when it announced details of its ‘reopening’ strategy earlier this week.

This may seem a surprise given that both governments have no immediate plans to actually reopen – rather the contrary in fact.

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