Bringing people into the country is strategic but having electricity isn’t??
Posted April 17, 2008on:
So we have been talking about asset sales (or the blocking of) in relation to Auckland airport a fair amount lately. As you may or may not have picked up I don’t really have a problem with the idea as the assets in question were already owned by investors and nothing bad had happened. We are talking about two profit maximizing investors exchanging ownership of an asset; they have the same incentives to make money regardless of whether they live here or overseas. We aren’t talking about privatization where the government is selling something to private investors where the incentives between the two parties could arguably be quite different (profit maximization vs. welfare maximization) although they often coincide. That however is a different issue.
I was a bit astounded to read this morning that aparantly the government is unlikely to block the sale of part of our electricity distribution network but not an airport. Not because I have a problem with the sale (I’m perfectly comfortable with it) , more that I think if you apply the same incorrect logic that blocked the AIAL sale, you should be more worried about electricity lines.
You’ll notice that in my post on AIAL one of my main points was that if the airport was “run down” to save money as greedy profit maximizing Canadians would do (but greedy profit maximizing New Zealanders would not), people could go somewhere else and that acts a constraint. What can people substitute to if the electricity network is run down by greedy profit maximizing investors? Well, you are pretty much screwed.
If you believe the arguments against asset sales (which I don’t), you should probably be much more worried about electricity, especially given that it powers all the computers we do all of our work and communicate with the rest of the world with. Even if no one comes to our country because our airport sucks, having electricity to be able to make things and communicate with the rest of the world is much more important.
I just don’t really understand the inconsistency here? Maybe someone can enlighten me the specific definition used to define a “strategic asset” is? Maybe it’s more than a coincidence that we just signed a free trade deal with China and a state owned Chinese company is bidding on the network is more than a coincidence? Maybe this just doesn’t make sense because I haven’t had my coffee yet today? who knows…..