The visible hand in economics

Keeping it Kiwi/Asset sales

Posted on: November 5, 2008

I’m certainly glad we are keeping it Kiwi….

http://www.stuff.co.nz/4750128a13.html

At the end of the day, I feel that people don’t analyse government asset purchases or sales properly. People get fired up about asset sales and make arguments like “National sold our state assets too cheap” to support the argument that asset sales in general are a bad idea (this argument is a personal pet hate of mine). Similarly I can see people will latch on to this announcement about kiwi rail and use it as an argument that the state shouldn’t own  these assets.

People need to seperate the poor implementation of an idea from the idea itself.

Agnitio

5 Responses to "Keeping it Kiwi/Asset sales"

implementation is the problem, not the sale of assets itself. The best example I know of is regulation to prevent market failure such as Telecom monopoly etc.

“implementation is the problem, not the sale of assets itself.”

I fully agree, I often find when i talk to people about asset sales they don’t seperate a discussion of whether or not the state should actaully own an a specific asset from whether or not the asset was sold “too cheap”. As an economist this is quite frustrating as they are fundamentally distinct issues.

If assets were sold too cheap (I lack the knowledge of the deals to comment) that is a bad thing, it doesn’t however justify the current treatment by some of “asset sales” as a four letter word.

Well the point when asset sales become “wrong” is when they cannot be regulated the way those markets should be. It does become a four letter word if the government sells it anyway when they cannot find a way to properly regulate (or deregulate) the market so that we end up with the best outcomes for society. If lack of regulation (or regulation itself) causes a market failure then that again is the implementation. However if the market cannot be regulated (not exactly sure of an example but maybe that there doesn’t seem to be a decent way of “unbundling” railway lines or postal services??) then perhaps there are arguments that the asset should remain in state ownership.

Matt made an interesting post about the the government owning the rails whent eh buy abck was announced

https://tvhe.wordpress.com/2008/05/06/why-is-the-nz-government-buying-the-rail-lines/

As you can see he was not entirely convinced. At the end of the day, if the government is going to own something like the railways I would like to see a case made for it along the lines of the points Matt raises, not because we get warm fuzzies from calling it Kiwi rail instead of Toll

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