Massive violence - the solution to 'Inequality'

It's worth slogging yer way through Scheidel's 'The Great Leveller'. Contra to the simplistic strain running through so many comments on economics, which boils down to a Utopian wish for 'policies to reverse inequality', Scheidel's magisterial survey of inequality across several millennia shows two aspects clearly:

1. Inequality is baked into agrarian (and its later variants including industrial and post-industrial) existence. The need to harvest, store, allocate and secure grains means, even in simple societal arrangements, that there is great opportunity to clip tickets and enrich elites at every step of the chain. So and invariably, societies develop priestly, ruling, military and other top-of-the-tree layers which then and equally invariably, oppress all beneath them. Millennia of histories, in his scholarly account, attest to this.
2. The only episodes which stop or significantly reverse this trend, are inherently violent. Mass-mobilisation wars, catastrophic pandemics, transformative revolutions, and state collapse are the Four Horsemen - the Great Levellers. Period.
   Finally, and if one was to take seriously the 'population overshoot' espoused by some commenters as the Root of our current Condition, it really just depends on one's tolerance for high body counts.......which Horse to back....
   From the blurb:

   Are mass violence and catastrophes the only forces that can seriously decrease economic inequality? To judge by thousands of years of history, the answer is yes. Tracing the global history of inequality from the Stone Age to today, Walter Scheidel shows that it never dies peacefully. The Great Leveler is the first book to chart the crucial role of violent shocks in reducing inequality over the full sweep of human history around the world. The “Four Horsemen” of leveling―mass-mobilization warfare, transformative revolutions, state collapse, and catastrophic plagues―have repeatedly destroyed the fortunes of the rich. Today, the violence that reduced inequality in the past seems to have diminished, and that is a good thing. But it casts serious doubt on the prospects for a more equal future.

Pike River - a fatally flawed design mandated by Gubmint

Pike River was at base a Gubmint-enforced faulty design, and any regulatory 'failure' was well downstream of that.

1. The seam at PRCC sloped upwards, through known-to-be-gassy coal (it's substantially the same as coal found at Brunner and Strongman - both famous historic disasters).
2. This should have placed a very high design emphasis on excellent mine ventilation.
3. DoC controls both the surface over the seam (Conservation land) and the outcropping face of the seam (the escarpment is in Paparoa National Park).
4. A sensible ventilation plan would have been to allow either or both of vertical vents up to surface through overburden, and vents right along the top of the seam straight out to the escarpment. Both would be natural ventilation (methane is lighter than air, and both sets of vents would vent up). As mine roads were driven, they could have been vented up and out, with less mechanical assistance needed and much greater margins of safety.
5. DoC would allow only one vent hole in its precious Conservation Estate, and would not even consider a vent on the escarpment above the seam.
6. The one vent allowed was at the lowest point of the coal seam (the least likely place to accumulate and vent methane without yuge mechanical assistance).
7. This was an inherently flawed design (the Royal Commission could find only one other similar design across the globe, and IIRC That went Boom, too)
8. It was, in short, an accident waiting to happen, from a design forced by Gubmint intransigence to be fatally deficient.
9. To be sure, mine management failures were also there. But managing a lemon tends to produce a bitter result regardless.

Machinery Training in the olden days

I look back on my machine-operator training: operating dozers, loaders, scrapers, graders, rollers, crusher plants, excavators, rock quarry blasting, and of course trucks. Total training for any one of these was less than a day. It was always a case of - get 'er rolling and don't Break it'...

Most such operations depend much more on muscle memory and a feeling for machinery, than any amount of theory. Simulators like the Caterpillar series do help with the muscle memory, but not much with the practicalities - like a tracked machine can slide sickeningly down-slope if walked across it sideways in the wet.....

Not much help now, because you need two years in an Approved Training Establishment and a piece of paper to even climb aboard an actual live machine....
My total 'test' for all of F/R/W/T classes was driving an ancient Cat D6 in a figure 8 in front of a country cop in 1971. Total elapsed testing time 2 minutes. No test at all for wheeled loaders (Cat 922 and Hough 65), no test for rollers (numerous), graders (Cat 112 and Champion D686). No license to run quarry plant (jaw and gyratory crushers, hammer mill, gensets to power all electrics). No license to run rock drills and place explosives. No RMA to doze up gravel, walking an International TD24 back and forth through the middle of the Hurunui river.

No kidding, there was simply zero environmental oversight or thought given. That's one reason why the 'old MoW' and assorted contractors of the era seemed so productive.....

Old-style Gubmint versus the current risk-averse, high-cost model

An Interest commenter avers that in the olden days, if the Gubmint got involved, Things got Done, referring to my exploits on the Cat D7 in Invercargill..

My rejoinder:
- No TLA DC's or Modest Fees. 
- No Worksafe (the old D7 was sans muffler, hearing protection unknown). 
- No Traffic Management (I walked the D7 all over public roads on planks and traffic had to take its chance). 
- No site inspectors (I once had the scraper fall sideways off of a 7m high stockpile because some eejit on a loader had excavated the side of the thing unbeknownst to me, and had an exciting hour maneuvering dozer and scraper to the point where I could back the entire rig straight down the side and off the heap). 

It was a much less regulation-mad, low-key Gubmint. Zero comparison with the risk-averse, safety-mad, high-cost model one sees everywhere now. And then folks gape in wonderment at plot prices that are in Buzz Lightyear territory....

Muddling through the Transition

Opening up means asking - to who, under what conditions. Most comments are simply tribal reflexive so far: red/blue, prepper/unprepared, subsistence existence/urban luxury, quasi-religious incantationists/full-on science. None of that is frankly very useful.

Some heretical thoughts:

• We know what we can Export but there's not much notion of How long-term. If FF is goneburger or too unstable, we may need to swallow our principles and think about a nuclear-propelled shipping service (maybe shared with Oz, which has plenty of U). Air freight may be a stop-gap but obviously cannot handle thousands of tonnes a week....and electric planes are a science fiction proposition for long-haul. City-hops, maybe.
• We need plenty of imports of raw materials or finished goods we simply cannot easily get ourselves: most metals, cotton, rice, sugar are examples of the former; chips, capacitors, tractors, trucks, machine tools, locomotives of the latter. Again, Oz is the obvious partner here.
• Few commenters including Goldsmith of the article and many on this august site, have much idea about how to preserve social cohesion and at the same time have some progress towards a new configuration during the transition that is a'comin' down the pike. It's simply ridiculous to expect the laid-off media types to 'learn to code', the tourist-trap woikers to light out for the nearest subsistence farm, the teeming masses of South Auckland and Northland to be Educated quickly or value-added enough to become SME entrepreneurs, the youngsters in the meshes of what passes for Education to look forward to - well - anything much in their fondly hoped-for future. We'll frankly be lucky to see a fraction of any of this, and disconnection does tend to lead to social unrest if history is any guide. Yet cohere, somehow, we must.
• No-one has much of a way through any of this. The talking-down we endure from the Covid Crew is one pole to be avoided, as are the Sermons from the Mount from those convinced that the way that works for their tiny fiefdom, is The Way, the Truth and the Life we must henceforth all Obey, at the other pole. As always, muddling through some sort of emergent middle is what we'll end up doing, assuming the centre holds. If it doesn't, look out below. In these circumstances, philosophers are far more useful than the Experts and the Zealots. Leonard Cohen became an advocate for 'Love is the only engine of survival' in his songs and life, and Alain de Botton, via a long series of books about How to Live in our fractured times, are two I recommend.

We should always demand that local government runs the ruler across all spending - article rejoinder

As a former (pre-1989, so old-world, prudent-rural-Council) LG Treasurer (no fancy CFO titles back then) I have been quietly appalled at the way in which staff have usurped Councillors.

Part is structural: Councils employ a CEO, who then employs all other staff. So there's an instant disconnect. Councillors tend to be actively discouraged from interacting with staff ('Policy, not execution', 'Governance, not Management' tend to be the shibboleths).

Part is the 'argument from authority' - a fallacy which nevertheless traps many a Councillor into a place whence no real push-back against even plainly loopy staff initiatives is possible.

Part is Council groupthink, especially when essentially tribal voting blocks have propelled 'their' councillors into the fray and proceed as if the 'others' are anathematized.

And part is the huge information and power disparity between staff, and the councillors, committees and especially the public. Taking on City Hall is a losing proposition, so most simply don't bother.

Staff attitudes to councillors can be summed up as 'vote-hungry show ponies around a very distant table'. Who can be and thus all too often are ignored. Calling for 'a staff report' is a recipe for getting handed 'what the staff always wanted', but suitably obfuscated so as to survive the limp surveillance of Der Public, and the occasional inquisition from the latest unpaid intern reporter in a local tabloid.

Against this background, and the 'four well-beings' power of general competence (Sec 10(2) LG Act 2002) it is only to be expected that there is little to no hope of effectively managing increases in Council spend, let alone reducing it. Bureaucracies are remunerated by numbers of staff managed - a built-in growth incentive. It simply hasn't occurred to any of them that there might be Limits to Growth. Or that (as in the older models) significant pools of expertise lie outside the staff echelons, can be tapped for free via committees and co-options, and can thus serve the dual purposes of keeping community connections, and deepening the intellectual horsepower brought to discussions.

So the article's fond hope that "We should always demand that local government runs the ruler across all spending" is quite impracticable, and has been increasingly so for three decades. We are all strapped to the Rates Rocket, every year the uplift increases, and few of us have any trust left in the edifice it's funding.

Maybe the WuHuFlu might be a circuit-breaker in this dismal progression. Maybe the engineers and other unexcitable types on staff might club together and persuade the Event Managers, Tourism Promoters, Community Engagement Fluffballs, and all the rest of the 'Social and Cultural Well-being' parasites, to gracefully yield their comfortable, secure and marginally useful positions in order to fund the unexciting requirements like sewer replacements, well-head securing, bridge strengthening, and public building earthquake-hardening.

But I wouldn't bet the rating tax base on That happening in my remaining lifetime.....

As with the DHB's I think there may well be a Great Reset of the number and distribution of authorities - Councils, Regional's etc. It's simply nuts to have small authorities, each with their own fiercely guarded C-suite, systems, Plans etc - all somewhat inconsistent with each other (District Plans....) - all claiming to be Diffrunt, Speshull, and thus entitled to defend their fiefdoms until Kingdom Come. Whereas in the commercial space, large verticals and franchises tend to have a single shared or multi-tenanted set of systems, extensive supply-chain links via EDI, superb logistics etc. I did some work for a well-known retailer a decade ago, and at that stage, they were doing a weekly forecast of sales for every SKU (around 10,000) in every product category across 100 stores, 3 countries and 3 currencies, complete with expected delivery dates from logistics, landed costs, margin, and local RRP. Councils and DHB's may be able to approach this sort of performance in the best examples, but I suspect the majority are still emailing Excel workbooks around.

One of the saddest aspects of the post-1989 TLA environment is the complete shutting-out of ordinary folks from the business of maintaining their own tiny pieces of the puzzle. In a former life, as well as being a Councillor on the Otautau (pop 3,000) Town Council, I was on the roster of volunteers who ran the local swimming pool. As a County Treasurer, I attended numerous meetings of committees for Water Races, Reserves, Halls as well as the usual Council committees and sub-committees. These all served the dual purpose I outlined above: keeping strong roots in the communities they served, and adding on-the-ground expertise and voices. Nothing like this now exists, and one obvious result is the complete disconnect between the behemoth Councils and the populations they serve. It doesn't take degrees in horticulture to maintain a local garden, keep a local reserve mowed, trees trimmed etc. 

Time for a re-connection.

Green's High-Speed Rail dreams

Well, the Greens have come up with a $9 billion plan to electrify the main trunks (NI plus SI) at least around the major cities and get high-speed (160km/hr), high-frequency-of-service trains running.

At an electrification cost per km of around $USD10m/km, that $NZD9B will extend electrification for 450 km at a USD/NZD rate of 0.50.

But I suspect the proposal has at least five deep flaws:

1. 1 - To let pax rail run in two directions, double-tracking is needed. That's probably north of $50m/km. Christchurch is the testbed here: there's no double-tracking, few passing sidings, no stations, no pax-capable signalling, and so on. Even if a slew of passing sidings is posited, that's gonna reduce that 160km/hr max speed to maybe a 60-80km/hr average. Not that much different to a bus or car. Suppose (say) a 15min frequency for three hours twice a day, over a 70km single trip at 70km/hr, and assuming instant turnarounds, that needs four trains per direction per hour on that trip. That's three or four crossings if single-track for the returning units.
2. 
   
3. 2 - Stations, signalling, ticketing, and meshing with last-mile services. No use turning up at the nearest station to your workplace (like Christchurch Airport freight ops) and finding you have 8-10km still to go and no last-mile PT. All this stuff is expensive, and uncosted, I suspect.
4. 
   

3 - Electrification is absent in the middle third of the NI, and absent from the SI except for heritage stuff through the Arthur's Pass tunnel. By no coincidence, these are the very parts that are toughest to electrify at all: tunnels, bridges, tight curves, high (for rail) gradients). The cost/km is likely to be an order of magnitude higher in these areas.

1. 
   
2. 4 - Where is the power to come from? A single source of power (overhead catenaries, substations) is vulnerable to outages which stop the entire block section - er- in its tracks. And, especially in the NI, there just isn't the spare capacity to impose significantly higher loads: most daytime top-up power comes from SI hydro. Perhaps Tiwai closure is part of the Green's assumptions. But there's still no way to get That power from the deep south to Auckland without expensive line duplication or upgrades (last estimate was north of 0.5B and that was some time ago).
3. 
   
4. 5 - Patronage in those shiny new commuter trains. It's all very well creating them, but who is actually going to use (say) a Hamilton-Auckland route, and in sufficient numbers? The sectors that can't or won't include tradies, the elderly, the very young, the WuFluFearFull, the poor and the unemployed. That's a big chunk of potential patrons.

Can't see it going anywhere but Off the Rails......

The 'economy' is not a Machine, but an Anthill (sort of)

A common failing is to think of the economy as a machine, which is subject to controls - levers and dials - which can be twiddled or pulled with well-understood results.

It simply isn't. What we characterize as an 'economy' is the aggregate result of millions of transactions between individuals, firms, 'little platoons' (the plethora of voluntary and uncommanded associations that folks generate), Governments, localities, resources, and other countries.

While some of this is counted, regulated and observable, much isn't. Ideas, innovation, tinkering, and thinking have generated most prosperity that we now enjoy, and much of That went completely unrecognised until it erupted (disrupted?) into the counted 'economy'.

That also makes a nonsense of the notion that 'economies can be re-constructed' as though they are a building, a dam, or an object with a BOM. To the extent that analogies work, economies are closer to an anthill (cubed) than to a machine. And there's no recipe for 'constructing an anthill' because there's no central intelligence, let alone central planning, involved. There's a bunch of ants....This is neatly laid out in Steven Johnson's 'Emergence'.

So Treasury and the other entrail-readers have no way of seeing or modelling aspects such as:

1. The possibility that older, skilled workers and business owners simply take a very long or permanent sabbatical. They've gotten used to a world where suddenly they are not beholden to customers, IRD, MBIE, Worksafe, TLA's and all the other overheads, and they may have discovered that they quite like it. That puts quite a dent in aspects like apprenticeships (who will mentor 'em?), productivity, niche products or raw materials, and other activities that are deep down in the BOM.
2. The possibility that actually-but-not-immediately-essential services or businesses have been so damaged that they won't re-start, or are sold on at fire-sale prices to new owners who take years to achieve the same levels of output or productivity. Either way, there's a big dip in the offing.

• Part of any reconfiguration (itself a bottom-up process) will lie in choice of trading partners. China has shat in its own nest via deceit, delays and imperial moves; so there will be a tense time as NZ still exports food to them, while at the same time gently disengages imports to some extent, and that as the aggregate choices of thousands of individuals and businesses rather than Gubmint fiat.

A lot of water to go under This bridge. Final word from Richard Fernandez: the most likely result of all of this will be systems run for the benefit of their componentry, rather than for the maximal optimisation overall. And globalism-compatible, not globalism-dependent. The title: Planning the Great Escape from House Arrest, and from Communist China.

Councils, CEO and Staff - once again, I wearily explain their relationships

This was a response to a comment which confessed that 'As voters we are failing'.  My reply:  No, don't be too hard on yourself (and by extension, on the rest of us Ratepayers strapped to this Rates Rocket).

• Voters only vote for Councillors.
• Councillors have only one Employee - the CEO.
• The CEO employs everyone else.

So all staff under the CEO actually are insulated totally from the Councillors. To staff, Councillors are a set of buffoons around a very distant table.

So staff are perfectly free to pursue their own aims and objectives and higher budgets, to the extent that these fly under the CEO's radar. And render 'reports' up through the CEO to the Council which lead to largely pre-determined policy positions which, quelle surprise, support those very same aims, objectives, and those safe and comfortable staff lives......

Autarky - flavour of the 2020's?

Let's draw out some Consequences of the 'all for it' themes - all varieties of autarky - a common characteristic of medieval economies:

1. No more foreign idiots = between 50 and 75% of the tourism industry, employing 400K workers, is toast. Add 'em to the welfare rolls or retrain 'em - all Gubmint cost, paid for by You Know Who.
2. No Importing Australian produce = no metals (Li, Cu, Fe, and the rare earths being prospected at Dubbo), so kiss goodbye to solar panels, EV's and Big Batteries. As for wheat, well, Oz grows most of the hard wheat used in our bread.
3. No more Foreign-owned firms.  But these include every Car, Machinery, Household Appliance manufacturer, amongst many others, so good luck when your tractor goes into Limp Mode in the middle of harvest and the firms have Departed our fair isles.
4. Foreign minimum wage temporary work visa workers go home - and are replaced by automation, manufactured either offshore, by foreign-owned firms here, or local firms using fairly much exclusively foreign-made parts. We seem, unaccountably, not to have chip fabs or bearing factories....
5. Dairy pays for its alleged externalities - via the plethora of New Taxes sure to come our way, and what does that do to the prices of dairy products locally? So who pays? Check a mirror. And who is Excluded because of high prices? The poor and children.

Autarky seems to be flavour of the month. Especially to commenters who clearly haven't Thought it Through.....

Covid and Councils

Well, we're not gonna need Conference Centres for a while either. And as several Councils have declared themselves to be in a Climate Emergency, they won't be needing:

1. those divvies from the airport companies (who just facilitate Nasty Emissions)
2. Tourism and business development agencies (neither is gonna come roaring back in the next year or three, so just fire 'em all)
3. Rates penalties set at 10% (when fer gosh sakes, even IRD's UOMI is 8.35% and even that's usurious when OCR is 0.25%)
4. Festivals, buskers, events and other Covid-Cluster-Generators
5. 4WD's and SUV's for Council staff who never get off the seal - buy 'em e-bikes with trailers

This Emergency could turn out to be Quite the Tipping-point for Councils....bring popcorn.

Define 'essential'

The Gubmint's definition of 'essential services' (tucked inside the Covid19 Levels blurb here) includes the airy statement 'including their supply chains'.

This raises the eternal question of exactly what constitutes 'essential' parts of a 'supply chain'.

E.g. the 3-waters functions of TLA's are certainly Essential. But suppose a water main blows (we've had four instances in our street over the space of 18 months). That'll need a digger, a tip-truck at minimum. One of them blows a hydraulic hose. That needs the Hose Guy to roll his truck and fix it. So he's Essential too. The Hose Guy gets a flattie on the way to or from the fix, that needs the Tyre Guy to either roll his truck, or stay open. So the Tyre Guy's Essential too.

You can by now discern where this is going. Just how far down the 'Supply Chain'/Bill of Materials does the Essential designation flow? And how to give certainty to the Hose, Tyre, Parts, Mechanics etc firms as to how Essential they are?

The Reverse-Bill-of-Materials conundrum

This is a reverse-bill-of-materials moment for the economy. A BOM is usually intended to show what one needs to Build something, and often a BOM is largely composed of many 'kits' - sub-assemblies, and that recursion can go many layers down to arrive at the ultimate content. That's what makes such a nonsense of trying to, for example, derive a 'carbon footprint' for a finished product of any complexity - too many ultimate components and thus far too many assumptions needed.

A dis-assembling economy. OTOH, crucially has no BOM's which specify the componentry which will ultimately be affected. So the unravelling of entire sectors (events, festivals, tourism) is inherently unable to be predicted in the precision needed to direct remediable action or arrange substitutions.

That's what makes this whole thing so not-amenable to ordinary economic modelling. Because BOM's only work during Assembly, not for Demolition. Hence the headless-chicken circling seen from prognosticators of all stripes, and from not a few commenters right here on Interest.....

As a thought experiment, imagine an AirNZ engineer, a barista, and an RE salesbot (sorry, Personage). 

1. The engineer has two mortgages, two cars on HP, an overdraft and significant CC debt, but owns two residential rentals and is now jobless. 
2. The barista has zero mortgage and moderate CC debt, but a student loan and a small overdraft - little to no other assets beyond a motorscooter, and her boss has just announced a 3-day week. 
3. The RE bot has a thumping mortgage, no rentals, a large Amex balance, two leased vehicles and a few other toys/assets, and the firm has just cut the commission rate by 50%. 

Now, kindly predict the economic effects of this small sample's situation. Then multiply that by a million.....

And here's the real kicker. It's far, far easier to Demolish than to Build.....