Kiwi Rail Round II

December 24th, 2010 at 10:59 am by David Farrar

Todd has done a blog post responding to some of the comments made here yesterday:

Yesterday, I fired a link to my /Hillside treatise through to prominent blogger David Farrar at KiwiBlog (my Brother In-Law’s, Brother and a very nice chap) in the hope of generating some discussion on this issue. Well I sure was successful in that regard. Check it out here:

Until this afternoon, I would have considered myself a fairly ‘right wing’ kind of guy when it comes to economic matters. Apparently not.

Judging from the comment stream I am actually a flag-waving neo-socialist, protectionist, pushing a thinly veiled Hugo Chavez/ Castro agenda. Crikey!

Welcome to Kiwiblog comments :-)

Todd covers a number of points:

1. SOE’s should be run like businesses.

I agree entirely. The question is – what kind of business?

 Sarah & I have been in business for 10 years and we make purchasing decisions based on a raft of considerations outside of pure cost. We print hundreds of thousands of our postcards annually and we do so in Dunedin. We are acutely aware that we are paying about 15-20% more in Dunedin than from an Auckland printer – and at least 50% more than printing via Hong Kong. This is all money that would drop directly into our family’s coffers.

 The reason we choose to pay this premium is that we lived in Dunedin for 9 years (we no longer do). The printing industry in Dunedin has been through the wringer over the past 5 years and I have glimpsed the personal wreckage – marriages destroyed, houses lost and much worse, that ensued as business after business went under. Dunedin is a small city – ‘working class’ live next door to management – this all happened in my community.

 I don’t drink beer with anyone from our printers, we don’t have barbecues – and they don’t take us out on boozy lunches. They do a fantastic job, they look after us if things go wrong and we know that our money pays a few days wages every year.

And yes, we pass those costs on to the end user (some years more successfully than others :)

 This kind of fuzzy, emotive thinking may well be part of the reason that we don’t drive a Bentley Continental. Sarah & I would undoubtedly be better off if I could divorce myself from my desire to contribute to my community and do my printing offshore via an online tendering process. We are not wired that way – if that makes us Castro & Bride-incarnate so be it.

The rest of Todd’s response is on his blog (linked above). Keep the debate going until Xmas!

Also, while it is too late for Xmas presents, if you are looking for nice gifts for any occassions, Todd and Sarah have a wonderful range of photo cards, prints, blocks bookmarks, notepads, magnets and postcards.

I love this photo of the yellow-eyed penguins. They have a good range of wildlife photos, with a bias towards penguins.

And I adore this shot from Lake Tekapo. It is so hard to beat the South Island scenery.

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54 Responses to “Kiwi Rail Round II”

  1. davidp (3,588 comments) says:

    >We are acutely aware that we are paying about 15-20% more in Dunedin than from an Auckland printer

    I can’t see any reason that the Dunedin printer should be more expensive than the Auckland printer. In fact I would expect the opposite to be true given that wages and real estate costs are generally higher in Auckland. Refusing to subsidise Dunedin inefficiency might incent them to get their act together and become better businesses. At which point they’d lose the entitlement mentality that causes them to vote Labour.

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  2. Nick C (336 comments) says:

    There are two ways we can make trains in New Zealand. The first way is that we can manafacture them in factories in Dunedin. The second is that we can farm them on the Cantabury plains.

    http://faculty.tamu-commerce.edu/dfunderburk/428/readings/The%20Iowa%20Car%20Crop.htm

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  3. KiwiGreg (3,259 comments) says:

    “Sarah & I have been in business for 10 years and we make purchasing decisions based on a raft of considerations outside of pure cost. We print hundreds of thousands of our postcards annually and we do so in Dunedin. We are acutely aware that we are paying about 15-20% more in Dunedin than from an Auckland printer – and at least 50% more than printing via Hong Kong. This is all money that would drop directly into our family’s coffers.”

    And that’s all fine. I dont even care if a company does the same (as long as I’m not a shareholder). But sadly I AM effectively a shareholder in SoEs and I dont expect them to indulge themselves in this manner.

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  4. ben (2,384 comments) says:

    Todd’s quoted response is non sequitur. It does not follow from agreeing with Kiwirail’s decision to source stock in China that one also thinks Mr Sissons is wrong to buy in Dunedin at a higher price. As any economist will tell you, the goal is welfare maximisation, not cost minimisation or dollars-maximisation. Welfare means you count more than just the accounting bottom line. Economists use dollar figures as the unit of measure, but that’s all it is. As Mr Sissons says, quality of service matters, and if buying in Dunedin makes them feel good, no economist is going to disagree with them.

    Government procurement is not like Mr Sisson’s decision to buy in Dunedin. The difference with Kiwirail is that feel good pay-off is missing, for several reasons. One, the subsidy doesn’t raise employment overall, it just shifts employment into one sector and out of others. Why should anybody feel good about that? What is it about engine construction that is more worthy than everything else these people would otherwise be working on? Two, government can’t know what makes citizens feel good – democracy is blunt. Three, taxpayers aren’t a uniform bunch: there is no one answer to the question what makes you feel good. Four, government has no particular advantage over charity, whether at an individual level, or organised: charity is far more effective in producing good feelings than government because, left to their own devices, people will give to causes they care about, not what the median voter went for. Five, as we all know, government is so inept that asking it to actually achieve anything useful with $7 million is hopeless. It either isn’t $7 million but $50 million, or the work goes overseas anyway.

    Mr Sissons is overlooking too much of the detail in defence of his position.

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  5. ben (2,384 comments) says:

    Mr Sissons also argues we would be naive not to notice all the trade barriers everybody else is putting up.

    Let them. New Zealand is better off allowing trade with foreign barriers. New Zealand is better off allowing trade without them.

    The reason is very simple: the division of labour is limited by the extent of the market. Trade gives us access to the much deeper division of labour made possible by the huge overseas markets. This is why China is cheaper to buy from: it is NOT their lower wages. It is their specialisation in that particular activity. China buys dairy from us in huge quantities – the wage differential cannot account for that. Specialisation can.

    The division of labour made possible by trade is the entire explanation for all consumption above subsistence. It is an extraordinarily bad deal to interfere in that process for the sake of the New Zealand rail engine construction industry.

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  6. decanker (184 comments) says:

    “But sadly I AM effectively a shareholder in SoEs and I dont expect them to indulge themselves in this manner.”

    And that’s the problem. Some of us think SOEs should have to consider the wider economic benefits to the country in addition to their own bottom line. Otherwise there is little point having SOEs, which is why I imagine a number of people want them sold.

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  7. Pete George (23,683 comments) says:

    I can’t see any reason that the Dunedin printer should be more expensive than the Auckland printer.

    Economies of scale.

    I commend Todd and Sarah’s approach – it can work both ways, it may put costs up or margins down but it can also attract business you otherwise may not get. Job satisfaction is also more important to many people than making as much dosh as possible.

    Many people make decisions based on things other than purely financial considerations, otherwise we’d all be walking or riding mopeds. We’d all drinking chateau cardboard, it’s far cheaper to import cheap foreign plonk than to set up a risky vineyard venture.

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  8. Jack5 (5,157 comments) says:

    Todd, you are right.

    Fortunately KiwiGreg (11.17am) isn’t the only shareholder in an SOE. The likes of Kiwigreg are far outweighed by those of us who think KiwiRail is wrong in outsourcing its rolling stock to China rather than building it in-house at its Hillside subsidiary.

    Perhaps the solution would be to do as China does – invite the Chinese to build the rolling stock in NZ, then rip off their techniques, which they in turn will have ripped off from other countries, such as Germany or Japan.

    The theoreticians who lambast Todd’s view ignore the fact that the countries which have benefited most from free trade are those who don’t practise it – Germany, Japan, China.

    Meanwhile, there is today’s news, which is Red Chinese interests are bidding to take over PGC Wrightson, our key agribusiness after Fonterra (see general debate thread).

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  9. Jack5 (5,157 comments) says:

    Todd, you also can relax in your view of yourself as a ” fairly ‘right wing’ kind of guy”.

    The ascetic theoreticians who oppose you in these threads – men and women (and in-betweens like Kimble) – represent but a sliver of the right-of-centre on the political spectrum .

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  10. Pete George (23,683 comments) says:

    I wonder, if the Chinese set up beef farm factories, dairy farm factories and lamb farm factories and supply at 25% less than us, would we be happy to turn our farms over to gorse and saved a few bucks?

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  11. Kimble (4,443 comments) says:

    Pete George,

    “I wonder, if the Chinese set up beef farm factories, dairy farm factories and lamb farm factories and supply at 25% less than us, would we be happy to turn our farms over to gorse and saved a few bucks?”

    The point is we wouldnt turn our farms over to gorse. We would use the land for something else.

    Instead of spending 25% more to produce locally, we could use those resources to produce something else. So in the end we have lamb, beef and dairy, PLUS something else.

    The idea that this would make us worse off is bizarre.

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  12. tom hunter (5,086 comments) says:

    …the countries which have benefited most from free trade are those who don’t practise it – Germany, Japan, China.

    As far as Germany is concerned, while the European Union pisses us off with anti-free-trade measures, there’s no question that within it’s borders the trade between the members is very free. Moreover, that was the intention and the practice from the very start with the EEC almost 50 years ago. Germany has grown rich more from trade within a Europe of 300 million people than from the rest of the world – which makes sense since they’re at the heart of the former. I’d be interested to hear exactly what anti-free trade measures they specifically have, and have had, as they rose to economic power (aside from the known EU-French-inspired agricultural crap).

    In case you have not noticed, Japan has been effectively in recession for nearly twenty years now and their economy is a disaster zone. I thought it was just Jim Anderton’s Old-Left stupidity that kept him yapping on about the wonders of MITI in the 1999 election, but clearly he’s not alone.

    Japan grew on the back of a relentless focus on exports, but as they approached and then exceeded the GDP/person of the Western countries they sold to, it all began to slow down and they finally realised that they had to switch to a more balanced economy with real local consumption. They did not pull it off and you can read about the sad results in this NYT article.

    The downsizing of Japan’s ambitions can be seen on the streets of Tokyo, where concrete “microhouses” have become popular among younger Japanese who cannot afford even the famously cramped housing of their parents, or lack the job security to take out a traditional multidecade loan.

    These matchbox-size homes stand on plots of land barely large enough to park a sport utility vehicle, yet have three stories of closet-size bedrooms, suitcase-size closets and a tiny kitchen that properly belongs on a submarine.

    “This is how to own a house even when you are uneasy about the future,” said Kimiyo Kondo, general manager at Zaus, a Tokyo-based company that builds microhouses.

    For many people under 40, it is hard to grasp just how far this is from the 1980s, when a mighty — and threatening — “Japan Inc.” seemed ready to obliterate whole American industries, from automakers to supercomputers. With the Japanese stock market quadrupling and the yen rising to unimagined heights, Japan’s companies dominated global business, gobbling up trophy properties like Hollywood movie studios (Universal Studios and Columbia Pictures), famous golf courses (Pebble Beach) and iconic real estate (Rockefeller Center).

    China’s biggest concern now is trying to avoid Japan’s fate. Incidently, this last year they exported $US 1.2 trillion of goods and imported $US 1 trillion. Imports made up 32% of their GDP in 2005 and 21% this year! Sounds like an economy that’s trading quite freely, especially since they’re running trade deficits with the likes of Japan, Taiwan, South Korea – even Australia.

    Where I would get worried about China is in the fact that it’s still dominated by the likes of the Communists and the People’s Army – people who firmly believe in mercantilism and commanding the heights of the economy. For such central planners the focus is on energy and food – the latter being the reason that NZ dairy farms and the likes of Wrightson’s are being pursued. It will have bugger all to do with real economics or actual cost/benefit calculations. How we fend that off within a Free Trade Agreement is a tough question. Perhaps we can invoke national security!!

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  13. davidp (3,588 comments) says:

    Pete George>Economies of scale.

    I’d expect the same number of printers per capita in both cities. The only way for Auckland to have economies of printing scale would be if there were less printers per capita than Dunedin. In which case the Dunedin printing industry could be nationally competitive if it consolidated, and Todd is delaying that process by subsidising their lack of economies of scale.

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  14. Dave Mann (1,251 comments) says:

    “It is so hard to beat the South Island scenery.”

    Actually, DPF (speaking as a photographer myself) this shot owes its beauty and success as a piece of work not to the scenery per se, but more to the dramatic angle and the composition of the image.

    It is a brilliant shot!

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  15. Kimble (4,443 comments) says:

    davidp

    “The only way for Auckland to have economies of printing scale would be if there were less printers per capita than Dunedin.”

    Not true. There can be more printers per capita, printing larger runs. The economies of scale come from the size of the printing runs, not the number of jobs.

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  16. KiwiGreg (3,259 comments) says:

    “Fortunately KiwiGreg (11.17am) isn’t the only shareholder in an SOE. The likes of Kiwigreg are far outweighed by those of us who think KiwiRail is wrong in outsourcing its rolling stock to China rather than building it in-house at its Hillside subsidiary.”

    Saying it doesnt make it true.

    The facts of the matter is that, given a choice, few, if any, New Zealanders would stump up their own cash to invest in Kiwi Rail. Just like few New Zealanders invest in any other listed company here. Those that did would absolutely not be up for some industrial welfare.

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  17. ben (2,384 comments) says:

    Jack5

    The theoreticians who lambast Todd’s view ignore the fact that the countries which have benefited most from free trade are those who don’t practise it – Germany, Japan, China.

    Of course they practice trade. Enormously. But it is irrelevant: a country as small as New Zealand is still better off allowing trade unrestricted whatever foreign tariffs are in place. There is no long run empirical relationship between employment and trade protection. Protection buys you nothing but higher prices and a lower living standard, and by that I mean some combination of less health care, education, clean environment, cars, tvs, and lifestyle.

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  18. side show bob (3,660 comments) says:

    How did Todd get the photo of the Greens caucus meeting?

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  19. trout (944 comments) says:

    Enjoy the scenery while it lasts DPF, those colourful lupins are on DOC’s hit list.
    How many here remember the disaster that was NZ Rail when it operated as a welfare (max. employment) substitute and no regard was paid to business principles; customer service, efficiency, or profitability? My own problems with NZ Rail would have been repeated many times over; we were forced to send a roll of carpet Auck-mid North island by rail (trucking was not permitted – rail had a monopoly). The third roll sent arrived at the job (the first 2 consignments were stolen by NZR employees.).

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  20. ben (2,384 comments) says:

    An irony here, no doubt one of many, is everyone banging off their objection to free trade by typing on Dell keyboards conceived in America, and made in China, India and Indonesia using oil from S Arabia, and all for $19.95. How about some appreciation for the near miracle of all that? (with apologies to the displaced New Zealand keyboard manufacturing industry)

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  21. Jack5 (5,157 comments) says:

    Kimble Bent posted at 12.51:

    …the economies of scale come from the size of the printing runs, not the number of jobs…

    That isn’t true of digital printing, which thrives on short runs. Come into the electronic age, you pre-digital dinosaur.

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  22. davidp (3,588 comments) says:

    ben>with apologies to the displaced New Zealand keyboard manufacturing industry

    I demand that the NZ government set up a keyboard manufacturing division within some government department. Like the Ministry of Health… they use plenty of keyboards, and their IT technicians certainly have the skills to manufacture keyboards instead of buying them from evil foreigners.

    Other government departments could manufacture other computer components. Womens Affairs could manufacture joysticks and the Office of Film and Literature Classification could turn out a nice range of webcams. The government wouldn’t have to buy any computers from China and create hundreds of domestic jobs.

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  23. Jack5 (5,157 comments) says:

    Ben at 1.05 posted “Of course they practice trade”, but he was replaying to a post about free trade.

    Ben, you haven’t explained how countries that have benefited most from free trade (the likes of Germany, Japan, China), are the countries who themselves do NOT practise free trade.

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  24. Kimble (4,443 comments) says:

    “That isn’t true of digital printing, which thrives on short runs.”

    There are many fixed costs with printing that digital cannot overcome.

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  25. Jack5 (5,157 comments) says:

    Here’s another question for free trade fanatics.

    Does a free trade agreement between two or more countries necessarily entail discrimination against trade between those countries and countries that are not part of the agreement?

    What’s the free trade purist’s view on CER, on the EC, on NZ’s free trade agreements with China and with others?

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  26. Jack5 (5,157 comments) says:

    Re Kimble’s 1.39 post:

    …There are many fixed costs with printing that digital cannot overcome.

    Of course in an industry there are fixed, variable, and semi-variable costs.

    But makers of digital printing machinery correctly market their equipment as ideal for shorter runs.

    Deluded about their own product, are they Kimble?

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  27. Kimble (4,443 comments) says:

    The shorter runs on digital equipment is cheaper than the alternative, but shorter runs arent cheaper per print than longer runs. THAT is the source of economies of scale.

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  28. Jack5 (5,157 comments) says:

    Kimble posted at 2.03:

    The shorter runs on digital equipment is cheaper than the alternative, but shorter runs arent cheaper per print than longer runs. THAT is the source of economies of scale.

    So what are you saying Kimble Bent? That you should print longer runs just to get the price per unit down? That’s crap.

    In publishing the secret is matching the print run to demand, not printing the max to get the production price as low as possible — that way you go broke with huge unsold inventory.

    Printing of high-colour books went to Asia initially because, being on international shipping routes (Singapore and HOng Kong, busy container ports), and being relatively close to big markets, they were able to get their finished product to the publishing customers quickly, and thus reduce their inventory costs (books don’t sell at sea). This led to a surge in business, which meant they could run their presses round the clock, increase the skills of their print staff, and grow ancillary industries (binders etc). They entered a virtuous circle from American and European demand just as shrinking demand put NZ printers in a vicious circle.

    The economies of scale the Asian printers achieved did not come from size of print runs. Those are set by consumer market demand. In fact Asian printers were and are able to offer shorter economic print runs. We are talking here about colour printing.

    For the sort of printing that most NZ businesses need, digital printing equipment has slashed the price of production.

    Where Asia still gets a huge boost in both this and in colour book printing is in exchange rates. THe NZD exchange rate is at least 20 per cent overvalued, and this is fucking both our exporters and internal service industries that compete with low-currency foreigners.

    Stick to your theoretical play, Kimble, you’re out of touch with the real world.

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  29. Kimble (4,443 comments) says:

    “Does a free trade agreement between two or more countries necessarily entail discrimination against trade between those countries and countries that are not part of the agreement?”

    It will, naturally, but not because of the FTA. It will happen because of the higher costs imposed by those other countries protections. If they dont have protections, then they are open to trade anyway and dont need to be part of the FTA.

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  30. tom hunter (5,086 comments) says:

    Ben, you haven’t explained how countries that have benefited most from free trade (the likes of Germany, Japan, China), are the countries who themselves do NOT practise free trade.

    I take it you did not read this.

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  31. Hagues (703 comments) says:

    Its all well and good being altruistic with your own money. However when you are dealing in other people’s money you have to make sure you get the best deal going. Taxation comes at a cost of jobs so spending tax to prop up some jobs is coming at a cost of other jobs.

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  32. Kimble (4,443 comments) says:

    “That you should print longer runs just to get the price per unit down? ”

    No, thats retarded. Its you who is saying that retarded thing.

    I am saying that longer print runs will be cheaper, so if you have to print longer runs, you will pay less per unit. It is retarded to think that this means you should print more of something (increasing your total costs) just to get a lower price per unit. Retarded.

    “The economies of scale the Asian printers achieved did not come from size of print runs.”

    But that is what “economy of scale” means. It literally means things being made cheaper per unit the more that are produced.

    You dont know what economy of scale means.

    It isnt a theory, it is an observable fact. The Asian printers could produce things cheaper because they produced more of them.

    You have no business commenting on anything in this thread if an understanding of such basic economics escapes your grasp.

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  33. Jack5 (5,157 comments) says:

    Tom Hunter at 2.21 points to his earlier, 12.21 post, which contains:

    …Germany has grown rich more from trade within a Europe of 300 million people than from the rest of the world – which makes sense since they’re at the heart of the former. I’d be interested to hear exactly what anti-free trade measures they specifically have, and have had, as they rose to economic power…

    Obviously Germany would trade first and foremost with the first-world countries that surround it and can afford its generally superb manufactured products.

    The EC duties against non-EC goods must be one of Germany’s foremost trade protection measures.

    Another is the euro. If it weren’t for the sick euro, Germany would be on the mark, which would be flying, especially with wobbliness in the USD and the euro. Keeping the euro afloat gives Germany the benefit of a low currency. When the cost of bolstering the PIIGS becomes far higher than the benefit from the weakish euro, Germany’s direction will become interesting.

    This raises the interesting point of whether you can have fully free trade between two countries when one has a fixed currency (as in China’s yuan), and the other is floating (as in the NZD).

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  34. Jack5 (5,157 comments) says:

    Kimble Bent posted at 2.31:

    “The economies of scale the Asian printers achieved did not come from size of print runs.”

    But that is what “economy of scale” means. It literally means things being made cheaper per unit the more that are produced.

    You dont know what economy of scale means.

    Kimble Bent, get a cup of tea, breathe into a paper bag for a a minute, then read this definition from Investopedia:

    What Does Economies Of Scale Mean?

    The increase in efficiency of production as the number of goods being produced increases. Typically, a company that achieves economies of scale lowers the average cost per unit through increased production since fixed costs are shared over an increased number of goods.

    There are two types of economies of scale:

    -External economies – the cost per unit depends on the size of the industry, not the firm.
    -Internal economies – the cost per unit depends on size of the individual firm.

    Economies of scale can equally relate to total production as much as to what a printer’s salesperson explains to a potential customer for one order.

    If you are printing millions of books a week in small print runs (though this is unlikely) for many hundreds of customers rather than tens of thousands for three or four in larger print runs, you still get returns to scale.

    As for your comments on who can and can’t post on this thread that’s up to DPF. I suggest, Kimble, that in the meantime you play with one of sticks you were fixated on in the thread yesterday. Don’t giggle too loudly.

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  35. ben (2,384 comments) says:

    Jack5

    Ben, you haven’t explained how countries that have benefited most from free trade (the likes of Germany, Japan, China), are the countries who themselves do NOT practise free trade.

    Free trade is not all or nothing. You can’t be a little bit pregnant, but you can be somewhat free to buy from overseas, even if its subject to a tariff or quota. Even North Korea doesn’t completely insulate itself from the rest of the world. But trade’s benefits are in direct proportion to the extent it is free. And those benefits are huge: witness just how much poorer countries that isolate themselves are compared to countries that are relatively open.

    Germany, Japan and China do permit trade that is free enough to allow huge volumes goods to move across their borders and for benefits of trade to be realised. That it is not completely uninhibited is really neither here nor there.

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  36. Jack5 (5,157 comments) says:

    Ben at 3.04 posted:

    …But trade’s benefits are in direct proportion to the extent it is free…

    That’s probably true, Ben, but what if it is freer for one partner than for the other, then who gets the benefit?

    If you say both benefit, who benefits more? And by how much?

    Who wins if Germany, Japan, China subtly stack the cards against those with freer trade by things such as non-tariff barriers (as against NZ timber products and food into Japan, or by manipulating their currency lower (as all three of these have done either now or in the past or both)?

    Partly free is okay if both trade parties are equally partly free, but that position may be the exception rather than the rule.

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  37. Jack5 (5,157 comments) says:

    Todd: sorry but I can’t spend more of a fine pre-Christmas afternoon discussing trade with such libertarian zealots. Leaves the mouth too dry.

    Merry Christmas to you and yours, and know that you are right.

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  38. Jimbob (641 comments) says:

    We had some of the same problems as Trout had. I used to get medical supplies in the late 70’s early eighties via rail from Wellington. One time I went to pick them up and found a dozen NZR employees looking into a wagon with my supplies in it floating in wine. Another time some supplies went missing and in the finish we had them trucked by road carriers. Everything arrived on time and in tack.
    At the moment China has the money and the cheap labour, when this changes is anyone’s guess. So it is up to the people running the SOE’s to make these decisions, they should know the pro’s and con’s better than anybody else. But China does not know how to produce eveything, their climate limits their food production and that is an advantage NZ has.

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  39. wat dabney (3,809 comments) says:

    Who wins if Germany, Japan, China subtly stack the cards against those with freer trade by things such as non-tariff barriers (as against NZ timber products and food into Japan, or by manipulating their currency lower (as all three of these have done either now or in the past or both)?

    Who wins?

    The shareholders and workers of the crony corporations with the political connections who got themselves protected from competition.

    Who loses?

    In this case, the consumers of Germany, Japan and China; and other non-protected industries in those countries which are consequently reduced in size.

    Let’s take a couple of examples. Firstly, the notorious sugar subsidies in the US (just google for the whole horror story. Here’s just one version: http://www.fff.org/freedom/0498d.asp)
    Why should US consumers be forced to pay higher prices for their sugar, just to protect a politically-powerful sector? Why should jobs in the sweets (candy) industry be sacrificed, because the artificially high sugar prices make it uneconomic to produce in the US? Why should US consumers have to buy all manner of products made with high-fructose corn syrup, just because using sugar is too expensive?

    A second example. You may remember George Bush imposing tariffs on steel to save jobs in the industry. That was pure political opportunism which cost thousands of jobs in steel consuming industries (http://www.washingtonpost.com/ac2/wp-dyn?pagename=article&node=&contentId=A31768-2003Sep18).

    And what about the notorious Common Agricultural Policy in Europe, which forces consumers there to pay vastly inflated food prices.

    Because that’s the real story here. Not only is it completely impossible for politicians to forsee the consequences of their interventions, but they don’t even give a flying **** provided they can buy votes with it. You’re talking about giving these powers to a class of people who are the worst scum in the world.

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  40. Kimble (4,443 comments) says:

    Jack5 my point should have been obvious.

    If you recall I said “The economies of scale come from the size of the printing runs, not the number of jobs.” And this was in response to the assertion that economies of scale come from fewer printers per capita.

    If you print 10,000 things it is likely to cost less than if you print 5,000 all else held constant. THAT’s one reason why Auckland printers can print cheaper even if they have more printers per capita. Thats economy of scale. Bigger scale, more economy.

    Now, if you are printing 10,000 in 10 runs of 1,000 units then that will be cheaper per unit than 10,000 runs of 1 unit. All else constant. THAT is another advantage that Auckland printers have. Longer runs. Then you said that digital makes short runs MORE efficient. But that just means shorter runs more efficient on digital compared to the alternative technology, not that shorter runs are more efficient than longer ones.

    I notice you didnt respond to the fact that you took the idea of economies of scale and ran like a Gump with it. Print more than you need to reduce the cost of each unit! Retarded.

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  41. jcuknz (704 comments) says:

    As a photographer I would suggest that Lake Taupo is a quite nice bit of editing … won’t mention the often used term because I don’t like it and use the alternative programme. It looks pretty but quite false, but no doubt it sells, David likes it :-)

    But I think it sad that all you experts with your opinions on efficiency do not remember … becuase obviously you are too young … when New Zealand was ‘God’s Own Country’. Where the Minister of Labour could allegedly count the number of unemployed with the fingers of one of his hands. True we had some crazy set-up such as the gravy train which was NZ Rail .. with porkbarrel employment policies to keep local MPs happy and such like. But then the wages it paid were low and almost as bad as the unemployment benefit today …. But remember when [Sir] Roger Douglas told NZR Chiefs there was not more money it was the NZ Staff who knew how to make it efficient … except the damm fool Nats sold it off to the asset strippers.
    Containerisation would solve most of the problems of thievery. Yes I’ve heard the story about the tractor which went missing and the farmer owner found it …. also the wagon which went off the end of the wharf at Port Chalmers, Westport … depending on where Richard Prebble was talking to ACT supporters ….. Today Kiwirail is partners with Toll running a linked rail-road system I gather.

    But my main point is that you financial experts do not consider the holistic cost of this silly purchasing choice … you are so utterly narrow minded in your little boxes … the number of people encouraged to go to Australia, the unemployed surviving god knows how on the unemployment benefit, the increase cost to our health system from the jobless … a happy worker is less likely to get sick,and then there was the Berl report mentioned yesterday[?] which said China needs to be 60% cheaper than New Zealand when the holistic costs are properly taken into account. I guess most of you have been to varsity doing law or business management ,,, you don’t encourage me to believe in the NZ Education system either.

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  42. jcuknz (704 comments) says:

    Was going to add this at the end :-)

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  43. Johnboy (16,994 comments) says:

    “Was going to add this at the end :-)”

    Good idea.

    Its makes the retards that populate this blog realise that even though you mean what you say you say it with the best possible intentions. :)

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  44. ben (2,384 comments) says:

    Jack5: both win from trade with one another, even if one sets higher barriers than the other. Both lose from trade protection, I believe it can be shown the losses from tariff protection are greater for the setter of the tariff than for each trading partner, except possibly where the country doing the setting is large enough to affect the world price, which certainly isn’t the case for New Zealand.

    One may feel indignant that everybody else is doing it, so why can’t we. But New Zealand is different: we are very small. Trade protection hurts us more than most, because our small market makes import substitution especially expensive for most goods. While it is true protection hurts China – though plainly not by enough to stop it taking off – it is especially true for small markets like New Zealand. Our standard of living is made possible through access to the scale and deep specialisation overseas. Yes, the Kiwirail China decision is small in the scheme of things, but we can be confident, in fact certain, New Zealand is made poorer by making things others have worked out how to comparatively cheaply, faster, better quality, etc. The corollary is this: NZ is made richer by focusing on things WE have worked out how to do more cheaply, faster, better quality, etc here. What’s not to like?

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  45. nickb (3,696 comments) says:

    What’s not to like?

    Lots when you are a card carrying NZ First member :)

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  46. Johnboy (16,994 comments) says:

    nickb:

    :)

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  47. Jack5 (5,157 comments) says:

    Bent Kimble, oops, Kimble Bent (5.38 post), and Johngirl at 6.46 label as retards, those in this thread with whom they disagree.

    It always surprises how many those of an ultra-libertarian/Ayn Rand/free-trade fanatic persuasion express themselves with a peevishness usually found only in waspish women and waspish gays.

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  48. Kimble (4,443 comments) says:

    I dont label every person I disagree with a retard. I label people retarded when they think that it is believable that someone is advocating producing more than needed (increasing total cost) just to reduce the cost per unit!

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  49. Kimble (4,443 comments) says:

    “But my main point is that you financial experts do not consider the holistic cost of this silly purchasing choice … ”

    Actually we are the only ones who appreciate the real tangible costs of making the opposite decision. You guys are dismissing them as if they didnt exist.

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  50. jcuknz (704 comments) says:

    Kimble …. Black is white and White is black … of course I’d forgotten that …. Merry Xmas :-)

    Retards are the poor unfortunate folk who missed out in the lottery of conception … not people with computers on the net contributing to blogs.

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  51. kiwiwik (3 comments) says:

    It would be great to know the economic figures if the local tender was actually accepted. Because it’s a SOE (lets call it the government), whilst the tender price was $7m higher, when one subtracts the PAYE that the government recieves from the employees wages, the GST recieved from the spending of the employees wages, and the tax on the profit that the company would have made, the resulting increase in the profitability of the suppliers to the manufacturer (and the resulting paye/GST spend on these wages, tax on profits etc), I actually think that the net cost to the country would have been far less than the $7m increase in the tender price when one considers the economic stimulus.
    Lets see if an economist can do these figures and we get a real result.
    Maybe the owner of the SOE (the Government) might consider this a fair price to pay? If the resulting economic tax/gst take was more that $7m, then the Government could have given the SOE a rebate of the $7m ????
    Maybe this is the wrong way to look at things, but at this very moment in time we as a country need to look at what we can do internally to stimulate our domestic economy.

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  52. wolfjung (61 comments) says:

    Kimble, why don’t you declare your agenda on this topic before everyone just writes you off as just another pseudo know-it-all-git who is Two strands of DNA short of a chromosome. You are here pontificating like you are some economics guru, make an economy of effort for everyone and stop your tedious comments, you clearly don’t know shit from clay. Thank you.

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  53. Swampy (191 comments) says:

    Trout, I remember those days, plus the fact they went on strike every 5 minutes.

    We’ve got a whole lot of people who cant quite see the problem of paying a goverment agency to compete against the private sector. that is just the begining of a bigger and bigger entitly that can swallow up more and more goverment money, starts to look like the old NZR all over again.

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  54. Swampy (191 comments) says:

    “jcuknz (616) Says:
    December 24th, 2010 at 6:38 pm”

    well thanks for the history lesson you also miss out that the goverment under muldoon in that era ran up huge debt was in danger of becoming basket case economy.

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