Friday, December 30, 2005


Overheard in the office:
Co-worker: Oh crap. We're having a fire drill today? That sucks. It's too cold for that.
Drill Captain: Yes, I know ... but they are important. We need to do them at least twice a year.
Co-worker: How the hell are they important? Did you miss fire safety week at school? You don't know what to do if there is a fire? Well, here you go: take the stairs down to the lobby and go outside away from the fire. You'd probably still get into strangers' cars if they offered you candy.

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Did you know ... In Shakespeare's time, mattresses were secured on bed frames by ropes. When you pulled on the ropes the mattress tightened, making the bed firmer to sleep on. Hence the phrase, "Goodnight, sleep tight."

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According to, the programme Crazy Housewives has debuted in China. Not only was Desperate Housewives sanitised for its premiere, but the drama's title was changed from "Desperate" to the Mandarin word for "crazy".

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Vicente Verez-Bencomo was slated to receive an award from the Tech Museum of Innovation in San Jose, California, for his work in developing a low-cost vaccine for meningitis and pneumonia. He was also scheduled to speak at a Society for Glycobiology meeting in Boston. But Verez-Bencomo couldn't make the trip. The State Department said giving him a visa would be "detrimental to the interests of the United States". Verez-Bencomo is from Cuba. (Source:

Editorial: Banks need to reiterate ethical base

The world, in the phrase of a leading banking executive, is awash with cash. There is funding aplenty for banks to do what they do; sell debt to customers. It stands to reason, therefore, that to maintain profitability in a competitive market, they will seek to provide credit in ever-increasing sums and in increasingly novel packages. The danger lies in this being done in ways that pay too little heed to the industry's ethical code. The sort of ways that have raised the ire of the industry watchdog, Banking ombudsman Liz Brown, and some of their own staff.

Westpac staff went on strike before Christmas, saying they were unhappy because sales targets for credit cards and loans were included in a pay contract. Ms Brown, for her part, has criticised the extending of credit to customers who may not be able to afford repayments and the pre-approving of credit cards to people who have not applied for them. In particular, she wants the wording of the Code of Banking Practice altered to ensure banks have a customer's financial details before signing lending contracts.

Several examples of banks' increasingly aggressive approach have surfaced. One bank offered credit cards with pre-approved limits of up to $5000 to thousands of non-bank customers on the Fly Buys database, without making substantial financial checks. Bankrupts and unemployed people were among the recipients. In another case, a beneficiary with a gambling addiction and bipolar disorder was initially given a $3000 credit limit, which was upgraded to a gold card with a $9500 limit.

More fundamentally, in terms of impact on the Reserve Bank and the economy, the banks have happily used uridashi bonds to create a predominantly fixed-rate mortgage market. In their homeland, however, they have created far fewer problems for Australia's central bank by sticking largely to floating mortgages.

It is a moot point whether the banks are driving what has become a lending frenzy or merely responding to customer demand. Either way, New Zealanders have become the worst savers in the OECD. Debt servicing as a percentage of income has become a source of particular alarm.

It must be noted that banks do not force people to incur debt. Buyers must bring to these products an awareness no less stringent than that applied to any other commodity or service. Just because credit is available, it does not have to be accepted. Inappropriate debt is, after all, rather more serious than buying the wrong can of baked beans.

For that very reason, banks also have a role to play. In some instances, they have overstepped the mark. Their code of practice requires them to "act fairly and reasonably" towards customers in a "consistent and ethical way". When the ombudsman becomes concerned that a loophole in that code is being exploited, it is reasonable to assume there has been some straying from that principle.

Banks, of course, do not want bad debts on their books. It is not in their interest to supply credit to customers who may not be able to repay it. Their degree of security, even in the housing market, goes only so far. Yet it is easy to lose sight of such fundamentals in a booming market, particularly if institutional memory is in short supply. When, for example, there is no recall of banks' overindulgence in the commercial property market of the late 1980s.

It is, therefore, in everyone's interest for lending to be prudent and ethical. For credit products to be explained fully to customers and not sold to them if they are unsuitable in any way. For a culture that serves people well - on both sides of the counter.

Jim Hopkins: It's all here - life, the universe and everything

It may very well be the silly season but there's no evidence of that on the Correspondence Page. Forsaking frivolity, its earnest contributors continue to submit a series of serious arguments, blithely indifferent to the sunburnt preoccupations of the world at large.

Out of step these scribes may be but they're probably also the only folk reading the paper right now so it seems sensible to gather this owlish group around the metaphorical campfire and further consider matters of great moment.

Or, more precisely, moments of great matter. And there can be no moment of greater matter (in every sense) than the one which is exercising many Correspondents' pens, that being the creation of the universe.

By all accounts, this was a pretty spectacular affair. Certainly, the eyewitness reports are generally positive, with assessments ranging from "totally cosmic" and "you had to be there" to "bigger than the Rugby World Cup" and "nearly as good as King Kong".

High praise indeed, but the question remains; "To whom does the praise belong?"

There are two schools of thought on this - the Intelligent Design Theory and the Big Bang Theory. (Actually, there is a third, the Intelligent Bang Theory, but it's all about cold fusion and the synaptic resonance of sub-atomic particles so we won't trouble your pretty little heads with that sort of nonsense.) Put simply, the two theories go like this. According to the Intelligent Designers, God created everything whereas, according to the Big Bangers, nothing created everything.

Which you believe is a matter of individual choice, although it's worth noting that one of these theories is regarded as superstitious mumbo-jumbo and the other is not.

If you've just come in from the beach and haven't been following the arguments closely, you might assume that the Big Bang Theory is the mumbo-jumbo one. "Nothing can't create everything," you might say. "That's impossible."

Ahh, but, you see, that ignores the Latency Principle which holds that nothing is everything turned inside out.

So that takes care of that.

Presumably, it was arguments like that which persuaded a US court to ban the teaching of Intelligent Design in schools, although the fact the case even got to court casts considerable doubt on the validity of the theory.

After all, no Intelligent Designer would design a universe with judges in it. That stands to reason. More to the point, no Intelligent Designer would contemplate a world with humans in charge. He, she or it would have chosen something sensible, like trees.

Trees don't go around attacking other trees. They don't destroy other forests or occupy their territory. True, they do occasionally fall on people but since the Law of Averages suggests that at least 43 per cent of those fallen upon are either lawyers, counsellors or ne'er-do-wells, this is no bad thing.

And the larger point remains; trees don't commit random acts of unprovoked aggression. Nor do plants in general. They are a remarkably benign group who would do justice to any solar system.

There is actually only one recorded instance of plants engaging in stemmed conflict and that was the War of The Roses, which may very well have been a tragic misunderstanding.

Some scholars believe the whole unhappy shemozzle was inadvertently triggered when one bunch of roses understandably said to another, "We don't want to be near your pricks."

Unfortunately, a sudden stampede of aphids on an adjacent rhododendron rendered inaudible the all important last letter of the pronoun and what the listening roses heard was, "We don't want to be near you pricks", and she was all on.

Nevertheless, it would be wrong to dismiss the argument for plant power on the basis of one unhappy fracas. Because it remains true that the world would be a much better place if turnips ate us and not the other way round.

Especially since we're so badly designed anyway. Mention ageing, for instance, and two comedic symptoms spring to mind; dentures and haemorrhoids.

Except there's nothing funny about watching your gums shrink and your teeth fall out while, down below, your haemorrhoids keep growing big and shiny.

An Intelligent Designer would surely have reversed the process, thus ensuring - as the years slowly passed - it was your haemorrhoids that shrank and fell out while your teeth got bigger and shinier by the day.

Equally, imagine the benefits for the young in particular if our relationship with alcohol had been intelligently designed so that the more you drank the more sober and sensible you became. The advantages are manifest and obvious.

Such a reconfiguration would make the imminent chaos of New Year's Eve an absolute doddle. Why any Intelligent Designer didn't arrange things in this fashion remains a mystery.

Speaking of mysteries, should you desire further elucidation regarding the nature of the creation of the universe (or perhaps just the proposed trees in Queen Street - which definitely weren't intelligently designed) you may wish briefly to prise yourself away from the orgiastic lovefest you're currently enjoying and spend a few thoughtful minutes consulting the many very improving Letters to the Editor that can be found just to the left of this celestial contribution.

John Berry: Why China can't catch the US

China's economy is growing so fast that estimates of its long-term prowess are bordering on the absurd.

After Chinese statisticians recently sharply revised up their estimate of economic output in 2004 to US$1.93 trillion ($2.84 trillion), some analysts said that in 35 years it would overtake the US economy.

No way, no how. The US simply has too big a lead, with gross domestic product last year at US$11.73 trillion.

Even if China's GDP were to grow indefinitely at 11 per cent a year - 9 per cent real growth plus 2 per cent inflation - and the US experienced 5.5 per cent growth - 3.5 per cent real and 2 per cent inflation - it would take the Chinese 40 years to catch up in terms of nominal GDP.

Sustainable nominal GDP growth of 5.5 per cent annually is well within the capability of the US. Eleven per cent growth, about what Chinese authorities expect in 2006, isn't remotely possible in the long run.

One reason China's economic growth looks so formidable is the sheer size of its population, just over 1.3 billion as of the middle of this year, compared with slightly fewer than 300 million in the US.

Yet that comparison is misleading in calculating the availability of workers to fuel economic growth.

Partly as the result of continued immigration, legal and illegal, the US Census Bureau estimates the American population is increasing by 0.92 per cent a year. With no net immigration and with its Government's harsh rule of one child a family, China's population is expanding at a much smaller 0.58 per cent rate.

Surprisingly, given the enormous difference in populations, bureau projections show that between now and 2050, the US population will rise by 124 million while the Chinese population will increase slightly less, by 118 million.

If those projections prove accurate, the Chinese would probably have no great advantage in terms of a burgeoning labour force as an ingredient for economic growth.

China does have an advantage in the rapid movement of workers from rural agriculture into higher productivity jobs in industry and services. On the other hand, it is a process that can only occur once, just as it was largely completed in the US more than half a century ago.

The other principal source of China's economic growth is its extraordinarily high share of GDP going to investment.

"China's investment-to-GDP ratio is still rising - we estimate it at 47 per cent in 2005 - and this has resulted in a significant build-up of production capacity in many industries," Lehman Bros economists said on December 19, just before the GDP revisions were published.

"So far, production has stayed strong, but there are symptoms of oversupply: Profit margins are being squeezed and the trade surplus has ballooned, partly because of excess local supply being exported.

"There is an urgent need to rebalance GDP from investment to consumption, otherwise weaker foreign demand, or rising protectionism, could slow exports and bring China's oversupply to a head, forcing a major cutback in production."

Some industries, such as steel and cement, are already plagued by overcapacity. And the People's Bank of China, the country's central bank, expressed concern that investment could rise further next year as local governments push new projects.

The threat of protectionist measures is probably greatest in the US, which in the first 10 months of this year had a US$167 billion trade deficit with China, about US$36 billion more than in the same period last year.

Meanwhile, as Chinese incomes rise, so will consumption as a share of GDP, with a more or less corresponding decline in the investment share.

Once the Chinese capital stock begins to rise more slowly, so will GDP.

Aside from these reasons to question the sustainability of continued annual increases of 11 per cent in Chinese nominal GDP, there is the overriding issue of authoritarian rule by the Chinese Communist Party.

China's Public Security Ministry reported there were 74,000 protest incidents involving some 3.76 million people in 2004.

Jerome Cohen, an adjunct senior fellow for Asia at the Council on Foreign Relations, said the number of protests over things such as land confiscations, pollution, taxation, corruption and religion had probably doubled this year.

Another council Asia senior fellow, Adam Segal, said the protests did not immediately threaten communist rule "because there's no co-ordination between them". On the other hand, the Chinese Government seemed unlikely to address the grievances, so the unrest would continue and grow.

At some point, the communists could well lose control of the country and a major disruption of the economy would be likely if that were to happen.

Prospects for US growth generally look good, even though eventually the country is going to have to deal with its low savings rate and huge current account deficit.

China will remain a formidable economic competitor.

Nevertheless, of necessity its growth will slow before too many more years pass and the US economy will remain the largest in the world.

Mirko Bagaric: Beasts feel human savagery

The moral black spot that we have towards animals is so gaping that it will shame us in the eyes of future generations. That's the message we should take from the Greenpeace activists who are harassing the Japanese whaling fleet as it goes about its brutal task of fulfilling its self-awarded licence quota of killing 935 minke and 10 fin whales this summer.

The Japanese don't have a monopoly when it comes to dishing out human savagery towards animals. All countries engage in the practice at obscenely high levels.

The killing of whales is a particularly distressing example. Whales scream as they are being massacred in a killing process that often lasts for several hours. Unlike humans, they are not blessed with a consciousness shut-off valve that kicks in when they are subjected to extreme levels of pain. Their suffering continues as their flesh is repeatedly harpooned and ripped apart.

The rivers of blood that are now filling the Antarctic ocean should jar our moral psyche into overdrive to reassess the manner in which we treat animals. Looking back on history many of us are bewildered at the barbarity displayed by previous generations.

More enlightened future generations will see the callous disregard with which we treat animals as on a par with the repugnant ways that our forefathers treated groups such as women and people with dark skin.

We eat millions of animals annually, despite the fact that animal products are not essential (and in some cases are detrimental) to our dietary needs. In the process we often farm and kill animals in cruel ways. We have no qualms about killing gentle creatures so that we can salivate on the transient delight of a yummy burger, even though we would salivate no less on a vegetarian meal, properly prepared.

Don't be conned into thinking that we don't inflict suffering on animals in the process. Just go to your local battery hen plant for a visit. There you will notice that within 1 to 10 days of being hatched, chicks will be debeaked, which involves amputating about half of their beak with a red hot blade or wire. The pain involved is so intense, that some chicks die of shock or injury.

Shortly after this they are placed in 50cm by 50cm wire cages with up to four other hens, where they stay for the rest of their lives. They will never experience walking or spreading their wings. Many hens lose all their feathers from being pecked by others and some even die from pecking injuries.

All this so that we pay a few cents less for our omelettes. Mercifully, the laying capacity of battery hens reduces quickly and after one or two years most are slaughtered for pet food or flavour concentrates.

We also intentionally inflict pain on animals in scientific experiments that have less than remote chances of success and use their skins to keep us warm and enhance our looks, despite the fact that we have an oversupply of synthetic material which can satisfy these "needs".

Rarely is the benefits and burdens scale so grossly distorted.

It's time for the carnage to stop.

There is no wriggle room on the animal cruelty front. It is unquestionably morally repugnant. Animals can't speak in ways that we understand. Their intellect is not high and they don't have an awareness of themselves as continuing entities over time. Yet they are entitled to be treated with concern and regard because they possess the most important attribute that qualifies an entity for moral standing: the capacity to feel pain and hence suffer.

Suffering is suffering, whether experienced by animals or humans. The physiological process is identical. It is always agonising to endure and often as agonising to observe.

That's why few people who witness the excruciating death of a whale would contemplate eating whale flesh, and the best advertisement for free range eggs is a visit to a battery hen processing plant.

To remedy this situation we need to be cognisant of the lessons of history. Thus, we need to move towards incrementally improving the plight of animals.

The first stage of this process involves ceasing to engage in activities that are cruel to animals, unless there is an overwhelming benefit to be obtained from such conduct. This means that it is never permissible to kill animals for food by painful means, given that we do not need animal products to maintain a healthy diet. Cruelty in relation to scientific experimentation should be permitted only where the objective of the research is to advance human or animal health; the potential benefits of the research are significant; the research goals cannot be achieved without animal experimentation and there is a high level of confidence that the research will achieve its stated outcomes.

Once the moral standing of animals has been elevated to a point where it is accepted that it is impermissible to treat them cruelly, the next stage involves a recognition of the fact that it is wrong to kill animals (even using painless techniques), or otherwise mistreat them, for our consumption.

Until we reach that level of moral understanding, our behaviour towards animals will continue to be the shame of our generation.

Mahatma Gandhi correctly noted that: "the greatness of a nation and its moral progress can be judged by the way its animals are treated". It's not only the Japanese that stand condemned at this point in history.

* Professor Mirko Bagaric is head of Deakin Law School, Victoria, Australia. This is a summary of his paper (with Keith Akers) in the Environmental and Planning Law Journal Generation.

John Young: Creationists trapped in medieval thinking

The article by Neil Broom supporting intelligent design was a departure from the usual defence of this idea. Rather than claiming that life on Earth was created supernaturally in recent times, Broom acknowledged that life arose gradually after the cooling of the primeval planet and evolved over the eons to the present.

However, the core of his article was devoted to criticising one defender of Darwin's idea and did little to show how intelligent design contributed to rational explanation for the evolution of life on Earth.

Intelligent design proposes that Darwin's mechanism for the evolution of complex life from chemical building blocks is impossible without the intervention of an intelligent designer. But if acceptance of an ancient Earth implies a gradual evolution of life from early simple forms to complex organisms, what role does intelligent design play?

Intelligent design as supernatural intervention in the world is miraculous. Were there complex chemicals on the primeval planet, but then a miracle happened, and there was life? Did this life grow and multiply in the usual way but, by a series of further miracles, was it changed from simple to complex? How many miracles were needed? Miracles have no place in science, so intelligent design as proposed is not science at all.

Evolutionists argue that 3.9 billion years is sufficient to achieve what opponents of Darwin say is "impossible". Defenders of intelligent design take inadequate account of the time available for the evolution of complex life.

Molecular biology shows that the building blocks of all today's complex plants and animals evolved in the bacteria and in single-celled animals, and it follows that these had most of the time that life existed on Earth to be refined and adapted by evolution.

How much more time do opponents think is needed? Twice times? Ten times? Or is it always "impossible"?

The argument for intelligent design is only a restatement of a medieval philosophical argument for the existence of a creating god.

Thus, if we find something as complex as a watch in a desert, we know a human must have been there. By analogy, if we find something as complex as life on Earth then it must be the result of a creating intelligence.

The reason why philosophers and most theologians reject this Argument from Design is that while we know what kinds of complex objects are made by humans, we have no basis, by analogy, for claiming that life is too complex to have occurred as a consequence of natural events or that it required the intervention of intelligence.

Darwin's theory of evolution by natural selection is unique in offering a mechanism to show how the complexities of life arose from the simpler chemical components of the non-living primordial world.

All other accounts, including intelligent design, involve an unexplained and forever mysterious supernatural being of greater complexity than the world we know.

The chilling aspect of Darwin's concept is that it brings into stark relief what is true, but what we would prefer to believe is not true - that humankind represents a small, warm and hopeful spark, isolated in a cold, barren and uncaring universe.

It is in the nature of the world we live in that there will be suffering. The successors of Darwin's theory have shown how co-operation, altruism and kindness are all factors consistent with the evolutionary model.

It is these co-operative characters that have made humanity what it is.

Science is based on reason in that all its conclusions must be falsifiable. That is to say, no scientist holds that any idea is undeniably true in the way that religious believers hold that their beliefs are undeniably true.

Science is based on a small number of assumptions, supported by observation, but these too are open to revision. The basis of religious belief invariably turns on some belief or set of beliefs that are held as a matter of faith.

But believing something on the basis of faith is to believe it to be true without reason, which seems no more than to believe it to be so because one wishes it to be so. Underlying discussion of intelligent design is the assumption that the designer is admirable. This is at the heart of religious belief.

But to believe that there exists an intelligent designer is to believe that there exists a being with the power and ability to intervene in our world, and who can and does intervene at will, and yet abandons us to the horrors of tsunamis, famines, pestilences and all natural disasters.

A being that, capriciously, "saves" one person from personal disaster (and prayers are answered) but leaves thousands, tens of thousands, millions, to suffer and die. A being that, arraigned before a court of justice, would be tried and surely found guilty of multiple crimes against humanity.

And this being is to be worshipped. It is hard to think of anything more unreasonable.

Better Darwin and reason. Huddle together, take care of one another and tend the cave, and throw another log on the fire. This isn't science, but it makes sense in the world we live in.

* John Young is a senior research bacteriologist with a Crown Research Institute in Auckland.

Thomas Pippos and Mike Shaw: Year of the tax review

Next year has been heralded as the year that the tax review achieves some traction. Expectations are high.

The review has its genesis in the confidence and supply agreements Labour has with United Future and New Zealand First.

Carbon tax met a premature end before Christmas and even Michael Cullen referred to "some bold measures emerging" from the proposed review.

With such a backdrop, what could business be looking for from a tax standpoint next year and beyond? Possibly in order of importance:

* A corporate tax rate reduction: Twenty years ago, New Zealand led the charge for corporate tax reductions; unfortunately, it is far from leading the world now. This is the highest priority to attract and retain investment in New Zealand.

* The alignment of tax rates: Many businesses are not corporatised. For some, the highest tax rate is the highest individual tax rate.

A key success of the 80s tax reforms was the acknowledgment that business transactions should not have different tax outcomes depending on whether the taxpayer is an individual, a corporate or a trust.

Also, the taxation of business income and that derived by individuals should correlate. The broad application of the 33 per cent rate from the late 80s meant taxpayers could focus on making money, not on managing tax.

* Mutual recognition of imputation credits between New Zealand and Australia: We are becoming more commercially integrated with Australia. A key enabler of even greater integration would be for New Zealand investors to be able to claim credits for Australian franking credits (similar to imputation credits) and vice versa.

This would substantially increase the investment opportunities to New Zealand businesses and attract greater Australian capital here.

It would also help to reduce the drive to pay as little tax as possible in the other jurisdiction.

* Attracting foreign capital: New Zealand relies heavily on foreign capital. Foreigners that bring such capital here also bring jobs, wealth, expertise and, most important, opportunities for many New Zealanders.

Tax incentives should be used to encourage this. If Microsoft wanted to establish a substantial research facility in New Zealand, we should encourage it, even if we had to provide a permanent tax exemption; the jobs (and tax on that income) and economic wealth created would be substantial compared with any corporate taxes forgone.

Other less obvious tax concessions include an immediate reduction in withholding taxes and corporate taxes on non-residents.

Reductions of withholding taxes with Australia and the United States would also substantially benefit the many New Zealand businesses that have investments in those countries; such reductions would almost be revenue positive as this foreign tax would now be paid to the New Zealand Government.

* Continuing without a capital gains tax on foreign equities: The proposals to subject offshore portfolio investment to a full capital gains tax should be axed. New Zealand investors should not have to pay additional tax if they invest in foreign companies. They are not avoiding local tax.

New Zealand simply does not have enough public companies to provide investors a diversified investment portfolio. This is best recognised by the Cullen Fund, which invests 80 per cent of its assets offshore; interestingly, it is measured on a pre-tax basis.

* A fairer penalties and interest regime: Only as an example, taxpayers who want to voluntarily disclose errors are subjected to the fifth degree over whether penalties should be imposed. There should be no penalties if a taxpayer discovers a normal error and seeks to correct it with Inland Revenue.

The present rate of use of money interest charged by the Government on tax underpayments, 13.08 per cent, is punitive enough; this rate should also be reviewed.

* A dedicated group within tax policy dealing with remedial matters: Legislation requires constant tinkering to get it right. Changes need to be timely, otherwise errors linger and the tax system falls into disrepute.

The establishment of a dedicated group within tax policy dealing with minor and remedial tax issues would help to counter the resource dilemma faced by business seeking to address legislative anomalies.

* The death of gift duty: An archaic tax which serves little or no purpose. Even Inland Revenue does not dedicate resources to enforcing it. The annual revenue gathered is $2.3 million. It is a trap for the unwary.