Death, regulation and politicians

We celebrated Guy Fawkes yesterday. We condemn Al Qaeda and other terrorists for their murderous bombing. And we deplore a mine company which didn’t keep its miners and contractors safe. How come the difference?

Perhaps it is that Fawkes was caught before he lit the fuse to blow up the English Parliament. In that vein we might welcome muslim terrorists’ diminished capacity to kill innocents as a result of United States President Barack Obama’s drones killing leading Muslim assassins and wreckers and his sanctioned assassination of Osama Bin Laden.

That is one side of Obama, whom voters will judge tomorrow our time: the Commander-in-chief, coolly doing some of the nastier bits of that business. He has been deliberate and measured in war (or what the United States says is war): out of Iraq, withdrawing from Afghanistan, executing terrorists classed as enemies. Clinical Obama is not vengeful George W Bush.

It is that measured quality, evident also in his re-engagement with Asia, on which Hillary Clinton has proved an able Secretary of State, that led many European commentators and major media to favour him over Mitt Romney.

Romney was strident on China, Iran and Palestine to the point where, taken at face value, his stance sounded like a recipe for global instability. But Romney flipflopped on so many policy positions so many times on his long campaign that it is also distinctly possible he would turn out not too different from Obama on foreign policy. That is the judgment of some experts.

That version of Romney would be a moderate conservative, who could set about uniting a divided nation — which is what Obama said he would do back in 2008 before he ran into an obstructive Congress, where moderate Republicans have been under assault from small-government ideologues and the Tea Party.

The Tea Party is a populist movement which reveres small government as a essential ingredient of its mythical, almost mystical, view of true America at the time of independence a quarter of a millennium ago. The Tea Party wants that America back, rescued from “socialist” enemies like Obama (and from failed Republicans).

The Tea Party’s emails are a libellous litany: Obama is not American, is a muslim and a radical leftist planning to steal people’s savings, commits fraud and much, much, much more. The next Congress will have more members of the sort it backs.

Europeans — and many Americans — assess the American political system as broken: deadlocked, bought by the big lobbies, limping from cliff-edge deal to deal instead of working with the Administration on the sort of longer-term strategic policies John Key and Bill English have mostly tried to set up here, with some success.

Partly that is a product of the too-cool first-term President who has seemed aloof and disconnected: understated, not exhibiting forceful leadership, including in deal-making with Congress leaders. One theory is that he has felt a responsibility not to set back the black cause by lasting just one term. Some backers expect he would be more assertive in a second term.

In that next term the critical issue facing the President and Congress is the balance of regulation.

For 30 years the thrust has been to lighter regulation and lower taxes favouring the better-off and especially the very-well-off. One result: real after-inflation average incomes have fallen and the gap between the best off and the average has grown very wide. Another result: innovations in financing and lending gave the world the global financial crisis, the cost of which is still mounting. How the United States votes tomorrow matters to the world.

One way of thinking about governments’ role is that it is to manage risk — the likes of war, climate change, civil disorder, national debt and economic mayhem.

This role was highlighted by New York mayor Michael Bloomberg on Friday in the wake of the devastating winds and water surges: the risk that the intensity of the storm may be due to climate change “should be enough to compel all elected leaders to take immediate action”.

Here light regulation gave us leaky homes and out-of-control finance companies which together have cost us about a tenth of annual output, not too far below the cost of Canterbury’s earthquakes.

Inadequate regulatory oversight contributed to the CTV building collapse: 115 killed. Light regulation compounded mine mismanagement and lax board oversight to give us Pike River: 29 killed.

So there are risks in light regulation.

The risk in heavy regulation is that it hampers initiative and productivity and so economic welfare. That risk has been this government’s main guide on regulation, for example, in easing resource consents and workforce rules.

But it has had some rude reminders of the other risk: Rena, CTV, Pike River.

The Pike River royal commission report was released after this was written. Appropriately, that release was on Guy Fawkes Day, which celebrates a risk that was neutralised.