“but is it correct to say that the sale will cause an immediate positive increase in the capital account and a series of current account outflows into the future as dividends are paid to the foreign owners? If so, and as long as the price is ‘right’, I can’t see any reason to be worried about this.”

Exactly! As long as the local investors receive a fair price (and remain in the country 😉 ) it doesn’t matter.

Furthermore, the financial capital that the investors collect could be used overseas, or to pay down debt, or for consumption even – however the “value” of this choice must be greater than the dividends available from the asset, as the investor decided to sell it.

Would you be able to clarify your comment on the current account deficit, “ignore all the crap about our current account deficit”? I’ve never liked Balance of Payments accounting, but is it correct to say that the sale will cause an immediate positive increase in the capital account and a series of current account outflows into the future as dividends are paid to the foreign owners? If so, and as long as the price is ‘right’, I can’t see any reason to be worried about this.

Economists don’t really quantify ‘social benefit’ it is something that is created by a value judgment – I believe the benefits to society will be. If I had some data I might be able to point to some potential social benefits in a more objective way but I don’t have that.

This is something we discuss on this blog alot, how normative assumptions and positive assumptions must be separate.

Also there are a number of other social costs and benefits that would need to be included if we look at this issue.

“I think you need to clarify further why you reached the conclusion that you did. After outlining the pros and cons succinctly and well, your statements weighing social benefit vs potential producer and consumer surplus came down to a series of opinions, rather than facts.”

You are exactly right – As I said I don’t know anything about the Auckland airport case, and my belief that it is probably better to leave it as is is just that a belief. The purpose of my blog article was to lay down the costs and benefits – any conclusions I made were a throw away line that people can disagree with and even change my opinion on.

I don’t think I should clarify my position any more as I don’t really have a position. If someone paid me to come up with a policy conclusion on Auckland Airport I would try to go through and quantify everything I can, and then give a feeling of where it would be better and where it would be worse.

“The fact is, we don’t actually know how well – or more to the point, how much better – a foreign owner could run the airport, and how much the surplus would be.”

True, my facts only gave an idea of the direction things moved – it did not quantify them.

Indeed, the best we can do is look at the difference between the valuation that the new owner places on the firm and the current valuation. If the new firm values it at a higher rate it will be because they can run the firm in a more ‘efficient’ fashion (note excludes social costs and benefits).

Ultimately, I’m very happy for you and everyone else to disagree with my conclusion – if our implicit value judgments do not match we do disagree, and we should disagree. The main purpose of this blog post was to look at the costs and benefits – not to weigh them up. As a result, discussing our different value judgments may not lead to us agreeing but could be interesting.

If you think that my ‘facts’ are wrong (which you didn’t say) then that is somewhere where we need to work together in order to find out what the full set of facts are.

Wouldn’t you agree that public outrage at the news that they were considering selling Auckland Airport would be a sign or a measure of Social benefit?

I’m not entirely sure what you mean by “laws on locals may be more effective than laws on foreign owners” – if you are saying that it will be more easy to control the airport if it is locally owned, I’d say you are right, and I think this has a lot to do with the public opinion against the sale to foreign owners.

I think you need to clarify further why you reached the conclusion that you did. After outlining the pros and cons succinctly and well, your statements weighing social benefit vs potential producer and consumer surplus came down to a series of opinions, rather than facts.

The fact is, we don’t actually know how well – or more to the point, how much better – a foreign owner could run the airport, and how much the surplus would be. There is a risk there, a potential that the surplus may end up being a surfeit. You yourself said a foreign owner MAY have more efficient ways of running the company. That’s not a heck of a lot of certainty there is it.