Posts Tagged ‘Eric Crampton’
The housing problem isn’t a housing problem; it’s a regional development problem![]() I have noted with growing despair the xenophobia which is becoming a political commonplace this election cycle. On the left it’s about house prices.* But this post is not about racism; it’s about development.
The national median house price is $415,000, a figure skewed substantially upwards by the extraordinary cost of housing in Auckland. But you can buy a three bedroom house in Taumarunui for $26,000, or for $67,000 in Tokoroa. These are extreme examples, but for considerably less than half the median price you can buy a charming colonial villa in Tapanui ($149,500). For a little more than half the median you can buy a newly-renovated house on an acre in central Gisborne ($225,000). Similar houses are available for not very much more money in larger regional centres like Dunedin and New Plymouth, and that’s without considering many apartments, townhouses and more modest types of dwelling. There are houses out there: there just aren’t jobs to go with them. The chart above shows income and employment growth by region, and this is why the houses are so cheap. The growth is just not there. (From the Ministry of Business, Innovation and Employment Regional Economic Activity Report 2013). Opportunity The community likewise needs needs certainty in its new arrivals. A gold rush or an oil boom might provide jobs and cash, but it doesn’t provide certainty for either group. Certainty — and opportunity — comes from deep and sustained development. The fly-in/fly-out mining towns in Australia are a good example, and while that industry has been instrumental in maintaining Australia’s robust economy, its direct value to the regions has been limited — trickling down, lifting all boats — without the adoption of targeted development initiatives such as Royalties for Regions, which seek to return a share of the proceeds of industry to local communities. As Eric Crampton said about the census income growth figures, increases in average wages across much of the South Island have been coupled with decreases in population, as people on low incomes move in search of better-paying work. Rob Salmond agreed, saying:
Returning to the MBIE chart above, notice the regions in the top-right quadrant: the West Coast, Waikato and Taranaki. These are distinguished by two characteristic sectors: dairy, and mining, each of which provides a relatively small number of well-paid jobs within a narrow sector, skewing up the income levels but not necessarily changing the overall development picture very much. As crucial as the dairy industry, in particular, is and will continue to be to New Zealand’s economy, a complete solution to development it sure ain’t. Which is why you can buy an enormous Moorish-inspired villa for $220,000 in the middle of gas and dairy country. Diversification and specialisation In New Zealand we talk a lot about the roles of government in distributing wealth, and in ensuring public access to health, education and other scarce resources. These levers are well-recognised and there is at least a moderate degree of bipartisan agreement on their use. This is not the case with regional and economic development strategies, where there are deep practical and ideological divisions between the parties. I can see why the noninterventionist technocratic right parties like ACT and National are reluctant to consider — or even recognise the viability of — the sort of robust, hands-on regional development strategy that will sustainable economic and community growth in regional areas and persuade the frustrated and overcommitted residents of our major cities to risk a change. It will require considerably more input than building roads, granting mining permits and water rights to permit the extraction of value directly from the land. It will require a lot more than public-private partnerships and white-elephant monorails through virgin rainforest. It very likely will require PPPs, roads, and mining rights, though, meaning the left will have to reconsider some of its positions as well. It will require thorough investment in infrastructure, especially transport infrastructure, and purposeful community-building, possibly funded by a deeper cut from mineral royalties, a localised share of revenues from key industries, or loans from the government. It will probably require considerable autonomy devolved to the communities affected, and the strengthening — rather than the weakening, as is currently happening — of local government. It needs to be a little bit New Deal and a little bit Think Big. Diversity is resilience, and our economy is very narrowly based. That must change. Different regions have their own strengths — environmental and historical, in terms of personnel and capability — and this represents an opportunity to improve the national economy holistically, by strengthening each of its component parts, rather than by building one economic muscle until it threatens to throw everything else out of balance. In many cases these nascent strengths will need considerable augmentation, and some will need to be developed almost from scratch. That requires significant and sustained investment in research and development — contributions to which the National government cut during the time when it was most crucial; when talent needed to be incentivised to stay here, and when industry needed to prepare to take advantage of the recovery, when it arrived. Public-sector research agencies can be beneficial in quite unpredictable ways, and when it comes to blue-sky research, patience can pay off enormously. If you’re reading this over Wi-Fi, you can thank the Australian government’s scientific agency, the CSIRO. People and places It is clear that having a critical mass of mobile public servants all located within a kilometre of each other can increase efficiency and cross-pollination in government and business. Some significant new businesses — such as Xero and Vend — clearly benefit from strong cohabitation and the development of their own start-up cultures. On the other hand, in the past decade telecommuting has become plausible for a large proportion of people whose work is predominantly reading, writing and talking on the phone, and the major reasons it is not more widely used are to do with middle-managers wishing to retain some measure of direct control over their staff, which they label “team culture”. There are costs and benefits to decentralisation, but it is hard to shake the sense that government, and the public service, are growing increasingly remote from the people whose interests they ostensibly serve. The gap between the experience of living in Auckland or Wellington and living in the rest of the country is vast already, and is likely to grow. Over the long term, as regional development improves, mobility will increase, as the economic and cultural risk of moving to or from a major centre will decrease, and this seems likely to yield an even greater cross-pollination benefit than that sacrificed by decentralisation. Political laziness from the left Labour and the Greens have taken strong and well-articulated positions in favour of regional development and smart growth but they’ve also gifted the government an opportunity to reframe what is essentially an economic development debate as being about housing and migration, when the former is a symptom and the latter is all but irrelevant. As a consequence the whole discussion gets sucked into an unwinnable partisan slagging-match. This isn’t so much a failure of policy, but a failure of political emphasis. It should be relatively easy to correct: they mainly need to stop complaining about the yellow peril, and start talking about the future of a country where wealth and innovation is spread beyond its main centres. Although I disagreed with his dismissive attitude towards the marriage equality debate, it seems likely that the once and future member for Napier, Stuart Nash, will be an important member of the Labour caucus in future. Late last year he argued persuasively that the regions are crucial not only for the economic wellbeing of the country, but for the wellbeing of that party, and so for the wider left. As he says:
To an extent it is understandable that this hasn’t happened yet. Development is hard. It takes a long time and a lot of money, and in a political context where governments change no less often than once per decade, it requires an uncommon degree of accord between increasingly diverse political movements. With the Greens now forming a substantial and apparently-permanent adjunct to Labour on the left, and the emergence of new climate-sceptic and anti-environmentalist sentiments within National and its allies, this is a big ask. But it needs to be done nonetheless. The regions aren’t going to develop themselves; they haven’t got the wealth or the people to do so, because it’s all tied up in tastefully-renovated villas on the North Shore and in Thorndon. Downsouthing The reason we live out here is because out here is where we could afford to buy a house on one modest Wellington income. The idea was always to move into town at some point, but that has gotten more distant, not closer, over the past five years with Wellington’s housing market proving largely impervious to the recession. So off we go. We anticipate significant benefits. My wife will be able to do something meaningful with her life other than raise our kids full-time or working as a rest home carer, worthy though both those tasks are. Commuting into Wellington would cost dozens of hours and hundreds of dollars a week, and at some point both of us would inevitably end up far from our young kids when they needed us. But not least among the advantages is the regional arbitrage of continuing to bring in something like a modest Wellington income while living in a place where houses are, very conservatively, $100,000 cheaper. But there’s the thing: unless you’re privileged enough to work in a field where you can telecommute (and bosses who’ll let you), or unless you work in a literal field, moving from Auckland or Wellington to pretty much anywhere else in the country is a big risk. (In Christchurch, the case is much more complex.) You can move, but for many people, the opportunity is just not there, and the risk of giving up what you have is very great. The government that raises those opportunities will find favour with those who want to move, those in the regions whose economies and communities are boosted by new growth, and those in the main centres who wish to stay, or must stay, who will have richer opportunities for doing do. L * On the right it’s more about asylum seekers (National) and internal threats to the colourblind state (ACT). The only party that seems clean of this is United Future, for which Peter Dunne should be congratulated. Revealed preference![]() Former National leader Don Brash addressed the ACT party conference at the weekend, which was half “catching Australia” boilerplate and half a warming-over of the infamous “nationhood” speech given at Orewa in January 2004 (for a thorough rebuttal of which see Jon Johansson, Orewa and the Rhetoric of Illusion). During his address at the weekend (although no mention is made of this in the text of the speech on his website, linked above), Brash correctly stated that the Treaty of Waitangi was ahead of its time, because the contemporary Australian approach, by contrast, was to “shoot the natives”. At this point, a heckler in the audience piped up: “let’s bring it in“. (Audio). Moments like these, when people are put in the position of genuinely involuntary response to some stimulus or other, are pretty rare in a political environment dominated by strict stage-management, spin and counter-spin. Their type and quality can tell you a whole lot about a political movement, especially when the response is collective, spontaneous, and embedded within a heightened or aroused political context, such as in the middle of a keynote speech. What happened next was that the delegates in attendance at the ACT party laughed. At the suggestion that New Zealand implement a system of genocide against its indigenous people which, even back in 1840, was a source of shame for Australia, those in attendance at the annual conference of a New Zealand government party whose ranks include two ministers of the crown laughed. It is hard to be sure from the audio, but it sounds like Don Brash also laughed — someone on-mike did, and in such circumstances only the speaker is miked. Quickly, the laughs turned to disapproving murmurs, and Brash continued speaking as if nothing had happened. But by then the moment was over — the ACT delegates’ true colours had been revealed. Not all of them, to be sure. No doubt there were those who were agape at the suggestion. Stony, stunned silence from the delegation at large would certainly have been an appropriate response and one which I don’t think would have been too hard to muster. Eric Crampton has suggested (though I suspect he’s by no means committed to this line of argument) that nervous laughter is a fair response to shock; admitting also that nobody seems to be claiming that the laughter was nervous. Eric also placed one in five odds on the heckler being a ringer whose plan was to elicit just this sort of response, in order to discredit the ACT party. Fair enough, I suppose. But it’s not the heckle itself which was disturbing — every party contains its fringe lunatics, those who fly off the handle and say embarrassing things. What’s disturbing is the response, the spontaneous, reflexive, collective reaction to the suggestion of genocide. Just as Labour are the party of humourless, tuneless harridans after their “John the Gambler” song at the 2008 annual conference, and the Greens are the party of morris dancing hippies because of their 2001 annual conference, the fundamental take-away here is that ACT is the party who laughs at genocide jokes. The ACT delegates own that moment of laughter, just as much as they own the disapproval which followed it. It’s not even out of character for a party which has for some years now campaigned on the basis of arguments that indigenous people represent barriers to the white man’s progress, and was at the time of the interjection revelling in a sustained argument to that very effect: get rid of the bloody natives, and things’ll be a lot easier around here, and then we might catch up with Australia, who solved their bloody native problem good and proper. It speaks to the core beliefs of those in attendance, and what’s more, it largely reiterates what most peoples’ impressions of the ACT party are, based on their rhetoric, their policy positions, and their steadfast opposition to every bit of legislation giving the slightest acknowledgement to Tino Rangatiratanga. Whether a ringer or an organic outgrowth from the party delegation, whether speaking his own truth to power or having just had a few too many free glasses of capitalist sauvignon, the people of New Zealand are indebted to this anonymous heckler. He has granted the nation a unique insight into the ACT party, and rare basis upon which to judge its underlying character. That’s good for democracy. L ‘Efficient’ pricing and social cohesion in disaster recovery![]() In my view, one of the more shameful episodes in the Canterbury earthquake was the call by some for retailers to implement so-called ‘efficient’ pricing of crucial goods such as water. Among these was University of Canterbury economist Eric Crampton, whose article on the topic was even printed in the papers. Read his blog post In defense of price gouging. I often agree with Eric, but on this topic I just don’t. I’m no big-city economist, and I seem to have misplaced the argument I wrote on the topic at the time, but essentially the problem is: if nothing is done, the resource just runs out and people who need it can’t get it. Absent some mechanism (rationing, gouging, &c) the criterion for access to the resource is speed and/or ruthlessness — the person who goes down to the supermarket & fills their ute with bottled water wins; everyone else has to rely on other means, such as asking their neighbours or others for help. I see efficient pricing as simply a means to shift the the criterion for access from ‘speed+ruthlessness’ to ‘accessible wealth+ruthlessness’. Those neither speedy nor wealthy (that is, almost everyone) will have to fall back on those same social structures of cooperation and goodwill to get their water in either case, and I don’t accept that privileging those with cash on hand is much of an improvement over privileging those who can get through the gate quickest. However there is a non-economic factor to consider: in times of disaster, social cohesion is crucial. To large extent it operates on the notion that both the mighty and the humble are brought low; that we’re all in this together, and when the chips are down, Jack’s as good as his master. A resource allocation mechanism which punctures these illusions so as to damage social cohesion, such as by turning the poor against the rich, must deliver an enormous efficiency benefit in order to offset the harm it causes by sapping the goodwill upon which disaster recovery thrives. At a time when the foremost objective should be to promote social cohesion, ‘efficient’ pricing is an ugly imposition of individualism on the collective spirit. Anyway, the point of this post wasn’t to relitigate that, or to criticise Eric, so much as to say that — by contrast — reports of price-gouging in post-flood Queensland have drawn a firm response from officials. Fair Trading Minister Peter Lawlor warned retailers of the possible strategic consequences of gouging:
More robust still was the statement from Ipswich Mayor Paul Pisasale, the same who warned looters that they would be used as flood markers if caught:
This suggests a vigilante streak and willingness to bring the coercive force of the state to bear for social, rather than strictly regulatory reasons, and this is not usually a beneficial trait in a civic leader. However I think in cases like this there is some justification for such a stance. Pisasale’s position is a manifestation of the ‘Queensland culture’ called upon by Premier Anna Bligh in her speeches, and which may now be her political legacy. If it all came to pass, perhaps a disgruntled gouger might take legal action against Pisasale or his agencies for harrassment; but this would be an uphill battle, because Pisasale enjoys the protection of being right in the eyes of his society. After all; the only thing most Aussie battlers hate more than a government bureaucrat is a disaster profiteer. He is on firm ground as a representative of his people, because his representation rings true. His commitment is to the cohesion of his society. He is doing what crisis leaders do; efficiency be damned. L Local Government Elections 2010![]() Just bullet points from me:
That’s all I’ve got. All in all, a pretty big day capping a pretty fierce election. L On media bias and distortion![]() BK Drinkwater has posted a good response to some of the comments on Bryce Edwards’ synopses of chapters from the book Informing Voters? Politics, Media and the New Zealand Election 2008 (edited by Chris Rudd, Janine Hayward and Geoff Craig of the University of Otago Politics department). In comments to BK’s post, Eric Crampton recommended Groseclose & Milyo‘s paper on the topic. Having not read the book, I’ll constrain my comments to the posts, comments and paper which I have read. [Apologies, this is a long and dry post on a topic very dear to my heart. I also banged it up in a spare couple of hours while I ought to have been sleeping, and haven’t proofed it, so it may be incoherent. I reserve the right to subedit it without notice. The rest is over the break.] Duelling imperatives![]() So, the National Business Review has decided to (partially) monetise its interweb presence. In a rather petulant letter, publisher Barry Colman takes aim at the enemies of journalism and backs his team to be able to make a paid content model work where very few have done so before, and never in such a tight and competitive media ecology as we have in NZ.
Good luck to them. Unfortunately, blaming competitors (yes; bloggers are competitors for reader time and attention) for the (slow) failure of one’s business never made the business suddenly work better, and this sort of competition-blaming is typically the refuge of people who believe they have an ordained right to profits. As Dan Conover says:
(Conover has links in his post, which you can follow if you go there. He was a newsman; now he’s a blogger. Go figure.) Blame anyone except the industry itself for failing to sufficiently move with the market. But perhaps that’s what Barry Colman thinks he’s doing. There are good reasons behind the decision, chief among which is the importance of maintaining a strong and well-resourced newsgathering apparatus. He’s aware that a move to a pay model needs to be accompanied by a dramatic increase in quality, and posits the fairly reasonable idea that people will pay for it. The trouble with artificial scarcity is partly highlighted by Cactus Kate:
Good question. If you withhold your best content from the market, you’re cutting off your nose to spite your brand. The imperatives which drive your business conflict: you want to put your best content in front of as many people as possible because it’s the best content (not the ordinary content) which drives your readership and reputation; by locking it away, you hide your light under a bushel so few people know about it, and even if people chance to find out about it (from those relatively few who do have a subscription) then they can’t access it anyway. This is not the way to become a news or commentary source of record. And if you don’t, And if you don’t put your best content up there, then what are you offering again? At best it seems like this model will rob Peter to pay Paul – that is, the NBR’s ordinary content (and readership) will suffer for the benefit of those few subscribers. This is also what online commenters the NBR site seem to think, and online opinion is predictably scathing. There has to be a better way. Edit: I should add that artificial scarcity can potentially work if the content is strong enough. Fairfax’s Australian Financial Review is probably the best daily newspaper in Australasia, and because of its exceptional content, extremely strong commitment to journalistic practice and authoritative market position it is able to dictate such strict terms of access that it causes major headaches for media analysis companies, archivers and researchers. The AFR has no real competition, and that’s what enables it to call the shots. But the NBR is not the AFR – nowhere near, more’s the pity. L Watching the watchers![]() Via Eric Crampton, of all people (his “interesting” sidebar is, well, interesting, and incidentally his co-fisk of the BERL booze report is brutal), the news that (in US prisons, at least) guards commit more rapes than inmates is pretty sobering.
This isn’t a report from some two-bit bunch of pinko soft-on-crime liberal nancies – The National Prison Rape Elimination Commission was formed in 2003 by the (then-majority Republican) US Congress, by a unanimous vote in conjunction with the passage of the Prison Rape Elimination Act. It is a large-scale demographic and consultative research project intended to first determine the scale of the problem of prison rape, then to develop policy and procedure by which to eliminate it and standards to which prison operators must adhere in ensuring its elimination. As Senator Edward Kennedy, one of the initiative’s sponsors, said “it is not a liberal issue or a conservative issue. It is an issue of basic decency and human rights.” The research has been almost six years in the making. So, for the benefit of David Garrett and Judith Collins:
In other words: dorm-style and double-bunked prisoner accommodation means more rapes. Further:
If it’s good enough for the USA, with the world’s highest incarceration rate per capita, then it’s good enough for New Zealand, which under the previous government as much as the current one, looks determined to challenge that record. L |