Wednesday, 31 October 2012

Cameron Slater takes over at the ‘Truth’

Checking my Google Reader for news I’d been told would be announced this afternoon, the first thing I saw was a post headlined “Rough and Tumble Play”—which I assumed must be the much-whispered announcement that Cameron Slater is taking over the Truth newspaper.

It wasn’t, as it turns out. That was a post by Literacy NZ. This is the post announcing Whale Oil is going mainstream.

Yes, ‘tis true Dear Readers. NZ’s favourite gonzo blogger is becoming the editor of what was once NZ’s favourite gonzo newspaper.  Which may or may not mean surrounding himself with a truckload of real gonzo journalists to do what The Truth used to do so well: to kick the arse out of every well-fed sacred cow they could find.  Which appears to be his aim:

“Wellington, you’re on notice – be afraid.”

New Zealand’s number 1 news and opinion blogger Cameron Slater has today been appointed Editor of the Truth.
Truth is New Zealand’s last remaining Kiwi-owned national newspaper, which this year turns 125 years old.
Slater has been brought on board to fundamentally change the way newspapers deliver to their audiences. Newspapers worldwide are in decline, due, Slater says, to a tired old business model that no longer works.
“We’re not going to spend $4 million on a paint job and then deliver the same tired old paid-for shit.
“Most of the media in this country is weak, and it’s paid for. The integrity in news went ages ago.”
Slater is adamant that the backbone of New Zealand – the people who work – are not getting a fair shake from government or the system. He aims to change that….
“We’re going to keep the buggers honest. There’s no better disinfectant than sunlight….

Changes will be rolled out over a period of months and will include both print and a 24 hour news website to support the paper. Slater aims to alter the approach to news presentation significantly.
“We took the pulse of the nation, and it had nearly bloody died.
“No bastard wants to read old news – they can get that online. We’ll be more of a views-paper that promises to deliver REAL news, REAL opinion.
“The people are numb from the eyes down with the diet of PR’d crap they get now. I will not do it to them anymore – it’s not right.
“I assure you – the little paper that could still can!”

Slater’s first issue will hit newsstands on Thursday 8 November 2012.

Here’s John Lennon:

Germany v Kiwi

Do you prefer the new German parking system?


…the more advanced yet traditional Kiwi system?

Is there anything good about #Sandy?

The only good thing about a storm that killed at least 39 people, disrupted millions of lives and caused around $20 billion of damage is the chance to talk about Frederic Bastiat’s lesson in his seminal essay "That Which is Seen, and That Which is Not Seen".  And the only reason we have that chance is because there are so many alleged economists out there—the same trolls who emerge after every disaster—who leap into print to insist the destruction will actually be “good for the economy.”

Alleged economist and professor at Smith School of Business Peter Morici, for example, who took immediately to the Philadelphia Inquirer and elsewhere to argue:

in an economy with high unemployment and underused construction resources, Sandy will probably unleash $15 billion to $20 billion in private spending directly related to reconstruction.
    That figure could grow as many rebuild larger and better than before. Consider a  struggling restaurant, for example, whose owner invests his insurance settlement in a new and more attractive business. In areas like the Jersey Shore, older, smaller homes on large plots may be replaced by bigger dwellings that can accommodate more families during the tourist season. The Outer Banks of North Carolina saw such gains several decades ago after rebuilding from a storm of similar scale.

Equally moronic is Panos Mourdoukoutas at, Derek Thompson at The Atlantic, Moody’s Analytics Ryan Sweet writing in the Wall Street JournalChris Isidore at CNN Money, and AP “economic writers” Christopher S. Rugaber & Martin Crutsinger writing everywhere ---all of them saying, as summarised by the idiotic Bo Peng writing in The Street,

In an economy not constrained by resources, such as that of the U.S., limited crisis means only two things at the statistical level: stimulus to individual and government spending; and stimulus to jobs.

That’s a whole asylum full of morons, to which only a moment’s Googling would be needed to add dozens more. And Paul Krugman hasn’t even had the chance to post yet.  Or Bernard Hickey.

Blogging at the Acton Institute, Joe Carter asks

Frederic Bastiat provided the ultimate rebuttal to this spurious thinking 162 years ago in his essay ‘That Which is Seen, and That Which is Not Seen.’ So why do we people make the same claim that destruction is economically beneficial? Could it be that people are simply unaware of Bastiat’s “parable of the broken window?

imageEither unaware, or too blinded by lousy economic thinking.

No wonder the sane, dry and sober Don Boudreaux “is far less worried about the actual consequences of Sandy than about the additional battering that Sandy's winds, rains, and flood waters will prompt economically uninformed reporters and pundits to inflict upon the body politic.”

Fortunately, sane and serious commentators are educating bodies both public and politic.

Writing at Bloomberg, Caroline Baum has

a standard response to such nonsense: If wealth destruction is such a good thing, why wait for natural disasters to occur when we could nuke and rebuild our cities on a regular basis?
    Yes, housing starts will increase, but the stock of homes won't be any larger. Businesses will replace the lost capital stock, but drawing on scarce resources to rebuild isn't an efficient use of them.
    Our old friend Frederic Bastiat explained it best -- the parable of the broken window --  in his 1850
essay, "That Which Is Seen and That Which Is Not Seen." He tells the story of a shopkeeper whose son breaks a window in his store. The shopkeeper has to pay the glazier six francs (no euros back then) to repair it. The glazier then has money in his pocket to spend. This is "that which is seen," or the Keynesian multiplier decades before John Maynard Keynes was even born.
    What if the shopkeeper didn't have to spend six francs to repair the broken window, Bastiat asks? He could have bought a pair of shoes, or spent it on something else. "Neither industry in general, nor the sum total of national labor, is affected, whether windows are broken or not," Bastiat writes. "Or, more briefly, 'destruction is not profit.' "
    Even a Ph.D. economist should be able to grasp that principle.

Boudreaux himself  describes Morici’s flawed reasoning as Vulgar Keynesianism at Full Gallop:

There’s nothing surprising in Prof. Morici’s argument that the spending necessary to repair damaged buildings and other assets can help the economy. Predictions of economy-wide wealth springing from devastation are issued after every natural disaster. These predictions are examples of what the English jurist A.V. Dicey called “the idle contentions of paradox-mongers”* – predictions that are just clever enough to strike economically uninformed people as being profoundly insightful.
    But what appears to many to be profoundly insightful is, in fact, fallacious.
    If Prof. Morici is correct, then surely he also applauds, say, the economic consequences of drunk driving. As with hurricanes and earthquakes, he can bemoan the loss of life caused by drunk driving and then get on with explaining how, paradoxically, the economy benefits from drunk driving. After all, drunk driving creates unnecessarily large numbers of destroyed automobiles to replace, damaged automobiles to repair, dead victims to bury, and injured victims to be cared for by first-responders, doctors, nurses, physical therapists, and hospital administrators and clerks.
    If you sense – as you should – that the economy in fact does not benefit from drunk driving, then you should reject Prof. Morici’s argument that the economy benefits from natural disasters.

At National Review, Veronique de Rugy wonders aloud at those who argue

Being forced to spend money that people had planned to spend on something else or to save to prepare for harder days ahead in order to give an artificial boost to GDP in the construction business has benefits? No, it doesn’t other than superficially. That’s what French economist Frederic Bastiat called the broken window fallacy. Bastiat rightly noted that a country doesn’t benefit or get richer because of the destruction imposed by disasters (whether natural or man-made ones, such as wars). Destruction of wealth, buildings, streets, subway systems, houses, electric grids, bridges, and more doesn’t make a country richer even if it temporarily creates jobs in the construction business. All destruction does is destroy and divert to the reconstruction effort scare resources that could have been allocated to other things (things people actually really wanted). 

She attacks the standard Keynesian response to the broken-window fallacy argument:

Keynesians argue that the broken window fallacy applies if and only if the resources needed to fix the window were already fully employed before they had to be diverted. However, today’s economic conditions are such that there are plenty of idle resources lying around that can now be put to productive use. But … why are there so many idle resources lying around? (Especially after years of policies meant to put them to good use.) [On that, Robert Murphy has several good points in response to the Keynesian argument.]
    On that note I would add that what we have found out during the last episode of stimulus spending is that unemployment rates among specialists, such as those with the skills to build roads, bridges or schools, (basically the people who will be used during the reconstruction effort in the next few months) are often relatively low. Moreover, it is unlikely that an employee who specializes in residential-area construction can easily update his or her skills to include rebuilding bridges or electric grids and subway systems. As a result, firms receiving stimulus money
tend to hire their workers away from other construction sites where they were employed rather than from the unemployment lines. This is what economists call “crowding out.” Except that in this case, labor, not capital, is being crowded out. In fact, the original work of GMU’s economist Garett Jones and AEI’s Dan Rothschild confirms that a plurality of workers hired with ARRA money were poached from other organizations rather than from the unemployment lines. The same will likely be true today with Sandy and the reconstruction effort that will follow its devastation. 

Writing at Forbes, Tim W0rstall reminds us the ignorant are only able to make their argument these days because of their GDP fetish allowing them to confuse our stock of capital with the flows that emanate from them.

[Here] is half the problem with the way we calculate GDP: government spending counts at what it costs, not what value it produces.
    The other half of the problem is that we are measuring the current activity, not the capital value. This is a common complaint when we talk about pollution. Cleaning up an oil spill counts as an increase in GDP. Which it is of course: we think that cleaning up an oil spill adds value so cleaning up an oil spill does add value. That’s why we clean it up and also why we count it in GDP: our measure of value being added.
    The problem is that we don’t count the loss in capital value of the original spill itself: nor of any other pollution. GDP measures the flows in the economy, not the stock…
    Imagine that the total wealth of the US is $100 trillion. All the buildings, the factories, the financial assets, the human capital, the natural resources, all add up to $100 trillion. The GDP of the country is around $15 trillion. That second is the flow that we get from the stock of the first.
    Now imagine that Hurricane Sandy does $20 billion of damage to that wealth [which is what disaster analysts Eqecat suggest]. The US is now worth $99.980 Trillion. GDP might rise to $15.01 trillion as we repair that damage. But we’re not in fact any richer at all: despite the fact that GDP has gone up. What has actually happened is that some of our stock of wealth has been destroyed and we’re having to do more work in order to rebuild it. This is exactly the same as our pollution example. We’re measuring what we produce but not the capital stock of what we have (or had).
    Yes, the rebound from Sandy may well provide a boost to the economy. But that’s a function of the way that we measure that economy, not a real boost in our general wealth.

It would be nice if some folk remembered that. Or learned it.

It is the difference in essence, as David Ricardo once pointed out, between Value and Riches.

imageTo help them, let me conclude by quoting extensively from the great Frederic Bastiat himself—whose insights still cast an enormous shadow. Here below is the relevant excerpt from his seminal 1850 essay, around which the great Henry Hazlitt developed his “one lesson” of economics:  “There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.”

…Have you ever witnessed the anger of the good shopkeeper, James B., when his careless son happened to break a square of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact, that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation - "It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?"

Now, this form of condolence contains an entire theory, which it will be well to show up in this simple case, seeing that it is precisely the same as that which, unhappily, regulates the greater part of our economical institutions.

Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier's trade - that it encourages that trade to the amount of six francs - I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.

But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, "Stop there! your theory is confined to that which is seen; it takes no account of that which is not seen."

It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.

Let us take a view of industry in general, as affected by this circumstance. The window being broken, the glazier's trade is encouraged to the amount of six francs; this is that which is seen. If the window had not been broken, the shoemaker's trade (or some other) would have been encouraged to the amount of six francs; this is that which is not seen.

And if that which is not seen is taken into consideration, because it is a negative fact, as well as that which is seen, because it is a positive fact, it will be understood that neither industry in general, nor the sum total of national labour, is affected, whether windows are broken or not.

Now let us consider James B. himself. In the former supposition, that of the window being broken, he spends six francs, and has neither more nor less than he had before, the enjoyment of a window.

In the second, where we suppose the window not to have been broken, he would have spent six francs on shoes, and would have had at the same time the enjoyment of a pair of shoes and of a window.

Now, as James B. forms a part of society, we must come to the conclusion, that, taking it altogether, and making an estimate of its enjoyments and its labours, it has lost the value of the broken window.

When we arrive at this unexpected conclusion: "Society loses the value of things which are uselessly destroyed;" and we must assent to a maxim which will make the hair of protectionists stand on end - To break, to spoil, to waste, is not to encourage national labour; or, more briefly, "destruction is not profit."

What will you say, Monsieur Industriel -- what will you say, disciples of good M. F. Chamans, who has calculated with so much precision how much trade would gain by the burning of Paris, from the number of houses it would be necessary to rebuild?

I am sorry to disturb these ingenious calculations, as far as their spirit has been introduced into our legislation; but I beg him to begin them again, by taking into the account that which is not seen, and placing it alongside of that which is seen. The reader must take care to remember that there are not two persons only, but three concerned in the little scene which I have submitted to his attention. One of them, James B., represents the consumer, reduced, by an act of destruction, to one enjoyment instead of two. Another under the title of the glazier, shows us the producer, whose trade is encouraged by the accident. The third is the shoemaker (or some other tradesman), whose labour suffers proportionably by the same cause. It is this third person who is always kept in the shade, and who, personating that which is not seen, is a necessary element of the problem. It is he who shows us how absurd it is to think we see a profit in an act of destruction. It is he who will soon teach us that it is not less absurd to see a profit in a restriction, which is, after all, nothing else than a partial destruction. Therefore, if you will only go to the root of all the arguments which are adduced in its favour, all you will find will be the paraphrase of this vulgar saying - What would become of the glaziers, if nobody ever broke windows?

It is the same with a people as it is with a man …

Tuesday, 30 October 2012

Oh, Sandy [rolling updates]

It looks like Sandy is coming back to Asbury Park, New Jersey, today. This early Bruce Springsteen lament seems eerily appropriate.

PS: Just so you know, the Wall Street Journal has opened its pay wall and WorldStream so you can keep up with coverage of the looming hurricane.

imageMap from Wall Street Journal

UPDATE 1: In the wake of Sandy, be prepared for an onslaught of both enviro- and econo-silliness—both from economists arguing destruction causes prosperity (yes folks, sit tight for an onslaught of Broken Window Fallacies), and from warmists desperate to link weather to climate.  (“Even in the midst of hurricanes,” notes Anthony Watts, “these people don’t give up trying to tie weather to climate. It’s shameless desperation.”)

Here’s some first signs of the warmist schtick: US warmists Bill McKibben and Joe Romm were out of the blocks early with their Tabloid Climatology™. Our own Jim Salinger pitched in on State Radio this morning. And Mr Real Estate Martyn Bradbury tried to join the tabloid climatologists with his own contribution.

Meanwhile, Roger Pielke points out “Large, damaging storms are not unprecedented in the second half of October, with Storm 11 (1944, ~$54 billion), Wilma (2005, $26 billion) and Hazel (1954, $24 billion).”  Quite so, concurs Anthony Watts, who lists destructive October hurricanes making landfall in the north-eastern States all the way back to 1852—long before the first drop of carbon dioxide was emitted from an exhaust pipe.

Now, the alleged economists: Frank Stephenson points out some early alleged economics portraying Sandy as "stimulus.".  Meanwhile, Don Boudreaux and Tim Worstall fire the first salvoes on behalf of sanity: “Destroying Property Does Not Promote Economic Prosperity,” argues Boudreaux. And Worstall points out that if anyone does see prosperity in destruction, it is only because of the ridiculous way GDP is measured. “The problem is that we don’t count the loss in capital value of the original [destruction]: nor of any [further consequences]. GDP measures the flows in the economy, not the stock.”

These numbers aren’t accurate (no one really has an accurate number for the wealth of the entire US) but they’re in the right order of magnitude at least. Imagine that the total wealth of the US is $100 trillion. All the buildings, the factories, the financial assets, the human capital, the natural resources, all add up to $100 trillion. The GDP of the country is around $15 trillion. That second is the flow that we get from the stock of the first.
    Now imagine that Hurricane Sandy does $10 billion of damage to that wealth (for our purposes it doesn’t matter whether it’s $100 billion or $1 trillion. Although this obviously matters to everyone except for the purposes of this example). The US is now worth $99.990 Trillion. GDP might rise to $15.01 trillion as we repair that damage. But we’re not in fact any richer at all: despite the fact that GDP has gone up. What has actually happened is that some of our stock of wealth has been destroyed and we’re having to do more work in order to rebuild it. This is exactly the same as our pollution example. We’re measuring what we produce but not the capital stock of what we have (or had).
    Yes, the rebound from Sandy may well provide “a boost to the economy.” But that’s a function of the way that we measure that economy, not a real boost in our general wealth.

UPDATE 2: Don Boudreaux’s been busy.  He’s also taken the opportunity to send to the Washington Post the BEST LETTER EVER on speculation:

Have you noticed the enormous increase in greedy speculation in the northeast over the past two days?  It’s quite something!  In advance of hurricane Sandy, consumers are now artificially increasing the scarcity today of the likes of bottled water, canned goods, batteries, and medicines by stocking up on these goods.
And all of this self-interested speculation – done merely in anticipation of staple goods being much more scarce after Sandy strikes than they are today – is applauded and even encouraged by the news media and government leaders!
What gives?  Many of the same people who today publicly encourage us to speculate (“Make sure your family has ample supplies of batteries!”) are among the loudest critics of speculation at other times and in other markets.
But in fact the oil speculator who, say, buys oil today in anticipation of oil becoming more scarce tomorrow does just what a consumer does today in a supermarket in anticipation of a disruptive storm: both persons usefully transfer resources across time.  They both stock up on resources that are today relatively abundant in order to preserve these resources for consumption at a time when they are relatively more scarce (and, hence, more precious).  Both persons transfer resources from today – when the consumption of any one bottle of water or gallon of gasoline provides relatively less benefit – to tomorrow when the consumption of that same bottle of water or gallon of gasoline will provide relatively more benefit.
Anticipating the future and taking actions to allocate goods and services from times of relative abundance to times of relatively greater scarcity is an immensely useful activity.  And we all perform such speculation whether or not we are popularly identified as “speculators.”

Donald J. Boudreaux
Professor of Economics
George Mason University
Fairfax, VA  22030

UPDATE 3: The first and longest boardwalk in the US is now floating through the streets of Atlantic City, New Jersey:


UPDATE 4: Hurricane Sandy death toll in Caribbean rises to 69, mostly in Haiti.

UPDATE 5: Storm surge and high tide put ‘lower’ Manhattan under water [pics from Zero Hedge]:


UPDATE 6: WSJ reports Governor Cuomo’s office “has confirmed at least five storm-related fatalities in New York.”

UPDATE 7:  CNBZ reports National Guard troops have moved into Lower Manhattan. Basement apartments, subway tunnels along the lower East River are under water. Water “rushing into” Battery Tunnel. Con Edison has begun shutting down all power in Manhattan … lights out in Greenwich Village … SoHo … Lower East Side …. Statue of Liberty…

UPDATE 8:  The East River continues to surge over its barriers. This is 34th St and First Avenue in Manhattan, almost in MidTown [pic by Robert Wenzel]:


UPDATE 9:  National Data Buoy Center reports winds are mercifully well below the 72 knots that would mark a hurricane, none of their stations recording over 50 knots.  Hat tip Willis Eschenbach who says, “Please note that the big damage from such storms is the flooding, so I am not minimizing the likely extent of the damage.  It will be widespread. However … not a hurricane.”

UPDATE 10: Still windy, however: “So The Front Of A Building Blew Off In NYC.”

UPDATE 11: Three feet of water on trading floor of NY Stock Exchange. May be shut down for weeks. [Hat tip @AmberLyon]  Oops. No. CNN (who had made the claim) redacts.

UPDATE 12:  Uh, Con Edision hadn’t been “shutting down” power. Turns out there was an explosion at the Con Ed Plant E14th and FDR Drive! [Hat tip Lyndon Hood]

UPDATE 13:  WCBS reports the storm surge at Battery Park (Lower Manhattan) has begun to recede.

UPDATE 14Salt Water Puts NYC Subway "In Jeopardy"

DOWN TO THE DOCTOR’S: Unintended Consequences [with correction]


This week, Doc McGrath points the finger of blame. [See Correction below]

I wonder if readers noticed this news item about the road toll at Labour Weekend—specifically a horrific, fiery car crash South of Te Karaka near Gisborne that saw four dead.

The story of that crash is a chilling demonstration of the Law of Unintended Consequences which states:

  The actions of people, and especially of government, always have effects that are unanticipated or unintended.

Now, we often say that where there are consequences, those who took the actions should bear the responsibility. So when those actions are taken by government, and those unintended consequences bear directly on someone else—someone who has often been prohibited from avoiding those consequences, however dire—then who takes  responsibility for that? 

How does that bear on this crash? Read this:

Police say passers-by stopped to try to help those trapped in the burning vehicle, but they couldn't get their seatbelts released before the fire took hold.

Did I mention responsibility?  I put it to you that those lawmakers who made wearing seat belts compulsory all those years ago should be held accountable to the family of the three people who suffered agonising death in the Ford Explorer because they were trapped by their seat belts.

Now I'm not saying these three people wouldn't have used their seat belts without laws mandating their use. They might have. And perhaps, without the seat belts, they would have died from injuries sustained directly as a result of the crash. The fact remains however that the restraints intended to save lives were in this case a contributing factor in the deaths of these unfortunate motorists.  And the choice over using those seat belts had been taken out of their hands—so even if they decided they’d be safer without wearing a restraint, they couldn’t.

Every action has consequences, and parliamentarians - like everyone else - should be held accountable for these consequences. If a law results in needless death or injury, justice should be sought for the victims.

I believe New Zealanders should have recourse to legal action against legislators who introduce bills to Parliament that end up as laws limiting the action of peaceful citizens, where this restriction leads to avoidable death.

Richard McGrath
Leader, Libertarianz Party

CORRECTION:  Later more accurate reports indicate the inability of heroic rescuers to extricate the car’s occupants before fire took hold had nothing to with seat belts. So while the discussion is a useful one, it has nothing to do with this tragedy. We regret the error.

Monday, 29 October 2012

“Sprawl” versus “intensification”

[Welcome Kiwiblog, Herald and NBR readers. Please also see my more immediate reaction to National’s proposals: Government finally plans to address unaffordable housing. But…]

The debate over affordable housing is already being framed as a facile debate between “sprawl” and “intensification”—a debate between those who wish to release (just a little) the planners’ ring-fences around NZ’s major cities to allow new homes on “greenfield” sections, versus those who insist we build with more intensity within the ring fence on so called “brownfield” sites.

The latter group characterise the former as being in favour of “sprawl”; the former characterise the latter as promoting the construction of the slums of tomorrow.

Both are right, and both are wrong.

What’s missing here is choice.  In talking about about development on either “greenfield” or “brownfield” sites, both advocates insist that folk do things their way. They completely ignore the fact that people have the right to choose where and how they live, particularly if they own the place on which they choose to settle down.

Let people live where they wish to, as long as they bear the costs. And let those choices themselves—choices based on people’s own values for which they are prepared to pay the cost—organically reflect the way the city develops.

Ironically, it’s the very promoters of intensification, the planners themselves, who have done the most to make decent intensification more difficult.  Here's just some examples of a few urban housing types that are enormously popular overseas, but could barely be even contemplated here…...

Government finally plans to address unaffordable housing. But… [updated]

imageGraph from Rodney Dickens’s report “Quantifying the Housing Affordability Time-Bomb

FOUR YEARS AFTER THEIR election pledge to address housing unaffordability, and ten years after the housing bubble began to seriously inflate, the National Government is finally making noises about the problem.

Unfortunately, I’m not sure they’re the right noises.

Short on specifics as yet—apparently there is a paper being submitted to Cabinet today outlining “a multi-pronged work programme” issued in response to the Productivity Commission's report on this issue,* after which we might perhaps learn more—and not a  peep has been heard out of housing minister Phil Heatley—so all we have to go on presently are the noises about this made over the last week and weekend by Finance Minister Bill English.  And those noises are not altogether encouraging.

English identifies housing affordability as a problem, yet his characterisation that the "housing market is not working properly” is neither accurate nor helpful.  The housing market is working as well as it can within the shackles and costs placed on it by government and councils. What is not working however are the planning, regulatory and rates burdens that constitute those shackles and add to the costs—such that between 1992 and 2012 the national average house price increased more than four times more than prices in general, which should ring warning bells.

IT IS ENCOURAGING THAT English is framing the debate around Hugh Pavletich’s annual Demographia  International Housing Affordability Surveys,** which now show the median cost of a house in New Zealand is 5.2 times the median income in New Zealand, and in Auckland 6.4 times median income.

Any ratio above five is considered unaffordable [says English in last week’s Herald]. Despite demand for low cost houses, relatively few are being built - in part because of the very high cost of land, particularly in Auckland.

Yesterday on Q+A he expanded on that, recognising “there are a number of problems.”

One is the cost of building. That does appear to be pretty high, particularly compared to Australia. There's a lot of work being done on why that might be the case. More scale, building regulation - all of that can be improved, and that process is underway.

imageWhile it is accurate however to say “that process is underway,” it is totally inaccurate to characterise Maurice Williamson’s amendments to the Building Act as anything but a sop. Nothing proposed therein will help reduce the increasing time, costs, delays and uncertainties involved in getting a building consent and in enduring the inspection process on site—instead he will be imposing new costs and further muddying the already opaque waters around risk and responsibility.   Not to mention the licensing of building practitioners, which will further reduce the already low number of builders in the country while doing nothing to ensure their quality. All of which will further reduce the number of houses being built.

And while the cost of building materials sky-rocket, nothing proposed therein is going to make it easier to break what is essentially a “regulatory wall” of box-ticking making it almost impossible for NZers to use inexpensive foreign materials, or to enjoy the cost-savings of innovative building systems and techniques and systems. Systems like these Structural Insulated Panels, which are used in Canada, Europe, the US and Australia to great effect—low cost, low risk, low energy, huge insulation value, robust--but which are virtually impossible to build with here at home under our command-and-control building regulations that dictate virtually every detail of every new build.

There will be no innovations in NZ’s high-cost labour-intensive building techniques until innovative systems such as this can be painlessly introduced and exploited—perhaps only when councils themselves are taken out of the chain of responsibility for policing building standards

Friday, 26 October 2012

Beer O’Clock: ?


Yes, it’s nearly that time. And since I’ll be heading off to Pukekohe to see Counties knock over Otago in the only game of rugby this weekend … I have no idea what I’ll be drinking. 

But hopefully it will taste like victory!

Spring is here!

After scouring the whole North Island for signs of it over the last week, I can confirm that Spring is now here!

And despite the many doubters, I can report it is possible to celebrate Spring in Auckland. With trees!

To celebrate Auckland’s Spring, Patrick Reynolds has tracked down and photographed his favourite city trees. Like this one:

imagePhotograph by Patrick Reynolds

Raw food is not real food

A diet consisting only of raw, uncooked food is one of many fad diets currently fashionable, one purporting to be healthy.

Sadly, for my many friends partaking of the fad,

eating a raw food diet is a recipe for disaster if you’re trying to boost your … brainpower. That’s because humans would have to spend more than 9 hours a day eating to get enough energy from unprocessed raw food alone to support our large brains.

N0, it really wasn’t about a YouTube video

Can we now get over the nonsense perpetrated by the media and the Obama Administration that the attack on the Benghazi Embassy, and the murder and desecration of Ambassador Chris Stevens, were the result of a random protest against an ill-made YouTube video?

Can we get over Vice President Biden’s assertion that the reason the Obama Administration spent weeks falsely blaming it on the video was "Because that was exactly what we were told by the intelligence community" ?

Because a flood of State Department emails released by Reuters makes clear that

within two hours of the attack, the State Department was aware that the jihadist group Ansar al-Sharia—declared by the State Department itself to be an al Qaeda affiliate—had claimed responsibility for the raid (or more appropriately, “razzia”).  These emails were disseminated by the State Department to sundry “redacted national security platforms,” such as the White House Situation room, the Pentagon, the FBI, the Director of National Intelligence and the State Department. An estimated 300-400 national security figures obtained these emails—including persons working directly below the administration’s leading national security, military and diplomatic officials—“in real time almost as the raid was playing out and concluding.”

Who are Ansar al-Sharia?

AL-QAEDA IN LIBYA: A PROFILE” was an August, 2012 report prepared by theCombating Terrorism Technical Support Office, a Pentagon program office under the aegis of the Assistant Secretary of Defense for Special Operations and Low-Intensity Conflict.  The report emphasized how Al Qaeda Senior Leadership (AQSL), working via a large, powerful, and well-established jihadist infrastructure in Libya—including, prominently, Ansar al-Sharia—sought to capitalize on the US and NATO-supported insurrection which toppled the Libyan despot Qaddafi, and fulfill its goal of making Libya part of an eventual transnational caliphate.

So they can’t say they didn’t know why they did it.

The attack was nothing to do with a video.

The defence—or lack thereof—was everything to do with the US being blindsided by its refusal to learn from history, and from what it knew in advance about the strength and plans of Libyan jihadists.

Thursday, 25 October 2012

Study Shows Studies Show Nothing [Updated]

Guest post by Nick Hubble of Money Morning Australia

If you’ve ever wondered how a study can show something that just can’t be true, or how studies can completely contradict each other, we’ve figured it out. With a little help of course. After today’s post, I hope you never believe another ‘study.’

Our heartfelt congratulations go out to a computer programme called Mathgen. A mathematics journal provisionally accepted its study for publication.

Wait, ‘its’ study?

Yes, that’s right. These days a computer programme can write an academic paper about mathematics. Then get published in academic journals like‘Advances in Pure Mathematics,’ as this one did.

And you thought those computer programs dominating the stock market were smart!

So what was the paper Mathgen wrote about? Here’s the abstract, which describes it:

‘Let ρ = A. Is it possible to extend isomorphisms? We show that D’ is stochastically orthogonal and trivially affine. In [10], the main result was the construction of p-Cardano, compactly Erdös, Weyl functions. This could shed important light on a conjecture of Conway-d’Alembert.’

If you’re confused, that’s sort of the idea.

Only a mathematics academic could decipher that abstract, because point of fact it’s completely meaningless—and intended to be so. You see, Mathgen creates papers by combining random nouns, verbs, numbers, symbols and the rest of it.  It spits out something that makes grammatical sense, not that you’d know it, but is completely devoid of any meaning.

The formatting is said to be nice, though.

Once the paper is randomly generated and submitted for the academic journal’s review, the academics safeguarding the gates of science and knowledge read the paper and figure it must mean something.

That’s how the paper gets past the peer review process. The same process that keeps climate change science squeaky clean, by the way. Here’s what the anonymous peer reviewer wrote about Mathgen’s bizarre creation:

For the abstract, I consider that the author can’t introduce the main idea and work of this topic specifically.

Maybe that’s because there is no main idea. No ideas at all, in fact.

Anyway, once the academics of the peer review process give the paper a once over and decide it’s fine to publish in their illustrious journal, the valuable and useful knowledge in the paper is disseminated around the academic world. That will probably never happen to Mathgen’s paper because the joke was exposed before the journal was finalised.

If all this makes you chuckle and shrug, consider that it’s the norm in academic publishing. A similar computer program managed to get an article about postmodernism published in a Duke University journal. And even when people run coherent scientific experiments (with real people) the results have a habit of being suspect too.

Many studies can’t seem to be replicated these days. Meaning, if you ran exactly the same experiment, you wouldn’t get results that confirm the study’s findings. According to one science journalist, 47 of the top 53 most important cancer studies can’t be replicated. They might be completely wrong, and yet we base modern research on the assumption they are right.

To be clear, for any sceptics, the Mathgen paper is a true ‘gotcha’ moment. It wasn’t about the fact that a paper can be written by a clever computer program. It wasn’t about anything. It was complete gibberish. But it did show the fact that academic journals are … academic. Let’s hope nobody reads them.

Unfortunately, finance and economics journals actually do get mentioned in the real world. In fact, their conclusions often determine public policy. Politicians hurl studies at each other proving their opinion.

Luckily for economists, it’s very difficult to disprove an economics study. You never know the ‘counterfactual’ — what would have happened. But if maths and science are corrupted, you’d think economics is corrupted twice over.

So the next time you read ‘a study has shown,’ you can disregard the end of the sentence.

Nick Hubble
Editor Money Morning Australia

This post first appeared at Money Morning Australia

UPDATE:  The author of the bogus paper blogs the story here.  And compares this to

Alan Sokal’s 1996 hoax, in which Sokal, a physicist, got the cultural studies journal Social Text to accept a parody article which identified physics and physical reality as a social construct.

#RoadTrip - And finally...

So where now then?


Thursday, 18 October 2012

Waitangi? It imposed no such obligation

I’m sorry, but this news this morning is ridiculous.

The Waitangi Tribunal has called on the Crown to apologise to the country's kohanga reo because they have suffered significant prejudice from early childhood policies of successive governments… The report follows a claim made to the tribunal by the Kohanga Reo National Trust last year.

“Prejudice”?!  Really?  What sort of “prejudice”? 

And a claim? A Waitangi claim?  About this? Have we gone mad?

The only prejudice I can see here is race-based early childhood centres set up and paid for by taxpayers on the basis of racial prejudice.

I have no problem at all with anyone wanting to send their children to early childhood centres using whatever language or languages they like. At that age children learn languages so easily, and the learning of them is so good for their development of literacy that introducing them to a wide range of languages is ideal.

But let’s not confuse that boon with the separatist aims of these race-based schools. Their aim is not literacy, but separatism.

[The Tribunal report says however] government policies have failed to support the Maori language immersion centres and to recognise their special role.

It would be far more accurate to say parents themselves have failed to support the centres by sending their children to them in large enough numbers, and the Kohanga Reo movement has failed those parents who do send them to their centres by filling them with teachers not fit for the role.

If there’s an apology needed here, it’s to parents from the movement for failing their children.

And what  “special” role do these centres have? What could possibly be so “special” about them it needs to be recognised by government, apologised for by past governments, and paid for (through the nose) by taxpayers? Here’s your answer:

Kohanga reo are so important for the survival of te reo Maori, [says the Tribunal’s report], that the Crown's obligation to protect the language extends to kohanga too.

What “obligation” is that then? An “obligation” to “protect the language”? Where does this obligation come from? Well, remember that the Waitangi Tribunal is not just a race-based talking shop. It is also a supralegal body, with its opinions not grounded not in prejudice but in law.  At least in theory. So this is a legal obligation they’re talking about.

And the law they point to? You guessed it: Te Tiriti, in which the British Government promised to protect Maori property. Except since Maori had no concept of “property,” the explicit concept “property” was translated as the vague and indefinable concept “taonga”—allowing gravy-train riders ever since to define and re-define and all along the line to claim government protection (and taxpayer resources) for whatever “treasures” they feel like.

Including language.

It gets worse:

The Tribunal found that the Crown’s early childhood education system … had failed to adequately sustain the specific needs of kōhanga reo as an environment for language transmission and whānau development. These failures constituted breaches of the Treaty principles of partnership and equity.

What “breach” is this then? Of the treaty principle of “partnership”?!

But the Treaty has no principle of partnership. It neither mentioned nor implied partnership. In three short articles it simply offered the introduction of British law, and the rights and protections that were then protected by British law. One law for all, you might say.

The Treaty which was drawn up and signed talked neither about race nor culture nor any partnership between them—nor about any permanent welfare, or a tax-paid gravy train into perpetuity.  Like British law itself at the time it was colour blind, and welfare-free.  What it promised was not the politics of either race or welfarism but the simple legal promise of protection of the rights of all, regardless of race, creed or skin colour.

This principle of partnership supposedly appearing in the Treaty, on the back of which so much garbage has been said and so many millions given away, is a myth. A modern myth.

A myth made up from whole cloth by modern politicians for reasons of political expediency.

If they do have anything in this about which to actually apologise , they could start there.


Religion vs Science

I don’t enjoy Ricky Gervais’s TV shows, but his Twitter feed is pure genius:


The State vs Christie Marceau

The first job of the state, its only legitimate role, is to protect the individual rights of its citizens—to protect each individuals’ rights to life, liberty and pursuit of property and happiness.

To protect our lives.

imageIt failed to protect Christie Marceau.

The primary purpose of incarceration is not to punish criminals. It is not to teach them a lesson, nor to turn them around. The primary purpose is protection. Protection for the harmless, like Christie Marceau, from the harmful, like her murderer.

The state, in the person of Justice McNaughton, failed Christie Marceau when it released on bail a man who had already been charged for kidnap and assault and attempted rape—for her kidnap and assault and attempted rape.

Justice McNaughton failed Christie Marceau.

The injustice system failed Christie Marceau—as it fails all of us when it fails to prosecute with sufficient swiftness, so because of long delays in coming to trial it releases on bail, and continues to release on bail, those charged with violence.

This is unconscionable. The price is paid in the blood of innocent people.

People like Christie Marceau.

And forget this nonsense of “not guilty by reason of temporary insanity.”

Guilty is guilty. Guilt properly should not require that you know you did wrong, that you understand what a moral action looks like, or that you were or were not in the grip of voices telling you to kill. It should not require this because the primary purpose of justice is not punishment. It is protection.

Protection for innocents like Christie Marceau.

Melnikov House, by Konstanin Melnikov

imageSource: Melnikov House

Even in the depths of the Soviet conquest of the soul, Konstanin Melnikov found a way to make inspiring architecture.  This, his family home, his masterpiece, he somehow managed to get through the system.

[Hat tip Sandrine L.]

Wednesday, 17 October 2012

The worst Nobel Prize ever?

imageGuest post by Keith Weiner

Amidst global economic collapse, *THIS* is what wins the Nobel Prize in Economics?!?

The world is building a tower of debt unprecedented in any prior era. The derivatives tower is estimated to be one quadrillion dollars.  It has taken unprecedented government injection of methamphetamine to "stabilize" things, and every central bank and government knows they dare not reduce the drip or the patient will collapse.

"The economy is recovering,” sayeth the Fed, “and zero interest rates will continue until 2015, and we will buy $40B+ of mortgage bonds per month with no set limit,"  Unemployment goes down only because people drop out of the workforce and onto welfare, disability, or social security when their patience (and savings) run out.

The marginal productivity of debt--how much additional GDP does the next dollar of borrowing buy--has been falling for many decades.

Capital destruction continues to accelerate. Savers are hosed, and let's not even talk about people trying to live on a fixed income!

Keynes' theory, the bedrock of the modern economy, is in a shambles (or ought to be if people could think their way out of a wet paper bag). And the most prestigious prize in economics?

Yeah, let's award that to a couple of guys who have played with a model for central planning when money cannot be used (e.g. organ donations, where buying organs is illegal).


The Philosopher is in

imagePhilosopher Leonard Peikoff is online at 11:30am talking and answering questions about his new book, The Dim Hypothesis, which attempts to integrate the entire history of human thought.  

Watch it on LiveStream via Facebook.