Friday, 23 November 2012

FRIDAY MORNING RAMBLE: Thanksgiving Edition


Yes, it’s Thanksgiving in the States—the sort of holiday we don’t have here in NZ, but should have. Don’t you have much to be thankful for?

On with the show!

No, it’s not what you think.
Beehive springs a leak – report – NZ HERALD

“The people complaining about New Zealand’s 100% pure marketing campaign have had a logic bypass.”
Critics have had logic bypass – HOME PADDOCK

Far too little, much too late, but still very, very helpful. Why did it take so long?
Brownlee orders land-use plan – THE PRESS

And while virtual ring fences around Christchurch’s outer suburbs continue to raise land prices, disgruntled property owners in the central city argue that the fences around the Chch CBD are in place to keep their prices depressed.
CCDU, what are you doing?: Locked out of undamaged factory for 635 days  - REBUILD CHRISTCHURCH

CERA’s Roger Sutton has finally, well after time, answered an Official Information (OIA) request for costing information and robust feasibility studies about his organisation’s multi-billion dollar plans for central Christchurch, none of which have been released to the public yet on the basis of which land confiscations have already begun. His answer to the question do you have costings or robust feasibility studies for your plans:  No.  Or in his words: “There are currently no confirmed costs.”
Scroll down here to see his OIA response:
CantabriansUnite – FACEBOOK

Finally someone in the media has asked Labour Leader David Shearer for a little bit of detail about his uncosted Lotto housing policy.  Like, for example, how many sections will the taxpayer need to buy?  Shearer couldn’t um, er, ah answer.
Shearer's Big 'Um' on Housing – WHALE OIL

Or maybe he wasn’t talking about actual houses, on actual land…
Labour Admits Affordable Housing = Apartments – CACTUS KATE

Insider trading on bringing down David Shearer? Who could be doing that!
David Shearer and the Labour Leadership - Part I – iPREDICT BLOG

Oh yes, and as a reward for a job done bloody poorly, the head of EQC has just been rewarded with a $70,000 pay rise.
Rewarding incompetence – NO RIGHT TURN

What gets political reporters excited?  “Political stories are generally very ‘managed.’ Political parties invest huge amounts of money and energy into controlling their presentation in the media, which can frustrate some journalists… I suspect that’s why journalists like Paddy get (very) excited when things don’t go as scheduled, e.g., the tea-pot tapes, the Labour conference. ‘Something’ actually happens – i.e., something that isn’t calculated and pre-planned by teams of highly paid experts.”
Do you support Paddy Gower? – DIM POST

So who are the winners and losers on Labour’s factional warfare?
Winners and Losers – KIWIBLOG

Urban legends, and Annette King, might be wrong say scientists.
Full Moons Won’t Make You Cray-Cray, Say Scientists – BLISSTREE

Safety message for our American readers on Thanksgiving, from William Shatner: “Just remember: ‘Fire, metal, oil, and turkey are glorious when in harmony.’”

Thanksgiving may look like like a holiday for consumption, but it’s really a holiday for producers.
Thanks to whom? – Jeff Scialabba, VOICES FOR REASON

As Americans sit down to enjoy their Thanksgiving they will, hopefully, be giving thanks to all those who made their consumption possible. Themselves.
Celebrate Thanksgiving the Ayn Rand way: Thank yourself – Debi Ghate, CS MONITOR

America might never have even got off the ground if those early pilgrims hadn’t thrown off communism. Read the almost unknown early history of those early Pilgrims -- of how private property saved their lives and their colony, so making today’s Thanksgiving celebrations possible.
How Private Property Saved the Pilgrims -  Tom Bethell. HOOVER INSTITUTION

By the way, “There are some things that God cares deeply about -- sex, foreskins, menstruation, and animal sacrifice,for example. And food.
Most Christians forget about that. They prepare and eat food on Thanksgiving that God abhors, while thanking him for it.. Don't make that mistake this Thanksgiving.
Here are some suggestions for a biblically correct Thanksgiving dinner.”
All the fat is the Lord's: The Bible's guide to Thanksgiving dinner – DWINDLING IN UNBELIEF

Is America a Christian nation? Or one nation under a constitution?


The fundamental dynamics in Gaza are more about the rise of the Muslim Brotherhood Gaza and the weakness of the Obama Administration than anything Israel can do anything about. Apart from military deterrence.
Gaza reality – Editorial, JERUSALEM POST

The choice to initiate the conflict rested, and rests, on a choice only possible to one side.
Gaza could have chosen peace but no – LIBERTY SCOTT

Is there no way to resolve the perennial Israeli-Palestinian conflict? Are both sides morally equivalent? For those interested, I can recommend this older but clearly still relevant lecture by Yaron Brook.  “Central to the Israeli-Palestinian conflict is the question of whether the state of Israel has a moral right to exist…”
The Israeli-Palestinian Conflict: What is the solution? – Yaron Brook, AYN RAND CENTER, 2002

“Israel is the only free country in a region dominated by Arab monarchies, theocracies and dictatorships. It is only the citizens of Israel--Arabs and Jews alike--who enjoy the right to express their views, to criticize their government, to form political parties, to publish private newspapers, to hold free elections. When Arab authorities deny the most basic freedoms to their own people, it is obscene for them to start claiming that Israel is violating the Palestinians' rights. All Arab citizens who are genuinely concerned with human rights should, as their very first action, seek to oust their own despotic rulers and adopt the type of free society that characterizes Israel.”
Israel Has a Moral Right to Its Life – Peter Schwartz and Yaron Brook, 2002

Fascinating interview with a renegade historian.
“'You've [talked] about Arabs being incapable of democracy, not respecting the rule of law or sanctity of life.”
Also the treatment of women, treatment of homosexuals. I've got a whole list.
Have you seen anything in the "Arab Spring" that leads you to rethink that?
It's only made things worse.”
Israel historian Benny Morris responds to critics left and right – L.A. TIMES


As a public service, the Washington Post’s defence writer put together this primer for generals on their way to Afghanistan.  “Here is a list of 19 things that many insiders and veterans of Afghanistan agree to be true about the war there, but that generals can't say in public.”  Top of the list: “We don't know why we are here, what we are fighting for, or how to know if we are winning,” and “Pakistan is now an enemy of the United States.”
19 true things generals can't say in public about the Afghan war: A helpful primer – Tom Ricks, BEST DEFENSE

It’s true for us too, you know.
The Best Reason To Reform Immigration Is It Would Be Good For America and the World – Matthew Yglesias, SLATE
Heartland Draws Hispanics to Help Revive Small Towns – WSJ

Are zealously defended borders necessary to make a nation?
If Defended Borders Make a Nation, Then the U.S. Has a Pretty Short History – Brian Doherty, REASON

Voters legalised it, but whether Washington and Colorado can implement laws to legalise the recreational use of Marijuana remains unclear.
Unperturbed puffery – THE ECONOMIST

“As President Obama embarks on his second term, we’ll have to see whether he conjures up the specters of his controversial campaign moments. Recall his insistence that “if you have a business, you didn’t build that.” That upset a lot of people. But here’s the thing about that memorable line: If you have a business, there is a sense in which you didn’t build it all on your own.
Obama was right—but for the wrong reasons.”
The Enduring Lesson of I, Pencil – Nicole Ciandella, THE FREEMAN

Mick Jagger's lyrics don't ring so true any more:


Interactive graphic explaining how China is ruled and the structure of the Communist party.
Who wields power in China? – FINANCIAL TIMES

How big was the American housing bubble that Greenspan, Bernanke and other monetary gods never saw?
Biggest Housing Bubble Since 807 A.D. Has Burst – ZERO HEDGE

WE ARE now in the middle of the fourth quarter of 2012. That means that it has been five full years since the American economy first tipped into recession amid a gathering financial storm. How have we done since that time?
The long slump – ECONOMIST

“Many commentators blame reckless bank lending as the key cause behind the 2008–2012 financial crises in Ireland and Iceland. Our analysis, however, suggests that it was not the banks as such that caused the crisis but rather the boom-bust policies of the central banks of Ireland and Iceland.”
Ire and Ice: A Tale of Two PIIIGS – Frank Shostak, MISES DAILY

Yes, Keynes does prescribe the destruction of wealth through the dilution of capital by monetary authorities. It’s right there in black and white on age 376.
Kyle Bass: Fallacies Such As MMT Are "Leading The Sheep To Slaughter" And "We Believe War Is Inevitable" – ZERO HEDGE

Mind you, he also believed perpetual war was a way to permanent prosperity. 
Keynes On Worker Utopia Through Perpetual Threat Of War – ZERO HEDGE

Problems with your debt ceiling? Then just eliminate it.
But Timmy, You Can't Borrow Forever! - VITAL SIGNS

The morality of the free market: And do note the example of Say’s Law right at the start of this vidoe where the mown lawn is exchanged for food and drink. Demand is created by supply. This has been replaced by Obama’s Law: from each according to his ability, to each according to his vote.” – Steve Kates, CATALLAXY FILES

In a world that constantly throws big, unexpected events our way, we must learn to benefit from disorder, writes Nassim Taleb, “Herewith are five policy rules that can help us to establish anti-fragility as a principle of our socioeconomic life. Rule 1: Think of the economy as being more like a cat than a washing machine…”
Learning to Love Volatility – Nassim Taleb, WSJ

There’s an awful lot of asphalt in Manukau.
Form follows parking – Peter M, AUCKLAND TRANSPORT BLOG

With the summer holiday season approaching Stats Chat responds to requests for a post on the relative safety of driving and flying.
Fly away home – STATS CHAT

“Almost forty years after animal rights advocates began asking us to put down our steak knives, plant advocates may start asking us to relinquish our salad forks as well. Plants have rights too, they say…”
Rooting Out the Motive of “Plant Rights” Advocates – Ross England, T.O.S. BLOG

When it happens spontaneously, it’s great!
Return of the walking city -  - Kent Lundberg, AUCKLAND TRANSPORT BLOG

As more of us use “the cloud,” the less secure the cloud is becoming.
Kill the Password: Why a String of Characters Can’t Protect Us Anymore – Mat Honan, WIRED

Professor Flynn from Otago is trying to help you improve your mind.

“Last night and today I have been chatting with friends on facebook about the nature of Romanticism. And I realized that my stance is radical, and it is so simple and intuitive I can’t believe it is not embraced as the standard for the next era of art.”
New Romanticism – Michael Newberry, ARTIST

Don’t order all those “name brands” you see in the movies.
Hollywood's best fake products. – FAST.CO.CREATE

A tip for exam season:
When taking a test, should you change that answer or stick with what you put down first? – BARKING UP THE WRONG TREE

How much do you love a good cigar?  Then make the most of it:

“Tosca, you make me forget God!” A stunning first-act climax:

The Auckland Philharminc did a top job last night of Mahler’s 5th Symphony. Here’s the gorgeous Adagietto, with Herbert von Karajan and the Berliner Philarmoniker, along with clips from the film that made it “famous”:

Time for a martini or two…

[Hat tips to Thrutch, History News Network, Great Opera Videos, Richard Dawkins, Geek Press]

Thanks for reading.


Exam question of the day: The police

Today’s question was prepared by the Tumeke blog and asks:

Do we really want a Police force that turns up on your doorstep at night and asks how you intend to plea in a case while threatening more charges if you plead innocent?

Do we?

Thursday, 22 November 2012

Legalise drugs–the debate

In response to the decision by Coloradan and Washingtonian voters to legalise marijuana, the Obama administration admits that marijuana legalization can do miracles.

According to the federal government, the price of pot will plummet following legalization while remaining above the black-market level. Pot will be dangerously cheap yet dangerously expensive at the same time.

Someone’s obviously smoking something, and it’s not just the good people of Colorado and Washington.

Should marijuana be legalised all across the board? Should all states? How about all drugs?

This timely debate was entered into last week at the Intelligence Squared Debate with Nick Gillespie and Paul Butler against their opponents Theodore Dalrymple and Asa Hutchinson—pitting writer against writer and law enforcer against law enforcer.  It’s good, intelligent debate. “From wherever you stood,” summarised the HuffPost, “the opposing side offered respectable, credible views. In today's fractured culture the evening struck a blow for civility.”

Watch it tonight.


Exam Question of the Day: On the Anniversary of Helicopter Ben

Today’s exam question is set by Addison Wiggin:

Ten years ago today, a relatively unknown U.S. Federal Reserve governor named Ben Bernanke delivered what might be the most famous speech in the history of monetary policy. In an address to the National Economists Club, he said: “The U.S. government has a technology called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”
In the speech, Mr. Bernanke invoked Milton Friedman’s idea that the Fed and Congress could simulate dropping dollar bills from a helicopter to stimulate “aggregate demand.”
Ten years on, we pose a simple question, not to Bernanke, but to you: How’s it working out?

This question is worth ten marks. Please show all your working.

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How to Live Without Irony [updated]

“A life without passion is not a life - it is merely an existence.”
                     - Lesley Fieger

“"When a culture is dedicated to the destruction of values - of all values,
of values as such - men's psychological destruction has to follow."

- Ayn Rand

imageAfter the carnage of the First World War Ernest Hemingway wrote The Sun Also Rises about a “lost generation” who were outwardly still alive after the cataclysm, but inwardly dead.  “Give them irony and give them pity” exhorts one of the novel’s many expatriates who drift idly through Europe, wondering without caring if they might prefer it somewhere else. Or not.

For these characters, irony is a “cultivated aloofness,” “a strategy of containment and a rejection of idealism” after a war that seemed to destroy virtually every human value.

At least those gorgeous bastards had the war as an excuse.  These days hipsters cultivate aloofness for no reason at all but fashion. To fit in. To be one of the herd. To “go with the flow.”

“If irony is the ethos of our age—and it is,” observes Christy Wampole in a great op-ed in the New York Times, “then the hipster is our archetype of ironic living.”

The hipster haunts every city street and university town.. .He harvests awkwardness and self-consciousness. Before he makes any choice, he has proceeded through several stages of self-scrutiny. The hipster is a scholar of social forms, a student of cool. He studies relentlessly, foraging for what has yet to be found by the mainstream. He is a walking citation; his clothes refer to much more than themselves. He tries to negotiate the age-old problem of individuality, not with concepts, but with material things…
    [Today’s hipster] is merely a symptom and the most extreme manifestation of ironic living. For many Americans born in the 1980s and 1990s — members of Generation Y, or Millennials — particularly middle-class Caucasians, irony is the primary mode with which daily life is dealt.

Where previous generations followed causes, lived with passion, stormed the barricades, this one sits around swapping ironic stories and examining its navel fluff. Being aroused by anything is uncool. Feeling actual passion for things is unwelcome. Not for them the stirring sounds  of exhortations “to strive, to seek, to find, but not to yield,” which they might once have felt when younger. Life now, instead, as adults, can be summed up in ironic tweets amounting to “Meh,” LOL, “Whatevers.”

The hipster “goes with the flow,” regardless of where it’s headed; declares that “perception is reality,” synonymous with saying “nothing is real anyway”; affirms that ideals are things “you’ll grow out of,” while not noticing that without them they have become grown-ups who neither  know what they are doing nor care.* They live  lives in the world while detaching themselves from  it, making them dead inside while devaluing everything in the world they touch—made dead and devalued by what amounts to quotidian self-immolation, a steady drip, drip, drip of what was once their passions, values, enthusiasms and loves. Wampole speaks for that generation’s destruction of themselves:

Born in 1977, at the tail end of Generation X, I came of age in the 1990s, a decade that, bracketed neatly by two architectural crumblings — of the Berlin Wall in 1989 and the Twin Towers in 2001 — now seems relatively irony-free. The grunge movement was serious in its aesthetics and its attitude, with a combative stance against authority, which the punk movement had also embraced. In my perhaps over-nostalgic memory, feminism reached an unprecedented peak, environmentalist concerns gained widespread attention, questions of race were more openly addressed: all of these stirrings contained within them the same electricity and euphoria touching generations that witness a centennial or millennial changeover.
    But Y2K came and went without disaster. We were hopeful throughout the ’90s, but hope is such a vulnerable emotion; we needed a self-defense mechanism, for every generation has one. For Gen Xers, it was a kind of diligent apathy. We actively did not care. Our archetype was the slacker who slouched through life in plaid flannel, alone in his room, misunderstood. And when we were bored with not caring, we were vaguely angry and melancholic, eating anti-depressants like they were candy.
    FROM this vantage, the ironic clique appears simply too comfortable, too brainlessly compliant. Ironic living is a first-world problem. For the relatively well educated and financially secure, irony functions as a kind of credit card you never have to pay back. In other words, the hipster can frivolously invest in sham social capital without ever paying back one sincere dime. He doesn’t own anything he possesses.
    Obviously, hipsters (male or female) produce a distinct irritation in me, one that until recently I could not explain. They provoke me, I realized, because they are, despite the distance from which I observe them, an amplified version of me.

Self-awareness is the beginning of self –cure. “The simple act of noticing my self-defensive behavior,” she says, “has made me think deeply about how potentially toxic ironic posturing could be.”

As a function of fear and pre-emptive shame, ironic living bespeaks cultural numbness, resignation and defeat. If life has become merely a clutter of kitsch objects, an endless series of sarcastic jokes and pop references, a competition to see who can care the least (or, at minimum, a performance of such a competition), it seems we’ve made a collective misstep. Could this be the cause of our emptiness and existential malaise? Or a symptom?

Or both?

Bewailing the cavalcade of coolness in which modern life is drowning, and offering his own antidotes to avoid what he calls “the swamp sirens,” Lindsay Perigo quotes Ayn Rand:

In her Journals, making notes for her upcoming novel, The Fountainhead, Ayn Rand said:

image"This may sound naïve. But - is our life ever to have any reality? Are we ever going to live on the level? Or is life always to be something else, something different from what it should be? A real life, simple and sincere, even naïve, is the only life where all the potential grandeur and beauty of human existence can be found. Are there real reasons for accepting the substitute, that which we have today? No one has shown today's life as it really is, with its real meaning and its reasons. I'm going to show it. If it's not a pretty picture - well, what is the alternative?"

In The Fountainhead, of course, she showed us, not just today's life as it really is, but the alternative also. And many years later, writing a weekly newspaper column for the Los Angeles Times, she said:

"When people look back at their childhood or youth, their wistfulness comes from the memory, not of what their lives had been in those years, but of what life had then promised to be. The expectation of some undefinable splendor, of the unusual, the exciting, the great, is an attribute of youth - and the process of aging is the process of that expectation's gradual extinction. One does not have to let it happen."

One doesn't - and one shouldn't. To let it happen is to succumb to spiritual death long before one's physical demise - to spend maybe half one's life jaundiced, jaded, cynical, listless, atrophied, desiccated …. Or, in the case of many of today's youth, to spend nearly all one's life like that.

Tragic. The best lack all conviction … and the world is the worse for it.  But intense passion is the effect of profound conviction, observes Perigo.

[The hipster however] says that intense passion is improper, unseemly, bad form, or in modern parlance, "uncool." "Hot" is "uncool." "Cool" - neither hot nor cold - is "cool." By implication, the best way to avoid the embarrassment of intense passion is to eschew its cause - profound conviction. So if you find yourself starting to believe in something, abandon it quickly, before you make a fool of yourself.

This is no way to live, is it. Christy Wampole offers her own antidotes to begin making your way back into the world.

What would it take to overcome the cultural pull of irony? Moving away from the ironic involves saying what you mean, meaning what you say and considering seriousness and forthrightness as expressive possibilities, despite the inherent risks. It means undertaking the cultivation of sincerity, humility and self-effacement, and demoting the frivolous and the kitschy on our collective scale of values. It might also consist of an honest self-inventory.

Saying what you mean and meaning what you say.

Considering seriousness and forthrightness as expressive possibilities.

The cultivation of sincerity.

These are all frightening prospects, right? But they offer an excellent recipe for beginning to find your way back to life.

Take as your fuel for that journey these words by Ayn Rand addressed to the hero within each of you:

"Do not let your fire go out, spark by irreplaceable spark, in the hopeless swamps of the approximate, the not-quite, the not-yet, the not at all. Do not let the hero in your soul perish in lonely frustration for the life you deserved but have never been able to reach. Check your road, and the nature of your battle. The world you desired can be won, it exists, it is real, it is possible, it's yours."

[Hat tip Paul Litterick]



Here’s a link to seven websites poking fun at hipsters. My favourite, from which the pics above and below are purloined, is Unhappy Hipsters.



Wednesday, 21 November 2012

Affordable housing, “churn,” and David Shearer’s new pony

A blogger at the Labour blog The Sub-Standard has found time between posts eviscerating the Labour leader to criticise John Key’s criticism of KiwiBuild, the Labour leader’s plan for his government to build 100,000 new houses around the country costing $300,000 or less and to give everybody a new pony. (How? Somehow.)

At least we have a plan for affordable housing (says the rebel in the Red Team), pointing the finger at the Blue Team who he says only have arm waving and rhetoric and plans to build 2,000 to 2,500 new homes in Hobsonville costing more than $485,000 each!

Which is a point, albeit not an entirely valid one, because while the National Government’s plans to fix a market the government's planners themselves have broken do amount to little more than rhetoric and arm waving, it’s worth noticing that in a market that isn’t broken it’s not entirely unhelpful to build houses costing more than $485,000 each if you want to free up houses of a lesser more affordable value.

This seemingly contradictory point can be understood only when you learn about the concept of “churn.”

“Churn” in this context refers to the chain of purchasers who “trade up” after a new house is bought and folk move into that house and out of their old one—leaving their old house empty for someone else to move into, which leaves their house empty for someone else to move into, which leaves their house empty for someone else to move into, and so on and so on right on down the line.

In a healthy housing market, one house purchase by one family can start off a chain reaction of up to ten, twelve or even twenty moves further down the line as each family moves out of their old and up to their new home.

Why do I say “move up”? Because this is the housing equivalent of the weird double-thank-you moment we talk about in economics:

How many times have you paid $1 for a cup of coffee and after the clerk said, "thank you," you responded, "thank you"?
There’s a wealth of economics wisdom in the weird double thank-you moment. Why does it happen? Because you want the coffee more than the buck, and the store wants the buck more than the coffee. Both of you win.

Equally, when you decide to sell what you’ve got now to move into a new place, it’s because you want the new place more than the old place—and your new buyer wants your old place more than their old place, and so on down the chain. You each want the new place because in your minds your new housing situation is going to be better for you than your existing housing situation.

It’s just the same for every buyer in the chain.

So every time a new house is built and purchased, of whatever value, that opens up opportunity for many other families to make their situation better. 

So while the buyer of the $300,000 may not know it, that new $485,000 house is what just made his own life better. He’s at the end of a chain of churn created by that first purchaser and his vendor saying “Thank you!”

This is what happens when the housing market is not broken by regulation, as it is now.

NewHome001Here’s something else that seems contradictory until you think it through a little: It turns out too that in a healthy housing market a new more expensive home creates more openings down the line than a cheaper more affordable home does—up to twenty housing moves for an upper-quartile home as compared to less than five or six for one in the lower price quartile--meaning, strangely enough, that the more expensive houses that are built the more folk actually benefit.*

If that idea makes your head hurt, then consider this question: is it better in general to build better houses or lesser houses? Wouldn’t we all agree that better quality is far better than lesser? So as better houses costing more are built and folk move up to what in their own view are better houses, the overall housing stock for everybody is improved.

NewHome002Isn’t this better than flooding the market with houses of lower cost and lesser quality, which actually produces fewer moves helping fewer people, and resulting in the end only in having created the slums of tomorrow?

The real answer to affordable housing then has been provided neither by the Blue Team nor the Red Team.

The answer is to fix the broken market.

And how do they do that?  They stop pretending they know what they're doing and get the hell out of the way.

* * * * *

* Of course, in a healthy market, housing prices don’t bubble up like New Zealand’s have in recent years.

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

Instead, they decline gently, just as all commodities do in healthy markets enjoying stable, un-inflated currencies.  Just like New Zealand & Britain were in the late 1800s…

“Course of Prices in New Zealand, 1860-1910,” from Muriel Prichard’s book An Economic History of New Zealand

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Another story of government confiscation from central Christchurch:

Another story of government confiscation from central Christchurch:

We have the dubious distinction that our commercial property (read it’s sorry tale here) is situated within the precinct pencilled in for the new stadium. We resigned ourselves to the fact that our land would be lost to us, but were buoyed by the stated intention to quickly and fairly manage the land acquisition process…

Their first mistake!

We dutifully gave CCDU all the required information about our property within the week of the announcement of the blueprint. And then we waited. And waited.

How do businesses manage with this kind of uncertainty? [Answer: see yesterday’s post on “regime uncertainty.”]

    It’s taken three months and this week we received notification that the Crown has obtained a valuation on our land and that valuation would mark the starting point for a negotiation about land purchase.

The valuation was orders of magnitude below what they expected.  Naturally, the forced “sellers” want at least as much as they would have to to spend to get a replacement piece of land anywhere similar. Whereas the confiscator (the government) wants to spend as little as possible.  And in a flattened central city with less business activity than downtown Ekatahuna, they’re keen to pick up land to carry out their grand plan for as little as possible—and trying to do it for as little as possible by confiscating land for nowt with made-up valuations.

Under the Public Works Act, an owner could at least challenge the valuation on which the government based its pay-out for your confiscated land. But not on Czar Gerry’s watch you can’t:

Here’s where it gets interesting. The Crown contracted valuers Colliers and Telfer Young to perform all the valuations. As would be expected, we requested from CCDU’s agent a copy of the valuation. Strangely we were told that:

            Unfortunately we are not allowed to hand out the Crown valuations. The reasoning behind this is that
            we have made an offer at market value (based on the Crown’s valuation) and it is up to the property
            owners to provide evidence contrary to that of the crown if they disagree.

This is highly unusual – in usual negotiations, be they rental or buy and sell ones, both parties have access to valuations and hence negotiations can happen in an open and transparent manner. In this case that is not the process and the Crown, despite its stated intention to act fairly, honorably and flexibly with landowners, would seem to be taking the role of commercially-driven land banker, while at the same time sheltering under the protection of an unprecedented piece of legislation which puts all the power in their hands.

Calling them “commercially-driven land bankers” is far, far, far too kind—unless Mr Benes means it as some kind of complex rhyming slang.

And yes, it is highly unusual. The last time land was nationalised in New Zealand on the scale now being carried out in Christchurch, it took  over one-hundred and fifty years for settlement to be reached.

People are shaking in fear at the power that CCDU and CERA are wielding in this city. What we have here then is a situation where the crown is demonstrably acting in a prejudicial manner that is designed to minimize the amount they have to pay for land. In other words, the Crown is using subterfuge to duplicitously rob land owners of fair value for their land, and in doing so, is furthering its intention to make an economic windfall from the future sale of acquired land.

Yes, that’s the other strong rumour around town… 

… that the Crown is intending to acquire land… at an artificially deflated price and to later sell that land at inflated prices.

It’s not like it’s unprecedented for a NZ government to do this. That is, after all, how New Zealand was settled.

Alas, yet again, it would seem that something is rotten in the state of Christchurch.

He just said a mouthful.

But given the source of that rot, supporters of the National Party’s “nationalise everything” earthquake policy should look closer to home.


Tuesday, 20 November 2012

Starchitects do battle [updated]


Henry Hobson Richardson said the first rule of architecture was this: “Get the job.”

In these five videos you can see four of the world’s leading starchitects, Richard Rogers, Zaha Hadid, Rem Koolhaas and Norman Foster, going about getting the job—competing with each other for one of this decade’s plums.

The series of videos below offers a fascinating insight into how this generation of "starchitects" behaves under pressure, as they each pitch to win one of the most high-profile invited competitions in recent years: a new tower for L&L Holding Company on Park Avenue in New York. The site has such daunting neighbours as Mies van der Rohe's Seagram building, and it will be the first full-block office tower to be built on the street in almost half a

Rogers Stirk Harbour + Partners Presentation – Round 1, July 2012

Zaha Hadid Architects – Presentation, July 2012

Foster + Partners Presentation - Round 1, July 2012

OMA Presentation – Round 1, July 2012

Did you guess who won?

PS: If you’re wondering why three of the firms invited to compete for the job are based primarily in London, while the fourth, OMA, is in Rotterdam—in other words, why there are no American firms for an American project—the client’s co-founder told the Architectural RECORD: “There is great architecture in the world, but it’s not happening in the U.S. Our country is not leading in this building type.”

[Hat tip Archinect]

UPDATE: Sadly, three of the four videos have been taken down overnight.  You might now be able to guess which presentation won the day, and with it the the multi-million dollar contract—”the one without all the fancy computer graphics and slick presentation techniques on show—the presentation that centred around hand drawn sketches and a physical model.*


Regime Uncertainty: Some Clarifications, by Robert Higgs

A major reason for businesses in a depression being unwilling to invest in recovery is being scared or uncertain about what the government will do next that will damage or destroy those investments. 
This idea is captured in Robert Higgs’ description of “
regime uncertainty”—a variant of an old idea: that the willingness of businesspeople to invest requires a sufficiently healthy state of “business confidence,” and the
continued and unpredictable meddling and “stimulus” of governments ravages the requisite confidence.

Regime uncertainty pertains to more than just the government's laws, regulations, and administrative decisions. A business-hostile administration such as Franklin D. Roosevelt's or Barack Obama's will provoke more apprehension among investors than a business-friendlier administration.

Regime Uncertainty: Some Clarifications
GUEST POST by Robert Higgs

imagePrivate investment is the most important driver of economic progress. Entrepreneurs need new structures, equipment, and software to produce new products, to produce existing products at lower cost, and to make use of new technology that requires embodiment in machinery, plant layouts, and other aspects of the existing capital stock. When the rate of private investment declines, the rate of growth of real income per capita slackens, and if private investment drops quickly and substantially, a recession or depression occurs.

Such recession or depression is likely to persist until private investment makes a fairly full recovery. In US history, such recovery usually has occurred within a year or two after the trough. Only twice in the past century has a fairly prompt and full recovery of private investment failed to occur — during the Great Depression and during the past five years.

In analyzing data on investment, we must distinguish gross and net investment: the former includes all spending for new structures, equipment, software, and inventory, including the large part aimed at compensating for the wear, tear, and obsolescence of the existing capital stock; the latter includes the gross expenditure in excess of that required simply to maintain the existing stock. Therefore, net investment is the best measure of the private investment expenditure that contributes to economic growth.


As the figure shows, net private domestic fixed investment (a measure that excludes investment in inventories) reached a peak in 2006–2007, declined somewhat in 2008, then plunged in 2009 before reaching a trough in 2010. Although it recovered slightly in 2011, it remained 20 percent below the previous peak, and the pace of its recovery to date implies that another three or four years will be required merely to bring it back to where it was in 2007. With adjustments for changes in the price level, the projected recovery period would be slightly longer. (Using the price index for gross private domestic investment to obtain real values, we find that real net private domestic fixed investment is now at approximately the same level it had attained in the late 1990s.) To understand why the current overall economic recovery has been so anemic, we must understand why net private investment has not recovered more quickly.

In a 1997 article in the Independent Review ("Regime Uncertainty: Why the Great Depression Lasted So Long and Why Prosperity Resumed After the War")Download PDF I argued that a major reason for the incomplete recovery of private investment during the latter half of the 1930s was "regime uncertainty." By this, I mean a pervasive lack of confidence among investors in their ability to foresee the extent to which future government actions will alter their private-property rights. In the original article and in many follow-up articles, I documented that between 1935 and 1940, many investors feared that the government might transform the very nature of the existing economic order, replacing the primarily market-oriented economy with fascism, socialism, or some other government-controlled arrangement in which private-property rights would be greatly curtailed, if they survived at all. Given such fears, many investors regarded new investment projects as too risky to justify their current costs.

During the past several years, I have argued that a similar, if somewhat less extreme fear now pervades the business community, which explains at least in part the sluggish pace of the current economic recovery. Other exponents of this view include such prominent economists as Gary Becker, Allan Meltzer, John Taylor, and Alan Greenspan. (Until recently, Austrian economists were more receptive than mainstream economists to the idea of regime uncertainty; see, for example, the recent Mises Daily by John P. Cochran.) In addition, economists Scott Baker and Nicholas Bloom at Stanford and Steven J. Davis at the University of Chicago have devised an empirical index of policy uncertaintyDownload PDF that has remained at extraordinarily high levels since September 2008. However, what most other economists — and all of those in the professional mainstream — have noted is not exactly the same as what I call regime uncertainty, but rather a related, somewhat narrower phenomenon.

Over the years, some economists have urged me to forsake the term "regime uncertainty" and to use instead an expression such as policy uncertainty, rule uncertainty, or regime worsening. I have rejected these suggestions because the idea I seek to convey encompasses more than simply policies or rules. Moreover, regime uncertainly does not necessarily signify only apprehension about potential worsening as a central tendency.

Regime uncertainty pertains to more than the government's laws, regulations, and administrative decisions. For one thing, as the saying goes, "personnel is policy." Two administrations may administer or enforce identical statutes and regulations quite differently. A business-hostile administration such as Franklin D. Roosevelt's or Barack Obama's will provoke more apprehension among investors than a business-friendlier administration such as Dwight D. Eisenhower's or Ronald Reagan's, even if the underlying "rules of the game" are identical on paper. Similar differences between judiciaries create uncertainties about how the courts will rule on contested laws and government actions.

Higgs, Robert

For another thing, seemingly neutral changes in policies or personnel may have major implications for specific types of investment. Even when government changes the rules in a way that seemingly strengthens private-property rights overall, the action's specific form may jeopardize particular types of investment, and apprehension about such a threat may paralyze investors in these areas. Moreover, it may also give pause to investors in other areas, who fear that what the government has done to harm others today, it may do to them tomorrow. In sum, heightened uncertainty in general — a perceived increase in the potential variance of all sorts of relevant government action — may deter investment even if the mean value of expectations shifts toward more secure private-property rights.

Regime uncertainly is a complex matter. No empirical index can capture it fully; some indexes may actually misrepresent it. Only the actors on the scene can appraise it, and their appraisals are intrinsically subjective. However, by assessing a variety of direct and indirect evidence, analysts can better appreciate its contours, direction, and impact on private investment decisions.

Robert Higgs is senior fellow in political economy for the Independent Institute and editor of The Independent Review. He is the 2007 recipient of the Gary G. Schlarbaum Prize for Lifetime Achievement in the Cause of Liberty.

The difference between the Davids

Bill Ralston set me thinking about the choices facing the Labour caucus  this afternoon—or, more accurately, next February, since the only choice this afternoon is to get unanimous or get out.

So neither of those choices next February are perfect, but if Cunliffe did actually step up and put his mouth where his white-anting has been, the choice would be between a good communicator and a decent, honest, reasonable man.*

But whereas David Shearer is a decent, honest, reasonable man who can conceivably be taught to communicate better, it will forever be impossible to teach Cunliffe to be either decent, honest or reasonable.

Which should be the choice right there.

* * * *

* Bill Ralston’s description, not mine. A difficult one to defend, I would have thought, after his indecent, dishonest and unreasonable proposal for the government to build forty times the number of houses every year that the country’s largest house build currently builds without utterly skewing the land, labour and materials markets.

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EXAM QUESTION: On emergencies

Since it’s exam season, NOT PC will begin a short series of exam questions for readers.  Here’s your first:

“The truth is governments are useless in emergencies,” says Robert Wenzel.” “The ‘leaders’ are posers. Christie, Bloomberg, Cuomo et al. They only make matters worse, e.g., enforcement of anti-gouging laws, rationing and interference in privately written property damage insurance contracts. These characters would have fit in nicely under Khrushchev. He looked ready for emergencies also.”

Discuss, with specific application to Christchurch.

This question is worth twelve marks.

Monday, 19 November 2012

And for every first-home buyer, a pony [updated]

Undaunted by the fact that with land and building regulations as they are it is now impossible to produce house and land packages for less than $300,000, this month’s Labour leader announced over the weekend his intention for the government to “invest” $1.5 billion producing 100,000 house and land packages under $300,000—two-thirds of those in Auckland.

This programme will eventually be self-financed by selling something called Home Ownership Bonds, says the nice Mr Shearer, with interest paid out of the returns made by on-selling these house and and land packages.

But if they are selling bonds they are clearly going to be of the perpetual variety, since it’s clear the principal will never be repaid out of the scheme itself. Indeed, it’s hard enough to see where the returns will come from to pay the interest on those bonds? Because if it were possible to produce house and land packages for less than $300,000, which is what is necessary to make the returns they’re dreaming about, then everyone would already be doing it.  And they’re not.

They can’t.

That’s why affordable housing is not being produced.

Which means these Home Ownership Bonds are just a fancy subterfuge to conceal that in the end the taxpayer will be picking up the tab for this “investment.”

And where will those 100,000 cheap sections come from to put those houses on?  If that many sections were at that price, they’d already have been snapped up and hosting affordable houses already. They haven’t been because they don’t exist. They don’t exist because the planners have shut down the market.

The fact that house and land packages for less than $300,000 are not being produced by the market is not because of some “market failure”; it’s because between the Department of Building and Housing’s gold-plated building regulations and the Resource Management Act’s planning restrictions on land have put the costs of producing house and land packages beyond the reach of the lower end of the market—neither of which Labour’s leaders intend to touch. 

And because the Reserve Bank continues to authorise the expansion of the money supply in the form of bank credit into the accounts of house buyers—which Labour’s leaders propose to encourage via even more inflationary bubble-making—we can only expect the demand-side of this explosive equation to keep rising.

So this amounts to a $1.5 billion promise to give potential Labour voters a pony.  Paid for by you and I.

And, when combined with their companion proposal to impose a Capital Gains Tax on New Zealanders—an envy tax on “the rich,” they insist, that in reality will be felt by everyone—a tax that in every country in which it had been imposed has failed to do anything to limit housing bubbles—it amounts to a plan to get existing home-owners and taxpayers to pay for the slums of tomorrow. Like the modern-day equivalents of those vast swathes of slum housing thrown up in Mangere, Otara and elsewhere in the seventies by similarly expansive borrowing—except that this time the slums will be designed by committee to be “sustainable.”

Yeah, right.

The nice Mr Shearer isn’t stupid, however. He reckons he has an answer to some of these obvious problems.  He has spoken to Auckland Mayor Len Brown already, he says, to take up his offer of a partnership with Auckland council to make land available.

But if Len Brown’s planners can magically make 66,666 cheap sections available to help Labour’s election chances, then why couldn’t it make cheap sections available for you and I to build our own affordable homes?

And if Mr Shearer thinks it’s appropriate to allow his 100,000 houses to be “fast-tracked” through the regulatory process, then why can’t houses and projects built by you and I?

In short and in summary, if cheap sections and “fast-tracking” were already available to everyone, then the problem of affordable housing would not be with us.  So let’s start with that now, and forget about buying everyone a pony.

UPDATE: Hugh Pavletich from Demographia and Performance Urban Planning comments:


It is remarkable that, after 8 years of public conversation on these issues, since the time of the release of the first Annual Demographia International Housing Affordability Survey back in early 2005, that this is the best the Labour Party can come up with.

Particularly, when one considers that it was the last Labour Government’s irresponsible management that allowed the housing bubble to erupt between 2002 through 2007.

This Quick Facts graph of the Christchurch City Council on the Our Purposes page of Cantabrians Unite is representative for the whole country over this period ...


After the bubble topped in 2007, Labour deservedly lost the 2008 election (for this reason and others) and the residential construction industry has been in decline ever since,

And since then, while new affordable housing is being provided on the fringes of the affordable United States housing markets for about $US600 per square metre all up – here in New Zealand it is now about $NZ2,500 per square metre all up....and often well beyond that.

I explained this very clearly early 2010, with respect to Christchurch ( 6 months prior to the first earthquakes September 2010 ) in my article HOUSTON: WE HAVE A HOUSING AFFORDABILITY PROBLEM ...

David Shearers speech today is telling us that sadly, the Labour Party has not learnt a thing.

It is an embarrassment.

David Shearer is talking rubbish about housing.


Because David Shearer has been a failure as a leader, he reverted in his speech to the tiresome ideological approach, in talking of “market failure”—when the only failure here is regulation stifling market activity.

It is simply a process of “following the numbers” to ascertain where the problems and solutions are.

Raw rural land costs in New Zealand are generally in the order of $10,000 through $40,000 per hectare. Horticultural land considerably more.  This is the sort of land on the outskirts of our major cities.

Mr Shearer deliberately avoided explaining why Councils are strangling land supply with planning “ring fences,” so that raw land costs, for example, are artificially ramped up to near $500,000 per hectare on the fringes of Rolleston, to $1 million on the fringes of Christchurch, to $1.25 through $1.50 million for raw land on the fringes of Auckland.

Mr Shearer deliberately avoided explaining why Local Government costs have got so badly out of control these past 10 years or so. And why councils are inappropriately financing infrastructure by imposing Development Levies of $20,000 through $70,000 per section – which are nothing more than “revenue milking” exercises whose value in the end comes out of home-buyers’ pockets.

This explains why fringe sections are $200,000 and much more, when they should be $50,000 and less, as Dale Smith, Affordable Land Convenor of Cantabrians Unite explained with ACHIEVING $50,000 SECTIONS ...

Cantabrians Unite set out the solutions with respect to Christchurch with CHRISTCHURCH: THE WAY FORWARD (note Section 4 – Affordable Land)...

These cost explosions are hardly “market failures”—they are instead serious systemic problems at the local level, where councils have lost control of their costs and allowed planners control over property owners, as I explained last November within HOW HOUSING BUBBLES ARE TRIGGERED ...

(Much like the problems they are experiencing in Britain (a degenerate influence on our public service culture) as the UK Daily Mail reporters found when investigating a London Council with THE GREAT INERTIA SECTOR ...)

Shearer hasn’t got what it takes to be a leader [mind you, neither does the other David] and [after the weekend’s constitutional changes allowing unions more say in elections] Labour is even more under the control of the public sector unions that prop it up financially. The Golden Rule of Politics “Those with the gold make the rules.”

Shearer is “parroting” what his Party’s paymasters, the public sector Unions, are telling him to say.

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Who’s running the show?

After a weekend of turbulence over who runs the Labour Party—the leader?—the unions?—the caucus?—the wanna-be leader and his gang of white ants?—the Herald headline this morning suggests oil has been poured on the leadership waters roughed up by new rules making it easier to trigger a leadership challenge.

Cunliffe backs Shearer as leadership crisis calms” says the headline. Clearly however, the headline writer hadn’t read the story itself, which quoted from (and linked to) State Radio’s Morning Report on which new hostilities broke out on  this morning.

I support David S, David C. told State Radio this morning after a weekend demonstrating the opposite, and I rang him last night to tell him, he said.

No, he didn’t, countered David S. But I’ll make sure I get that support this Tuesday.

I’m fully in support of David S., reiterated David C., at least I am until February—or earlier if circumstances work out my way.

He’ll never get the chance, responded a hopeful David S., because now I’m running the show.

But is he?